[Congressional Record Volume 152, Number 102 (Friday, July 28, 2006)]
[House]
[Pages H6040-H6170]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PENSION PROTECTION ACT OF 2006
Mr. THOMAS. Mr. Speaker, pursuant to House Resolution 966, I call up
the bill (H.R. 4) to provide economic security for all Americans, and
for other purposes, and ask for its immediate consideration.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 4
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Pension
Protection Act of 2006''.
(b) Table of Contents.--The table of contents for this Act
(other than so much of title XIV as follows section 1401) is
as follows:
Sec. 1. Short title and table of contents.
TITLE I--REFORM OF FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT
PENSION PLANS
Subtitle A--Amendments to Employee Retirement Income Security Act of
1974
Sec. 101. Minimum funding standards.
Sec. 102. Funding rules for single-employer defined benefit pension
plans.
Sec. 103. Benefit limitations under single-employer plans.
Sec. 104. Special rules for multiple employer plans of certain
cooperatives.
Sec. 105. Temporary relief for certain PBGC settlement plans.
Sec. 106. Special rules for plans of certain government contractors.
Sec. 107. Technical and conforming amendments.
Subtitle B--Amendments to Internal Revenue Code of 1986
Sec. 111. Minimum funding standards.
Sec. 112. Funding rules for single-employer defined benefit pension
plans.
Sec. 113. Benefit limitations under single-employer plans.
Sec. 114. Technical and conforming amendments.
Sec. 115. Modification of transition rule to pension funding
requirements.
Sec. 116. Restrictions on funding of nonqualified deferred compensation
plans by employers maintaining underfunded or terminated
single-employer plans.
TITLE II--FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS AND
RELATED PROVISIONS
Subtitle A--Amendments to Employee Retirement Income Security Act of
1974
Sec. 201. Funding rules for multiemployer defined benefit plans.
Sec. 202. Additional funding rules for multiemployer plans in
endangered or critical status.
Sec. 203. Measures to forestall insolvency of multiemployer plans.
Sec. 204. Withdrawal liability reforms.
Sec. 205. Prohibition on retaliation against employers exercising their
rights to petition the Federal government.
Sec. 206. Special rule for certain benefits funded under an agreement
approved by the Pension Benefit Guaranty Corporation.
Subtitle B--Amendments to Internal Revenue Code of 1986
Sec. 211. Funding rules for multiemployer defined benefit plans.
Sec. 212. Additional funding rules for multiemployer plans in
endangered or critical status.
Sec. 213. Measures to forestall insolvency of multiemployer plans.
Sec. 214. Exemption from excise taxes for certain multiemployer pension
plans.
Subtitle C--Sunset of Additional Funding Rules
Sec. 221. Sunset of additional funding rules.
TITLE III--INTEREST RATE ASSUMPTIONS
Sec. 301. Extension of replacement of 30-year Treasury rates.
Sec. 302. Interest rate assumption for determination of lump sum
distributions.
Sec. 303. Interest rate assumption for applying benefit limitations to
lump sum distributions.
TITLE IV--PBGC GUARANTEE AND RELATED PROVISIONS
Sec. 401. PBGC premiums.
Sec. 402. Special funding rules for certain plans maintained by
commercial airlines.
Sec. 403. Limitation on PBGC guarantee of shutdown and other benefits.
Sec. 404. Rules relating to bankruptcy of employer.
Sec. 405. PBGC premiums for small plans.
Sec. 406. Authorization for PBGC to pay interest on premium overpayment
refunds.
Sec. 407. Rules for substantial owner benefits in terminated plans.
Sec. 408. Acceleration of PBGC computation of benefits attributable to
recoveries from employers.
Sec. 409. Treatment of certain plans where cessation or change in
membership of a controlled group.
Sec. 410. Missing participants.
Sec. 411. Director of the Pension Benefit Guaranty Corporation.
Sec. 412. Inclusion of information in the PBGC annual report.
TITLE V--DISCLOSURE
Sec. 501. Defined benefit plan funding notice.
Sec. 502. Access to multiemployer pension plan information.
Sec. 503. Additional annual reporting requirements.
Sec. 504. Electronic display of annual report information.
Sec. 505. Section 4010 filings with the PBGC.
Sec. 506. Disclosure of termination information to plan participants.
Sec. 507. Notice of freedom to divest employer securities.
Sec. 508. Periodic pension benefit statements.
Sec. 509. Notice to participants or beneficiaries of blackout periods.
TITLE VI--INVESTMENT ADVICE, PROHIBITED TRANSACTIONS, AND FIDUCIARY
RULES
Subtitle A--Investment Advice
Sec. 601. Prohibited transaction exemption for provision of investment
advice.
Subtitle B--Prohibited Transactions
Sec. 611. Prohibited transaction rules relating to financial
investments.
Sec. 612. Correction period for certain transactions involving
securities and commodities.
Subtitle C--Fiduciary and Other Rules
Sec. 621. Inapplicability of relief from fiduciary liability during
suspension of ability of participant or beneficiary to
direct investments.
Sec. 622. Increase in maximum bond amount.
Sec. 623. Increase in penalties for coercive interference with exercise
of ERISA rights.
Sec. 624. Treatment of investment of assets by plan where participant
fails to exercise investment election.
Sec. 625. Clarification of fiduciary rules.
TITLE VII--BENEFIT ACCRUAL STANDARDS
Sec. 701. Benefit accrual standards.
Sec. 702. Regulations relating to mergers and acquisitions.
TITLE VIII--PENSION RELATED REVENUE PROVISIONS
Subtitle A--Deduction Limitations
Sec. 801. Increase in deduction limit for single-employer plans.
Sec. 802. Deduction limits for multiemployer plans.
Sec. 803. Updating deduction rules for combination of plans.
Subtitle B--Certain Pension Provisions Made Permanent
Sec. 811. Pensions and individual retirement arrangement provisions of
Economic Growth and Tax Relief Reconciliation Act of 2001
made permanent.
Sec. 812. Saver's credit.
Subtitle C--Improvements in Portability, Distribution, and Contribution
Rules
Sec. 821. Clarifications regarding purchase of permissive service
credit.
Sec. 822. Allow rollover of after-tax amounts in annuity contracts.
Sec. 823. Clarification of minimum distribution rules for governmental
plans.
Sec. 824. Allow direct rollovers from retirement plans to Roth IRAs.
Sec. 825. Eligibility for participation in retirement plans.
Sec. 826. Modifications of rules governing hardships and unforseen
financial emergencies.
Sec. 827. Penalty-free withdrawals from retirement plans for
individuals called to active duty for at least 179 days.
Sec. 828. Waiver of 10 percent early withdrawal penalty tax on certain
distributions of pension plans for public safety
employees.
[[Page H6041]]
Sec. 829. Allow rollovers by nonspouse beneficiaries of certain
retirement plan distributions.
Sec. 830. Direct payment of tax refunds to individual retirement plans.
Sec. 831. Allowance of additional IRA payments in certain bankruptcy
cases.
Sec. 832. Determination of average compensation for section 415 limits.
Sec. 833. Inflation indexing of gross income limitations on certain
retirement savings incentives.
Subtitle D--Health and Medical Benefits
Sec. 841. Use of excess pension assets for future retiree health
benefits and collectively bargained retiree health
benefits.
Sec. 842. Transfer of excess pension assets to multiemployer health
plan.
Sec. 843. Allowance of reserve for medical benefits of plans sponsored
by bona fide associations.
Sec. 844. Treatment of annuity and life insurance contracts with a
long-term care insurance feature.
Sec. 845. Distributions from governmental retirement plans for health
and Long-Term care insurance for public safety officers.
Subtitle E--United States Tax Court Modernization
Sec. 851. Cost-of-living adjustments for Tax Court judicial survivor
annuities.
Sec. 852. Cost of life insurance coverage for Tax Court judges age 65
or over.
Sec. 853. Participation of Tax Court judges in the Thrift Savings Plan.
Sec. 854. Annuities to surviving spouses and dependent children of
special trial judges of the Tax Court.
Sec. 855. Jurisdiction of Tax Court over collection due process cases.
Sec. 856. Provisions for recall.
Sec. 857. Authority for special trial judges to hear and decide certain
employment status cases.
Sec. 858. Confirmation of authority of Tax Court to apply doctrine of
equitable recoupment.
Sec. 859. Tax Court filing fee in all cases commenced by filing
petition.
Sec. 860. Expanded use of Tax Court practice fee for pro se taxpayers.
Subtitle F--Other Provisions
Sec. 861. Extension to all governmental plans of current moratorium on
application of certain nondiscrimination rules applicable
to State and local plans.
Sec. 862. Elimination of aggregate limit for usage of excess funds from
black lung disability trusts.
Sec. 863. Treatment of death benefits from corporate-owned life
insurance.
Sec. 864. Treatment of test room supervisors and proctors who assist in
the administration of college entrance and placement
exams.
Sec. 865. Grandfather rule for church plans which self-annuitize.
Sec. 866. Exemption for income from leveraged real estate held by
church plans.
Sec. 867. Church plan rule.
Sec. 868. Gratuitous transfer for benefits of employees.
TITLE IX--INCREASE IN PENSION PLAN DIVERSIFICATION AND PARTICIPATION
AND OTHER PENSION PROVISIONS
Sec. 901. Defined contribution plans required to provide employees with
freedom to invest their plan assets.
Sec. 902. Increasing participation through automatic contribution
arrangements.
Sec. 903. Treatment of eligible combined defined benefit plans and
qualified cash or deferred arrangements.
Sec. 904. Faster vesting of employer nonelective contributions.
Sec. 905. Distributions during working retirement.
Sec. 906. Treatment of certain pension plans of Indian tribal
governments.
TITLE X--PROVISIONS RELATING TO SPOUSAL PENSION PROTECTION
Sec. 1001. Regulations on time and order of issuance of domestic
relations orders.
Sec. 1002. Entitlement of divorced spouses to railroad retirement
annuities independent of actual entitlement of employee.
Sec. 1003. Extension of tier II railroad retirement benefits to
surviving former spouses pursuant to divorce agreements.
Sec. 1004. Requirement for additional survivor annuity option.
TITLE XI--ADMINISTRATIVE PROVISIONS
Sec. 1101. Employee plans compliance resolution system.
Sec. 1102. Notice and consent period regarding distributions.
Sec. 1103. Reporting simplification.
Sec. 1104. Voluntary early retirement incentive and employment
retention plans maintained by local educational agencies
and other entities.
Sec. 1105. No reduction in unemployment compensation as a result of
pension rollovers.
Sec. 1106. Revocation of election relating to treatment as
multiemployer plan.
Sec. 1107. Provisions relating to plan amendments.
TITLE XII--PROVISIONS RELATING TO EXEMPT ORGANIZATIONS
Subtitle A--Charitable Giving Incentives
Sec. 1201. Tax-free distributions from individual retirement plans for
charitable purposes.
Sec. 1202. Extension of modification of charitable deduction for
contributions of food inventory.
Sec. 1203. Basis adjustment to stock of S corporation contributing
property.
Sec. 1204. Extension of modification of charitable deduction for
contributions of book inventory.
Sec. 1205. Modification of tax treatment of certain payments to
controlling exempt organizations.
Sec. 1206. Encouragement of contributions of capital gain real property
made for conservation purposes.
Sec. 1207. Excise taxes exemption for blood collector organizations.
Subtitle B--Reforming Exempt Organizations
Part 1--General Reforms
Sec. 1211. Reporting on certain acquisitions of interests in insurance
contracts in which certain exempt organizations hold an
interest.
Sec. 1212. Increase in penalty excise taxes relating to public
charities, social welfare organizations, and private
foundations.
Sec. 1213. Reform of charitable contributions of certain easements in
registered historic districts and reduced deduction for
portion of qualified conservation contribution
attributable to rehabilitation credit.
Sec. 1214. Charitable contributions of taxidermy property.
Sec. 1215. Recapture of tax benefit for charitable contributions of
exempt use property not used for an exempt use.
Sec. 1216. Limitation of deduction for charitable contributions of
clothing and household items.
Sec. 1217. Modification of recordkeeping requirements for certain
charitable contributions.
Sec. 1218. Contributions of fractional interests in tangible personal
property.
Sec. 1219. Provisions relating to substantial and gross overstatements
of valuations.
Sec. 1220. Additional standards for credit counseling organizations.
Sec. 1221. Expansion of the base of tax on private foundation net
investment income.
Sec. 1222. Definition of convention or association of churches.
Sec. 1223. Notification requirement for entities not currently required
to file.
Sec. 1224. Disclosure to State officials relating to exempt
organizations.
Sec. 1225. Public disclosure of information relating to unrelated
business income tax returns.
Sec. 1226. Study on donor advised funds and supporting organizations.
Part 2--Improved Accountability of Donor Advised Funds
Sec. 1231. Excise taxes relating to donor advised funds.
Sec. 1232. Excess benefit transactions involving donor advised funds
and sponsoring organizations.
Sec. 1233. Excess business holdings of donor advised funds.
Sec. 1234. Treatment of charitable contribution deductions to donor
advised funds.
Sec. 1235. Returns of, and applications for recognition by, sponsoring
organizations.
Part 3--Improved Accountability of Supporting Organizations
Sec. 1241. Requirements for supporting organizations.
Sec. 1242. Excess benefit transactions involving supporting
organizations.
Sec. 1243. Excess business holdings of supporting organizations.
Sec. 1244. Treatment of amounts paid to supporting organizations by
private foundations.
Sec. 1245. Returns of supporting organizations.
TITLE XIII--OTHER PROVISIONS
Sec. 1301. Technical corrections relating to mine safety.
Sec. 1302. Going-to-the-sun road.
Sec. 1303. Exception to the local furnishing requirement of the tax-
exempt bond rules.
Sec. 1304. Qualified tuition programs.
TITLE XIV--TARIFF PROVISIONS
Sec. 1401. Short title; table of contents.
TITLE I--REFORM OF FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT
PENSION PLANS
Subtitle A--Amendments to Employee Retirement Income Security Act of
1974
SEC. 101. MINIMUM FUNDING STANDARDS.
(a) Repeal of Existing Funding Rules.--Sections 302 through
308 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1082 through 1086) are repealed.
(b) New Minimum Funding Standards.--Part 3 of subtitle B of
title I of such Act (as
[[Page H6042]]
amended by subsection (a)) is amended by inserting after
section 301 the following new section:
``SEC. 302. MINIMUM FUNDING STANDARDS.
``(a) Requirement to Meet Minimum Funding Standard.--
``(1) In general.--A plan to which this part applies shall
satisfy the minimum funding standard applicable to the plan
for any plan year.
``(2) Minimum funding standard.--For purposes of paragraph
(1), a plan shall be treated as satisfying the minimum
funding standard for a plan year if--
``(A) in the case of a defined benefit plan which is a
single-employer plan, the employer makes contributions to or
under the plan for the plan year which, in the aggregate, are
not less than the minimum required contribution determined
under section 303 for the plan for the plan year,
``(B) in the case of a money purchase plan which is a
single-employer plan, the employer makes contributions to or
under the plan for the plan year which are required under the
terms of the plan, and
``(C) in the case of a multiemployer plan, the employers
make contributions to or under the plan for any plan year
which, in the aggregate, are sufficient to ensure that the
plan does not have an accumulated funding deficiency under
section 304 as of the end of the plan year.
``(b) Liability for Contributions.--
``(1) In general.--Except as provided in paragraph (2), the
amount of any contribution required by this section
(including any required installments under paragraphs (3) and
(4) of section 303(j)) shall be paid by the employer
responsible for making contributions to or under the plan.
``(2) Joint and several liability where employer member of
controlled group.--If the employer referred to in paragraph
(1) is a member of a controlled group, each member of such
group shall be jointly and severally liable for payment of
such contributions.
``(c) Variance From Minimum Funding Standards.--
``(1) Waiver in case of business hardship.--
``(A) In general.--If--
``(i) an employer is (or in the case of a multiemployer
plan, 10 percent or more of the number of employers
contributing to or under the plan is) unable to satisfy the
minimum funding standard for a plan year without temporary
substantial business hardship (substantial business hardship
in the case of a multiemployer plan), and
``(ii) application of the standard would be adverse to the
interests of plan participants in the aggregate,
the Secretary of the Treasury may, subject to subparagraph
(C), waive the requirements of subsection (a) for such year
with respect to all or any portion of the minimum funding
standard. The Secretary of the Treasury shall not waive the
minimum funding standard with respect to a plan for more than
3 of any 15 (5 of any 15 in the case of a multiemployer plan)
consecutive plan years.
``(B) Effects of waiver.--If a waiver is granted under
subparagraph (A) for any plan year--
``(i) in the case of a single-employer plan, the minimum
required contribution under section 303 for the plan year
shall be reduced by the amount of the waived funding
deficiency and such amount shall be amortized as required
under section 303(e), and
``(ii) in the case of a multiemployer plan, the funding
standard account shall be credited under section 304(b)(3)(C)
with the amount of the waived funding deficiency and such
amount shall be amortized as required under section
304(b)(2)(C).
``(C) Waiver of amortized portion not allowed.--The
Secretary of the Treasury may not waive under subparagraph
(A) any portion of the minimum funding standard under
subsection (a) for a plan year which is attributable to any
waived funding deficiency for any preceding plan year.
``(2) Determination of business hardship.--For purposes of
this subsection, the factors taken into account in
determining temporary substantial business hardship
(substantial business hardship in the case of a multiemployer
plan) shall include (but shall not be limited to) whether or
not--
``(A) the employer is operating at an economic loss,
``(B) there is substantial unemployment or underemployment
in the trade or business and in the industry concerned,
``(C) the sales and profits of the industry concerned are
depressed or declining, and
``(D) it is reasonable to expect that the plan will be
continued only if the waiver is granted.
``(3) Waived funding deficiency.--For purposes of this
part, the term `waived funding deficiency' means the portion
of the minimum funding standard under subsection (a)
(determined without regard to the waiver) for a plan year
waived by the Secretary of the Treasury and not satisfied by
employer contributions.
``(4) Security for waivers for single-employer plans,
consultations.--
``(A) Security may be required.--
``(i) In general.--Except as provided in subparagraph (C),
the Secretary of the Treasury may require an employer
maintaining a defined benefit plan which is a single-employer
plan (within the meaning of section 4001(a)(15)) to provide
security to such plan as a condition for granting or
modifying a waiver under paragraph (1).
``(ii) Special rules.--Any security provided under clause
(i) may be perfected and enforced only by the Pension Benefit
Guaranty Corporation, or at the direction of the Corporation,
by a contributing sponsor (within the meaning of section
4001(a)(13)), or a member of such sponsor's controlled group
(within the meaning of section 4001(a)(14)).
``(B) Consultation with the pension benefit guaranty
corporation.--Except as provided in subparagraph (C), the
Secretary of the Treasury shall, before granting or modifying
a waiver under this subsection with respect to a plan
described in subparagraph (A)(i)--
``(i) provide the Pension Benefit Guaranty Corporation
with--
``(I) notice of the completed application for any waiver or
modification, and
``(II) an opportunity to comment on such application within
30 days after receipt of such notice, and
``(ii) consider--
``(I) any comments of the Corporation under clause (i)(II),
and
``(II) any views of any employee organization (within the
meaning of section 3(4)) representing participants in the
plan which are submitted in writing to the Secretary of the
Treasury in connection with such application.
Information provided to the Corporation under this
subparagraph shall be considered tax return information and
subject to the safeguarding and reporting requirements of
section 6103(p) of the Internal Revenue Code of 1986.
``(C) Exception for certain waivers.--
``(i) In general.--The preceding provisions of this
paragraph shall not apply to any plan with respect to which
the sum of--
``(I) the aggregate unpaid minimum required contributions
for the plan year and all preceding plan years, and
``(II) the present value of all waiver amortization
installments determined for the plan year and succeeding plan
years under section 303(e)(2),
is less than $1,000,000.
``(ii) Treatment of waivers for which applications are
pending.--The amount described in clause (i)(I) shall include
any increase in such amount which would result if all
applications for waivers of the minimum funding standard
under this subsection which are pending with respect to such
plan were denied.
``(iii) Unpaid minimum required contribution.--For purposes
of this subparagraph--
``(I) In general.--The term `unpaid minimum required
contribution' means, with respect to any plan year, any
minimum required contribution under section 303 for the plan
year which is not paid on or before the due date (as
determined under section 303(j)(1)) for the plan year.
``(II) Ordering rule.--For purposes of subclause (I), any
payment to or under a plan for any plan year shall be
allocated first to unpaid minimum required contributions for
all preceding plan years on a first-in, first-out basis and
then to the minimum required contribution under section 303
for the plan year.
``(5) Special rules for single-employer plans.--
``(A) Application must be submitted before date 2\1/2\
months after close of year.--In the case of a single-employer
plan, no waiver may be granted under this subsection with
respect to any plan for any plan year unless an application
therefor is submitted to the Secretary of the Treasury not
later than the 15th day of the 3rd month beginning after the
close of such plan year.
``(B) Special rule if employer is member of controlled
group.--In the case of a single-employer plan, if an employer
is a member of a controlled group, the temporary substantial
business hardship requirements of paragraph (1) shall be
treated as met only if such requirements are met--
``(i) with respect to such employer, and
``(ii) with respect to the controlled group of which such
employer is a member (determined by treating all members of
such group as a single employer).
The Secretary of the Treasury may provide that an analysis of
a trade or business or industry of a member need not be
conducted if such Secretary determines such analysis is not
necessary because the taking into account of such member
would not significantly affect the determination under this
paragraph.
``(6) Advance notice.--
``(A) In general.--The Secretary of the Treasury shall,
before granting a waiver under this subsection, require each
applicant to provide evidence satisfactory to such Secretary
that the applicant has provided notice of the filing of the
application for such waiver to each affected party (as
defined in section 4001(a)(21)). Such notice shall include a
description of the extent to which the plan is funded for
benefits which are guaranteed under title IV and for benefit
liabilities.
``(B) Consideration of relevant information.--The Secretary
of the Treasury shall consider any relevant information
provided by a person to whom notice was given under
subparagraph (A).
``(7) Restriction on plan amendments.--
``(A) In general.--No amendment of a plan which increases
the liabilities of the plan by reason of any increase in
benefits, any change in the accrual of benefits, or any
change in the rate at which benefits become
[[Page H6043]]
nonforfeitable under the plan shall be adopted if a waiver
under this subsection or an extension of time under section
304(d) is in effect with respect to the plan, or if a plan
amendment described in subsection (d)(2) has been made at any
time in the preceding 12 months (24 months in the case of a
multiemployer plan). If a plan is amended in violation of the
preceding sentence, any such waiver, or extension of time,
shall not apply to any plan year ending on or after the date
on which such amendment is adopted.
``(B) Exception.--Subparagraph (A) shall not apply to any
plan amendment which--
``(i) the Secretary of the Treasury determines to be
reasonable and which provides for only de minimis increases
in the liabilities of the plan,
``(ii) only repeals an amendment described in subsection
(d)(2), or
``(iii) is required as a condition of qualification under
part I of subchapter D of chapter 1 of the Internal Revenue
Code of 1986.
``(8) Cross reference.--For corresponding duties of the
Secretary of the Treasury with regard to implementation of
the Internal Revenue Code of 1986, see section 412(c) of such
Code.
``(d) Miscellaneous Rules.--
``(1) Change in method or year.--If the funding method, the
valuation date, or a plan year for a plan is changed, the
change shall take effect only if approved by the Secretary of
the Treasury.
``(2) Certain retroactive plan amendments.--For purposes of
this section, any amendment applying to a plan year which--
``(A) is adopted after the close of such plan year but no
later than 2\1/2\ months after the close of the plan year
(or, in the case of a multiemployer plan, no later than 2
years after the close of such plan year),
``(B) does not reduce the accrued benefit of any
participant determined as of the beginning of the first plan
year to which the amendment applies, and
``(C) does not reduce the accrued benefit of any
participant determined as of the time of adoption except to
the extent required by the circumstances,
shall, at the election of the plan administrator, be deemed
to have been made on the first day of such plan year. No
amendment described in this paragraph which reduces the
accrued benefits of any participant shall take effect unless
the plan administrator files a notice with the Secretary of
the Treasury notifying him of such amendment and such
Secretary has approved such amendment, or within 90 days
after the date on which such notice was filed, failed to
disapprove such amendment. No amendment described in this
subsection shall be approved by the Secretary of the Treasury
unless such Secretary determines that such amendment is
necessary because of a temporary substantial business
hardship (as determined under subsection (c)(2)) or a
substantial business hardship (as so determined) in the case
of a multiemployer plan and that a waiver under subsection
(c) (or, in the case of a multiemployer plan, any extension
of the amortization period under section 304(d)) is
unavailable or inadequate.
``(3) Controlled group.--For purposes of this section, the
term `controlled group' means any group treated as a single
employer under subsection (b), (c), (m), or (o) of section
414 of the Internal Revenue Code of 1986.''.
(c) Clerical Amendment.--The table of contents in section 1
of such Act is amended by striking the items relating to
sections 302 through 308 and inserting the following new
item:
``Sec. 302. Minimum funding standards.''.
(d) Effective Date.--The amendments made by this section
shall apply to plan years beginning after 2007.
SEC. 102. FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT
PENSION PLANS.
(a) In General.--Part 3 of subtitle B of title I of the
Employee Retirement Income Security Act of 1974 (as amended
by section 101 of this Act) is amended by inserting after
section 302 the following new section:
``SEC. 303. MINIMUM FUNDING STANDARDS FOR SINGLE-EMPLOYER
DEFINED BENEFIT PENSION PLANS.
``(a) Minimum Required Contribution.--For purposes of this
section and section 302(a)(2)(A), except as provided in
subsection (f), the term `minimum required contribution'
means, with respect to any plan year of a single-employer
plan--
``(1) in any case in which the value of plan assets of the
plan (as reduced under subsection (f)(4)(B)) is less than the
funding target of the plan for the plan year, the sum of--
``(A) the target normal cost of the plan for the plan year,
``(B) the shortfall amortization charge (if any) for the
plan for the plan year determined under subsection (c), and
``(C) the waiver amortization charge (if any) for the plan
for the plan year as determined under subsection (e); or
``(2) in any case in which the value of plan assets of the
plan (as reduced under subsection (f)(4)(B)) equals or
exceeds the funding target of the plan for the plan year, the
target normal cost of the plan for the plan year reduced (but
not below zero) by such excess.
``(b) Target Normal Cost.--For purposes of this section,
except as provided in subsection (i)(2) with respect to plans
in at-risk status, the term `target normal cost' means, for
any plan year, the present value of all benefits which are
expected to accrue or to be earned under the plan during the
plan year. For purposes of this subsection, if any benefit
attributable to services performed in a preceding plan year
is increased by reason of any increase in compensation during
the current plan year, the increase in such benefit shall be
treated as having accrued during the current plan year.
``(c) Shortfall Amortization Charge.--
``(1) In general.--For purposes of this section, the
shortfall amortization charge for a plan for any plan year is
the aggregate total (not less than zero) of the shortfall
amortization installments for such plan year with respect to
the shortfall amortization bases for such plan year and each
of the 6 preceding plan years.
``(2) Shortfall amortization installment.--For purposes of
paragraph (1)--
``(A) Determination.--The shortfall amortization
installments are the amounts necessary to amortize the
shortfall amortization base of the plan for any plan year in
level annual installments over the 7-plan-year period
beginning with such plan year.
``(B) Shortfall installment.--The shortfall amortization
installment for any plan year in the 7-plan-year period under
subparagraph (A) with respect to any shortfall amortization
base is the annual installment determined under subparagraph
(A) for that year for that base.
``(C) Segment rates.--In determining any shortfall
amortization installment under this paragraph, the plan
sponsor shall use the segment rates determined under
subparagraph (C) of subsection (h)(2), applied under rules
similar to the rules of subparagraph (B) of subsection
(h)(2).
``(3) Shortfall amortization base.--For purposes of this
section, the shortfall amortization base of a plan for a plan
year is--
``(A) the funding shortfall of such plan for such plan
year, minus
``(B) the present value (determined using the segment rates
determined under subparagraph (C) of subsection (h)(2),
applied under rules similar to the rules of subparagraph (B)
of subsection (h)(2)) of the aggregate total of the shortfall
amortization installments and waiver amortization
installments which have been determined for such plan year
and any succeeding plan year with respect to the shortfall
amortization bases and waiver amortization bases of the plan
for any plan year preceding such plan year.
``(4) Funding shortfall.--For purposes of this section, the
funding shortfall of a plan for any plan year is the excess
(if any) of--
``(A) the funding target of the plan for the plan year,
over
``(B) the value of plan assets of the plan (as reduced
under subsection (f)(4)(B)) for the plan year which are held
by the plan on the valuation date.
``(5) Exemption from new shortfall amortization base.--
``(A) In general.--In any case in which the value of plan
assets of the plan (as reduced under subsection (f)(4)(A)) is
equal to or greater than the funding target of the plan for
the plan year, the shortfall amortization base of the plan
for such plan year shall be zero.
``(B) Transition rule.--
``(i) In general.--Except as provided in clauses (iii) and
(iv), in the case of plan years beginning after 2007 and
before 2011, only the applicable percentage of the funding
target shall be taken into account under paragraph (3)(A) in
determining the funding shortfall for the plan year for
purposes of subparagraph (A).
``(ii) Applicable percentage.--For purposes of subparagraph
(A), the applicable percentage shall be determined in
accordance with the following table:
``In the case of a plan year beginning in cThe applicable percentage is
2008..............................................................92
2009..............................................................94
2010..............................................................96.
``(iii) Limitation.--Clause (i) shall not apply with
respect to any plan year after 2008 unless the shortfall
amortization base for each of the preceding years beginning
after 2007 was zero (determined after application of this
subparagraph).
``(iv) Transition relief not available for new or deficit
reduction plans.--Clause (i) shall not apply to a plan--
``(I) which was not in effect for a plan year beginning in
2007, or
``(II) which was in effect for a plan year beginning in
2007 and which was subject to section 302(d) (as in effect
for plan years beginning in 2007), determined after the
application of paragraphs (6) and (9) thereof.
``(6) Early deemed amortization upon attainment of funding
target.--In any case in which the funding shortfall of a plan
for a plan year is zero, for purposes of determining the
shortfall amortization charge for such plan year and
succeeding plan years, the shortfall amortization bases for
all preceding plan years (and all shortfall amortization
installments determined with respect to such bases) shall be
reduced to zero.
``(d) Rules Relating to Funding Target.--For purposes of
this section--
``(1) Funding target.--Except as provided in subsection
(i)(1) with respect to plans in at-risk status, the funding
target of a plan for a plan year is the present value of all
benefits accrued or earned under the plan as of the beginning
of the plan year.
[[Page H6044]]
``(2) Funding target attainment percentage.--The `funding
target attainment percentage' of a plan for a plan year is
the ratio (expressed as a percentage) which--
``(A) the value of plan assets for the plan year (as
reduced under subsection (f)(4)(B)), bears to
``(B) the funding target of the plan for the plan year
(determined without regard to subsection (i)(1)).
``(e) Waiver Amortization Charge.--
``(1) Determination of waiver amortization charge.--The
waiver amortization charge (if any) for a plan for any plan
year is the aggregate total of the waiver amortization
installments for such plan year with respect to the waiver
amortization bases for each of the 5 preceding plan years.
``(2) Waiver amortization installment.--For purposes of
paragraph (1)--
``(A) Determination.--The waiver amortization installments
are the amounts necessary to amortize the waiver amortization
base of the plan for any plan year in level annual
installments over a period of 5 plan years beginning with the
succeeding plan year.
``(B) Waiver installment.--The waiver amortization
installment for any plan year in the 5-year period under
subparagraph (A) with respect to any waiver amortization base
is the annual installment determined under subparagraph (A)
for that year for that base.
``(3) Interest rate.--In determining any waiver
amortization installment under this subsection, the plan
sponsor shall use the segment rates determined under
subparagraph (C) of subsection (h)(2), applied under rules
similar to the rules of subparagraph (B) of subsection
(h)(2).
``(4) Waiver amortization base.--The waiver amortization
base of a plan for a plan year is the amount of the waived
funding deficiency (if any) for such plan year under section
302(c).
``(5) Early deemed amortization upon attainment of funding
target.--In any case in which the funding shortfall of a plan
for a plan year is zero, for purposes of determining the
waiver amortization charge for such plan year and succeeding
plan years, the waiver amortization bases for all preceding
plan years (and all waiver amortization installments
determined with respect to such bases) shall be reduced to
zero.
``(f) Reduction of Minimum Required Contribution by
Prefunding Balance and Funding Standard Carryover Balance.--
``(1) Election to maintain balances.--
``(A) Prefunding balance.--The plan sponsor of a single-
employer plan may elect to maintain a prefunding balance.
``(B) Funding standard carryover balance.--
``(i) In general.--In the case of a single-employer plan
described in clause (ii), the plan sponsor may elect to
maintain a funding standard carryover balance, until such
balance is reduced to zero.
``(ii) Plans maintaining funding standard account in
2007.--A plan is described in this clause if the plan--
``(I) was in effect for a plan year beginning in 2007, and
``(II) had a positive balance in the funding standard
account under section 302(b) as in effect for such plan year
and determined as of the end of such plan year.
``(2) Application of balances.--A prefunding balance and a
funding standard carryover balance maintained pursuant to
this paragraph--
``(A) shall be available for crediting against the minimum
required contribution, pursuant to an election under
paragraph (3),
``(B) shall be applied as a reduction in the amount treated
as the value of plan assets for purposes of this section, to
the extent provided in paragraph (4), and
``(C) may be reduced at any time, pursuant to an election
under paragraph (5).
``(3) Election to apply balances against minimum required
contribution.--
``(A) In general.--Except as provided in subparagraphs (B)
and (C), in the case of any plan year in which the plan
sponsor elects to credit against the minimum required
contribution for the current plan year all or a portion of
the prefunding balance or the funding standard carryover
balance for the current plan year (not in excess of such
minimum required contribution), the minimum required
contribution for the plan year shall be reduced as of the
first day of the plan year by the amount so credited by the
plan sponsor. For purposes of the preceding sentence, the
minimum required contribution shall be determined after
taking into account any waiver under section 302(c).
``(B) Coordination with funding standard carryover
balance.--To the extent that any plan has a funding standard
carryover balance greater than zero, no amount of the
prefunding balance of such plan may be credited under this
paragraph in reducing the minimum required contribution.
``(C) Limitation for underfunded plans.--The preceding
provisions of this paragraph shall not apply for any plan
year if the ratio (expressed as a percentage) which--
``(i) the value of plan assets for the preceding plan year
(as reduced under paragraph (4)(C)), bears to
``(ii) the funding target of the plan for the preceding
plan year (determined without regard to subsection (i)(1)),
is less than 80 percent. In the case of plan years beginning
in 2008, the ratio under this subparagraph may be determined
using such methods of estimation as the Secretary of the
Treasury may prescribe.
``(4) Effect of balances on amounts treated as value of
plan assets.--In the case of any plan maintaining a
prefunding balance or a funding standard carryover balance
pursuant to this subsection, the amount treated as the value
of plan assets shall be deemed to be such amount, reduced as
provided in the following subparagraphs:
``(A) Applicability of shortfall amortization base.--For
purposes of subsection (c)(5), the value of plan assets is
deemed to be such amount, reduced by the amount of the
prefunding balance, but only if an election under paragraph
(2) applying any portion of the prefunding balance in
reducing the minimum required contribution is in effect for
the plan year.
``(B) Determination of excess assets, funding shortfall,
and funding target attainment percentage.--
``(i) In general.--For purposes of subsections (a),
(c)(4)(B), and (d)(2)(A), the value of plan assets is deemed
to be such amount, reduced by the amount of the prefunding
balance and the funding standard carryover balance.
``(ii) Special rule for certain binding agreements with
pbgc.--For purposes of subsection (c)(4)(B), the value of
plan assets shall not be deemed to be reduced for a plan year
by the amount of the specified balance if, with respect to
such balance, there is in effect for a plan year a binding
written agreement with the Pension Benefit Guaranty
Corporation which provides that such balance is not available
to reduce the minimum required contribution for the plan
year. For purposes of the preceding sentence, the term
`specified balance' means the prefunding balance or the
funding standard carryover balance, as the case may be.
``(C) Availability of balances in plan year for crediting
against minimum required contribution.--For purposes of
paragraph (3)(C)(i) of this subsection, the value of plan
assets is deemed to be such amount, reduced by the amount of
the prefunding balance.
``(5) Election to reduce balance prior to determinations of
value of plan assets and crediting against minimum required
contribution.--
``(A) In general.--The plan sponsor may elect to reduce by
any amount the balance of the prefunding balance and the
funding standard carryover balance for any plan year (but not
below zero). Such reduction shall be effective prior to any
determination of the value of plan assets for such plan year
under this section and application of the balance in reducing
the minimum required contribution for such plan for such plan
year pursuant to an election under paragraph (2).
``(B) Coordination between prefunding balance and funding
standard carryover balance.--To the extent that any plan has
a funding standard carryover balance greater than zero, no
election may be made under subparagraph (A) with respect to
the prefunding balance.
``(6) Prefunding balance.--
``(A) In general.--A prefunding balance maintained by a
plan shall consist of a beginning balance of zero, increased
and decreased to the extent provided in subparagraphs (B) and
(C), and adjusted further as provided in paragraph (8).
``(B) Increases.--
``(i) In general.--As of the first day of each plan year
beginning after 2008, the prefunding balance of a plan shall
be increased by the amount elected by the plan sponsor for
the plan year. Such amount shall not exceed the excess (if
any) of--
``(I) the aggregate total of employer contributions to the
plan for the preceding plan year, over--
``(II) the minimum required contribution for such preceding
plan year.
``(ii) Adjustments for interest.--Any excess contributions
under clause (i) shall be properly adjusted for interest
accruing for the periods between the first day of the current
plan year and the dates on which the excess contributions
were made, determined by using the effective interest rate
for the preceding plan year and by treating contributions as
being first used to satisfy the minimum required
contribution.
``(iii) Certain contributions necessary to avoid benefit
limitations disregarded.--The excess described in clause (i)
with respect to any preceding plan year shall be reduced (but
not below zero) by the amount of contributions an employer
would be required to make under paragraph (1), (2), or (4) of
section 206(g) to avoid a benefit limitation which would
otherwise be imposed under such paragraph for the preceding
plan year. Any contribution which may be taken into account
in satisfying the requirements of more than 1 of such
paragraphs shall be taken into account only once for purposes
of this clause.
``(C) Decrease.--The prefunding balance of a plan shall be
decreased (but not below zero) by--
``(i) as of the first day of each plan year after 2008, the
amount of such balance credited under paragraph (2) (if any)
in reducing the minimum required contribution of the plan for
the preceding plan year, and
``(ii) as of the time specified in paragraph (5))(A), any
reduction in such balance elected under paragraph (5).
``(7) Funding standard carryover balance.--
``(A) In general.--A funding standard carryover balance
maintained by a plan shall consist of a beginning balance
determined
[[Page H6045]]
under subparagraph (B), decreased to the extent provided in
subparagraph (C), and adjusted further as provided in
paragraph (8).
``(B) Beginning balance.--The beginning balance of the
funding standard carryover balance shall be the positive
balance described in paragraph (1)(B)(ii)(II).
``(C) Decreases.--The funding standard carryover balance of
a plan shall be decreased (but not below zero) by--
``(i) as of the first day of each plan year after 2008, the
amount of such balance credited under paragraph (2) (if any)
in reducing the minimum required contribution of the plan for
the preceding plan year, and
``(ii) as of the time specified in paragraph (5))(A), any
reduction in such balance elected under paragraph (5).
``(8) Adjustments for investment experience.--In
determining the prefunding balance or the funding standard
carryover balance of a plan as of the first day of the plan
year, the plan sponsor shall, in accordance with regulations
prescribed by the Secretary of the Treasury, adjust such
balance to reflect the rate of return on plan assets for the
preceding plan year. Notwithstanding subsection (g)(3), such
rate of return shall be determined on the basis of fair
market value and shall properly take into account, in
accordance with such regulations, all contributions,
distributions, and other plan payments made during such
period.
``(9) Elections.--Elections under this subsection shall be
made at such times, and in such form and manner, as shall be
prescribed in regulations of the Secretary of the Treasury.
``(g) Valuation of Plan Assets and Liabilities.--
``(1) Timing of determinations.--Except as otherwise
provided under this subsection, all determinations under this
section for a plan year shall be made as of the valuation
date of the plan for such plan year.
``(2) Valuation date.--For purposes of this section--
``(A) In general.--Except as provided in subparagraph (B),
the valuation date of a plan for any plan year shall be the
first day of the plan year.
``(B) Exception for small plans.--If, on each day during
the preceding plan year, a plan had 100 or fewer
participants, the plan may designate any day during the plan
year as its valuation date for such plan year and succeeding
plan years. For purposes of this subparagraph, all defined
benefit plans which are single-employer plans and are
maintained by the same employer (or any member of such
employer's controlled group) shall be treated as 1 plan, but
only participants with respect to such employer or member
shall be taken into account.
``(C) Application of certain rules in determination of plan
size.--For purposes of this paragraph--
``(i) Plans not in existence in preceding year.--In the
case of the first plan year of any plan, subparagraph (B)
shall apply to such plan by taking into account the number of
participants that the plan is reasonably expected to have on
days during such first plan year.
``(ii) Predecessors.--Any reference in subparagraph (B) to
an employer shall include a reference to any predecessor of
such employer.
``(3) Determination of value of plan assets.--For purposes
of this section--
``(A) In general.--Except as provided in subparagraph (B),
the value of plan assets shall be the fair market value of
the assets.
``(B) Averaging allowed.--A plan may determine the value of
plan assets on the basis of the averaging of fair market
values, but only if such method--
``(i) is permitted under regulations prescribed by the
Secretary of the Treasury,
``(ii) does not provide for averaging of such values over
more than the period beginning on the last day of the 25th
month preceding the month in which the valuation date occurs
and ending on the valuation date (or a similar period in the
case of a valuation date which is not the 1st day of a
month), and
``(iii) does not result in a determination of the value of
plan assets which, at any time, is lower than 90 percent or
greater than 110 percent of the fair market value of such
assets at such time.
Any such averaging shall be adjusted for contributions and
distributions (as provided by the Secretary of the Treasury).
``(4) Accounting for contribution receipts.--For purposes
of determining the value of assets under paragraph (3)--
``(A) Prior year contributions.--If--
``(i) an employer makes any contribution to the plan after
the valuation date for the plan year in which the
contribution is made, and
``(ii) the contribution is for a preceding plan year,
the contribution shall be taken into account as an asset of
the plan as of the valuation date, except that in the case of
any plan year beginning after 2008, only the present value
(determined as of the valuation date) of such contribution
may be taken into account. For purposes of the preceding
sentence, present value shall be determined using the
effective interest rate for the preceding plan year to which
the contribution is properly allocable.
``(B) Special rule for current year contributions made
before valuation date.--If any contributions for any plan
year are made to or under the plan during the plan year but
before the valuation date for the plan year, the assets of
the plan as of the valuation date shall not include--
``(i) such contributions, and
``(ii) interest on such contributions for the period
between the date of the contributions and the valuation date,
determined by using the effective interest rate for the plan
year.
``(h) Actuarial Assumptions and Methods.--
``(1) In general.--Subject to this subsection, the
determination of any present value or other computation under
this section shall be made on the basis of actuarial
assumptions and methods--
``(A) each of which is reasonable (taking into account the
experience of the plan and reasonable expectations), and
``(B) which, in combination, offer the actuary's best
estimate of anticipated experience under the plan.
``(2) Interest rates.--
``(A) Effective interest rate.--For purposes of this
section, the term `effective interest rate' means, with
respect to any plan for any plan year, the single rate of
interest which, if used to determine the present value of the
plan's accrued or earned benefits referred to in subsection
(d)(1), would result in an amount equal to the funding target
of the plan for such plan year.
``(B) Interest rates for determining funding target.--For
purposes of determining the funding target and normal cost of
a plan for any plan year, the interest rate used in
determining the present value of the benefits of the plan
shall be--
``(i) in the case of benefits reasonably determined to be
payable during the 5-year period beginning on the first day
of the plan year, the first segment rate with respect to the
applicable month,
``(ii) in the case of benefits reasonably determined to be
payable during the 15-year period beginning at the end of the
period described in clause (i), the second segment rate with
respect to the applicable month, and
``(iii) in the case of benefits reasonably determined to be
payable after the period described in clause (ii), the third
segment rate with respect to the applicable month.
``(C) Segment rates.--For purposes of this paragraph--
``(i) First segment rate.--The term `first segment rate'
means, with respect to any month, the single rate of interest
which shall be determined by the Secretary of the Treasury
for such month on the basis of the corporate bond yield curve
for such month, taking into account only that portion of such
yield curve which is based on bonds maturing during the 5-
year period commencing with such month.
``(ii) Second segment rate.--The term `second segment rate'
means, with respect to any month, the single rate of interest
which shall be determined by the Secretary of the Treasury
for such month on the basis of the corporate bond yield curve
for such month, taking into account only that portion of such
yield curve which is based on bonds maturing during the 15-
year period beginning at the end of the period described in
clause (i).
``(iii) Third segment rate.--The term `third segment rate'
means, with respect to any month, the single rate of interest
which shall be determined by the Secretary of the Treasury
for such month on the basis of the corporate bond yield curve
for such month, taking into account only that portion of such
yield curve which is based on bonds maturing during periods
beginning after the period described in clause (ii).
``(D) Corporate bond yield curve.--For purposes of this
paragraph--
``(i) In general.--The term `corporate bond yield curve'
means, with respect to any month, a yield curve which is
prescribed by the Secretary of the Treasury for such month
and which reflects the average, for the 24-month period
ending with the month preceding such month, of monthly yields
on investment grade corporate bonds with varying maturities
and that are in the top 3 quality levels available.
``(ii) Election to use yield curve.--Solely for purposes of
determining the minimum required contribution under this
section, the plan sponsor may, in lieu of the segment rates
determined under subparagraph (C), elect to use interest
rates under the corporate bond yield curve. For purposes of
the preceding sentence such curve shall be determined without
regard to the 24-month averaging described in clause (i) .
Such election, once made, may be revoked only with the
consent of the Secretary of the Treasury.
``(E) Applicable month.--For purposes of this paragraph,
the term `applicable month' means, with respect to any plan
for any plan year, the month which includes the valuation
date of such plan for such plan year or, at the election of
the plan sponsor, any of the 4 months which precede such
month. Any election made under this subparagraph shall apply
to the plan year for which the election is made and all
succeeding plan years, unless the election is revoked with
the consent of the Secretary of the Treasury.
``(F) Publication requirements.--The Secretary of the
Treasury shall publish for each month the corporate bond
yield curve (and the corporate bond yield curve reflecting
the modification described in section 205(g)(3)(B)(iii)(I))
for such month and each of the rates determined under
subparagraph (B) for such month. The Secretary of the
Treasury shall also publish a description of the methodology
used to determine such yield curve and such rates which is
sufficiently detailed to enable plans to make reasonable
projections regarding the yield curve
[[Page H6046]]
and such rates for future months based on the plan's
projection of future interest rates.
``(G) Transition rule.--
``(i) In general.--Notwithstanding the preceding provisions
of this paragraph, for plan years beginning in 2008 or 2009,
the first, second, or third segment rate for a plan with
respect to any month shall be equal to the sum of--
``(I) the product of such rate for such month determined
without regard to this subparagraph, multiplied by the
applicable percentage, and
``(II) the product of the rate determined under the rules
of section 302(b)(5)(B)(ii)(II) (as in effect for plan years
beginning in 2007), multiplied by a percentage equal to 100
percent minus the applicable percentage.
``(ii) Applicable percentage.--For purposes of clause (i),
the applicable percentage is 33\1/3\ percent for plan years
beginning in 2008 and 66\2/3\ percent for plan years
beginning in 2009.
``(iii) New plans ineligible.--Clause (i) shall not apply
to any plan if the first plan year of the plan begins after
December 31, 2007.
``(iv) Election.--The plan sponsor may elect not to have
this subparagraph apply. Such election, once made, may be
revoked only with the consent of the Secretary of the
Treasury.
``(3) Mortality tables.--
``(A) In general.--Except as provided in subparagraph (C)
or (D), the Secretary of the Treasury shall by regulation
prescribe mortality tables to be used in determining any
present value or making any computation under this section.
Such tables shall be based on the actual experience of
pension plans and projected trends in such experience. In
prescribing such tables, the Secretary of the Treasury shall
take into account results of available independent studies of
mortality of individuals covered by pension plans.
``(B) Periodic revision.--The Secretary of the Treasury
shall (at least every 10 years) make revisions in any table
in effect under subparagraph (A) to reflect the actual
experience of pension plans and projected trends in such
experience.
``(C) Substitute mortality table.--
``(i) In general.--Upon request by the plan sponsor and
approval by the Secretary of the Treasury, a mortality table
which meets the requirements of clause (iii) shall be used in
determining any present value or making any computation under
this section during the period of consecutive plan years (not
to exceed 10) specified in the request.
``(ii) Early termination of period.--Notwithstanding
clause (i), a mortality table described in clause (i) shall
cease to be in effect as of the earliest of--
``(I) the date on which there is a significant charge in
the participations in the plan by reason of a plan spinoff or
merger or otherwise, or
``(II) the date on which the plan actuary determines that
such table does not meet the requirements of clause (iii).
``(iii) Requirements.--A mortality table meets the
requirements of this clause if--
``(I) there is a sufficient number of plan participants,
and the pension plans have been maintained for a sufficient
period of time, to have credible information necessary for
purposes of subclause (II), and
``(II) such table reflects the actual experience of the
pension plans maintained by the sponsor and projected trends
in general mortality experience.
``(iv) All plans in controlled group must use separate
table.--Except as provided by the Secretary of the Treasury,
a plan sponsor may not use a mortality table under this
subparagraph for any plan maintained by the plan sponsor
unless--
``(I) a separate mortality table is established and used
under this subparagraph for each other plan maintained by the
plan sponsor and if the plan sponsor is a member of a
controlled group, each member of the controlled group, and
``(II) the requirements of clause (iii) are met separately
with respect to the table so established for each such plan,
determined by only taking into account the participants of
such plan, the time such plan has been in existence, and the
actual experience of such plan.
``(v) Deadline for submission and disposition of
application.--
``(I) Submission.--The plan sponsor shall submit a
mortality table to the Secretary of the Treasury for approval
under this subparagraph at least 7 months before the 1st day
of the period described in clause (i).
``(II) Disposition.--Any mortality table submitted to the
Secretary of the Treasury for approval under this
subparagraph shall be treated as in effect as of the 1st day
of the period described in clause (i) unless the Secretary of
the Treasury, during the 180-day period beginning on the date
of such submission, disapproves of such table and provides
the reasons that such table fails to meet the requirements of
clause (iii). The 180-day period shall be extended upon
mutual agreement of the Secretary of the Treasury and the
plan sponsor.
``(D) Separate mortality tables for the disabled.--
Notwithstanding subparagraph (A)--
``(i) In general.--The Secretary of the Treasury shall
establish mortality tables which may be used (in lieu of the
tables under subparagraph (A)) under this subsection for
individuals who are entitled to benefits under the plan on
account of disability. The Secretary of the Treasury shall
establish separate tables for individuals whose disabilities
occur in plan years beginning before January 1, 1995, and for
individuals whose disabilities occur in plan years beginning
on or after such date.
``(ii) Special rule for disabilities occurring after
1994.--In the case of disabilities occurring in plan years
beginning after December 31, 1994, the tables under clause
(i) shall apply only with respect to individuals described in
such subclause who are disabled within the meaning of title
II of the Social Security Act and the regulations thereunder.
``(iii) Periodic revision.--The Secretary of the Treasury
shall (at least every 10 years) make revisions in any table
in effect under clause (i) to reflect the actual experience
of pension plans and projected trends in such experience.
``(4) Probability of benefit payments in the form of lump
sums or other optional forms.--For purposes of determining
any present value or making any computation under this
section, there shall be taken into account--
``(A) the probability that future benefit payments under
the plan will be made in the form of optional forms of
benefits provided under the plan (including lump sum
distributions, determined on the basis of the plan's
experience and other related assumptions), and
``(B) any difference in the present value of such future
benefit payments resulting from the use of actuarial
assumptions, in determining benefit payments in any such
optional form of benefits, which are different from those
specified in this subsection.
``(5) Approval of large changes in actuarial assumptions.--
``(A) In general.--No actuarial assumption used to
determine the funding target for a plan to which this
paragraph applies may be changed without the approval of the
Secretary of the Treasury.
``(B) Plans to which paragraph applies.--This paragraph
shall apply to a plan only if--
``(i) the plan is a single-employer plan to which title IV
applies,
``(ii) the aggregate unfunded vested benefits as of the
close of the preceding plan year (as determined under section
4006(a)(3)(E)(iii)) of such plan and all other plans
maintained by the contributing sponsors (as defined in
section 4001(a)(13)) and members of such sponsors' controlled
groups (as defined in section 4001(a)(14)) which are covered
by title IV (disregarding plans with no unfunded vested
benefits) exceed $50,000,000, and
``(iii) the change in assumptions (determined after taking
into account any changes in interest rate and mortality
table) results in a decrease in the funding shortfall of the
plan for the current plan year that exceeds $50,000,000, or
that exceeds $5,000,000 and that is 5 percent or more of the
funding target of the plan before such change.
``(i) Special Rules for At-Risk Plans.--
``(1) Funding target for plans in at-risk status.--
``(A) In general.--In the case of a plan which is in at-
risk status for a plan year, the funding target of the plan
for the plan year shall be equal to the sum of--
``(i) the present value of all benefits accrued or earned
under the plan as of the beginning of the plan year, as
determined by using the additional actuarial assumptions
described in subparagraph (B), and
``(ii) in the case of a plan which also has been in at-risk
status for at least 2 of the 4 preceding plan years, a
loading factor determined under subparagraph (C).
``(B) Additional actuarial assumptions.--The actuarial
assumptions described in this subparagraph are as follows:
``(i) All employees who are not otherwise assumed to retire
as of the valuation date but who will be eligible to elect
benefits during the plan year and the 10 succeeding plan
years shall be assumed to retire at the earliest retirement
date under the plan but not before the end of the plan year
for which the at-risk funding target and at-risk target
normal cost are being determined.
``(ii) All employees shall be assumed to elect the
retirement benefit available under the plan at the assumed
retirement age (determined after application of clause (i))
which would result in the highest present value of benefits.
``(C) Loading factor.--The loading factor applied with
respect to a plan under this paragraph for any plan year is
the sum of--
``(i) $700, times the number of participants in the plan,
plus
``(ii) 4 percent of the funding target (determined without
regard to this paragraph) of the plan for the plan year.
``(2) Target normal cost of at-risk plans.--In the case of
a plan which is in at-risk status for a plan year, the target
normal cost of the plan for such plan year shall be equal to
the sum of--
``(A) the present value of all benefits which are expected
to accrue or be earned under the plan during the plan year,
determined using the additional actuarial assumptions
described in paragraph (1)(B), plus
``(B) in the case of a plan which also has been in at-risk
status for at least 2 of the 4 preceding plan years, a
loading factor equal to 4 percent of the target normal cost
(determined without regard to this paragraph) of the plan for
the plan year.
``(3) Minimum amount.--In no event shall--
``(A) the at-risk funding target be less than the funding
target, as determined without regard to this subsection, or
``(B) the at-risk target normal cost be less than the
target normal cost, as determined without regard to this
subsection.
[[Page H6047]]
``(4) Determination of at-risk status.--For purposes of
this subsection--
``(A) In general.--A plan is in at-risk status for a plan
year if--
``(i) the funding target attainment percentage for the
preceding plan year (determined under this section without
regard to this subsection) is less than 80 percent, and
``(ii) the funding target attainment percentage for the
preceding plan year (determined under this section by using
the additional actuarial assumptions described in paragraph
(1)(B) in computing the funding target) is less than 70
percent.
``(B) Transition rule.--In the case of plan years beginning
in 2008, 2009, and 2010, subparagraph (A)(i) shall be applied
by substituting the following percentages for `80 percent':
``(i) 65 percent in the case of 2008.
``(ii) 70 percent in the case of 2009.
``(iii) 75 percent in the case of 2010.
In the case of plan years beginning in 2008, the funding
target attainment percentage for the preceding plan year
under subparagraph (A)(ii) may be determined using such
methods of estimation as the Secretary of the Treasury may
provide.
``(C) Special rule for employees offered early retirement
in 2006.--
``(i) In general.--For purposes of subparagraph (A)(ii),
the additional actuarial assumptions described in paragraph
(1)(B) shall not be taken into account with respect to any
employee if--
``(I) such employee is employed by a specified automobile
manufacturer,
``(II) such employee is offered a substantial amount of
additional cash compensation, substantially enhanced
retirement benefits under the plan, or materially reduced
employment duties on the condition that by a specified date
(not later than December 31, 2010) the employee retires (as
defined under the terms of the plan),
``(III) such offer is made during 2006 and pursuant to a
bona fide retirement incentive program and requires, by the
terms of the offer, that such offer can be accepted not later
than a specified date (not later than December 31, 2006), and
``(IV) such employee does not elect to accept such offer
before the specified date on which the offer expires.
``(ii) Specified automobile manufacturer.--For purposes of
clause (i), the term `specified automobile manufacturer'
means--
``(I) any manufacturer of automobiles, and
``(II) any manufacturer of automobile parts which supplies
such parts directly to a manufacturer of automobiles and
which, after a transaction or series of transactions ending
in 1999, ceased to be a member of a controlled group which
included such manufacturer of automobiles.
``(5) Transition between applicable funding targets and
between applicable target normal costs.--
``(A) In general.--In any case in which a plan which is in
at-risk status for a plan year has been in such status for a
consecutive period of fewer than 5 plan years, the applicable
amount of the funding target and of the target normal cost
shall be, in lieu of the amount determined without regard to
this paragraph, the sum of--
``(i) the amount determined under this section without
regard to this subsection, plus
``(ii) the transition percentage for such plan year of the
excess of the amount determined under this subsection
(without regard to this paragraph) over the amount determined
under this section without regard to this subsection.
``(B) Transition percentage.--For purposes of subparagraph
(A), the transition percentage shall be determined in
accordance with the following table:
``If the consecutive number of years (including the plan year) the plan
is in at-risk status is-- The transition percentage is--
1..................................................................20
2..................................................................40
3..................................................................60
4.................................................................80.
``(C) Years before effective date.--For purposes of this
paragraph, plan years beginning before 2008 shall not be
taken into account.
``(6) Small plan exception.--If, on each day during the
preceding plan year, a plan had 500 or fewer participants,
the plan shall not be treated as in at-risk status for the
plan year. For purposes of this paragraph, all defined
benefit plans (other than multiemployer plans) maintained by
the same employer (or any member of such employer's
controlled group) shall be treated as 1 plan, but only
participants with respect to such employer or member shall be
taken into account and the rules of subsection (g)(2)(C)
shall apply.
``(j) Payment of Minimum Required Contributions.--
``(1) In general.--For purposes of this section, the due
date for any payment of any minimum required contribution for
any plan year shall be 8\1/2\ months after the close of the
plan year.
``(2) Interest.--Any payment required under paragraph (1)
for a plan year that is made on a date other than the
valuation date for such plan year shall be adjusted for
interest accruing for the period between the valuation date
and the payment date, at the effective rate of interest for
the plan for such plan year.
``(3) Accelerated quarterly contribution schedule for
underfunded plans.--
``(A) Failure to timely make required installment.--In any
case in which the plan has a funding shortfall for the
preceding plan year, the employer maintaining the plan shall
make the required installments under this paragraph and if
the employer fails to pay the full amount of a required
installment for the plan year, then the amount of interest
charged under paragraph (2) on the underpayment for the
period of underpayment shall be determined by using a rate of
interest equal to the rate otherwise used under paragraph (2)
plus 5 percentage points.
``(B) Amount of underpayment, period of underpayment.--For
purposes of subparagraph (A)--
``(i) Amount.--The amount of the underpayment shall be the
excess of--
``(I) the required installment, over
``(II) the amount (if any) of the installment contributed
to or under the plan on or before the due date for the
installment.
``(ii) Period of underpayment.--The period for which any
interest is charged under this paragraph with respect to any
portion of the underpayment shall run from the due date for
the installment to the date on which such portion is
contributed to or under the plan.
``(iii) Order of crediting contributions.--For purposes of
clause (i)(II), contributions shall be credited against
unpaid required installments in the order in which such
installments are required to be paid.
``(C) Number of required installments; due dates.--For
purposes of this paragraph--
``(i) Payable in 4 installments.--There shall be 4 required
installments for each plan year.
``(ii) Time for payment of installments.--The due dates for
required installments are set forth in the following table:
In the case of the following required
installment: The due date is:
1st................................. April 15
2nd................................. July 15
3rd................................. October 15
4th................................. January 15 of the following
year.
``(D) Amount of required installment.--For purposes of this
paragraph--
``(i) In general.--The amount of any required installment
shall be 25 percent of the required annual payment.
``(ii) Required annual payment.--For purposes of clause
(i), the term `required annual payment' means the lesser of--
``(I) 90 percent of the minimum required contribution
(determined without regard to this subsection) to the plan
for the plan year under this section, or
``(II) 100 percent of the minimum required contribution
(determined without regard to this subsection or to any
waiver under section 302(c)) to the plan for the preceding
plan year.
Subclause (II) shall not apply if the preceding plan year
referred to in such clause was not a year of 12 months.
``(E) Fiscal years and short years.--
``(i) Fiscal years.--In applying this paragraph to a plan
year beginning on any date other than January 1, there shall
be substituted for the months specified in this paragraph,
the months which correspond thereto.
``(ii) Short plan year.--This subparagraph shall be applied
to plan years of less than 12 months in accordance with
regulations prescribed by the Secretary of the Treasury.
``(4) Liquidity requirement in connection with quarterly
contributions.--
``(A) In general.--A plan to which this paragraph applies
shall be treated as failing to pay the full amount of any
required installment under paragraph (3) to the extent that
the value of the liquid assets paid in such installment is
less than the liquidity shortfall (whether or not such
liquidity shortfall exceeds the amount of such installment
required to be paid but for this paragraph).
``(B) Plans to which paragraph applies.--This paragraph
shall apply to a plan (other than a plan described in
subsection (g)(2)(B)) which--
``(i) is required to pay installments under paragraph (3)
for a plan year, and
``(ii) has a liquidity shortfall for any quarter during
such plan year.
``(C) Period of underpayment.--For purposes of paragraph
(3)(A), any portion of an installment that is treated as not
paid under subparagraph (A) shall continue to be treated as
unpaid until the close of the quarter in which the due date
for such installment occurs.
``(D) Limitation on increase.--If the amount of any
required installment is increased by reason of subparagraph
(A), in no event shall such increase exceed the amount which,
when added to prior installments for the plan year, is
necessary to increase the funding target attainment
percentage of the plan for the plan year (taking into account
the expected increase in funding target due to benefits
accruing or earned during the plan year) to 100 percent.
``(E) Definitions.--For purposes of this paragraph--
``(i) Liquidity shortfall.--The term `liquidity shortfall'
means, with respect to any required installment, an amount
equal to the excess (as of the last day of the quarter for
which such installment is made) of--
``(I) the base amount with respect to such quarter, over
[[Page H6048]]
``(II) the value (as of such last day) of the plan's liquid
assets.
``(ii) Base amount.--
``(I) In general.--The term `base amount' means, with
respect to any quarter, an amount equal to 3 times the sum of
the adjusted disbursements from the plan for the 12 months
ending on the last day of such quarter.
``(II) Special rule.--If the amount determined under
subclause (I) exceeds an amount equal to 2 times the sum of
the adjusted disbursements from the plan for the 36 months
ending on the last day of the quarter and an enrolled actuary
certifies to the satisfaction of the Secretary of the
Treasury that such excess is the result of nonrecurring
circumstances, the base amount with respect to such quarter
shall be determined without regard to amounts related to
those nonrecurring circumstances.
``(iii) Disbursements from the plan.--The term
`disbursements from the plan' means all disbursements from
the trust, including purchases of annuities, payments of
single sums and other benefits, and administrative expenses.
``(iv) Adjusted disbursements.--The term `adjusted
disbursements' means disbursements from the plan reduced by
the product of--
``(I) the plan's funding target attainment percentage for
the plan year, and
``(II) the sum of the purchases of annuities, payments of
single sums, and such other disbursements as the Secretary of
the Treasury shall provide in regulations.
``(v) Liquid assets.--The term `liquid assets' means cash,
marketable securities, and such other assets as specified by
the Secretary of the Treasury in regulations.
``(vi) Quarter.--The term `quarter' means, with respect to
any required installment, the 3-month period preceding the
month in which the due date for such installment occurs.
``(F) Regulations.--The Secretary of the Treasury may
prescribe such regulations as are necessary to carry out this
paragraph.
``(k) Imposition of Lien Where Failure to Make Required
Contributions.--
``(1) In general.--In the case of a plan to which this
subsection applies (as provided under paragraph (2)), if--
``(A) any person fails to make a contribution payment
required by section 302 and this section before the due date
for such payment, and
``(B) the unpaid balance of such payment (including
interest), when added to the aggregate unpaid balance of all
preceding such payments for which payment was not made before
the due date (including interest), exceeds $1,000,000,
then there shall be a lien in favor of the plan in the amount
determined under paragraph (3) upon all property and rights
to property, whether real or personal, belonging to such
person and any other person who is a member of the same
controlled group of which such person is a member.
``(2) Plans to which subsection applies.--This subsection
shall apply to a single-employer plan covered under section
4021 for any plan year for which the funding target
attainment percentage (as defined in subsection (d)(2)) of
such plan is less than 100 percent.
``(3) Amount of lien.--For purposes of paragraph (1), the
amount of the lien shall be equal to the aggregate unpaid
balance of contribution payments required under this section
and section 302 for which payment has not been made before
the due date.
``(4) Notice of failure; lien.--
``(A) Notice of failure.--A person committing a failure
described in paragraph (1) shall notify the Pension Benefit
Guaranty Corporation of such failure within 10 days of the
due date for the required contribution payment.
``(B) Period of lien.--The lien imposed by paragraph (1)
shall arise on the due date for the required contribution
payment and shall continue until the last day of the first
plan year in which the plan ceases to be described in
paragraph (1)(B). Such lien shall continue to run without
regard to whether such plan continues to be described in
paragraph (2) during the period referred to in the preceding
sentence.
``(C) Certain rules to apply.--Any amount with respect to
which a lien is imposed under paragraph (1) shall be treated
as taxes due and owing the United States and rules similar to
the rules of subsections (c), (d), and (e) of section 4068
shall apply with respect to a lien imposed by subsection (a)
and the amount with respect to such lien.
``(5) Enforcement.--Any lien created under paragraph (1)
may be perfected and enforced only by the Pension Benefit
Guaranty Corporation, or at the direction of the Pension
Benefit Guaranty Corporation, by the contributing sponsor (or
any member of the controlled group of the contributing
sponsor).
``(6) Definitions.--For purposes of this subsection--
``(A) Contribution payment.--The term `contribution
payment' means, in connection with a plan, a contribution
payment required to be made to the plan, including any
required installment under paragraphs (3) and (4) of
subsection (j).
``(B) Due date; required installment.--The terms `due date'
and `required installment' have the meanings given such terms
by subsection (j), except that in the case of a payment other
than a required installment, the due date shall be the date
such payment is required to be made under section 303.
``(C) Controlled group.--The term `controlled group' means
any group treated as a single employer under subsections (b),
(c), (m), and (o) of section 414 of the Internal Revenue Code
of 1986.
``(l) Qualified Transfers to Health Benefit Accounts.--In
the case of a qualified transfer (as defined in section 420
of the Internal Revenue Code of 1986), any assets so
transferred shall not, for purposes of this section, be
treated as assets in the plan.''.
(b) Clerical Amendment.--The table of sections in section 1
of such Act (as amended by section 101) is amended by
inserting after the item relating to section 302 the
following new item:
``Sec. 303. Minimum funding standards for single-employer defined
benefit pension plans.''.
(c) Effective Date.--The amendments made by this section
shall apply with respect to plan years beginning after 2007.
SEC. 103. BENEFIT LIMITATIONS UNDER SINGLE-EMPLOYER PLANS.
(a) Funding-Based Limits on Benefits and Benefit Accruals
Under Single-Employer Plans.--Section 206 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1056) is
amended by adding at the end the following new subsection:
``(g) Funding-Based Limits on Benefits and Benefit Accruals
Under Single-Employer Plans.--
``(1) Funding-based limitation on shutdown benefits and
other unpredictable contingent event benefits under single-
employer plans.--
``(A) In general.--If a participant of a defined benefit
plan which is a single-employer plan is entitled to an
unpredictable contingent event benefit payable with respect
to any event occurring during any plan year, the plan shall
provide that such benefit may not be provided if the adjusted
funding target attainment percentage for such plan year--
``(i) is less than 60 percent, or
``(ii) would be less than 60 percent taking into account
such occurrence.
``(B) Exemption.--Subparagraph (A) shall cease to apply
with respect to any plan year, effective as of the first day
of the plan year, upon payment by the plan sponsor of a
contribution (in addition to any minimum required
contribution under section 303) equal to--
``(i) in the case of subparagraph (A)(i), the amount of the
increase in the funding target of the plan (under section
303) for the plan year attributable to the occurrence
referred to in subparagraph (A), and
``(ii) in the case of subparagraph (A)(ii), the amount
sufficient to result in a funding target attainment
percentage of 60 percent.
``(C) Unpredictable contingent event.--For purposes of this
paragraph, the term `unpredictable contingent event benefit'
means any benefit payable solely by reason of--
``(i) a plant shutdown (or similar event, as determined by
the Secretary of the Treasury), or
``(ii) an event other than the attainment of any age,
performance of any service, receipt or derivation of any
compensation, or occurrence of death or disability.
``(2) Limitations on plan amendments increasing liability
for benefits.--
``(A) In general.--No amendment to a defined benefit plan
which is a single-employer plan which has the effect of
increasing liabilities of the plan by reason of increases in
benefits, establishment of new benefits, changing the rate of
benefit accrual, or changing the rate at which benefits
become nonforfeitable may take effect during any plan year if
the adjusted funding target attainment percentage for such
plan year is--
``(i) less than 80 percent, or
``(ii) would be less than 80 percent taking into account
such amendment.
``(B) Exemption.--Subparagraph (A) shall cease to apply
with respect to any plan year, effective as of the first day
of the plan year (or if later, the effective date of the
amendment), upon payment by the plan sponsor of a
contribution (in addition to any minimum required
contribution under section 303) equal to--
``(i) in the case of subparagraph (A)(i), the amount of the
increase in the funding target of the plan (under section
303) for the plan year attributable to the amendment, and
``(ii) in the case of subparagraph (A)(ii), the amount
sufficient to result in an adjusted funding target attainment
percentage of 80 percent.
``(C) Exception for certain benefit increases.--
Subparagraph (A) shall not apply to any amendment which
provides for an increase in benefits under a formula which is
not based on a participant's compensation, but only if the
rate of such increase is not in excess of the contemporaneous
rate of increase in average wages of participants covered by
the amendment.
``(3) Limitations on accelerated benefit distributions.--
``(A) Funding percentage less than 60 percent.--A defined
benefit plan which is a single-employer plan shall provide
that, in any case in which the plan's adjusted funding target
attainment percentage for a plan year is less than 60
percent, the plan may not pay any prohibited payment after
the valuation date for the plan year.
``(B) Bankruptcy.--A defined benefit plan which is a
single-employer plan shall provide that, during any period in
which the plan sponsor is a debtor in a case under title 11,
[[Page H6049]]
United States Code, or similar Federal or State law, the plan
may not pay any prohibited payment. The preceding sentence
shall not apply on or after the date on which the enrolled
actuary of the plan certifies that the adjusted funding
target attainment percentage of such plan is not less than
100 percent.
``(C) Limited payment if percentage at least 60 percent but
less than 80 percent.--
``(i) In general.--A defined benefit plan which is a
single-employer plan shall provide that, in any case in which
the plan's adjusted funding target attainment percentage for
a plan year is 60 percent or greater but less than 80
percent, the plan may not pay any prohibited payment after
the valuation date for the plan year to the extent the amount
of the payment exceeds the lesser of--
``(I) 50 percent of the amount of the payment which could
be made without regard to this subsection, or
``(II) the present value (determined under guidance
prescribed by the Pension Benefit Guaranty Corporation, using
the interest and mortality assumptions under section 205(g))
of the maximum guarantee with respect to the participant
under section 4022.
``(ii) One-time application.--
``(I) In general.--The plan shall also provide that only 1
prohibited payment meeting the requirements of clause (i) may
be made with respect to any participant during any period of
consecutive plan years to which the limitations under either
subparagraph (A) or (B) or this subparagraph applies.
``(II) Treatment of beneficiaries.--For purposes of this
clause, a participant and any beneficiary on his behalf
(including an alternate payee, as defined in section
206(d)(3)(K)) shall be treated as 1 participant. If the
accrued benefit of a participant is allocated to such an
alternate payee and 1 or more other persons, the amount under
clause (i) shall be allocated among such persons in the same
manner as the accrued benefit is allocated unless the
qualified domestic relations order (as defined in section
206(d)(3)(B)(i)) provides otherwise.
``(D) Exception.--This paragraph shall not apply to any
plan for any plan year if the terms of such plan (as in
effect for the period beginning on September 1, 2005, and
ending with such plan year) provide for no benefit accruals
with respect to any participant during such period.
``(E) Prohibited payment.--For purpose of this paragraph,
the term `prohibited payment' means--
``(i) any payment, in excess of the monthly amount paid
under a single life annuity (plus any social security
supplements described in the last sentence of section
204(b)(1)(G)), to a participant or beneficiary whose annuity
starting date (as defined in section 205(h)(2)) occurs during
any period a limitation under subparagraph (A) or (B) is in
effect,
``(ii) any payment for the purchase of an irrevocable
commitment from an insurer to pay benefits, and
``(iii) any other payment specified by the Secretary of the
Treasury by regulations.
``(4) Limitation on benefit accruals for plans with severe
funding shortfalls.--
``(A) In general.--A defined benefit plan which is a
single-employer plan shall provide that, in any case in which
the plan's adjusted funding target attainment percentage for
a plan year is less than 60 percent, benefit accruals under
the plan shall cease as of the valuation date for the plan
year.
``(B) Exemption.--Subparagraph (A) shall cease to apply
with respect to any plan year, effective as of the first day
of the plan year, upon payment by the plan sponsor of a
contribution (in addition to any minimum required
contribution under section 303) equal to the amount
sufficient to result in an adjusted funding target attainment
percentage of 60 percent.
``(5) Rules relating to contributions required to avoid
benefit limitations.--
``(A) Security may be provided.--
``(i) In general.--For purposes of this subsection, the
adjusted funding target attainment percentage shall be
determined by treating as an asset of the plan any security
provided by a plan sponsor in a form meeting the requirements
of clause (ii).
``(ii) Form of security.--The security required under
clause (i) shall consist of--
``(I) a bond issued by a corporate surety company that is
an acceptable surety for purposes of section 412 of this Act,
``(II) cash, or United States obligations which mature in 3
years or less, held in escrow by a bank or similar financial
institution, or
``(III) such other form of security as is satisfactory to
the Secretary of the Treasury and the parties involved.
``(iii) Enforcement.--Any security provided under clause
(i) may be perfected and enforced at any time after the
earlier of--
``(I) the date on which the plan terminates,
``(II) if there is a failure to make a payment of the
minimum required contribution for any plan year beginning
after the security is provided, the due date for the payment
under section 303(j), or
``(III) if the adjusted funding target attainment
percentage is less than 60 percent for a consecutive period
of 7 years, the valuation date for the last year in the
period.
``(iv) Release of security.--The security shall be released
(and any amounts thereunder shall be refunded together with
any interest accrued thereon) at such time as the Secretary
of the Treasury may prescribe in regulations, including
regulations for partial releases of the security by reason of
increases in the funding target attainment percentage.
``(B) Prefunding balance or funding standard carryover
balance may not be used.--No prefunding balance or funding
standard carryover balance under section 303(f) may be used
under paragraph (1), (2), or (4) to satisfy any payment an
employer may make under any such paragraph to avoid or
terminate the application of any limitation under such
paragraph.
``(C) Deemed reduction of funding balances.--
``(i) In general.--Subject to clause (iii), in any case in
which a benefit limitation under paragraph (1), (2), (3), or
(4) would (but for this subparagraph and determined without
regard to paragraph (1)(B), (2)(B), or (4)(B)) apply to such
plan for the plan year, the plan sponsor of such plan shall
be treated for purposes of this Act as having made an
election under section 303(f) to reduce the prefunding
balance or funding standard carryover balance by such amount
as is necessary for such benefit limitation to not apply to
the plan for such plan year.
``(ii) Exception for insufficient funding balances.--Clause
(i) shall not apply with respect to a benefit limitation for
any plan year if the application of clause (i) would not
result in the benefit limitation not applying for such plan
year.
``(iii) Restrictions of certain rules to collectively
bargained plans.--With respect to any benefit limitation
under paragraph (1), (2), or (4), clause (i) shall only apply
in the case of a plan maintained pursuant to 1 or more
collective bargaining agreements between employee
representatives and 1 or more employers.
``(6) New plans.--Paragraphs (1), (2) and (4) shall not
apply to a plan for the first 5 plan years of the plan. For
purposes of this paragraph, the reference in this paragraph
to a plan shall include a reference to any predecessor plan.
``(7) Presumed underfunding for purposes of benefit
limitations.--
``(A) Presumption of continued underfunding.--In any case
in which a benefit limitation under paragraph (1), (2), (3),
or (4) has been applied to a plan with respect to the plan
year preceding the current plan year, the adjusted funding
target attainment percentage of the plan for the current plan
year shall be presumed to be equal to the adjusted funding
target attainment percentage of the plan for the preceding
plan year until the enrolled actuary of the plan certifies
the actual adjusted funding target attainment percentage of
the plan for the current plan year.
``(B) Presumption of underfunding after 10th month.--In any
case in which no certification of the adjusted funding target
attainment percentage for the current plan year is made with
respect to the plan before the first day of the 10th month of
such year, for purposes of paragraphs (1), (2), (3), and (4),
such first day shall be deemed, for purposes of such
paragraph, to be the valuation date of the plan for the
current plan year and the plan's adjusted funding target
attainment percentage shall be conclusively presumed to be
less than 60 percent as of such first day.
``(C) Presumption of underfunding after 4th month for
nearly underfunded plans.--In any case in which--
``(i) a benefit limitation under paragraph (1), (2), (3),
or (4) did not apply to a plan with respect to the plan year
preceding the current plan year, but the adjusted funding
target attainment percentage of the plan for such preceding
plan year was not more than 10 percentage points greater than
the percentage which would have caused such paragraph to
apply to the plan with respect to such preceding plan year,
and
``(ii) as of the first day of the 4th month of the current
plan year, the enrolled actuary of the plan has not certified
the actual adjusted funding target attainment percentage of
the plan for the current plan year,
until the enrolled actuary so certifies, such first day shall
be deemed, for purposes of such paragraph, to be the
valuation date of the plan for the current plan year and the
adjusted funding target attainment percentage of the plan as
of such first day shall, for purposes of such paragraph, be
presumed to be equal to 10 percentage points less than the
adjusted funding target attainment percentage of the plan for
such preceding plan year.
``(8) Treatment of plan as of close of prohibited or
cessation period.--For purposes of applying this part--
``(A) Operation of plan after period.--Unless the plan
provides otherwise, payments and accruals will resume
effective as of the day following the close of the period for
which any limitation of payment or accrual of benefits under
paragraph (3) or (4) applies.
``(B) Treatment of affected benefits.--Nothing in this
paragraph shall be construed as affecting the plan's
treatment of benefits which would have been paid or accrued
but for this subsection.
``(9) Terms relating to funding target attainment
percentage.--For purposes of this subsection--
``(A) In general.--The term `funding target attainment
percentage' has the same meaning given such term by section
303(d)(2).
``(B) Adjusted funding target attainment percentage.--The
term `adjusted funding target attainment percentage' means
the funding target attainment percentage which is determined
under subparagraph (A) by increasing each of the amounts
under subparagraphs (A) and (B) of section 303(d)(2) by the
[[Page H6050]]
aggregate amount of purchases of annuities for employees
other than highly compensated employees (as defined in
section 414(q) of the Internal Revenue Code of 1986) which
were made by the plan during the preceding 2 plan years.
``(C) Application to plans which are fully funded without
regard to reductions for funding balances.--
``(i) In general.--In the case of a plan for any plan year,
if the funding target attainment percentage is 100 percent or
more (determined without regard to this subparagraph and
without regard to the reduction in the value of assets under
section 303(f)(4)), the funding target attainment percentage
for purposes of subparagraphs (A) and (B) shall be determined
without regard to such reduction.
``(ii) Transition rule.--Clause (i) shall be applied to
plan years beginning after 2007 and before 2011 by
substituting for `100 percent' the applicable percentage
determined in accordance with the following table:
``In the case of a plan year beginning in cThe applicable percentage is
2008...............................................................92
2009...............................................................94
2010..............................................................96.
``(iii) Limitation.--Clause (ii) shall not apply with
respect to any plan year after 2008 unless the funding target
attainment percentage (determined without regard to this
subparagraph) of the plan for each preceding plan year after
2007 was not less than the applicable percentage with respect
to such preceding plan year determined under clause (ii).
``(10) Special rule for 2008.--For purposes of this
subsection, in the case of plan years beginning in 2008, the
funding target attainment percentage for the preceding plan
year may be determined using such methods of estimation as
the Secretary of the Treasury may provide.''.
(b) Notice Requirement.--
(1) In general.--Section 101 of such Act (29 U.S.C. 1021)
is amended--
(A) by redesignating subsection (j) as subsection (k); and
(B) by inserting after subsection (i) the following new
subsection:
``(j) Notice of Funding-Based Limitation on Certain Forms
of Distribution.--The plan administrator of a single-employer
plan shall provide a written notice to plan participants and
beneficiaries within 30 days--
``(1) after the plan has become subject to a restriction
described in paragraph (1) or (3) of section 206(g)),
``(2) in the case of a plan to which section 206(g)(4)
applies, after the valuation date for the plan year described
in section 206(g)(4)(B) for which the plan's adjusted funding
target attainment percentage for the plan year is less than
60 percent (or, if earlier, the date such percentage is
deemed to be less than 60 percent under section 206(g)(7)),
and
``(3) at such other time as may be determined by the
Secretary of the Treasury.
The notice required to be provided under this subsection
shall be in writing, except that such notice may be in
electronic or other form to the extent that such form is
reasonably accessible to the recipient.''.
(2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C.
1132(c)(4)) is amended by striking ``section
302(b)(7)(F)(iv)'' and inserting ``section 101(j) or
302(b)(7)(F)(iv)''.
(c) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply to plan years beginning after December 31, 2007.
(2) Collective bargaining exception.--In the case of a plan
maintained pursuant to 1 or more collective bargaining
agreements between employee representatives and 1 or more
employers ratified before January 1, 2008, the amendments
made by this section shall not apply to plan years beginning
before the earlier of--
(A) the later of--
(i) the date on which the last collective bargaining
agreement relating to the plan terminates (determined without
regard to any extension thereof agreed to after the date of
the enactment of this Act), or
(ii) the first day of the first plan year to which the
amendments made by this subsection would (but for this
subparagraph) apply, or
(B) January 1, 2010.
For purposes of subparagraph (A)(i), any plan amendment made
pursuant to a collective bargaining agreement relating to the
plan which amends the plan solely to conform to any
requirement added by this section shall not be treated as a
termination of such collective bargaining agreement.
SEC. 104. SPECIAL RULES FOR MULTIPLE EMPLOYER PLANS OF
CERTAIN COOPERATIVES.
(a) General Rule.--Except as provided in this section, if a
plan in existence on July 26, 2005, was an eligible
cooperative plan for its plan year which includes such date,
the amendments made by this subtitle and subtitle B shall not
apply to plan years beginning before the earlier of--
(1) the first plan year for which the plan ceases to be an
eligible cooperative plan, or
(2) January 1, 2017.
(b) Interest Rate.--In applying section 302(b)(5)(B) of the
Employee Retirement Income Security Act of 1974 and section
412(b)(5)(B) of the Internal Revenue Code of 1986 (as in
effect before the amendments made by this subtitle and
subtitle B) to an eligible cooperative plan for plan years
beginning after December 31, 2007, and before the first plan
year to which such amendments apply, the third segment rate
determined under section 303(h)(2)(C)(iii) of such Act and
section 430(h)(2)(C)(iii) of such Code (as added by such
amendments) shall be used in lieu of the interest rate
otherwise used.
(c) Eligible Cooperative Plan Defined.--For purposes of
this section, a plan shall be treated as an eligible
cooperative plan for a plan year if the plan is maintained by
more than 1 employer and at least 85 percent of the employers
are--
(1) rural cooperatives (as defined in section 401(k)(7)(B)
of such Code without regard to clause (iv) thereof), or
(2) organizations which are--
(A) cooperative organizations described in section 1381(a)
of such Code which are more than 50-percent owned by
agricultural producers or by cooperatives owned by
agricultural producers, or
(B) more than 50-percent owned, or controlled by, one or
more cooperative organizations described in subparagraph (A).
A plan shall also be treated as an eligible cooperative plan
for any plan year for which it is described in section 210(a)
of the Employee Retirement Income Security Act of 1974 and is
maintained by a rural telephone cooperative association
described in section 3(40)(B)(v) of such Act.
SEC. 105. TEMPORARY RELIEF FOR CERTAIN PBGC SETTLEMENT PLANS.
(a) General Rule.--Except as provided in this section, if a
plan in existence on July 26, 2005, was a PBGC settlement
plan as of such date, the amendments made by this subtitle
and subtitle B shall not apply to plan years beginning before
January 1, 2014.
(b) Interest Rate.--In applying section 302(b)(5)(B) of the
Employee Retirement Income Security Act of 1974 and section
412(b)(5)(B) of the Internal Revenue Code of 1986 (as in
effect before the amendments made by this subtitle and
subtitle B), to a PBGC settlement plan for plan years
beginning after December 31, 2007, and before January 1,
2014, the third segment rate determined under section
303(h)(2)(C)(iii) of such Act and section 430(h)(2)(C)(iii)
of such Code (as added by such amendments) shall be used in
lieu of the interest rate otherwise used.
(c) PBGC Settlement Plan.--For purposes of this section,
the term ``PBGC settlement plan'' means a defined benefit
plan (other than a multiemployer plan) to which section 302
of such Act and section 412 of such Code apply and--
(1) which was sponsored by an employer which was in
bankruptcy, giving rise to a claim by the Pension Benefit
Guaranty Corporation of not greater than $150,000,000, and
the sponsorship of which was assumed by another employer that
was not a member of the same controlled group as the bankrupt
sponsor and the claim of the Pension Benefit Guaranty
Corporation was settled or withdrawn in connection with the
assumption of the sponsorship, or
(2) which, by agreement with the Pension Benefit Guaranty
Corporation, was spun off from a plan subsequently terminated
by such Corporation under section 4042 of the Employee
Retirement Income Security Act of 1974.
SEC. 106. SPECIAL RULES FOR PLANS OF CERTAIN GOVERNMENT
CONTRACTORS.
(a) General Rule.--Except as provided in this section, if a
plan is an eligible government contractor plan, this subtitle
and subtitle B shall not apply to plan years beginning before
the earliest of--
(1) the first plan year for which the plan ceases to be an
eligible government contractor plan,
(2) the effective date of the Cost Accounting Standards
Pension Harmonization Rule, or
(3) January 1, 2011.
(b) Interest Rate.--In applying section 302(b)(5)(B) of the
Employee Retirement Income Security Act of 1974 and section
412(b)(5)(B) of the Internal Revenue Code of 1986 (as in
effect before the amendments made by this subtitle and
subtitle B) to an eligible government contractor plan for
plan years beginning after December 31, 2007, and before the
first plan year to which such amendments apply, the third
segment rate determined under section 303(h)(2)(C)(iii) of
such Act and section 430(h)(2)(C)(iii) of such Code (as added
by such amendments) shall be used in lieu of the interest
rate otherwise used.
(c) Eligible Government Contractor Plan Defined.--For
purposes of this section, a plan shall be treated as an
eligible government contractor plan if it is maintained by a
corporation or a member of the same affiliated group (as
defined by section 1504(a) of the Internal Revenue Code of
1986), whose primary source of revenue is derived from
business performed under contracts with the United States
that are subject to the Federal Acquisition Regulations
(Chapter 1 of Title 48, C.F.R.) and that are also subject to
the Defense Federal Acquisition Regulation Supplement
(Chapter 2 of Title 48, C.F.R.), and whose revenue derived
from such business in the previous fiscal year exceeded
$5,000,000,000, and whose pension plan costs that are
assignable under those contracts are subject to sections 412
and 413 of the Cost Accounting Standards (48 C.F.R. 9904.412
and 9904.413).
(d) Cost Accounting Standards Pension Harmonization Rule.--
The Cost Accounting Standards Board shall review and revise
sections 412 and 413 of the Cost Accounting Standards (48
C.F.R. 9904.412 and 9904.413) to harmonize the minimum
required contribution under the Employee Retirement Income
[[Page H6051]]
Security Act of 1974 of eligible government contractor plans
and government reimbursable pension plan costs not later than
January 1, 2010. Any final rule adopted by the Cost
Accounting Standards Board shall be deemed the Cost
Accounting Standards Pension Harmonization Rule.
SEC. 107. TECHNICAL AND CONFORMING AMENDMENTS.
(a) Miscellaneous Amendments to Title I.--Subtitle B of
title I of such Act (29 U.S.C. 1021 et seq.) is amended--
(1) in section 101(d)(3), by striking ``section 302(e)''
and inserting ``section 303(j)'';
(2) in section 103(d)(8)(B), by striking ``the requirements
of section 302(c)(3)'' and inserting ``the applicable
requirements of sections 303(h) and 304(c)(3)'';
(3) in section 103(d), by striking paragraph (11) and
inserting the following:
``(11) If the current value of the assets of the plan is
less than 70 percent of--
``(A) in the case of a single-employer plan, the funding
target (as defined in section 303(d)(1)) of the plan, or
``(B) in the case of a multiemployer plan, the current
liability (as defined in section 304(c)(6)(D)) under the
plan,
the percentage which such value is of the amount described in
subparagraph (A) or (B).'';
(4) in section 203(a)(3)(C), by striking ``section
302(c)(8)'' and inserting ``section 302(d)(2)'';
(5) in section 204(g)(1), by striking ``section 302(c)(8)''
and inserting ``section 302(d)(2)'';
(6) in section 204(i)(2)(B), by striking ``section
302(c)(8)'' and inserting ``section 302(d)(2)'';
(7) in section 204(i)(3), by striking ``funded current
liability percentage (within the meaning of section 302(d)(8)
of this Act)'' and inserting ``funding target attainment
percentage (as defined in section 303(d)(2))'';
(8) in section 204(i)(4), by striking ``section
302(c)(11)(A), without regard to section 302(c)(11)(B)'' and
inserting ``section 302(b)(1), without regard to section
302(b)(2)'';
(9) in section 206(e)(1), by striking ``section 302(d)''
and inserting ``section 303(j)(4)'', and by striking
``section 302(e)(5)'' and inserting ``section
303(j)(4)(E)(i)'';
(10) in section 206(e)(3), by striking ``section 302(e) by
reason of paragraph (5)(A) thereof'' and inserting ``section
303(j)(3) by reason of section 303(j)(4)(A)''; and
(11) in sections 101(e)(3), 403(c)(1), and 408(b)(13), by
striking ``American Jobs Creation Act of 2004'' and inserting
``Pension Protection Act of 2006''.
(b) Miscellaneous Amendments to Title IV.--Title IV of such
Act is amended--
(1) in section 4001(a)(13) (29 U.S.C. 1301(a)(13)), by
striking ``302(c)(11)(A)'' and inserting ``302(b)(1)'', by
striking ``412(c)(11)(A)'' and inserting ``412(b)(1)'', by
striking ``302(c)(11)(B)'' and inserting ``302(b)(2)'', and
by striking ``412(c)(11)(B)'' and inserting ``412(b)(2)'';
(2) in section 4003(e)(1) (29 U.S.C. 1303(e)(1)), by
striking ``302(f)(1)(A) and (B)'' and inserting
``303(k)(1)(A) and (B)'', and by striking ``412(n)(1)(A) and
(B)'' and inserting ``430(k)(1)(A) and (B)'';
(3) in section 4010(b)(2) (29 U.S.C. 1310(b)(2)), by
striking ``302(f)(1)(A) and (B)'' and inserting
``303(k)(1)(A) and (B)'', and by striking ``412(n)(1)(A) and
(B)'' and inserting ``430(k)(1)(A) and (B)'';
(4) in section 4062(c) (29 U.S.C. 1362(c)), by striking
paragraphs (1), (2), and (3) and inserting the following:
``(1) the sum of the shortfall amortization charge (within
the meaning of section 303(c)(1) of this Act and 430(d)(1) of
the Internal Revenue Code of 1986) with respect to the plan
(if any) for the plan year in which the termination date
occurs, plus the aggregate total of shortfall amortization
installments (if any) determined for succeeding plan years
under section 303(c)(2) of this Act and section 430(d)(2) of
such Code (which, for purposes of this subparagraph, shall
include any increase in such sum which would result if all
applications for waivers of the minimum funding standard
under section 302(c) of this Act and section 412(c) of such
Code which are pending with respect to such plan were denied
and if no additional contributions (other than those already
made by the termination date) were made for the plan year in
which the termination date occurs or for any previous plan
year), and
``(2) the sum of the waiver amortization charge (within the
meaning of section 303(e)(1) of this Act and 430(e)(1) of the
Internal Revenue Code of 1986) with respect to the plan (if
any) for the plan year in which the termination date occurs,
plus the aggregate total of waiver amortization installments
(if any) determined for succeeding plan years under section
303(e)(2) of this Act and section 430(e)(2) of such Code,'';
(5) in section 4071 (29 U.S.C. 1371), by striking
``302(f)(4)'' and inserting ``303(k)(4)'';
(6) in section 4243(a)(1)(B) (29 U.S.C. 1423(a)(1)(B)), by
striking ``302(a)'' and inserting ``304(a)'', and, in clause
(i), by striking ``302(a)'' and inserting ``304(a)'';
(7) in section 4243(f)(1) (29 U.S.C. 1423(f)(1)), by
striking ``303(a)'' and inserting ``302(c)'';
(8) in section 4243(f)(2) (29 U.S.C. 1423(f)(2)), by
striking ``303(c)'' and inserting ``302(c)(3)''; and
(9) in section 4243(g) (29 U.S.C. 1423(g)), by striking
``302(c)(3)'' and inserting ``304(c)(3)''.
(c) Amendments to Reorganization Plan No. 4 of 1978.--
Section 106(b)(ii) of Reorganization Plan No. 4 of 1978
(ratified and affirmed as law by Public Law 98-532 (98 Stat.
2705)) is amended by striking ``302(c)(8)'' and inserting
``302(d)(2)'', by striking ``304(a) and (b)(2)(A)'' and
inserting ``304(d)(1), (d)(2), and (e)(2)(A)'', and by
striking ``412(c)(8), (e), and (f)(2)(A)'' and inserting
``412(c)(2) and 431(d)(1), (d)(2), and (e)(2)(A)''.
(d) Repeal of Expired Authority for Temporary Variances.--
Section 207 of such Act (29 U.S.C. 1057) is repealed.
(e) Effective Date.--The amendments made by this section
shall apply to plan years beginning after 2007.
Subtitle B--Amendments to Internal Revenue Code of 1986
SEC. 111. MINIMUM FUNDING STANDARDS.
(a) New Minimum Funding Standards.--Section 412 of the
Internal Revenue Code of 1986 (relating to minimum funding
standards) is amended to read as follows:
``SEC. 412. MINIMUM FUNDING STANDARDS.
``(a) Requirement To Meet Minimum Funding Standard.--
``(1) In general.--A plan to which this section applies
shall satisfy the minimum funding standard applicable to the
plan for any plan year.
``(2) Minimum funding standard.--For purposes of paragraph
(1), a plan shall be treated as satisfying the minimum
funding standard for a plan year if--
``(A) in the case of a defined benefit plan which is not a
multiemployer plan, the employer makes contributions to or
under the plan for the plan year which, in the aggregate, are
not less than the minimum required contribution determined
under section 430 for the plan for the plan year,
``(B) in the case of a money purchase plan which is not a
multiemployer plan, the employer makes contributions to or
under the plan for the plan year which are required under the
terms of the plan, and
``(C) in the case of a multiemployer plan, the employers
make contributions to or under the plan for any plan year
which, in the aggregate, are sufficient to ensure that the
plan does not have an accumulated funding deficiency under
section 431 as of the end of the plan year.
``(b) Liability for Contributions.--
``(1) In general.--Except as provided in paragraph (2), the
amount of any contribution required by this section
(including any required installments under paragraphs (3) and
(4) of section 430(j)) shall be paid by the employer
responsible for making contributions to or under the plan.
``(2) Joint and several liability where employer member of
controlled group.--If the employer referred to in paragraph
(1) is a member of a controlled group, each member of such
group shall be jointly and severally liable for payment of
such contributions.
``(c) Variance From Minimum Funding Standards.--
``(1) Waiver in case of business hardship.--
``(A) In general.--If--
``(i) an employer is (or in the case of a multiemployer
plan, 10 percent or more of the number of employers
contributing to or under the plan is) unable to satisfy the
minimum funding standard for a plan year without temporary
substantial business hardship (substantial business hardship
in the case of a multiemployer plan), and
``(ii) application of the standard would be adverse to the
interests of plan participants in the aggregate,
the Secretary may, subject to subparagraph (C), waive the
requirements of subsection (a) for such year with respect to
all or any portion of the minimum funding standard. The
Secretary shall not waive the minimum funding standard with
respect to a plan for more than 3 of any 15 (5 of any 15 in
the case of a multiemployer plan) consecutive plan years
``(B) Effects of waiver.--If a waiver is granted under
subparagraph (A) for any plan year--
``(i) in the case of a defined benefit plan which is not a
multiemployer plan, the minimum required contribution under
section 430 for the plan year shall be reduced by the amount
of the waived funding deficiency and such amount shall be
amortized as required under section 430(e), and
``(ii) in the case of a multiemployer plan, the funding
standard account shall be credited under section 431(b)(3)(C)
with the amount of the waived funding deficiency and such
amount shall be amortized as required under section
431(b)(2)(C).
``(C) Waiver of amortized portion not allowed.--The
Secretary may not waive under subparagraph (A) any portion of
the minimum funding standard under subsection (a) for a plan
year which is attributable to any waived funding deficiency
for any preceding plan year.
``(2) Determination of business hardship.--For purposes of
this subsection, the factors taken into account in
determining temporary substantial business hardship
(substantial business hardship in the case of a multiemployer
plan) shall include (but shall not be limited to) whether or
not--
``(A) the employer is operating at an economic loss,
``(B) there is substantial unemployment or underemployment
in the trade or business and in the industry concerned,
``(C) the sales and profits of the industry concerned are
depressed or declining, and
``(D) it is reasonable to expect that the plan will be
continued only if the waiver is granted.
[[Page H6052]]
``(3) Waived funding deficiency.--For purposes of this
section and part III of this subchapter, the term `waived
funding deficiency' means the portion of the minimum funding
standard under subsection (a) (determined without regard to
the waiver) for a plan year waived by the Secretary and not
satisfied by employer contributions.
``(4) Security for waivers for single-employer plans,
consultations.--
``(A) Security may be required.--
``(i) In general.--Except as provided in subparagraph (C),
the Secretary may require an employer maintaining a defined
benefit plan which is a single-employer plan (within the
meaning of section 4001(a)(15) of the Employee Retirement
Income Security Act of 1974) to provide security to such plan
as a condition for granting or modifying a waiver under
paragraph (1).
``(ii) Special rules.--Any security provided under clause
(i) may be perfected and enforced only by the Pension Benefit
Guaranty Corporation, or at the direction of the Corporation,
by a contributing sponsor (within the meaning of section
4001(a)(13) of the Employee Retirement Income Security Act of
1974), or a member of such sponsor's controlled group (within
the meaning of section 4001(a)(14) of such Act).
``(B) Consultation with the pension benefit guaranty
corporation.--Except as provided in subparagraph (C), the
Secretary shall, before granting or modifying a waiver under
this subsection with respect to a plan described in
subparagraph (A)(i)--
``(i) provide the Pension Benefit Guaranty Corporation
with--
``(I) notice of the completed application for any waiver or
modification, and
``(II) an opportunity to comment on such application within
30 days after receipt of such notice, and
``(ii) consider--
``(I) any comments of the Corporation under clause (i)(II),
and
``(II) any views of any employee organization (within the
meaning of section 3(4) of the Employee Retirement Income
Security Act of 1974) representing participants in the plan
which are submitted in writing to the Secretary in connection
with such application.
Information provided to the Corporation under this
subparagraph shall be considered tax return information and
subject to the safeguarding and reporting requirements of
section 6103(p).
``(C) Exception for certain waivers.--
``(i) In general.--The preceding provisions of this
paragraph shall not apply to any plan with respect to which
the sum of--
``(I) the aggregate unpaid minimum required contributions
(within the meaning of section 4971(c)(4)) for the plan year
and all preceding plan years, and
``(II) the present value of all waiver amortization
installments determined for the plan year and succeeding plan
years under section 430(e)(2),
is less than $1,000,000.
``(ii) Treatment of waivers for which applications are
pending.--The amount described in clause (i)(I) shall include
any increase in such amount which would result if all
applications for waivers of the minimum funding standard
under this subsection which are pending with respect to such
plan were denied.
``(5) Special rules for single-employer plans.--
``(A) Application must be submitted before date 2\1/2\
months after close of year.--In the case of a defined benefit
plan which is not a multiemployer plan, no waiver may be
granted under this subsection with respect to any plan for
any plan year unless an application therefor is submitted to
the Secretary not later than the 15th day of the 3rd month
beginning after the close of such plan year.
``(B) Special rule if employer is member of controlled
group.--In the case of a defined benefit plan which is not a
multiemployer plan, if an employer is a member of a
controlled group, the temporary substantial business hardship
requirements of paragraph (1) shall be treated as met only if
such requirements are met--
``(i) with respect to such employer, and
``(ii) with respect to the controlled group of which such
employer is a member (determined by treating all members of
such group as a single employer).
The Secretary may provide that an analysis of a trade or
business or industry of a member need not be conducted if the
Secretary determines such analysis is not necessary because
the taking into account of such member would not
significantly affect the determination under this paragraph.
``(6) Advance notice.--
``(A) In general.--The Secretary shall, before granting a
waiver under this subsection, require each applicant to
provide evidence satisfactory to the Secretary that the
applicant has provided notice of the filing of the
application for such waiver to each affected party (as
defined in section 4001(a)(21) of the Employee Retirement
Income Security Act of 1974). Such notice shall include a
description of the extent to which the plan is funded for
benefits which are guaranteed under title IV of the Employee
Retirement Income Security Act of 1974 and for benefit
liabilities.
``(B) Consideration of relevant information.--The Secretary
shall consider any relevant information provided by a person
to whom notice was given under subparagraph (A).
``(7) Restriction on plan amendments.--
``(A) In general.--No amendment of a plan which increases
the liabilities of the plan by reason of any increase in
benefits, any change in the accrual of benefits, or any
change in the rate at which benefits become nonforfeitable
under the plan shall be adopted if a waiver under this
subsection or an extension of time under section 431(d) is in
effect with respect to the plan, or if a plan amendment
described in subsection (d)(2) has been made at any time in
the preceding 12 months (24 months in the case of a
multiemployer plan). If a plan is amended in violation of the
preceding sentence, any such waiver, or extension of time,
shall not apply to any plan year ending on or after the date
on which such amendment is adopted.
``(B) Exception.--Subparagraph (A) shall not apply to any
plan amendment which--
``(i) the Secretary determines to be reasonable and which
provides for only de minimis increases in the liabilities of
the plan,
``(ii) only repeals an amendment described in subsection
(d)(2), or
``(iii) is required as a condition of qualification under
part I of subchapter D, of chapter 1.
``(d) Miscellaneous Rules.--
``(1) Change in method or year.--If the funding method, the
valuation date, or a plan year for a plan is changed, the
change shall take effect only if approved by the Secretary.
``(2) Certain retroactive plan amendments.--For purposes of
this section, any amendment applying to a plan year which--
``(A) is adopted after the close of such plan year but no
later than 2\1/2\ months after the close of the plan year
(or, in the case of a multiemployer plan, no later than 2
years after the close of such plan year),
``(B) does not reduce the accrued benefit of any
participant determined as of the beginning of the first plan
year to which the amendment applies, and
``(C) does not reduce the accrued benefit of any
participant determined as of the time of adoption except to
the extent required by the circumstances,
shall, at the election of the plan administrator, be deemed
to have been made on the first day of such plan year. No
amendment described in this paragraph which reduces the
accrued benefits of any participant shall take effect unless
the plan administrator files a notice with the Secretary
notifying him of such amendment and the Secretary has
approved such amendment, or within 90 days after the date on
which such notice was filed, failed to disapprove such
amendment. No amendment described in this subsection shall be
approved by the Secretary unless the Secretary determines
that such amendment is necessary because of a temporary
substantial business hardship (as determined under subsection
(c)(2)) or a substantial business hardship (as so determined)
in the case of a multiemployer plan and that a waiver under
subsection (c) (or, in the case of a multiemployer plan, any
extension of the amortization period under section 431(d)) is
unavailable or inadequate.
``(3) Controlled group.--For purposes of this section, the
term `controlled group' means any group treated as a single
employer under subsection (b), (c), (m), or (o) of section
414.
``(e) Plans to Which Section Applies.--
``(1) In general.--Except as provided in paragraphs (2) and
(4), this section applies to a plan if, for any plan year
beginning on or after the effective date of this section for
such plan under the Employee Retirement Income Security Act
of 1974--
``(A) such plan included a trust which qualified (or was
determined by the Secretary to have qualified) under section
401(a), or
``(B) such plan satisfied (or was determined by the
Secretary to have satisfied) the requirements of section
403(a).
``(2) Exceptions.--This section shall not apply to--
``(A) any profit-sharing or stock bonus plan,
``(B) any insurance contract plan described in paragraph
(3),
``(C) any governmental plan (within the meaning of section
414(d)),
``(D) any church plan (within the meaning of section
414(e)) with respect to which the election provided by
section 410(d) has not been made,
``(E) any plan which has not, at any time after September
2, 1974, provided for employer contributions, or
``(F) any plan established and maintained by a society,
order, or association described in section 501(c)(8) or (9),
if no part of the contributions to or under such plan are
made by employers of participants in such plan.
No plan described in subparagraph (C), (D), or (F) shall be
treated as a qualified plan for purposes of section 401(a)
unless such plan meets the requirements of section 401(a)(7)
as in effect on September 1, 1974.
``(3) Certain insurance contract plans.--A plan is
described in this paragraph if--
``(A) the plan is funded exclusively by the purchase of
individual insurance contracts,
``(B) such contracts provide for level annual premium
payments to be paid extending not later than the retirement
age for each individual participating in the plan, and
commencing with the date the individual became a participant
in the plan (or, in the case of an increase in benefits,
commencing at the time such increase becomes effective),
``(C) benefits provided by the plan are equal to the
benefits provided under each
[[Page H6053]]
contract at normal retirement age under the plan and are
guaranteed by an insurance carrier (licensed under the laws
of a State to do business with the plan) to the extent
premiums have been paid,
``(D) premiums payable for the plan year, and all prior
plan years, under such contracts have been paid before lapse
or there is reinstatement of the policy,
``(E) no rights under such contracts have been subject to a
security interest at any time during the plan year, and
``(F) no policy loans are outstanding at any time during
the plan year.
A plan funded exclusively by the purchase of group insurance
contracts which is determined under regulations prescribed by
the Secretary to have the same characteristics as contracts
described in the preceding sentence shall be treated as a
plan described in this paragraph.
``(4) Certain terminated multiemployer plans.--This section
applies with respect to a terminated multiemployer plan to
which section 4021 of the Employee Retirement Income Security
Act of 1974 applies until the last day of the plan year in
which the plan terminates (within the meaning of section
4041A(a)(2) of such Act).''.
(b) Effective Date.--The amendments made by this section
shall apply to plan years beginning after December 31, 2007.
SEC. 112. FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT
PENSION PLANS.
(a) In General.--Subchapter D of chapter 1 of the Internal
Revenue Code of 1986 (relating to deferred compensation,
etc.) is amended by adding at the end the following new part:
``PART III--MINIMUM FUNDING STANDARDS FOR SINGLE-EMPLOYER DEFINED
BENEFIT PENSION PLANS
``SEC. 430. MINIMUM FUNDING STANDARDS FOR SINGLE-EMPLOYER
DEFINED BENEFIT PENSION PLANS.
``(a) Minimum Required Contribution.--For purposes of this
section and section 412(a)(2)(A), except as provided in
subsection (f), the term `minimum required contribution'
means, with respect to any plan year of a defined benefit
plan which is not a multiemployer plan--
``(1) in any case in which the value of plan assets of the
plan (as reduced under subsection (f)(4)(B)) is less than the
funding target of the plan for the plan year, the sum of--
``(A) the target normal cost of the plan for the plan year,
``(B) the shortfall amortization charge (if any) for the
plan for the plan year determined under subsection (c), and
``(C) the waiver amortization charge (if any) for the plan
for the plan year as determined under subsection (e);
``(2) in any case in which the value of plan assets of the
plan (as reduced under subsection (f)(4)(B)) equals or
exceeds the funding target of the plan for the plan year, the
target normal cost of the plan for the plan year reduced (but
not below zero) by such excess.
``(b) Target Normal Cost.--For purposes of this section,
except as provided in subsection (i)(2) with respect to plans
in at-risk status, the term `target normal cost' means, for
any plan year, the present value of all benefits which are
expected to accrue or to be earned under the plan during the
plan year. For purposes of this subsection, if any benefit
attributable to services performed in a preceding plan year
is increased by reason of any increase in compensation during
the current plan year, the increase in such benefit shall be
treated as having accrued during the current plan year.
``(c) Shortfall Amortization Charge.--
``(1) In general.--For purposes of this section, the
shortfall amortization charge for a plan for any plan year is
the aggregate total (not less than zero) of the shortfall
amortization installments for such plan year with respect to
the shortfall amortization bases for such plan year and each
of the 6 preceding plan years.
``(2) Shortfall amortization installment.--For purposes of
paragraph (1)--
``(A) Determination.--The shortfall amortization
installments are the amounts necessary to amortize the
shortfall amortization base of the plan for any plan year in
level annual installments over the 7-plan-year period
beginning with such plan year.
``(B) Shortfall installment.--The shortfall amortization
installment for any plan year in the 7-plan-year period under
subparagraph (A) with respect to any shortfall amortization
base is the annual installment determined under subparagraph
(A) for that year for that base.
``(C) Segment rates.--In determining any shortfall
amortization installment under this paragraph, the plan
sponsor shall use the segment rates determined under
subparagraph (C) of subsection (h)(2), applied under rules
similar to the rules of subparagraph (B) of subsection
(h)(2).
``(3) Shortfall amortization base.--For purposes of this
section, the shortfall amortization base of a plan for a plan
year is--
``(A) the funding shortfall of such plan for such plan
year, minus
``(B) the present value (determined using the segment rates
determined under subparagraph (C) of subsection (h)(2),
applied under rules similar to the rules of subparagraph (B)
of subsection (h)(2)) of the aggregate total of the shortfall
amortization installments and waiver amortization
installments which have been determined for such plan year
and any succeeding plan year with respect to the shortfall
amortization bases and waiver amortization bases of the plan
for any plan year preceding such plan year.
``(4) Funding shortfall.--For purposes of this section, the
funding shortfall of a plan for any plan year is the excess
(if any) of--
``(A) the funding target of the plan for the plan year,
over
``(B) the value of plan assets of the plan (as reduced
under subsection (f)(4)(B)) for the plan year which are held
by the plan on the valuation date.
``(5) Exemption from new shortfall amortization base.--
``(A) In general.--In any case in which the value of plan
assets of the plan (as reduced under subsection (f)(4)(A)) is
equal to or greater than the funding target of the plan for
the plan year, the shortfall amortization base of the plan
for such plan year shall be zero.
``(B) Transition rule.--
``(i) In general.--Except as provided in clauses (iii) and
(iv), in the case of plan years beginning after 2007 and
before 2011, only the applicable percentage of the funding
target shall be taken into account under paragraph (3)(A) in
determining the funding shortfall for the plan year for
purposes of subparagraph (A).
``(ii) Applicable percentage.--For purposes of subparagraph
(A), the applicable percentage shall be determined in
accordance with the following table:
``In the case of a plan year beginning in cThe applicable percentage is
2008..............................................................92
2009..............................................................94
2010..............................................................96.
``(iii) Limitation.--Clause (i) shall not apply with
respect to any plan year after 2008 unless the shortfall
amortization base for each of the preceding years beginning
after 2007 was zero (determined after application of this
subparagraph).
``(iv) Transition relief not available for new or deficit
reduction plans.--Clause (i) shall not apply to a plan--
``(I) which was not in effect for a plan year beginning in
2007, or
``(II) which was in effect for a plan year beginning in
2007 and which was subject to section 412(l) (as in effect
for plan years beginning in 2007), determined after the
application of paragraphs (6) and (9) thereof.
``(6) Early deemed amortization upon attainment of funding
target.--In any case in which the funding shortfall of a plan
for a plan year is zero, for purposes of determining the
shortfall amortization charge for such plan year and
succeeding plan years, the shortfall amortization bases for
all preceding plan years (and all shortfall amortization
installments determined with respect to such bases) shall be
reduced to zero.
``(d) Rules Relating to Funding Target.--For purposes of
this section--
``(1) Funding target.--Except as provided in subsection
(i)(1) with respect to plans in at-risk status, the funding
target of a plan for a plan year is the present value of all
benefits accrued or earned under the plan as of the beginning
of the plan year.
``(2) Funding target attainment percentage.--The `funding
target attainment percentage' of a plan for a plan year is
the ratio (expressed as a percentage) which--
``(A) the value of plan assets for the plan year (as
reduced under subsection (f)(4)(B)), bears to
``(B) the funding target of the plan for the plan year
(determined without regard to subsection (i)(1)).
``(e) Waiver Amortization Charge.--
``(1) Determination of waiver amortization charge.--The
waiver amortization charge (if any) for a plan for any plan
year is the aggregate total of the waiver amortization
installments for such plan year with respect to the waiver
amortization bases for each of the 5 preceding plan years.
``(2) Waiver amortization installment.--For purposes of
paragraph (1)--
``(A) Determination.--The waiver amortization installments
are the amounts necessary to amortize the waiver amortization
base of the plan for any plan year in level annual
installments over a period of 5 plan years beginning with the
succeeding plan year.
``(B) Waiver installment.--The waiver amortization
installment for any plan year in the 5-year period under
subparagraph (A) with respect to any waiver amortization base
is the annual installment determined under subparagraph (A)
for that year for that base.
``(3) Interest rate.--In determining any waiver
amortization installment under this subsection, the plan
sponsor shall use the segment rates determined under
subparagraph (C) of subsection (h)(2), applied under rules
similar to the rules of subparagraph (B) of subsection
(h)(2).
``(4) Waiver amortization base.--The waiver amortization
base of a plan for a plan year is the amount of the waived
funding deficiency (if any) for such plan year under section
412(c).
``(5) Early deemed amortization upon attainment of funding
target.--In any case in which the funding shortfall of a plan
for a plan year is zero, for purposes of determining the
waiver amortization charge for such plan year and succeeding
plan years, the waiver amortization bases for all preceding
plan years (and all waiver amortization installments
determined with respect to such bases) shall be reduced to
zero.
[[Page H6054]]
``(f) Reduction of Minimum Required Contribution by
Prefunding Balance and Funding Standard Carryover Balance.--
``(1) Election to maintain balances.--
``(A) Prefunding balance.--The plan sponsor of a defined
benefit plan which is not a multiemployer plan may elect to
maintain a prefunding balance.
``(B) Funding standard carryover balance.--
``(i) In general.--In the case of a defined benefit plan
(other than a multiemployer plan) described in clause (ii),
the plan sponsor may elect to maintain a funding standard
carryover balance, until such balance is reduced to zero.
``(ii) Plans maintaining funding standard account in
2007.--A plan is described in this clause if the plan--
``(I) was in effect for a plan year beginning in 2007, and
``(II) had a positive balance in the funding standard
account under section 412(b) as in effect for such plan year
and determined as of the end of such plan year.
``(2) Application of balances.--A prefunding balance and a
funding standard carryover balance maintained pursuant to
this paragraph--
``(A) shall be available for crediting against the minimum
required contribution, pursuant to an election under
paragraph (3),
``(B) shall be applied as a reduction in the amount treated
as the value of plan assets for purposes of this section, to
the extent provided in paragraph (4), and
``(C) may be reduced at any time, pursuant to an election
under paragraph (5).
``(3) Election to apply balances against minimum required
contribution.--
``(A) In general.--Except as provided in subparagraphs (B)
and (C), in the case of any plan year in which the plan
sponsor elects to credit against the minimum required
contribution for the current plan year all or a portion of
the prefunding balance or the funding standard carryover
balance for the current plan year (not in excess of such
minimum required contribution), the minimum required
contribution for the plan year shall be reduced as of the
first day of the plan year by the amount so credited by the
plan sponsor as of the first day of the plan year. For
purposes of the preceding sentence, the minimum required
contribution shall be determined after taking into account
any waiver under section 412(c).
``(B) Coordination with funding standard carryover
balance.--To the extent that any plan has a funding standard
carryover balance greater than zero, no amount of the
prefunding balance of such plan may be credited under this
paragraph in reducing the minimum required contribution.
``(C) Limitation for underfunded plans.--The preceding
provisions of this paragraph shall not apply for any plan
year if the ratio (expressed as a percentage) which--
``(i) the value of plan assets for the preceding plan year
(as reduced under paragraph (4)(C)), bears to
``(ii) the funding target of the plan for the preceding
plan year (determined without regard to subsection (i)(1)),
is less than 80 percent. In the case of plan years beginning
in 2008, the ratio under this subparagraph may be determined
using such methods of estimation as the Secretary may
prescribe.
``(4) Effect of balances on amounts treated as value of
plan assets.--In the case of any plan maintaining a
prefunding balance or a funding standard carryover balance
pursuant to this subsection, the amount treated as the value
of plan assets shall be deemed to be such amount, reduced as
provided in the following subparagraphs:
``(A) Applicability of shortfall amortization base.--For
purposes of subsection (c)(5), the value of plan assets is
deemed to be such amount, reduced by the amount of the
prefunding balance, but only if an election under paragraph
(2) applying any portion of the prefunding balance in
reducing the minimum required contribution is in effect for
the plan year.
``(B) Determination of excess assets, funding shortfall,
and funding target attainment percentage.--
``(i) In general.--For purposes of subsections (a),
(c)(4)(B), and (d)(2)(A), the value of plan assets is deemed
to be such amount, reduced by the amount of the prefunding
balance and the funding standard carryover balance.
``(ii) Special rule for certain binding agreements with
pbgc.--For purposes of subsection (c)(4)(B), the value of
plan assets shall not be deemed to be reduced for a plan year
by the amount of the specified balance if, with respect to
such balance, there is in effect for a plan year a binding
written agreement with the Pension Benefit Guaranty
Corporation which provides that such balance is not available
to reduce the minimum required contribution for the plan
year. For purposes of the preceding sentence, the term
`specified balance' means the prefunding balance or the
funding standard carryover balance, as the case may be.
``(C) Availability of balances in plan year for crediting
against minimum required contribution.--For purposes of
paragraph (3)(C)(i) of this subsection, the value of plan
assets is deemed to be such amount, reduced by the amount of
the prefunding balance.
``(5) Election to reduce balance prior to determinations of
value of plan assets and crediting against minimum required
contribution.--
``(A) In general.--The plan sponsor may elect to reduce by
any amount the balance of the prefunding balance and the
funding standard carryover balance for any plan year (but not
below zero). Such reduction shall be effective prior to any
determination of the value of plan assets for such plan year
under this section and application of the balance in reducing
the minimum required contribution for such plan for such plan
year pursuant to an election under paragraph (2).
``(B) Coordination between prefunding balance and funding
standard carryover balance.--To the extent that any plan has
a funding standard carryover balance greater than zero, no
election may be made under subparagraph (A) with respect to
the prefunding balance.
``(6) Prefunding balance.--
``(A) In general.--A prefunding balance maintained by a
plan shall consist of a beginning balance of zero, increased
and decreased to the extent provided in subparagraphs (B) and
(C), and adjusted further as provided in paragraph (8).
``(B) Increases.--
``(i) In general.--As of the first day of each plan year
beginning after 2008, the prefunding balance of a plan shall
be increased by the amount elected by the plan sponsor for
the plan year. Such amount shall not exceed the excess (if
any) of--
``(I) the aggregate total of employer contributions to the
plan for the preceding plan year, over--
``(II) the minimum required contribution for such preceding
plan year.
``(ii) Adjustments for interest.--Any excess contributions
under clause (i) shall be properly adjusted for interest
accruing for the periods between the first day of the current
plan year and the dates on which the excess contributions
were made, determined by using the effective interest rate
for the preceding plan year and by treating contributions as
being first used to satisfy the minimum required
contribution.
``(iii) Certain contributions necessary to avoid benefit
limitations disregarded.--The excess described in clause (i)
with respect to any preceding plan year shall be reduced (but
not below zero) by the amount of contributions an employer
would be required to make under paragraph (1), (2), or (4) of
section 206(g) to avoid a benefit limitation which would
otherwise be imposed under such paragraph for the preceding
plan year. Any contribution which may be taken into account
in satisfying the requirements of more than 1 of such
paragraphs shall be taken into account only once for purposes
of this clause.
``(C) Decreases.--The prefunding balance of a plan shall be
decreased (but not below zero) by the sum of--
``(i) as of the first day of each plan year after 2008, the
amount of such balance credited under paragraph (2) (if any)
in reducing the minimum required contribution of the plan for
the preceding plan year, and
``(ii) as of the time specified in paragraph (5))(A), any
reduction in such balance elected under paragraph (5).
``(7) Funding standard carryover balance.--
``(A) In general.--A funding standard carryover balance
maintained by a plan shall consist of a beginning balance
determined under subparagraph (B), decreased to the extent
provided in subparagraph (C), and adjusted further as
provided in paragraph (8).
``(B) Beginning balance.--The beginning balance of the
funding standard carryover balance shall be the positive
balance described in paragraph (1)(B)(ii)(II).
``(C) Decreases.--The funding standard carryover balance of
a plan shall be decreased (but not below zero) by--
``(i) as of the first day of each plan year after 2008, the
amount of such balance credited under paragraph (2) (if any)
in reducing the minimum required contribution of the plan for
the preceding plan year, and
``(ii) as of the time specified in paragraph (5))(A), any
reduction in such balance elected under paragraph (5).
``(8) Adjustments for investment experience.--In
determining the prefunding balance or the funding standard
carryover balance of a plan as of the first day of the plan
year, the plan sponsor shall, in accordance with regulations
prescribed by the Secretary of the Treasury, adjust such
balance to reflect the rate of return on plan assets for the
preceding plan year. Notwithstanding subsection (g)(3), such
rate of return shall be determined on the basis of fair
market value and shall properly take into account, in
accordance with such regulations, all contributions,
distributions, and other plan payments made during such
period.
``(9) Elections.--Elections under this subsection shall be
made at such times, and in such form and manner, as shall be
prescribed in regulations of the Secretary.
``(g) Valuation of Plan Assets and Liabilities.--
``(1) Timing of determinations.--Except as otherwise
provided under this subsection, all determinations under this
section for a plan year shall be made as of the valuation
date of the plan for such plan year.
``(2) Valuation date.--For purposes of this section--
``(A) In general.--Except as provided in subparagraph (B),
the valuation date of a plan for any plan year shall be the
first day of the plan year.
``(B) Exception for small plans.--If, on each day during
the preceding plan year, a plan had 100 or fewer
participants, the plan may designate any day during the plan
year
[[Page H6055]]
as its valuation date for such plan year and succeeding plan
years. For purposes of this subparagraph, all defined benefit
plans (other than multiemployer plans) maintained by the same
employer (or any member of such employer's controlled group)
shall be treated as 1 plan, but only participants with
respect to such employer or member shall be taken into
account.
``(C) Application of certain rules in determination of plan
size.--For purposes of this paragraph--
``(i) Plans not in existence in preceding year.--In the
case of the first plan year of any plan, subparagraph (B)
shall apply to such plan by taking into account the number of
participants that the plan is reasonably expected to have on
days during such first plan year.
``(ii) Predecessors.--Any reference in subparagraph (B) to
an employer shall include a reference to any predecessor of
such employer.
``(3) Determination of value of plan assets.--For purposes
of this section--
``(A) In general.--Except as provided in subparagraph (B),
the value of plan assets shall be the fair market value of
the assets.
``(B) Averaging allowed.--A plan may determine the value of
plan assets on the basis of the averaging of fair market
values, but only if such method--
``(i) is permitted under regulations prescribed by the
Secretary,
``(ii) does not provide for averaging of such values over
more than the period beginning on the last day of the 25th
month preceding the month in which the valuation date occurs
and ending on the valuation date (or a similar period in the
case of a valuation date which is not the 1st day of a
month), and
``(iii) does not result in a determination of the value of
plan assets which, at any time, is lower than 90 percent or
greater than 110 percent of the fair market value of such
assets at such time.
Any such averaging shall be adjusted for contributions and
distributions (as provided by the Secretary).
``(4) Accounting for contribution receipts.--For purposes
of determining the value of assets under paragraph (3)--
``(A) Prior year contributions.--If--
``(i) an employer makes any contribution to the plan after
the valuation date for the plan year in which the
contribution is made, and
``(ii) the contribution is for a preceding plan year,
the contribution shall be taken into account as an asset of
the plan as of the valuation date, except that in the case of
any plan year beginning after 2008, only the present value
(determined as of the valuation date) of such contribution
may be taken into account. For purposes of the preceding
sentence, present value shall be determined using the
effective interest rate for the preceding plan year to which
the contribution is properly allocable.
``(B) Special rule for current year contributions made
before valuation date.--If any contributions for any plan
year are made to or under the plan during the plan year but
before the valuation date for the plan year, the assets of
the plan as of the valuation date shall not include--
``(i) such contributions, and
``(ii) interest on such contributions for the period
between the date of the contributions and the valuation date,
determined by using the effective interest rate for the plan
year.
``(h) Actuarial Assumptions and Methods.--
``(1) In general.--Subject to this subsection, the
determination of any present value or other computation under
this section shall be made on the basis of actuarial
assumptions and methods--
``(A) each of which is reasonable (taking into account the
experience of the plan and reasonable expectations), and
``(B) which, in combination, offer the actuary's best
estimate of anticipated experience under the plan.
``(2) Interest rates.--
``(A) Effective interest rate.--For purposes of this
section, the term `effective interest rate' means, with
respect to any plan for any plan year, the single rate of
interest which, if used to determine the present value of the
plan's accrued or earned benefits referred to in subsection
(d)(1), would result in an amount equal to the funding target
of the plan for such plan year.
``(B) Interest rates for determining funding target.--For
purposes of determining the funding target of a plan for any
plan year, the interest rate used in determining the present
value of the liabilities of the plan shall be--
``(i) in the case of benefits reasonably determined to be
payable during the 5-year period beginning on the first day
of the plan year, the first segment rate with respect to the
applicable month,
``(ii) in the case of benefits reasonably determined to be
payable during the 15-year period beginning at the end of the
period described in clause (i), the second segment rate with
respect to the applicable month, and
``(iii) in the case of benefits reasonably determined to be
payable after the period described in clause (ii), the third
segment rate with respect to the applicable month.
``(C) Segment rates.--For purposes of this paragraph--
``(i) First segment rate.--The term `first segment rate'
means, with respect to any month, the single rate of interest
which shall be determined by the Secretary for such month on
the basis of the corporate bond yield curve for such month,
taking into account only that portion of such yield curve
which is based on bonds maturing during the 5-year period
commencing with such month.
``(ii) Second segment rate.--The term `second segment rate'
means, with respect to any month, the single rate of interest
which shall be determined by the Secretary for such month on
the basis of the corporate bond yield curve for such month,
taking into account only that portion of such yield curve
which is based on bonds maturing during the 15-year period
beginning at the end of the period described in clause (i).
``(iii) Third segment rate.--The term `third segment rate'
means, with respect to any month, the single rate of interest
which shall be determined by the Secretary for such month on
the basis of the corporate bond yield curve for such month,
taking into account only that portion of such yield curve
which is based on bonds maturing during periods beginning
after the period described in clause (ii).
``(D) Corporate bond yield curve.--For purposes of this
paragraph--
``(i) In general.--The term `corporate bond yield curve'
means, with respect to any month, a yield curve which is
prescribed by the Secretary for such month and which reflects
the average, for the 24-month period ending with the month
preceding such month, of monthly yields on investment grade
corporate bonds with varying maturities and that are in the
top 3 quality levels available.
``(ii) Election to use yield curve.--Solely for purposes of
determining the minimum required contribution under this
section, the plan sponsor may, in lieu of the segment rates
determined under subparagraph (C), elect to use interest
rates under the corporate bond yield curve. For purposes of
the preceding sentence such curve shall be determined without
regard to the 24-month averaging described in clause (i) .
Such election, once made, may be revoked only with the
consent of the Secretary.
``(E) Applicable month.--For purposes of this paragraph,
the term `applicable month' means, with respect to any plan
for any plan year, the month which includes the valuation
date of such plan for such plan year or, at the election of
the plan sponsor, any of the 4 months which precede such
month. Any election made under this subparagraph shall apply
to the plan year for which the election is made and all
succeeding plan years, unless the election is revoked with
the consent of the Secretary.
``(F) Publication requirements.--The Secretary shall
publish for each month the corporate bond yield curve (and
the corporate bond yield curve reflecting the modification
described in section 417(e)(3)(D)(i) for such month and each
of the rates determined under subparagraph (B) for such
month. The Secretary shall also publish a description of the
methodology used to determine such yield curve and such rates
which is sufficiently detailed to enable plans to make
reasonable projections regarding the yield curve and such
rates for future months based on the plan's projection of
future interest rates.
``(G) Transition rule.--
``(i) In general.--Notwithstanding the preceding provisions
of this paragraph, for plan years beginning in 2008 or 2009,
the first, second, or third segment rate for a plan with
respect to any month shall be equal to the sum of--
``(I) the product of such rate for such month determined
without regard to this subparagraph, multiplied by the
applicable percentage, and
``(II) the product of the rate determined under the rules
of section 412(b)(5)(B)(ii)(II) (as in effect for plan years
beginning in 2007), multiplied by a percentage equal to 100
percent minus the applicable percentage.
``(ii) Applicable percentage.--For purposes of clause (i),
the applicable percentage is 33\1/3\ percent for plan years
beginning in 2008 and 66\2/3\ percent for plan years
beginning in 2009.
``(iii) New plans ineligible.--Clause (i) shall not apply
to any plan if the first plan year of the plan begins after
December 31, 2007.
``(iv) Election.--The plan sponsor may elect not to have
this subparagraph apply. Such election, once made, may be
revoked only with the consent of the Secretary.
``(3) Mortality tables.--
``(A) In general.--Except as provided in subparagraph (C)
or (D), the Secretary shall by regulation prescribe mortality
tables to be used in determining any present value or making
any computation under this section. Such tables shall be
based on the actual experience of pension plans and projected
trends in such experience. In prescribing such tables, the
Secretary shall take into account results of available
independent studies of mortality of individuals covered by
pension plans.
``(B) Periodic revision.--The Secretary shall (at least
every 10 years) make revisions in any table in effect under
subparagraph (A) to reflect the actual experience of pension
plans and projected trends in such experience.
``(C) Substitute mortality table.--
``(i) In general.--Upon request by the plan sponsor and
approval by the Secretary, a mortality table which meets the
requirements of clause (iii) shall be used in determining any
present value or making any computation under this section
during the period of consecutive plan years (not to exceed
10) specified in the request.
[[Page H6056]]
``(ii) Early termination of period.--Notwithstanding clause
(i), a mortality table described in clause (i) shall cease to
be in effect as of the earliest of--
``(I) the date on which there is a significant change in
the participants in the plan by reason of a plan spinoff or
merger or otherwise, or
``(II) the date on which the plan actuary determines that
such table does not meet the requirements of clause (iii).
``(iii) Requirements.--A mortality table meets the
requirements of this clause if--
``(I) there is a sufficient number of plan participants,
and the pension plans have been maintained for a sufficient
period of time, to have credible information necessary for
purposes of subclause (II), and
``(II) such table reflects the actual experience of the
pension plans maintained by the sponsor and projected trends
in general mortality experience.
``(iv) All plans in controlled group must use separate
table.--Except as provided by the Secretary, a plan sponsor
may not use a mortality table under this subparagraph for any
plan maintained by the plan sponsor unless--
``(I) a separate mortality table is established and used
under this subparagraph for each other plan maintained by the
plan sponsor and if the plan sponsor is a member of a
controlled group, each member of the controlled group, and
``(II) the requirements of clause (iii) are met separately
with respect to the table so established for each such plan,
determined by only taking into account the participants of
such plan, the time such plan has been in existence, and the
actual experience of such plan.
``(v) Deadline for submission and disposition of
application.--
``(I) Submission.--The plan sponsor shall submit a
mortality table to the Secretary for approval under this
subparagraph at least 7 months before the 1st day of the
period described in clause (i).
``(II) Disposition.--Any mortality table submitted to the
Secretary for approval under this subparagraph shall be
treated as in effect as of the 1st day of the period
described in clause (i) unless the Secretary, during the 180-
day period beginning on the date of such submission,
disapproves of such table and provides the reasons that such
table fails to meet the requirements of clause (iii). The
180-day period shall be extended upon mutual agreement of the
Secretary and the plan sponsor.
``(D) Separate mortality tables for the disabled.--
Notwithstanding subparagraph (A)--
``(i) In general.--The Secretary shall establish mortality
tables which may be used (in lieu of the tables under
subparagraph (A)) under this subsection for individuals who
are entitled to benefits under the plan on account of
disability. The Secretary shall establish separate tables for
individuals whose disabilities occur in plan years beginning
before January 1, 1995, and for individuals whose
disabilities occur in plan years beginning on or after such
date.
``(ii) Special rule for disabilities occurring after
1994.--In the case of disabilities occurring in plan years
beginning after December 31, 1994, the tables under clause
(i) shall apply only with respect to individuals described in
such subclause who are disabled within the meaning of title
II of the Social Security Act and the regulations thereunder.
``(iii) Periodic revision.--The Secretary shall (at least
every 10 years) make revisions in any table in effect under
clause (i) to reflect the actual experience of pension plans
and projected trends in such experience.
``(4) Probability of benefit payments in the form of lump
sums or other optional forms.--For purposes of determining
any present value or making any computation under this
section, there shall be taken into account--
``(A) the probability that future benefit payments under
the plan will be made in the form of optional forms of
benefits provided under the plan (including lump sum
distributions, determined on the basis of the plan's
experience and other related assumptions), and
``(B) any difference in the present value of such future
benefit payments resulting from the use of actuarial
assumptions, in determining benefit payments in any such
optional form of benefits, which are different from those
specified in this subsection.
``(5) Approval of large changes in actuarial assumptions.--
``(A) In general.--No actuarial assumption used to
determine the funding target for a plan to which this
paragraph applies may be changed without the approval of the
Secretary.
``(B) Plans to which paragraph applies.--This paragraph
shall apply to a plan only if--
``(i) the plan is a defined benefit plan (other than a
multiemployer plan) to which title IV of the Employee
Retirement Income Security Act of 1974 applies,
``(ii) the aggregate unfunded vested benefits as of the
close of the preceding plan year (as determined under section
4006(a)(3)(E)(iii) of the Employee Retirement Income Security
Act of 1974) of such plan and all other plans maintained by
the contributing sponsors (as defined in section 4001(a)(13)
of such Act) and members of such sponsors' controlled groups
(as defined in section 4001(a)(14) of such Act) which are
covered by title IV (disregarding plans with no unfunded
vested benefits) exceed $50,000,000, and
``(iii) the change in assumptions (determined after taking
into account any changes in interest rate and mortality
table) results in a decrease in the funding shortfall of the
plan for the current plan year that exceeds $50,000,000, or
that exceeds $5,000,000 and that is 5 percent or more of the
funding target of the plan before such change.
``(i) Special Rules for At-Risk Plans.--
``(1) Funding target for plans in at-risk status.--
``(A) In general.--In the case of a plan which is in at-
risk status for a plan year, the funding target of the plan
for the plan year shall be equal to the sum of--
``(i) the present value of all benefits accrued or earned
under the plan as of the beginning of the plan year, as
determined by using the additional actuarial assumptions
described in subparagraph (B), and
``(ii) in the case of a plan which also has been in at-risk
status for at least 2 of the 4 preceding plan years, a
loading factor determined under subparagraph (C).
``(B) Additional actuarial assumptions.--The actuarial
assumptions described in this subparagraph are as follows:
``(i) All employees who are not otherwise assumed to retire
as of the valuation date but who will be eligible to elect
benefits during the plan year and the 10 succeeding plan
years shall be assumed to retire at the earliest retirement
date under the plan but not before the end of the plan year
for which the at-risk funding target and at-risk target
normal cost are being determined.
``(ii) All employees shall be assumed to elect the
retirement benefit available under the plan at the assumed
retirement age (determined after application of clause (i))
which would result in the highest present value of benefits.
``(C) Loading factor.--The loading factor applied with
respect to a plan under this paragraph for any plan year is
the sum of--
``(i) $700, times the number of participants in the plan,
plus
``(ii) 4 percent of the funding target (determined without
regard to this paragraph) of the plan for the plan year.
``(2) Target normal cost of at-risk plans.--In the case of
a plan which is in at-risk status for a plan year, the target
normal cost of the plan for such plan year shall be equal to
the sum of--
``(A) the present value of all benefits which are expected
to accrue or be earned under the plan during the plan year,
determined using the additional actuarial assumptions
described in paragraph (1)(B), plus
``(B) in the case of a plan which also has been in at-risk
status for at least 2 of the 4 preceding plan years, a
loading factor equal to 4 percent of the target normal cost
(determined without regard to this paragraph) of the plan for
the plan year.
``(3) Minimum amount.--In no event shall--
``(A) the at-risk funding target be less than the funding
target, as determined without regard to this subsection, or
``(B) the at-risk target normal cost be less than the
target normal cost, as determined without regard to this
subsection.
``(4) Determination of at-risk status.--For purposes of
this subsection--
``(A) In general.--A plan is in at-risk status for a plan
year if--
``(i) the funding target attainment percentage for the
preceding plan year (determined under this section without
regard to this subsection) is less than 80 percent, and
``(ii) the funding target attainment percentage for the
preceding plan year (determined under this section by using
the additional actuarial assumptions described in paragraph
(1)(B) in computing the funding target) is less than 70
percent.
``(B) Transition rule.--In the case of plan years beginning
in 2008, 2009, and 2010, subparagraph (A)(i) shall be applied
by substituting the following percentages for `80 percent':
``(i) 65 percent in the case of 2008.
``(ii) 70 percent in the case of 2009.
``(iii) 75 percent in the case of 2010.
In the case of plan years beginning in 2008, the funding
target attainment percentage for the preceding plan year
under subparagraph (A)(ii) may be determined using such
methods of estimation as the Secretary may provide.
``(C) Special rule for employees offered early retirement
in 2006.--
``(i) In general.--For purposes of subparagraph (A)(ii),
the additional actuarial assumptions described in paragraph
(1)(B) shall not be taken into account with respect to any
employee if--
``(I) such employee is employed by a specified automobile
manufacturer,
``(II) such employee is offered a substantial amount of
additional cash compensation, substantially enhanced
retirement benefits under the plan, or materially reduced
employment duties on the condition that by a specified date
(not later than December 31, 2010) the employee retires (as
defined under the terms of the plan),
``(III) such offer is made during 2006 and pursuant to a
bona fide retirement incentive program and requires, by the
terms of the offer, that such offer can be accepted not later
than a specified date (not later than December 31, 2006), and
``(IV) such employee does not elect to accept such offer
before the specified date on which the offer expires.
``(ii) Specified automobile manufacturer.--For purposes of
clause (i), the term `specified automobile manufacturer'
means--
[[Page H6057]]
``(I) any manufacturer of automobiles, and
``(II) any manufacturer of automobile parts which supplies
such parts directly to a manufacturer of automobiles and
which, after a transaction or series of transactions ending
in 1999, ceased to be a member of a controlled group which
included such manufacturer of automobiles.
``(5) Transition between applicable funding targets and
between applicable target normal costs.--
``(A) In general.--In any case in which a plan which is in
at-risk status for a plan year has been in such status for a
consecutive period of fewer than 5 plan years, the applicable
amount of the funding target and of the target normal cost
shall be, in lieu of the amount determined without regard to
this paragraph, the sum of--
``(i) the amount determined under this section without
regard to this subsection, plus
``(ii) the transition percentage for such plan year of the
excess of the amount determined under this subsection
(without regard to this paragraph) over the amount determined
under this section without regard to this subsection.
``(B) Transition percentage.--For purposes of subparagraph
(A), the transition percentage shall be determined in
accordance with the following table:
``
``If the consecutive number of years (including the plan year) the plan
is in at-risk status is-- The transition percentage is--
1.................................................................20
2.................................................................40
3.................................................................60
4.................................................................80.
``(C) Years before effective date.--For purposes of this
paragraph, plan years beginning before 2008 shall not be
taken into account.
``(6) Small plan exception.--If, on each day during the
preceding plan year, a plan had 500 or fewer participants,
the plan shall not be treated as in at-risk status for the
plan year. For purposes of this paragraph, all defined
benefit plans (other than multiemployer plans) maintained by
the same employer (or any member of such employer's
controlled group) shall be treated as 1 plan, but only
participants with respect to such employer or member shall be
taken into account and the rules of subsection (g)(2)(C)
shall apply.
``(j) Payment of Minimum Required Contributions.--
``(1) In general.--For purposes of this section, the due
date for any payment of any minimum required contribution for
any plan year shall be 8\1/2\ months after the close of the
plan year.
``(2) Interest.--Any payment required under paragraph (1)
for a plan year that is made on a date other than the
valuation date for such plan year shall be adjusted for
interest accruing for the period between the valuation date
and the payment date, at the effective rate of interest for
the plan for such plan year.
``(3) Accelerated quarterly contribution schedule for
underfunded plans.--
``(A) Failure to timely make required installment.--In any
case in which the plan has a funding shortfall for the
preceding plan year, the employer maintaining the plan shall
make the required installments under this paragraph and if
the employer fails to pay the full amount of a required
installment for the plan year, then the amount of interest
charged under paragraph (2) on the underpayment for the
period of underpayment shall be determined by using a rate of
interest equal to the rate otherwise used under paragraph (2)
plus 5 percentage points.
``(B) Amount of underpayment, period of underpayment.--For
purposes of subparagraph (A)--
``(i) Amount.--The amount of the underpayment shall be the
excess of--
``(I) the required installment, over
``(II) the amount (if any) of the installment contributed
to or under the plan on or before the due date for the
installment.
``(ii) Period of underpayment.--The period for which any
interest is charged under this paragraph with respect to any
portion of the underpayment shall run from the due date for
the installment to the date on which such portion is
contributed to or under the plan.
``(iii) Order of crediting contributions.--For purposes of
clause (i)(II), contributions shall be credited against
unpaid required installments in the order in which such
installments are required to be paid.
``(C) Number of required installments; due dates.--For
purposes of this paragraph--
``(i) Payable in 4 installments.--There shall be 4 required
installments for each plan year.
``(ii) Time for payment of installments.--The due dates for
required installments are set forth in the following table:
In the case of the following required installment: The due date is:
1st April 15
2nd July 15
3rd October 15
4th January 15 of the following year.
``(D) Amount of required installment.--For purposes of this
paragraph--
``(i) In general.--The amount of any required installment
shall be 25 percent of the required annual payment.
``(ii) Required annual payment.--For purposes of clause
(i), the term `required annual payment' means the lesser of--
``(I) 90 percent of the minimum required contribution
(determined without regard to this subsection) to the plan
for the plan year under this section, or
``(II) 100 percent of the minimum required contribution
(determined without regard to this subsection or to any
waiver under section 302(c)) to the plan for the preceding
plan year.
Subclause (II) shall not apply if the preceding plan year
referred to in such clause was not a year of 12 months.
``(E) Fiscal years and short years.--
``(i) Fiscal years.--In applying this paragraph to a plan
year beginning on any date other than January 1, there shall
be substituted for the months specified in this paragraph,
the months which correspond thereto.
``(ii) Short plan year.--This subparagraph shall be applied
to plan years of less than 12 months in accordance with
regulations prescribed by the Secretary.
``(4) Liquidity requirement in connection with quarterly
contributions.--
``(A) In general.--A plan to which this paragraph applies
shall be treated as failing to pay the full amount of any
required installment under paragraph (3) to the extent that
the value of the liquid assets paid in such installment is
less than the liquidity shortfall (whether or not such
liquidity shortfall exceeds the amount of such installment
required to be paid but for this paragraph).
``(B) Plans to which paragraph applies.--This paragraph
shall apply to a plan (other than a plan described in
subsection (g)(2)(B)) which--
``(i) is required to pay installments under paragraph (3)
for a plan year, and
``(ii) has a liquidity shortfall for any quarter during
such plan year.
``(C) Period of underpayment.--For purposes of paragraph
(3)(A), any portion of an installment that is treated as not
paid under subparagraph (A) shall continue to be treated as
unpaid until the close of the quarter in which the due date
for such installment occurs.
``(D) Limitation on increase.--If the amount of any
required installment is increased by reason of subparagraph
(A), in no event shall such increase exceed the amount which,
when added to prior installments for the plan year, is
necessary to increase the funding target attainment
percentage of the plan for the plan year (taking into account
the expected increase in funding target due to benefits
accruing or earned during the plan year) to 100 percent.
``(E) Definitions.--For purposes of this paragraph--
``(i) Liquidity shortfall.--The term `liquidity shortfall'
means, with respect to any required installment, an amount
equal to the excess (as of the last day of the quarter for
which such installment is made) of--
``(I) the base amount with respect to such quarter, over
``(II) the value (as of such last day) of the plan's liquid
assets.
``(ii) Base amount.--
``(I) In general.--The term `base amount' means, with
respect to any quarter, an amount equal to 3 times the sum of
the adjusted disbursements from the plan for the 12 months
ending on the last day of such quarter.
``(II) Special rule.--If the amount determined under
subclause (I) exceeds an amount equal to 2 times the sum of
the adjusted disbursements from the plan for the 36 months
ending on the last day of the quarter and an enrolled actuary
certifies to the satisfaction of the Secretary that such
excess is the result of nonrecurring circumstances, the base
amount with respect to such quarter shall be determined
without regard to amounts related to those nonrecurring
circumstances.
``(iii) Disbursements from the plan.--The term
`disbursements from the plan' means all disbursements from
the trust, including purchases of annuities, payments of
single sums and other benefits, and administrative expenses.
``(iv) Adjusted disbursements.--The term `adjusted
disbursements' means disbursements from the plan reduced by
the product of--
``(I) the plan's funding target attainment percentage for
the plan year, and
``(II) the sum of the purchases of annuities, payments of
single sums, and such other disbursements as the Secretary
shall provide in regulations.
``(v) Liquid assets.--The term `liquid assets' means cash,
marketable securities, and such other assets as specified by
the Secretary in regulations.
``(vi) Quarter.--The term `quarter' means, with respect to
any required installment, the 3-month period preceding the
month in which the due date for such installment occurs.
``(F) Regulations.--The Secretary may prescribe such
regulations as are necessary to carry out this paragraph.
``(k) Imposition of Lien Where Failure to Make Required
Contributions.--
``(1) In general.--In the case of a plan to which this
subsection applies, if--
``(A) any person fails to make a contribution payment
required by section 412 and this section before the due date
for such payment, and
``(B) the unpaid balance of such payment (including
interest), when added to the aggregate unpaid balance of all
preceding such payments for which payment was not made
[[Page H6058]]
before the due date (including interest), exceeds $1,000,000,
then there shall be a lien in favor of the plan in the amount
determined under paragraph (3) upon all property and rights
to property, whether real or personal, belonging to such
person and any other person who is a member of the same
controlled group of which such person is a member.
``(2) Plans to which subsection applies.--This subsection
shall apply to a defined benefit plan (other than a
multiemployer plan) covered under section 4021 of the
Employee Retirement Income Security Act of 1974 for any plan
year for which the funding target attainment percentage (as
defined in subsection (d)(2)) of such plan is less than 100
percent.
``(3) Amount of lien.--For purposes of paragraph (1), the
amount of the lien shall be equal to the aggregate unpaid
balance of contribution payments required under this section
and section 412 for which payment has not been made before
the due date.
``(4) Notice of failure; lien.--
``(A) Notice of failure.--A person committing a failure
described in paragraph (1) shall notify the Pension Benefit
Guaranty Corporation of such failure within 10 days of the
due date for the required contribution payment.
``(B) Period of lien.--The lien imposed by paragraph (1)
shall arise on the due date for the required contribution
payment and shall continue until the last day of the first
plan year in which the plan ceases to be described in
paragraph (1)(B). Such lien shall continue to run without
regard to whether such plan continues to be described in
paragraph (2) during the period referred to in the preceding
sentence.
``(C) Certain rules to apply.--Any amount with respect to
which a lien is imposed under paragraph (1) shall be treated
as taxes due and owing the United States and rules similar to
the rules of subsections (c), (d), and (e) of section 4068 of
the Employee Retirement Income Security Act of 1974 shall
apply with respect to a lien imposed by subsection (a) and
the amount with respect to such lien.
``(5) Enforcement.--Any lien created under paragraph (1)
may be perfected and enforced only by the Pension Benefit
Guaranty Corporation, or at the direction of the Pension
Benefit Guaranty Corporation, by the contributing sponsor (or
any member of the controlled group of the contributing
sponsor).
``(6) Definitions.--For purposes of this subsection--
``(A) Contribution payment.--The term `contribution
payment' means, in connection with a plan, a contribution
payment required to be made to the plan, including any
required installment under paragraphs (3) and (4) of
subsection (j).
``(B) Due date; required installment.--The terms `due date'
and `required installment' have the meanings given such terms
by subsection (j), except that in the case of a payment other
than a required installment, the due date shall be the date
such payment is required to be made under section 430.
``(C) Controlled group.--The term `controlled group' means
any group treated as a single employer under subsections (b),
(c), (m), and (o) of section 414.
``(l) Qualified Transfers to Health Benefit Accounts.--In
the case of a qualified transfer (as defined in section 420),
any assets so transferred shall not, for purposes of this
section, be treated as assets in the plan.''.
(b) Effective Date.--The amendments made by this section
shall apply with respect to plan years beginning after
December 31, 2007.
SEC. 113. BENEFIT LIMITATIONS UNDER SINGLE-EMPLOYER PLANS.
(a) Prohibition of Shutdown Benefits and Other
Unpredictable Contingent Event Benefits Under Single-Employer
Plans.--
(1) In general.--Part III of subchapter D of chapter 1 of
the Internal Revenue Code of 1986 (relating to deferred
compensation, etc.) is amended--
(A) by striking the heading and inserting the following:
``PART III--RULES RELATING TO MINIMUM FUNDING STANDARDS AND BENEFIT
LIMITATIONS
``Subpart A. Minimum Funding Standards for Pension Plans.
``Subpart B. Benefit Limitations Under Single-Employer Plans.
``Subpart A--Minimum Funding Standards for Pension Plans
``Sec. 430. Minimum funding standards for single-employer defined
benefit pension plans.'', and
(B) by adding at the end the following new subpart:
``Subpart B--Benefit Limitations Under Single-Employer Plans
``Sec. 436. Funding-based limitation on shutdown benefits and other
unpredictable contingent event benefits under single-
employer plans.
``SEC. 436. FUNDING-BASED LIMITS ON BENEFITS AND BENEFIT
ACCRUALS UNDER SINGLE-EMPLOYER PLANS.
``(a) General Rule.--For purposes of section 401(a)(29), a
defined benefit plan which is a single-employer plan shall be
treated as meeting the requirements of this section if the
plan meets the requirements of subsections (b), (c), (d), and
(e).
``(b) Funding-Based Limitation on Shutdown Benefits and
Other Unpredictable Contingent Event Benefits Under Single-
Employer Plans.--
``(1) In general.--If a participant of a defined benefit
plan which is a single-employer plan is entitled to an
unpredictable contingent event benefit payable with respect
to any event occurring during any plan year, the plan shall
provide that such benefit may not be provided if the adjusted
funding target attainment percentage for such plan year--
``(A) is less than 60 percent, or
``(B) would be less than 60 percent taking into account
such occurrence.
``(2) Exemption.--Paragraph (1) shall cease to apply with
respect to any plan year, effective as of the first day of
the plan year, upon payment by the plan sponsor of a
contribution (in addition to any minimum required
contribution under section 303) equal to--
``(A) in the case of paragraph (1)(A), the amount of the
increase in the funding target of the plan (under section
430) for the plan year attributable to the occurrence
referred to in paragraph (1), and
``(B) in the case of paragraph (1)(B), the amount
sufficient to result in a funding target attainment
percentage of 60 percent.
``(3) Unpredictable contingent event.--For purposes of this
subsection, the term `unpredictable contingent event benefit'
means any benefit payable solely by reason of--
``(A) a plant shutdown (or similar event, as determined by
the Secretary), or
``(B) any event other than the attainment of any age,
performance of any service, receipt or derivation of any
compensation, or occurrence of death or disability.
``(c) Limitations on Plan Amendments Increasing Liability
for Benefits.--
``(1) In general.--No amendment to a defined benefit plan
which is a single-employer plan which has the effect of
increasing liabilities of the plan by reason of increases in
benefits, establishment of new benefits, changing the rate of
benefit accrual, or changing the rate at which benefits
become nonforfeitable may take effect during any plan year if
the adjusted funding target attainment percentage for such
plan year is--
``(A) less than 80 percent, or
``(B) would be less than 80 percent taking into account
such amendment.
``(2) Exemption.--Paragraph (1) shall cease to apply with
respect to any plan year, effective as of the first day of
the plan year (or if later, the effective date of the
amendment), upon payment by the plan sponsor of a
contribution (in addition to any minimum required
contribution under section 430) equal to--
``(A) in the case of paragraph (1)(A), the amount of the
increase in the funding target of the plan (under section
430) for the plan year attributable to the amendment, and
``(B) in the case of paragraph (1)(B), the amount
sufficient to result in an adjusted funding target attainment
percentage of 80 percent.
``(3) Exception for certain benefit increases.--Paragraph
(1) shall not apply to any amendment which provides for an
increase in benefits under a formula which is not based on a
participant's compensation, but only if the rate of such
increase is not in excess of the contemporaneous rate of
increase in average wages of participants covered by the
amendment.
``(d) Limitations on Accelerated Benefit Distributions.--
``(1) Funding percentage less than 60 percent.--A defined
benefit plan which is a single-employer plan shall provide
that, in any case in which the plan's adjusted funding target
attainment percentage for a plan year is less than 60
percent, the plan may not pay any prohibited payment after
the valuation date for the plan year.
``(2) Bankruptcy.--A defined benefit plan which is a
single-employer plan shall provide that, during any period in
which the plan sponsor is a debtor in a case under title 11,
United States Code, or similar Federal or State law, the plan
may not pay any prohibited payment. The preceding sentence
shall not apply on or after the date on which the enrolled
actuary of the plan certifies that the adjusted funding
target attainment percentage of such plan is not less than
100 percent.
``(3) Limited payment if percentage at least 60 percent but
less than 80 percent.--
``(A) In general.--A defined benefit plan which is a
single-employer plan shall provide that, in any case in which
the plan's adjusted funding target attainment percentage for
a plan year is 60 percent or greater but less than 80
percent, the plan may not pay any prohibited payment after
the valuation date for the plan year to the extent the amount
of the payment exceeds the lesser of--
``(i) 50 percent of the amount of the payment which could
be made without regard to this section, or
``(ii) the present value (determined under guidance
prescribed by the Pension Benefit Guaranty Corporation, using
the interest and mortality assumptions under section 417(e))
of the maximum guarantee with respect to the participant
under section 4022 of the Employee Retirement Income Security
Act of 1974.
``(B) One-time application.--
``(i) In general.--The plan shall also provide that only 1
prohibited payment meeting the requirements of subparagraph
(A) may be
[[Page H6059]]
made with respect to any participant during any period of
consecutive plan years to which the limitations under either
paragraph (1) or (2) or this paragraph applies.
``(ii) Treatment of beneficiaries.--For purposes of this
subparagraph, a participant and any beneficiary on his behalf
(including an alternate payee, as defined in section
414(p)(8)) shall be treated as 1 participant. If the accrued
benefit of a participant is allocated to such an alternate
payee and 1 or more other persons, the amount under
subparagraph (A) shall be allocated among such persons in the
same manner as the accrued benefit is allocated unless the
qualified domestic relations order (as defined in section
414(p)(1)(A)) provides otherwise.
``(4) Exception.--This subsection shall not apply to any
plan for any plan year if the terms of such plan (as in
effect for the period beginning on September 1, 2005, and
ending with such plan year) provide for no benefit accruals
with respect to any participant during such period.
``(5) Prohibited payment.--For purpose of this subsection,
the term `prohibited payment' means--
``(A) any payment, in excess of the monthly amount paid
under a single life annuity (plus any social security
supplements described in the last sentence of section
411(a)(9)), to a participant or beneficiary whose annuity
starting date (as defined in section 417(f)(2)) occurs during
any period a limitation under paragraph (1) or (2) is in
effect,
``(B) any payment for the purchase of an irrevocable
commitment from an insurer to pay benefits, and
``(C) any other payment specified by the Secretary by
regulations.
``(e) Limitation on Benefit Accruals for Plans With Severe
Funding Shortfalls.--
``(1) In general.--A defined benefit plan which is a
single-employer plan shall provide that, in any case in which
the plan's adjusted funding target attainment percentage for
a plan year is less than 60 percent, benefit accruals under
the plan shall cease as of the valuation date for the plan
year.
``(2) Exemption.--Paragraph (1) shall cease to apply with
respect to any plan year, effective as of the first day of
the plan year, upon payment by the plan sponsor of a
contribution (in addition to any minimum required
contribution under section 430) equal to the amount
sufficient to result in an adjusted funding target attainment
percentage of 60 percent.
``(f) Rules Relating to Contributions Required to Avoid
Benefit Limitations.--
``(1) Security may be provided.--
``(A) In general.--For purposes of this section, the
adjusted funding target attainment percentage shall be
determined by treating as an asset of the plan any security
provided by a plan sponsor in a form meeting the requirements
of subparagraph (B).
``(B) Form of security.--The security required under
subparagraph (A) shall consist of--
``(i) a bond issued by a corporate surety company that is
an acceptable surety for purposes of section 412 of the
Employee Retirement Income Security Act of 1974,
``(ii) cash, or United States obligations which mature in 3
years or less, held in escrow by a bank or similar financial
institution, or
``(iii) such other form of security as is satisfactory to
the Secretary and the parties involved.
``(C) Enforcement.--Any security provided under
subparagraph (A) may be perfected and enforced at any time
after the earlier of--
``(i) the date on which the plan terminates,
``(ii) if there is a failure to make a payment of the
minimum required contribution for any plan year beginning
after the security is provided, the due date for the payment
under section 430(j), or
``(iii) if the adjusted funding target attainment
percentage is less than 60 percent for a consecutive period
of 7 years, the valuation date for the last year in the
period.
``(D) Release of security.--The security shall be released
(and any amounts thereunder shall be refunded together with
any interest accrued thereon) at such time as the Secretary
may prescribe in regulations, including regulations for
partial releases of the security by reason of increases in
the funding target attainment percentage.
``(2) Prefunding balance or funding standard carryover
balance may not be used.--No prefunding balance under section
430(f) or funding standard carryover balance may be used
under subsection (b), (c), or (e) to satisfy any payment an
employer may make under any such subsection to avoid or
terminate the application of any limitation under such
subsection.
``(3) Deemed reduction of funding balances.--
``(A) In general.--Subject to subparagraph (C), in any case
in which a benefit limitation under subsection (b), (c), (d),
or (e) would (but for this subparagraph and determined
without regard to subsection (b)(2), (c)(2), or (e)(2)) apply
to such plan for the plan year, the plan sponsor of such plan
shall be treated for purposes of this title as having made an
election under section 430(f) to reduce the prefunding
balance or funding standard carryover balance by such amount
as is necessary for such benefit limitation to not apply to
the plan for such plan year.
``(B) Exception for insufficient funding balances.--
Subparagraph (A) shall not apply with respect to a benefit
limitation for any plan year if the application of
subparagraph (A) would not result in the benefit limitation
not applying for such plan year.
``(C) Restrictions of certain rules to collectively
bargained plans.--With respect to any benefit limitation
under subsection (b), (c), or (e), subparagraph (A) shall
only apply in the case of a plan maintained pursuant to 1 or
more collective bargaining agreements between employee
representatives and 1 or more employers.
``(g) New Plans.--Subsections (b), (c), and (e) shall not
apply to a plan for the first 5 plan years of the plan. For
purposes of this subsection, the reference in this subsection
to a plan shall include a reference to any predecessor plan.
``(h) Presumed Underfunding for Purposes of Benefit
Limitations.--
``(1) Presumption of continued underfunding.--In any case
in which a benefit limitation under subsection (b), (c), (d),
or (e) has been applied to a plan with respect to the plan
year preceding the current plan year, the adjusted funding
target attainment percentage of the plan for the current plan
year shall be presumed to be equal to the adjusted funding
target attainment percentage of the plan for the preceding
plan year until the enrolled actuary of the plan certifies
the actual adjusted funding target attainment percentage of
the plan for the current plan year.
``(2) Presumption of underfunding after 10th month.--In any
case in which no certification of the adjusted funding target
attainment percentage for the current plan year is made with
respect to the plan before the first day of the 10th month of
such year, for purposes of subsections (b), (c), (d), and
(e), such first day shall be deemed, for purposes of such
subsection, to be the valuation date of the plan for the
current plan year and the plan's adjusted funding target
attainment percentage shall be conclusively presumed to be
less than 60 percent as of such first day.
``(3) Presumption of underfunding after 4th month for
nearly underfunded plans.--In any case in which--
``(A) a benefit limitation under subsection (b), (c), (d),
or (e) did not apply to a plan with respect to the plan year
preceding the current plan year, but the adjusted funding
target attainment percentage of the plan for such preceding
plan year was not more than 10 percentage points greater than
the percentage which would have caused such subsection to
apply to the plan with respect to such preceding plan year,
and
``(B) as of the first day of the 4th month of the current
plan year, the enrolled actuary of the plan has not certified
the actual adjusted funding target attainment percentage of
the plan for the current plan year,
until the enrolled actuary so certifies, such first day shall
be deemed, for purposes of such subsection, to be the
valuation date of the plan for the current plan year and the
adjusted funding target attainment percentage of the plan as
of such first day shall, for purposes of such subsection, be
presumed to be equal to 10 percentage points less than the
adjusted funding target attainment percentage of the plan for
such preceding plan year.
``(i) Treatment of Plan as of Close of Prohibited or
Cessation Period.--For purposes of applying this title--
``(1) Operation of plan after period.--Unless the plan
provides otherwise, payments and accruals will resume
effective as of the day following the close of the period for
which any limitation of payment or accrual of benefits under
subsection (d) or (e) applies.
``(2) Treatment of affected benefits.--Nothing in this
subsection shall be construed as affecting the plan's
treatment of benefits which would have been paid or accrued
but for this section.
``(j) Terms Relating to Funding Target Attainment
Percentage.--For purposes of this section--
``(1) In general.--The term `funding target attainment
percentage' has the same meaning given such term by section
430(d)(2).
``(2) Adjusted funding target attainment percentage.--The
term `adjusted funding target attainment percentage' means
the funding target attainment percentage which is determined
under paragraph (1) by increasing each of the amounts under
subparagraphs (A) and (B) of section 430(d)(2) by the
aggregate amount of purchases of annuities for employees
other than highly compensated employees (as defined in
section 414(q)) which were made by the plan during the
preceding 2 plan years.
``(3) Application to plans which are fully funded without
regard to reductions for funding balances.--
``(A) In general.--In the case of a plan for any plan year,
if the funding target attainment percentage is 100 percent or
more (determined without regard to this paragraph and without
regard to the reduction in the value of assets under section
430(f)(4)(A)), the funding target attainment percentage for
purposes of paragraph (1) shall be determined without regard
to such reduction.
``(B) Transition rule.--Subparagraph (A) shall be applied
to plan years beginning after 2007 and before 2011 by
substituting for `100 percent' the applicable percentage
determined in accordance with the following table:
``In the case of a plan year beginning in cThe applicable percentage is
2008..............................................................92
2009..............................................................94
2010..............................................................96.
``(C) Limitation.--Subparagraph (B) shall not apply with
respect to any plan year after
[[Page H6060]]
2008 unless the funding target attainment percentage
(determined without regard to this paragraph) of the plan for
each preceding plan year after 2007 was not less than the
applicable percentage with respect to such preceding plan
year determined under subparagraph (B).
``(k) Special Rule for 2008.--For purposes of this section,
in the case of plan years beginning in 2008, the funding
target attainment percentage for the preceding plan year may
be determined using such methods of estimation as the
Secretary may provide.''.
(2) Clerical amendment.--The table of parts for subchapter
D of chapter 1 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new item:
``Part III--Rules Relating to Minimum Funding Standards and Benefit
Limitations''.
(b) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to plan years beginning after December 31, 2007.
(2) Collective bargaining exception.--In the case of a plan
maintained pursuant to 1 or more collective bargaining
agreements between employee representatives and 1 or more
employers ratified before January 1, 2008, the amendments
made by this section shall not apply to plan years beginning
before the earlier of--
(A) the later of--
(i) the date on which the last collective bargaining
agreement relating to the plan terminates (determined without
regard to any extension thereof agreed to after the date of
the enactment of this Act), or
(ii) the first day of the first plan year to which the
amendments made by this subsection would (but for this
subparagraph) apply, or
(B) January 1, 2010.
For purposes of subparagraph (A)(i), any plan amendment made
pursuant to a collective bargaining agreement relating to the
plan which amends the plan solely to conform to any
requirement added by this section shall not be treated as a
termination of such collective bargaining agreement.
SEC. 114. TECHNICAL AND CONFORMING AMENDMENTS.
(a) Amendments Related to Qualification Requirements.--
(1) Section 401(a)(29) of the Internal Revenue Code of 1986
is amended to read as follows:
``(29) Benefit limitations on plans in at-risk status.--In
the case of a defined benefit plan (other than a
multiemployer plan) to which the requirements of section 412
apply, the trust of which the plan is a part shall not
constitute a qualified trust under this subsection unless the
plan meets the requirements of section 436.''.
(2) Section 401(a)(32) of such Code is amended--
(A) in subparagraph (A), by striking ``412(m)(5)'' each
place it appears and inserting ``section 430(j)(4)'', and
(B) in subparagraph (C), by striking ``section 412(m)'' and
inserting ``section 430(j)''.
(3) Section 401(a)(33) of such Code is amended--
(A) in subparagraph (B)(i), by striking ``funded current
liability percentage (within the meaning of section
412(l)(8))'' and inserting ``funding target attainment
percentage (as defined in section 430(d)(2))'',
(B) in subparagraph (B)(iii), by striking ``subsection
412(c)(8)'' and inserting ``section 412(c)(2)'', and
(C) in subparagraph (D), by striking ``section 412(c)(11)
(without regard to subparagraph (B) thereof)'' and inserting
``section 412(b)(2) (without regard to subparagraph (B)
thereof)''.
(b) Vesting Rules.--Section 411 of such Code is amended--
(1) by striking ``section 412(c)(8)'' in subsection
(a)(3)(C) and inserting ``section 412(c)(2)'',
(2) in subsection (b)(1)(F)--
(A) by striking ``paragraphs (2) and (3) of section
412(i)'' in clause (ii) and inserting ``subparagraphs (B) and
(C) of section 412(e)(3)'', and
(B) by striking ``paragraphs (4), (5), and (6) of section
412(i)'' and inserting ``subparagraphs (D), (E), and (F) of
section 412(e)(3)'', and
(3) by striking ``section 412(c)(8)'' in subsection
(d)(6)(A) and inserting ``section 412(e)(2)''.
(c) Mergers and Consolidations of Plans.--Subclause (I) of
section 414(l)(2)(B)(i) of such Code is amended to read as
follows:
``(I) the amount determined under section 431(c)(6)(A)(i)
in the case of a multiemployer plan (and the sum of the
funding shortfall and target normal cost determined under
section 430 in the case of any other plan), over''.
(d) Transfer of Excess Pension Assets to Retiree Health
Accounts.--
(1) Section 420(e)(2) of such Code is amended to read as
follows:
``(2) Excess pension assets.--The term `excess pension
assets' means the excess (if any) of--
``(A) the lesser of--
``(i) the fair market value of the plan's assets (reduced
by the prefunding balance and funding standard carryover
balance determined under section 430(f)), or
``(ii) the value of plan assets as determined under section
430(g)(3) after reduction under section 430(f), over
``(B) 125 percent of the sum of the funding shortfall and
the target normal cost determined under section 430 for such
plan year.''.
(2) Section 420(e)(4) of such Code is amended to read as
follows:
``(4) Coordination with section 430.--In the case of a
qualified transfer, any assets so transferred shall not, for
purposes of this section and section 430, be treated as
assets in the plan.''.
(e) Excise Taxes.--
(1) In general.--Subsections (a) and (b) of section 4971 of
such Code are amended to read as follows:
``(a) Initial Tax.--If at any time during any taxable year
an employer maintains a plan to which section 412 applies,
there is hereby imposed for the taxable year a tax equal to--
``(1) in the case of a single-employer plan, 10 percent of
the aggregate unpaid minimum required contributions for all
plan years remaining unpaid as of the end of any plan year
ending with or within the taxable year, and
``(2) in the case of a multiemployer plan, 5 percent of the
accumulated funding deficiency determined under section 431
as of the end of any plan year ending with or within the
taxable year.
``(b) Additional Tax.--If--
``(1) a tax is imposed under subsection (a)(1) on any
unpaid required minimum contribution and such amount remains
unpaid as of the close of the taxable period, or
``(2) a tax is imposed under subsection (a)(2) on any
accumulated funding deficiency and the accumulated funding
deficiency is not corrected within the taxable period,
there is hereby imposed a tax equal to 100 percent of the
unpaid minimum required contribution or accumulated funding
deficiency, whichever is applicable, to the extent not so
paid or corrected.''.
(2) Section 4971(c) of such Code is amended--
(A) by striking ``the last two sentences of section
412(a)'' in paragraph (1) and inserting ``section 431'', and
(B) by adding at the end the following new paragraph:
``(4) Unpaid minimum required contribution.--
``(A) In general.--The term `unpaid minimum required
contribution' means, with respect to any plan year, any
minimum required contribution under section 430 for the plan
year which is not paid on or before the due date (as
determined under section 430(j)(1)) for the plan year.
``(B) Ordering rule.--Any payment to or under a plan for
any plan year shall be allocated first to unpaid minimum
required contributions for all preceding plan years on a
first-in, first-out basis and then to the minimum required
contribution under section 430 for the plan year.''.
(3) Section 4971(e)(1) of such Code is amended by striking
``section 412(b)(3)(A)'' and inserting ``section
412(a)(1)(A)''.
(4) Section 4971(f)(1) of such Code is amended--
(A) by striking ``section 412(m)(5)'' and inserting
``section 430(j)(4)'', and
(B) by striking ``section 412(m)'' and inserting ``section
430(j)''.
(5) Section 4972(c)(7) of such Code is amended by striking
``except to the extent that such contributions exceed the
full-funding limitation (as defined in section 412(c)(7),
determined without regard to subparagraph (A)(i)(I)
thereof)'' and inserting ``except, in the case of a
multiemployer plan, to the extent that such contributions
exceed the full-funding limitation (as defined in section
431(c)(6))''.
(f) Reporting Requirements.--Section 6059(b) of such Code
is amended--
(1) by striking ``the accumulated funding deficiency (as
defined in section 412(a))'' in paragraph (2) and inserting
``the minimum required contribution determined under section
430, or the accumulated funding deficiency determined under
section 431,'', and
(2) by striking paragraph (3)(B) and inserting:
``(B) the requirements for reasonable actuarial assumptions
under section 430(h)(1) or 431(c)(3), whichever are
applicable, have been complied with.''.
SEC. 115. MODIFICATION OF TRANSITION RULE TO PENSION FUNDING
REQUIREMENTS.
(a) In General.--In the case of a plan that--
(1) was not required to pay a variable rate premium for the
plan year beginning in 1996,
(2) has not, in any plan year beginning after 1995, merged
with another plan (other than a plan sponsored by an employer
that was in 1996 within the controlled group of the plan
sponsor); and
(3) is sponsored by a company that is engaged primarily in
the interurban or interstate passenger bus service,
the rules described in subsection (b) shall apply for any
plan year beginning after December 31, 2007.
(b) Modified Rules.--The rules described in this subsection
are as follows:
(1) For purposes of section 430(j)(3) of the Internal
Revenue Code of 1986 and section 303(j)(3) of the Employee
Retirement Income Security Act of 1974, the plan shall be
treated as not having a funding shortfall for any plan year.
(2) For purposes of--
(A) determining unfunded vested benefits under section
4006(a)(3)(E)(iii) of such Act, and
(B) determining any present value or making any computation
under section 412 of such Code or section 302 of such Act,
[[Page H6061]]
the mortality table shall be the mortality table used by the
plan.
(3) Section 430(c)(5)(B) of such Code and section
303(c)(5)(B) of such Act (relating to phase-in of funding
target for exemption from new shortfall amortization base)
shall each be applied by substituting ``2012'' for ``2011''
therein and by substituting for the table therein the
following:
In the case of a plan year beginning in caThe applicable percentage is:
2008 90 percent
2009 92 percent
2010 94 percent
2011 96 percent.
(c) Definitions.--Any term used in this section which is
also used in section 430 of such Code or section 303 of such
Act shall have the meaning provided such term in such
section. If the same term has a different meaning in such
Code and such Act, such term shall, for purposes of this
section, have the meaning provided by such Code when applied
with respect to such Code and the meaning provided by such
Act when applied with respect to such Act.
(d) Special Rule for 2006 and 2007.--
(1) In general.--Section 769(c)(3) of the Retirement
Protection Act of 1994, as added by section 201 of the
Pension Funding Equity Act of 2004, is amended by striking
``and 2005'' and inserting ``, 2005, 2006, and 2007''.
(2) Effective date.--The amendment made by paragraph (1)
shall apply to plan years beginning after December 31, 2005.
(e) Conforming Amendment.--
(1) Section 769 of the Retirement Protection Act of 1994 is
amended by striking subsection (c).
(2) The amendment made by paragraph (1) shall take effect
on December 31, 2007, and shall apply to plan years beginning
after such date.
SEC. 116. RESTRICTIONS ON FUNDING OF NONQUALIFIED DEFERRED
COMPENSATION PLANS BY EMPLOYERS MAINTAINING
UNDERFUNDED OR TERMINATED SINGLE-EMPLOYER
PLANS.
(a) Amendments of Internal Revenue Code.--Subsection (b) of
section 409A of the Internal Revenue Code of 1986 (providing
rules relating to funding) is amended by redesignating
paragraphs (3) and (4) as paragraphs (4) and (5),
respectively, and by inserting after paragraph (2) the
following new paragraph:
``(3) Treatment of employer's defined benefit plan during
restricted period.--
``(A) In general.--If-
``(i) during any restricted period with respect to a
single-employer defined benefit plan, assets are set aside or
reserved (directly or indirectly) in a trust (or other
arrangement as determined by the Secretary) or transferred to
such a trust or other arrangement for purposes of paying
deferred compensation of an applicable covered employee under
a nonqualified deferred compensation plan of the plan sponsor
or member of a controlled group which includes the plan
sponsor, or
``(ii) a nonqualified deferred compensation plan of the
plan sponsor or member of a controlled group which includes
the plan sponsor provides that assets will become restricted
to the provision of benefits under the plan in connection
with such restricted period (or other similar financial
measure determined by the Secretary) with respect to the
defined benefit plan, or assets are so restricted,
such assets shall, for purposes of section 83, be treated as
property transferred in connection with the performance of
services whether or not such assets are available to satisfy
claims of general creditors. Clause (i) shall not apply with
respect to any assets which are so set aside before the
restricted period with respect to the defined benefit plan.
``(B) Restricted period.--For purposes of this section, the
term `restricted period' means, with respect to any plan
described in subparagraph (A)--
``(i) any period during which the plan is in at-risk status
(as defined in section 430(i));
``(ii) any period the plan sponsor is a debtor in a case
under title 11, United States Code, or similar Federal or
State law, and
``(iii) the 12-month period beginning on the date which is
6 months before the termination date of the plan if, as of
the termination date, the plan is not sufficient for benefit
liabilities (within the meaning of section 4041 of the
Employee Retirement Income Security Act of 1974).
``(C) Special rule for payment of taxes on deferred
compensation included in income.--If an employer provides
directly or indirectly for the payment of any Federal, State,
or local income taxes with respect to any compensation
required to be included in gross income by reason of this
paragraph--
``(i) interest shall be imposed under subsection
(a)(1)(B)(i)(I) on the amount of such payment in the same
manner as if such payment was part of the deferred
compensation to which it relates,
``(ii) such payment shall be taken into account in
determining the amount of the additional tax under subsection
(a)(1)(B)(i)(II) in the same manner as if such payment was
part of the deferred compensation to which it relates, and
``(iii) no deduction shall be allowed under this title with
respect to such payment.
``(D) Other definitions.--For purposes of this section--
``(i) Applicable covered employee.--The term `applicable
covered employee' means any--
``(I) covered employee of a plan sponsor,
``(II) covered employee of a member of a controlled group
which includes the plan sponsor, and
``(III) former employee who was a covered employee at the
time of termination of employment with the plan sponsor or a
member of a controlled group which includes the plan sponsor.
``(ii) Covered employee.--The term `covered employee' means
an individual described in section 162(m)(3) or an individual
subject to the requirements of section 16(a) of the
Securities Exchange Act of 1934.''.
(b) Conforming Amendments.--Paragraphs (4) and (5) of
section 409A(b) of such Code, as redesignated by subsection
(a) of this subsection, are each amended by striking
``paragraph (1) or (2)'' each place it appears and inserting
``paragraph (1), (2), or (3)''.
(c) Effective Date.--The amendments made by this section
shall apply to transfers or other reservation of assets after
the date of the enactment of this Act.
TITLE II--FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS AND
RELATED PROVISIONS
Subtitle A--Amendments to Employee Retirement Income Security Act of
1974
SEC. 201. FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT
PLANS.
(a) In General.--Part 3 of subtitle B of title I of the
Employee Retirement Income Security Act of 1974 (as amended
by this Act) is amended by inserting after section 303 the
following new section:
``MINIMUM FUNDING STANDARDS FOR MULTIEMPLOYER PLANS
``Sec. 304. (a) In General.--For purposes of section 302,
the accumulated funding deficiency of a multiemployer plan
for any plan year is--
``(1) except as provided in paragraph (2), the amount,
determined as of the end of the plan year, equal to the
excess (if any) of the total charges to the funding standard
account of the plan for all plan years (beginning with the
first plan year for which this part applies to the plan) over
the total credits to such account for such years, and
``(2) if the multiemployer plan is in reorganization for
any plan year, the accumulated funding deficiency of the plan
determined under section 4243.
``(b) Funding Standard Account.--
``(1) Account required.--Each multiemployer plan to which
this part applies shall establish and maintain a funding
standard account. Such account shall be credited and charged
solely as provided in this section.
``(2) Charges to account.--For a plan year, the funding
standard account shall be charged with the sum of--
``(A) the normal cost of the plan for the plan year,
``(B) the amounts necessary to amortize in equal annual
installments (until fully amortized)--
``(i) in the case of a plan which comes into existence on
or after January 1, 2008, the unfunded past service liability
under the plan on the first day of the first plan year to
which this section applies, over a period of 15 plan years,
``(ii) separately, with respect to each plan year, the net
increase (if any) in unfunded past service liability under
the plan arising from plan amendments adopted in such year,
over a period of 15 plan years,
``(iii) separately, with respect to each plan year, the net
experience loss (if any) under the plan, over a period of 15
plan years, and
``(iv) separately, with respect to each plan year, the net
loss (if any) resulting from changes in actuarial assumptions
used under the plan, over a period of 15 plan years,
``(C) the amount necessary to amortize each waived funding
deficiency (within the meaning of section 302(c)(3)) for each
prior plan year in equal annual installments (until fully
amortized) over a period of 15 plan years,
``(D) the amount necessary to amortize in equal annual
installments (until fully amortized) over a period of 5 plan
years any amount credited to the funding standard account
under section 302(b)(3)(D) (as in effect on the day before
the date of the enactment of the Pension Protection Act of
2006), and
``(E) the amount necessary to amortize in equal annual
installments (until fully amortized) over a period of 20
years the contributions which would be required to be made
under the plan but for the provisions of section
302(c)(7)(A)(i)(I) (as in effect on the day before the date
of the enactment of the Pension Protection Act of 2006).
``(3) Credits to account.--For a plan year, the funding
standard account shall be credited with the sum of--
``(A) the amount considered contributed by the employer to
or under the plan for the plan year,
``(B) the amount necessary to amortize in equal annual
installments (until fully amortized)--
``(i) separately, with respect to each plan year, the net
decrease (if any) in unfunded past service liability under
the plan arising from plan amendments adopted in such year,
over a period of 15 plan years,
``(ii) separately, with respect to each plan year, the net
experience gain (if any) under the plan, over a period of 15
plan years, and
``(iii) separately, with respect to each plan year, the net
gain (if any) resulting from changes in actuarial assumptions
used under the plan, over a period of 15 plan years,
[[Page H6062]]
``(C) the amount of the waived funding deficiency (within
the meaning of section 302(c)(3)) for the plan year, and
``(D) in the case of a plan year for which the accumulated
funding deficiency is determined under the funding standard
account if such plan year follows a plan year for which such
deficiency was determined under the alternative minimum
funding standard under section 305 (as in effect on the day
before the date of the enactment of the Pension Protection
Act of 2006), the excess (if any) of any debit balance in the
funding standard account (determined without regard to this
subparagraph) over any debit balance in the alternative
minimum funding standard account.
``(4) Special rule for amounts first amortized in plan
years before 2008.--In the case of any amount amortized under
section 302(b) (as in effect on the day before the date of
the enactment of the Pension Protection Act of 2006) over any
period beginning with a plan year beginning before 2008, in
lieu of the amortization described in paragraphs (2)(B) and
(3)(B), such amount shall continue to be amortized under such
section as so in effect.
``(5) Combining and offsetting amounts to be amortized.--
Under regulations prescribed by the Secretary of the
Treasury, amounts required to be amortized under paragraph
(2) or paragraph (3), as the case may be--
``(A) may be combined into one amount under such paragraph
to be amortized over a period determined on the basis of the
remaining amortization period for all items entering into
such combined amount, and
``(B) may be offset against amounts required to be
amortized under the other such paragraph, with the resulting
amount to be amortized over a period determined on the basis
of the remaining amortization periods for all items entering
into whichever of the two amounts being offset is the
greater.
``(6) Interest.--The funding standard account (and items
therein) shall be charged or credited (as determined under
regulations prescribed by the Secretary of the Treasury) with
interest at the appropriate rate consistent with the rate or
rates of interest used under the plan to determine costs.
``(7) Special rules relating to charges and credits to
funding standard account.--For purposes of this part--
``(A) Withdrawal liability.--Any amount received by a
multiemployer plan in payment of all or part of an employer's
withdrawal liability under part 1 of subtitle E of title IV
shall be considered an amount contributed by the employer to
or under the plan. The Secretary of the Treasury may
prescribe by regulation additional charges and credits to a
multiemployer plan's funding standard account to the extent
necessary to prevent withdrawal liability payments from being
unduly reflected as advance funding for plan liabilities.
``(B) Adjustments when a multiemployer plan leaves
reorganization.--If a multiemployer plan is not in
reorganization in the plan year but was in reorganization in
the immediately preceding plan year, any balance in the
funding standard account at the close of such immediately
preceding plan year--
``(i) shall be eliminated by an offsetting credit or charge
(as the case may be), but
``(ii) shall be taken into account in subsequent plan years
by being amortized in equal annual installments (until fully
amortized) over 30 plan years.
The preceding sentence shall not apply to the extent of any
accumulated funding deficiency under section 4243(a) as of
the end of the last plan year that the plan was in
reorganization.
``(C) Plan payments to supplemental program or withdrawal
liability payment fund.--Any amount paid by a plan during a
plan year to the Pension Benefit Guaranty Corporation
pursuant to section 4222 of this Act or to a fund exempt
under section 501(c)(22) of the Internal Revenue Code of 1986
pursuant to section 4223 of this Act shall reduce the amount
of contributions considered received by the plan for the plan
year.
``(D) Interim withdrawal liability payments.--Any amount
paid by an employer pending a final determination of the
employer's withdrawal liability under part 1 of subtitle E of
title IV and subsequently refunded to the employer by the
plan shall be charged to the funding standard account in
accordance with regulations prescribed by the Secretary of
the Treasury.
``(E) Election for deferral of charge for portion of net
experience loss.--If an election is in effect under section
302(b)(7)(F) (as in effect on the day before the date of the
enactment of the Pension Protection Act of 2006) for any plan
year, the funding standard account shall be charged in the
plan year to which the portion of the net experience loss
deferred by such election was deferred with the amount so
deferred (and paragraph (2)(B)(iii) shall not apply to the
amount so charged).
``(F) Financial assistance.--Any amount of any financial
assistance from the Pension Benefit Guaranty Corporation to
any plan, and any repayment of such amount, shall be taken
into account under this section and section 302 in such
manner as is determined by the Secretary of the Treasury.
``(G) Short-term benefits.--To the extent that any plan
amendment increases the unfunded past service liability under
the plan by reason of an increase in benefits which are not
payable as a life annuity but are payable under the terms of
the plan for a period that does not exceed 14 years from the
effective date of the amendment, paragraph (2)(B)(ii) shall
be applied separately with respect to such increase in
unfunded past service liability by substituting the number of
years of the period during which such benefits are payable
for `15'.
``(c) Additional Rules.--
``(1) Determinations to be made under funding method.--For
purposes of this part, normal costs, accrued liability, past
service liabilities, and experience gains and losses shall be
determined under the funding method used to determine costs
under the plan.
``(2) Valuation of assets.--
``(A) In general.--For purposes of this part, the value of
the plan's assets shall be determined on the basis of any
reasonable actuarial method of valuation which takes into
account fair market value and which is permitted under
regulations prescribed by the Secretary of the Treasury.
``(B) Election with respect to bonds.--The value of a bond
or other evidence of indebtedness which is not in default as
to principal or interest may, at the election of the plan
administrator, be determined on an amortized basis running
from initial cost at purchase to par value at maturity or
earliest call date. Any election under this subparagraph
shall be made at such time and in such manner as the
Secretary of the Treasury shall by regulations provide, shall
apply to all such evidences of indebtedness, and may be
revoked only with the consent of such Secretary.
``(3) Actuarial assumptions must be reasonable.--For
purposes of this section, all costs, liabilities, rates of
interest, and other factors under the plan shall be
determined on the basis of actuarial assumptions and
methods--
``(A) each of which is reasonable (taking into account the
experience of the plan and reasonable expectations), and
``(B) which, in combination, offer the actuary's best
estimate of anticipated experience under the plan.
``(4) Treatment of certain changes as experience gain or
loss.--For purposes of this section, if--
``(A) a change in benefits under the Social Security Act or
in other retirement benefits created under Federal or State
law, or
``(B) a change in the definition of the term `wages' under
section 3121 of the Internal Revenue Code of 1986, or a
change in the amount of such wages taken into account under
regulations prescribed for purposes of section 401(a)(5) of
such Code,
results in an increase or decrease in accrued liability under
a plan, such increase or decrease shall be treated as an
experience loss or gain.
``(5) Full funding.--If, as of the close of a plan year, a
plan would (without regard to this paragraph) have an
accumulated funding deficiency in excess of the full funding
limitation--
``(A) the funding standard account shall be credited with
the amount of such excess, and
``(B) all amounts described in subparagraphs (B), (C), and
(D) of subsection (b) (2) and subparagraph (B) of subsection
(b)(3) which are required to be amortized shall be considered
fully amortized for purposes of such subparagraphs.
``(6) Full-funding limitation.--
``(A) In general.--For purposes of paragraph (5), the term
`full-funding limitation' means the excess (if any) of--
``(i) the accrued liability (including normal cost) under
the plan (determined under the entry age normal funding
method if such accrued liability cannot be directly
calculated under the funding method used for the plan), over
``(ii) the lesser of--
``(I) the fair market value of the plan's assets, or
``(II) the value of such assets determined under paragraph
(2).
``(B) Minimum amount.--
``(i) In general.--In no event shall the full-funding
limitation determined under subparagraph (A) be less than the
excess (if any) of--
``(I) 90 percent of the current liability of the plan
(including the expected increase in current liability due to
benefits accruing during the plan year), over
``(II) the value of the plan's assets determined under
paragraph (2).
``(ii) Assets.--For purposes of clause (i), assets shall
not be reduced by any credit balance in the funding standard
account.
``(C) Full funding limitation.--For purposes of this
paragraph, unless otherwise provided by the plan, the accrued
liability under a multiemployer plan shall not include
benefits which are not nonforfeitable under the plan after
the termination of the plan (taking into consideration
section 411(d)(3) of the Internal Revenue Code of 1986).
``(D) Current liability.--For purposes of this paragraph--
``(i) In general.--The term `current liability' means all
liabilities to employees and their beneficiaries under the
plan.
``(ii) Treatment of unpredictable contingent event
benefits.--For purposes of clause (i), any benefit contingent
on an event other than--
``(I) age, service, compensation, death, or disability, or
``(II) an event which is reasonably and reliably
predictable (as determined by the Secretary of the Treasury),
[[Page H6063]]
shall not be taken into account until the event on which the
benefit is contingent occurs.
``(iii) Interest rate used.--The rate of interest used to
determine current liability under this paragraph shall be the
rate of interest determined under subparagraph (E).
``(iv) Mortality tables.--
``(I) Commissioners' standard table.--In the case of plan
years beginning before the first plan year to which the first
tables prescribed under subclause (II) apply, the mortality
table used in determining current liability under this
paragraph shall be the table prescribed by the Secretary of
the Treasury which is based on the prevailing commissioners'
standard table (described in section 807(d)(5)(A) of the
Internal Revenue Code of 1986) used to determine reserves for
group annuity contracts issued on January 1, 1993.
``(II) Secretarial authority.--The Secretary of the
Treasury may by regulation prescribe for plan years beginning
after December 31, 1999, mortality tables to be used in
determining current liability under this subsection. Such
tables shall be based upon the actual experience of pension
plans and projected trends in such experience. In prescribing
such tables, such Secretary shall take into account results
of available independent studies of mortality of individuals
covered by pension plans.
``(v) Separate mortality tables for the disabled.--
Notwithstanding clause (iv)--
``(I) In general.--The Secretary of the Treasury shall
establish mortality tables which may be used (in lieu of the
tables under clause (iv)) to determine current liability
under this subsection for individuals who are entitled to
benefits under the plan on account of disability. Such
Secretary shall establish separate tables for individuals
whose disabilities occur in plan years beginning before
January 1, 1995, and for individuals whose disabilities occur
in plan years beginning on or after such date.
``(II) Special rule for disabilities occurring after
1994.--In the case of disabilities occurring in plan years
beginning after December 31, 1994, the tables under subclause
(I) shall apply only with respect to individuals described in
such subclause who are disabled within the meaning of title
II of the Social Security Act and the regulations thereunder.
``(vi) Periodic review.--The Secretary of the Treasury
shall periodically (at least every 5 years) review any tables
in effect under this subparagraph and shall, to the extent
such Secretary determines necessary, by regulation update the
tables to reflect the actual experience of pension plans and
projected trends in such experience.
``(E) Required change of interest rate.--For purposes of
determining a plan's current liability for purposes of this
paragraph--
``(i) In general.--If any rate of interest used under the
plan under subsection (b)(6) to determine cost is not within
the permissible range, the plan shall establish a new rate of
interest within the permissible range.
``(ii) Permissible range.--For purposes of this
subparagraph--
``(I) In general.--Except as provided in subclause (II),
the term `permissible range' means a rate of interest which
is not more than 5 percent above, and not more than 10
percent below, the weighted average of the rates of interest
on 30-year Treasury securities during the 4-year period
ending on the last day before the beginning of the plan year.
``(II) Secretarial authority.--If the Secretary of the
Treasury finds that the lowest rate of interest permissible
under subclause (I) is unreasonably high, such Secretary may
prescribe a lower rate of interest, except that such rate may
not be less than 80 percent of the average rate determined
under such subclause.
``(iii) Assumptions.--Notwithstanding paragraph (3)(A), the
interest rate used under the plan shall be--
``(I) determined without taking into account the experience
of the plan and reasonable expectations, but
``(II) consistent with the assumptions which reflect the
purchase rates which would be used by insurance companies to
satisfy the liabilities under the plan.
``(7) Annual valuation.--
``(A) In general.--For purposes of this section, a
determination of experience gains and losses and a valuation
of the plan's liability shall be made not less frequently
than once every year, except that such determination shall be
made more frequently to the extent required in particular
cases under regulations prescribed by the Secretary of the
Treasury.
``(B) Valuation date.--
``(i) Current year.--Except as provided in clause (ii), the
valuation referred to in subparagraph (A) shall be made as of
a date within the plan year to which the valuation refers or
within one month prior to the beginning of such year.
``(ii) Use of prior year valuation.--The valuation referred
to in subparagraph (A) may be made as of a date within the
plan year prior to the year to which the valuation refers if,
as of such date, the value of the assets of the plan are not
less than 100 percent of the plan's current liability (as
defined in paragraph (6)(D) without regard to clause (iv)
thereof).
``(iii) Adjustments.--Information under clause (ii) shall,
in accordance with regulations, be actuarially adjusted to
reflect significant differences in participants.
``(iv) Limitation.--A change in funding method to use a
prior year valuation, as provided in clause (ii), may not be
made unless as of the valuation date within the prior plan
year, the value of the assets of the plan are not less than
125 percent of the plan's current liability (as defined in
paragraph (6)(D) without regard to clause (iv) thereof).
``(8) Time when certain contributions deemed made.--For
purposes of this section, any contributions for a plan year
made by an employer after the last day of such plan year, but
not later than two and one-half months after such day, shall
be deemed to have been made on such last day. For purposes of
this subparagraph, such two and one-half month period may be
extended for not more than six months under regulations
prescribed by the Secretary of the Treasury.
``(d) Extension of Amortization Periods for Multiemployer
Plans.--
``(1) Automatic extension upon application by certain
plans.--
``(A) In general.--If the plan sponsor of a multiemployer
plan--
``(i) submits to the Secretary of the Treasury an
application for an extension of the period of years required
to amortize any unfunded liability described in any clause of
subsection (b)(2)(B) or described in subsection (b)(4), and
``(ii) includes with the application a certification by the
plan's actuary described in subparagraph (B),
the Secretary of the Treasury shall extend the amortization
period for the period of time (not in excess of 5 years)
specified in the application. Such extension shall be in
addition to any extension under paragraph (2).
``(B) Criteria.--A certification with respect to a
multiemployer plan is described in this subparagraph if the
plan's actuary certifies that, based on reasonable
assumptions--
``(i) absent the extension under subparagraph (A), the plan
would have an accumulated funding deficiency in the current
plan year or any of the 9 succeeding plan years,
``(ii) the plan sponsor has adopted a plan to improve the
plan's funding status,
``(iii) the plan is projected to have sufficient assets to
timely pay expected benefits and anticipated expenditures
over the amortization period as extended, and
``(iv) the notice required under paragraph (3)(A) has been
provided.
``(C) Termination.--The preceding provisions of this
paragraph shall not apply with respect to any application
submitted after December 31, 2014.
``(2) Alternative extension.--
``(A) In general.--If the plan sponsor of a multiemployer
plan submits to the Secretary of the Treasury an application
for an extension of the period of years required to amortize
any unfunded liability described in any clause of subsection
(b)(2)(B) or described in subsection (b)(4), the Secretary of
the Treasury may extend the amortization period for a period
of time (not in excess of 10 years reduced by the number of
years of any extension under paragraph (1) with respect to
such unfunded liability) if the Secretary of the Treasury
makes the determination described in subparagraph (B). Such
extension shall be in addition to any extension under
paragraph (1).
``(B) Determination.--The Secretary of the Treasury may
grant an extension under subparagraph (A) if such Secretary
determines that--
``(i) such extension would carry out the purposes of this
Act and would provide adequate protection for participants
under the plan and their beneficiaries, and
``(ii) the failure to permit such extension would--
``(I) result in a substantial risk to the voluntary
continuation of the plan, or a substantial curtailment of
pension benefit levels or employee compensation, and
``(II) be adverse to the interests of plan participants in
the aggregate.
``(C) Action by secretary of the treasury.--The Secretary
of the Treasury shall act upon any application for an
extension under this paragraph within 180 days of the
submission of such application. If such Secretary rejects the
application for an extension under this paragraph, such
Secretary shall provide notice to the plan detailing the
specific reasons for the rejection, including references to
the criteria set forth above.
``(3) Advance notice.--
``(A) In general.--The Secretary of the Treasury shall,
before granting an extension under this subsection, require
each applicant to provide evidence satisfactory to such
Secretary that the applicant has provided notice of the
filing of the application for such extension to each affected
party (as defined in section 4001(a)(21)) with respect to the
affected plan. Such notice shall include a description of the
extent to which the plan is funded for benefits which are
guaranteed under title IV and for benefit liabilities.
``(B) Consideration of relevant information.--The Secretary
of the Treasury shall consider any relevant information
provided by a person to whom notice was given under paragraph
(1).''.
(b) Shortfall Funding Method.--
(1) In general.--A multiemployer plan meeting the criteria
of paragraph (2) may adopt, use, or cease using, the
shortfall funding method and such adoption, use, or cessation
of use of such method, shall be deemed approved by the
Secretary of the Treasury under section 302(d)(1) of the
Employee Retirement Income Security Act of 1974 and section
412(d)(1) of the Internal Revenue Code of 1986.
[[Page H6064]]
(2) Criteria.--A multiemployer pension plan meets the
criteria of this clause if--
(A) the plan has not used the shortfall funding method
during the 5-year period ending on the day before the date
the plan is to use the method under paragraph (1); and
(B) the plan is not operating under an amortization period
extension under section 304(d) of such Act and did not
operate under such an extension during such 5-year period.
(3) Shortfall funding method defined.--For purposes of this
subsection, the term ``shortfall funding method'' means the
shortfall funding method described in Treasury Regulations
section 1.412(c)(1)-2 (26 C.F.R. 1.412(c)(1)-2).
(4) Benefit restrictions to apply.--The benefit
restrictions under section 302(c)(7) of such Act and section
412(c)(7) of such Code shall apply during any period a
multiemployer plan is on the shortfall funding method
pursuant to this subsection.
(5) Use of shortfall method not to preclude other
options.--Nothing in this subsection shall be construed to
affect a multiemployer plan's ability to adopt the shortfall
funding method with the Secretary's permission under
otherwise applicable regulations or to affect a multiemployer
plan's right to change funding methods, with or without the
Secretary's consent, as provided in applicable rules and
regulations.
(c) Conforming Amendments.--
(1) Section 301 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1081) is amended by striking
subsection (d).
(2) The table of contents in section 1 of such Act (as
amended by this Act) is amended by inserting after the item
relating to section 303 the following new item:
``Sec. 304. Minimum funding standards for multiemployer plans.''.
(d) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to plan years beginning after 2007.
(2) Special rule for certain amortization extensions.--If
the Secretary of the Treasury grants an extension under
section 304 of the Employee Retirement Income Security Act of
1974 and section 412(e) of the Internal Revenue Code of 1986
with respect to any application filed with the Secretary of
the Treasury on or before June 30, 2005, the extension (and
any modification thereof) shall be applied and administered
under the rules of such sections as in effect before the
enactment of this Act, including the use of the rate of
interest determined under section 6621(b) of such Code.
SEC. 202. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS IN
ENDANGERED OR CRITICAL STATUS.
(a) In General.--Part 3 of subtitle B of title I of the
Employee Retirement Income Security Act of 1974 (as amended
by the preceding provisions of this Act) is amended by
inserting after section 304 the following new section:
``ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS IN ENDANGERED STATUS
OR CRITICAL STATUS
``Sec. 305. (a) General Rule.--For purposes of this part,
in the case of a multiemployer plan in effect on July 16,
2006--
``(1) if the plan is in endangered status--
``(A) the plan sponsor shall adopt and implement a funding
improvement plan in accordance with the requirements of
subsection (c), and
``(B) the requirements of subsection (d) shall apply during
the funding plan adoption period and the funding improvement
period, and
``(2) if the plan is in critical status--
``(A) the plan sponsor shall adopt and implement a
rehabilitation plan in accordance with the requirements of
subsection (e), and
``(B) the requirements of subsection (f) shall apply during
the rehabilitation plan adoption period and the
rehabilitation period.
``(b) Determination of Endangered and Critical Status.--For
purposes of this section--
``(1) Endangered status.--A multiemployer plan is in
endangered status for a plan year if, as determined by the
plan actuary under paragraph (3), the plan is not in critical
status for the plan year and, as of the beginning of the plan
year, either--
``(A) the plan's funded percentage for such plan year is
less than 80 percent, or
``(B) the plan has an accumulated funding deficiency for
such plan year, or is projected to have such an accumulated
funding deficiency for any of the 6 succeeding plan years,
taking into account any extension of amortization periods
under section 304(d).
For purposes of this section, a plan shall be treated as in
seriously endangered status for a plan year if the plan is
described in both subparagraphs (A) and (B).
``(2) Critical status.--A multiemployer plan is in critical
status for a plan year if, as determined by the plan actuary
under paragraph (3), the plan is described in 1 or more of
the following subparagraphs as of the beginning of the plan
year:
``(A) A plan is described in this subparagraph if--
``(i) the funded percentage of the plan is less than 65
percent, and
``(ii) the sum of--
``(I) the fair market value of plan assets, plus
``(II) the present value of the reasonably anticipated
employer contributions for the current plan year and each of
the 6 succeeding plan years, assuming that the terms of all
collective bargaining agreements pursuant to which the plan
is maintained for the current plan year continue in effect
for succeeding plan years,
is less than the present value of all nonforfeitable benefits
projected to be payable under the plan during the current
plan year and each of the 6 succeeding plan years (plus
administrative expenses for such plan years).
``(B) A plan is described in this subparagraph if--
``(i) the plan has an accumulated funding deficiency for
the current plan year, not taking into account any extension
of amortization periods under section 304(d), or
``(ii) the plan is projected to have an accumulated funding
deficiency for any of the 3 succeeding plan years (4
succeeding plan years if the funded percentage of the plan is
65 percent or less), not taking into account any extension of
amortization periods under section 304(d).
``(C) A plan is described in this subparagraph if--
``(i)(I) the plan's normal cost for the current plan year,
plus interest (determined at the rate used for determining
costs under the plan) for the current plan year on the amount
of unfunded benefit liabilities under the plan as of the last
date of the preceding plan year, exceeds
``(II) the present value of the reasonably anticipated
employer and employee contributions for the current plan
year,
``(ii) the present value, as of the beginning of the
current plan year, of nonforfeitable benefits of inactive
participants is greater than the present value of
nonforfeitable benefits of active participants, and
``(iii) the plan has an accumulated funding deficiency for
the current plan year, or is projected to have such a
deficiency for any of the 4 succeeding plan years, not taking
into account any extension of amortization periods under
section 304(d).
``(D) A plan is described in this subparagraph if the sum
of--
``(i) the fair market value of plan assets, plus
``(ii) the present value of the reasonably anticipated
employer contributions for the current plan year and each of
the 4 succeeding plan years, assuming that the terms of all
collective bargaining agreements pursuant to which the plan
is maintained for the current plan year continue in effect
for succeeding plan years,
is less than the present value of all benefits projected to
be payable under the plan during the current plan year and
each of the 4 succeeding plan years (plus administrative
expenses for such plan years).
``(3) Annual certification by plan actuary.--
``(A) In general.--Not later than the 90th day of each plan
year of a multiemployer plan, the plan actuary shall certify
to the Secretary of the Treasury and to the plan sponsor--
``(i) whether or not the plan is in endangered status for
such plan year and whether or not the plan is or will be in
critical status for such plan year, and
``(ii) in the case of a plan which is in a funding
improvement or rehabilitation period, whether or not the plan
is making the scheduled progress in meeting the requirements
of its funding improvement or rehabilitation plan.
``(B) Actuarial projections of assets and liabilities.--
``(i) In general.--In making the determinations and
projections under this subsection, the plan actuary shall
make projections required for the current and succeeding plan
years of the current value of the assets of the plan and the
present value of all liabilities to participants and
beneficiaries under the plan for the current plan year as of
the beginning of such year. The actuary's projections shall
be based on reasonable actuarial estimates, assumptions, and
methods that, except as provided in clause (iii), offer the
actuary's best estimate of anticipated experience under the
plan. The projected present value of liabilities as of the
beginning of such year shall be determined based on the most
recent of either--
``(I) the actuarial statement required under section 103(d)
with respect to the most recently filed annual report, or
``(II) the actuarial valuation for the preceding plan year.
``(ii) Determinations of future contributions.--Any
actuarial projection of plan assets shall assume--
``(I) reasonably anticipated employer contributions for the
current and succeeding plan years, assuming that the terms of
the one or more collective bargaining agreements pursuant to
which the plan is maintained for the current plan year
continue in effect for succeeding plan years, or
``(II) that employer contributions for the most recent plan
year will continue indefinitely, but only if the plan actuary
determines there have been no significant demographic changes
that would make such assumption unreasonable.
``(iii) Projected industry activity.--Any projection of
activity in the industry or industries covered by the plan,
including future covered employment and contribution levels,
shall be based on information provided by the plan sponsor,
which shall act reasonably and in good faith.
``(C) Penalty for failure to secure timely actuarial
certification.--Any failure of the plan's actuary to certify
the plan's status under this subsection by the date specified
in subparagraph (A) shall be treated for purposes of section
502(c)(2) as a failure or refusal by the plan administrator
to file the
[[Page H6065]]
annual report required to be filed with the Secretary under
section 101(b)(4).
``(D) Notice.--
``(i) In general.--In any case in which it is certified
under subparagraph (A) that a multiemployer plan is or will
be in endangered or critical status for a plan year, the plan
sponsor shall, not later than 30 days after the date of the
certification, provide notification of the endangered or
critical status to the participants and beneficiaries, the
bargaining parties, the Pension Benefit Guaranty Corporation,
and the Secretary.
``(ii) Plans in critical status.--If it is certified under
subparagraph (A) that a multiemployer plan is or will be in
critical status, the plan sponsor shall include in the notice
under clause (i) an explanation of the possibility that--
``(I) adjustable benefits (as defined in subsection (e)(8))
may be reduced, and
``(II) such reductions may apply to participants and
beneficiaries whose benefit commencement date is on or after
the date such notice is provided for the first plan year in
which the plan is in critical status.
``(iii) Model notice.--The Secretary shall prescribe a
model notice that a multiemployer plan may use to satisfy the
requirements under clause (ii).
``(c) Funding Improvement Plan Must Be Adopted for
Multiemployer Plans in Endangered Status.--
``(1) In general.--In any case in which a multiemployer
plan is in endangered status for a plan year, the plan
sponsor, in accordance with this subsection--
``(A) shall adopt a funding improvement plan not later than
240 days following the required date for the actuarial
certification of endangered status under subsection
(b)(3)(A), and
``(B) within 30 days after the adoption of the funding
improvement plan--
``(i) shall provide to the bargaining parties 1 or more
schedules showing revised benefit structures, revised
contribution structures, or both, which, if adopted, may
reasonably be expected to enable the multiemployer plan to
meet the applicable benchmarks in accordance with the funding
improvement plan, including--
``(I) one proposal for reductions in the amount of future
benefit accruals necessary to achieve the
applicable benchmarks, assuming no amendments increasing
contributions under the plan (other than amendments
increasing contributions necessary to achieve the
applicable benchmarks after amendments have reduced future
benefit accruals to the maximum extent permitted by law),
and
``(II) one proposal for increases in contributions under
the plan necessary to achieve the applicable benchmarks,
assuming no amendments reducing future benefit accruals under
the plan, and
``(ii) may, if the plan sponsor deems appropriate, prepare
and provide the bargaining parties with additional
information relating to contribution rates or benefit
reductions, alternative schedules, or other information
relevant to achieving the applicable benchmarks in accordance
with the funding improvement plan.
For purposes of this section, the term `applicable
benchmarks' means the requirements applicable to the
multiemployer plan under paragraph (3) (as modified by
paragraph (5)).
``(2) Exception for years after process begins.--Paragraph
(1) shall not apply to a plan year if such year is in a
funding plan adoption period or funding improvement period by
reason of the plan being in endangered status for a preceding
plan year. For purposes of this section, such preceding plan
year shall be the initial determination year with respect to
the funding improvement plan to which it relates.
``(3) Funding improvement plan.--For purposes of this
section--
``(A) In general.--A funding improvement plan is a plan
which consists of the actions, including options or a range
of options to be proposed to the bargaining parties,
formulated to provide, based on reasonably anticipated
experience and reasonable actuarial assumptions, for the
attainment by the plan during the funding improvement period
of the following requirements:
``(i) Increase in plan's funding percentage.--The plan's
funded percentage as of the close of the funding improvement
period equals or exceeds a percentage equal to the sum of--
``(I) such percentage as of the beginning of such period,
plus
``(II) 33 percent of the difference between 100 percent and
the percentage under subclause (I).
``(ii) Avoidance of accumulated funding deficiencies.--No
accumulated funding deficiency for any plan year during the
funding improvement period (taking into account any extension
of amortization periods under section 304(d)).
``(B) Seriously endangered plans.--In the case of a plan in
seriously endangered status, except as provided in paragraph
(5), subparagraph (A)(i)(II) shall be applied by substituting
`20 percent' for `33 percent'.
``(4) Funding improvement period.--For purposes of this
section--
``(A) In general.--The funding improvement period for any
funding improvement plan adopted pursuant to this subsection
is the 10-year period beginning on the first day of the first
plan year of the multiemployer plan beginning after the
earlier of--
``(i) the second anniversary of the date of the adoption of
the funding improvement plan, or
``(ii) the expiration of the collective bargaining
agreements in effect on the due date for the actuarial
certification of endangered status for the initial
determination year under subsection (b)(3)(A) and covering,
as of such due date, at least 75 percent of the active
participants in such multiemployer plan.
``(B) Seriously endangered plans.--In the case of a plan in
seriously endangered status, except as provided in paragraph
(5), subparagraph (A) shall be applied by substituting `15-
year period' for `10-year period'.
``(C) Coordination with changes in status.--
``(i) Plans no longer in endangered status.--If the plan's
actuary certifies under subsection (b)(3)(A) for a plan year
in any funding plan adoption period or funding improvement
period that the plan is no longer in endangered status and is
not in critical status, the funding plan adoption period or
funding improvement period, whichever is applicable, shall
end as of the close of the preceding plan year.
``(ii) Plans in critical status.--If the plan's actuary
certifies under subsection (b)(3)(A) for a plan year in any
funding plan adoption period or funding improvement period
that the plan is in critical status, the funding plan
adoption period or funding improvement period, whichever is
applicable, shall end as of the close of the plan year
preceding the first plan year in the rehabilitation period
with respect to such status.
``(D) Plans in endangered status at end of period.--If the
plan's actuary certifies under subsection (b)(3)(A) for the
first plan year following the close of the period described
in subparagraph (A) that the plan is in endangered status,
the provisions of this subsection and subsection (d) shall be
applied as if such first plan year were an initial
determination year, except that the plan may not be amended
in a manner inconsistent with the funding improvement plan in
effect for the preceding plan year until a new funding
improvement plan is adopted.
``(5) Special rules for seriously endangered plans more
than 70 percent funded.--
``(A) In general.--If the funded percentage of a plan in
seriously endangered status was more than 70 percent as of
the beginning of the initial determination year--
``(i) paragraphs (3)(B) and (4)(B) shall apply only if the
plan's actuary certifies, within 30 days after the
certification under subsection (b)(3)(A) for the initial
determination year, that, based on the terms of the plan and
the collective bargaining agreements in effect at the time of
such certification, the plan is not projected to meet the
requirements of paragraph (3)(A) (without regard to
paragraphs (3)(B) and (4)(B)), and
``(ii) if there is a certification under clause (i), the
plan may, in formulating its funding improvement plan, only
take into account the rules of paragraph (3)(B) and (4)(B)
for plan years in the funding improvement period beginning on
or before the date on which the last of the collective
bargaining agreements described in paragraph (4)(A)(ii)
expires.
``(B) Special rule after expiration of agreements.--
Notwithstanding subparagraph (A)(ii), if, for any plan year
ending after the date described in subparagraph (A)(ii), the
plan actuary certifies (at the time of the annual
certification under subsection (b)(3)(A) for such plan year)
that, based on the terms of the plan and collective
bargaining agreements in effect at the time of that annual
certification, the plan is not projected to be able to meet
the requirements of paragraph (3)(A) (without regard to
paragraphs (3)(B) and (4)(B)), paragraphs (3)(B) and (4)(B)
shall continue to apply for such year.
``(6) Updates to funding improvement plan and schedules.--
``(A) Funding improvement plan.--The plan sponsor shall
annually update the funding improvement plan and shall file
the update with the plan's annual report under section 104.
``(B) Schedules.--The plan sponsor shall annually update
any schedule of contribution rates provided under this
subsection to reflect the experience of the plan.
``(C) Duration of schedule.--A schedule of contribution
rates provided by the plan sponsor and relied upon by
bargaining parties in negotiating a collective bargaining
agreement shall remain in effect for the duration of that
collective bargaining agreement.
``(7) Imposition of default schedule where failure to adopt
funding improvement plan.--
``(A) In general.--If--
``(i) a collective bargaining agreement providing for
contributions under a multiemployer plan that was in effect
at the time the plan entered endangered status expires, and
``(ii) after receiving one or more schedules from the plan
sponsor under paragraph (1)(B), the bargaining parties with
respect to such agreement fail to agree on changes to
contribution or benefit schedules necessary to meet the
applicable benchmarks in accordance with the funding
improvement plan,
the plan sponsor shall implement the schedule described in
paragraph (1)(B)(i)(I) beginning on the date specified in
subparagraph (B).
``(B) Date of implementation.--The date specified in this
subparagraph is the earlier of the date--
``(i) on which the Secretary certifies that the parties are
at an impasse, or
[[Page H6066]]
``(ii) which is 180 days after the date on which the
collective bargaining agreement described in subparagraph (A)
expires.
``(8) Funding plan adoption period.--For purposes of this
section, the term `funding plan adoption period' means the
period beginning on the date of the certification under
subsection (b)(3)(A) for the initial determination year and
ending on the day before the first day of the funding
improvement period.
``(d) Rules for Operation of Plan During Adoption and
Improvement Periods.--
``(1) Special rules for plan adoption period.--During the
funding plan adoption period--
``(A) the plan sponsor may not accept a collective
bargaining agreement or participation agreement with respect
to the multiemployer plan that provides for--
``(i) a reduction in the level of contributions for any
participants,
``(ii) a suspension of contributions with respect to any
period of service, or
``(iii) any new direct or indirect exclusion of younger or
newly hired employees from plan participation,
``(B) no amendment of the plan which increases the
liabilities of the plan by reason of any increase in
benefits, any change in the accrual of benefits, or any
change in the rate at which benefits become nonforfeitable
under the plan may be adopted unless the amendment is
required as a condition of qualification under part I of
subchapter D of chapter 1 of the Internal Revenue Code of
1986 or to comply with other applicable law, and
``(C) in the case of a plan in seriously endangered status,
the plan sponsor shall take all reasonable actions which are
consistent with the terms of the plan and applicable law and
which are expected, based on reasonable assumptions, to
achieve--
``(i) an increase in the plan's funded percentage, and
``(ii) postponement of an accumulated funding deficiency
for at least 1 additional plan year.
Actions under subparagraph (C) include applications for
extensions of amortization periods under section 304(d), use
of the shortfall funding method in making funding standard
account computations, amendments to the plan's benefit
structure, reductions in future benefit accruals, and other
reasonable actions consistent with the terms of the plan and
applicable law.
``(2) Compliance with funding improvement plan.--
``(A) In general.--A plan may not be amended after the date
of the adoption of a funding improvement plan so as to be
inconsistent with the funding improvement plan.
``(B) No reduction in contributions.--A plan sponsor may
not during any funding improvement period accept a collective
bargaining agreement or participation agreement with respect
to the multiemployer plan that provides for--
``(i) a reduction in the level of contributions for any
participants,
``(ii) a suspension of contributions with respect to any
period of service, or
``(iii) any new direct or indirect exclusion of younger or
newly hired employees from plan participation.
``(C) Special rules for benefit increases.--A plan may not
be amended after the date of the adoption of a funding
improvement plan so as to increase benefits, including future
benefit accruals, unless the plan actuary certifies that the
benefit increase is consistent with the funding improvement
plan and is paid for out of contributions not required by the
funding improvement plan to meet the applicable benchmark in
accordance with the schedule contemplated in the funding
improvement plan.
``(e) Rehabilitation Plan Must Be Adopted for Multiemployer
Plans in Critical Status.--
``(1) In general.--In any case in which a multiemployer
plan is in critical status for a plan year, the plan sponsor,
in accordance with this subsection--
``(A) shall adopt a rehabilitation plan not later than 240
days following the required date for the actuarial
certification of critical status under subsection (b)(3)(A),
and
``(B) within 30 days after the adoption of the
rehabilitation plan--
``(i) shall provide to the bargaining parties 1 or more
schedules showing revised benefit structures, revised
contribution structures, or both, which, if adopted, may
reasonably be expected to enable the multiemployer plan to
emerge from critical status in accordance with the
rehabilitation plan, and
``(ii) may, if the plan sponsor deems appropriate, prepare
and provide the bargaining parties with additional
information relating to contribution rates or benefit
reductions, alternative schedules, or other information
relevant to emerging from critical status in accordance with
the rehabilitation plan.
The schedule or schedules described in subparagraph (B)(i)
shall reflect reductions in future benefit accruals and
adjustable benefits, and increases in contributions, that the
plan sponsor determines are reasonably necessary to emerge
from critical status. One schedule shall be designated as the
default schedule and such schedule shall assume that there
are no increases in contributions under the plan other than
the increases necessary to emerge from critical status after
future benefit accruals and other benefits (other than
benefits the reduction or elimination of which are not
permitted under section 204(g)) have been reduced to the
maximum extent permitted by law.
``(2) Exception for years after process begins.--Paragraph
(1) shall not apply to a plan year if such year is in a
rehabilitation plan adoption period or rehabilitation period
by reason of the plan being in critical status for a
preceding plan year. For purposes of this section, such
preceding plan year shall be the initial critical year with
respect to the rehabilitation plan to which it relates.
``(3) Rehabilitation plan.--For purposes of this section--
``(A) In general.--A rehabilitation plan is a plan which
consists of--
``(i) actions, including options or a range of options to
be proposed to the bargaining parties, formulated, based on
reasonably anticipated experience and reasonable actuarial
assumptions, to enable the plan to cease to be in critical
status by the end of the rehabilitation period and may
include reductions in plan expenditures (including plan
mergers and consolidations), reductions in future benefit
accruals or increases in contributions, if agreed to by the
bargaining parties, or any combination of such actions, or
``(ii) if the plan sponsor determines that, based on
reasonable actuarial assumptions and upon exhaustion of all
reasonable measures, the plan can not reasonably be expected
to emerge from critical status by the end of the
rehabilitation period, reasonable measures to emerge from
critical status at a later time or to forestall possible
insolvency (within the meaning of section 4245).
A rehabilitation plan must provide annual standards for
meeting the requirements of such rehabilitation plan. Such
plan shall also include the schedules required to be provided
under paragraph (1)(B)(i) and if clause (ii) applies, shall
set forth the alternatives considered, explain why the plan
is not reasonably expected to emerge from critical status by
the end of the rehabilitation period, and specify when, if
ever, the plan is expected to emerge from critical status in
accordance with the rehabilitation plan.
``(B) Updates to rehabilitation plan and schedules.--
``(i) Rehabilitation plan.--The plan sponsor shall annually
update the rehabilitation plan and shall file the update with
the plan's annual report under section 104.
``(ii) Schedules.--The plan sponsor shall annually update
any schedule of contribution rates provided under this
subsection to reflect the experience of the plan.
``(iii) Duration of schedule.--A schedule of contribution
rates provided by the plan sponsor and relied upon by
bargaining parties in negotiating a collective bargaining
agreement shall remain in effect for the duration of that
collective bargaining agreement.
``(C) Imposition of default schedule where failure to adopt
rehabilitation plan.--
``(i) In general.--If--
``(I) a collective bargaining agreement providing for
contributions under a multiemployer plan that was in effect
at the time the plan entered critical status expires, and
``(II) after receiving one or more schedules from the plan
sponsor under paragraph (1)(B), the bargaining parties with
respect to such agreement fail to adopt a contribution or
benefit schedules with terms consistent with the
rehabilitation plan and the schedule from the plan sponsor
under paragraph (1)(B)(i),
the plan sponsor shall implement the default schedule
described in the last sentence of paragraph (1) beginning on
the date specified in clause (ii).
``(ii) Date of implementation.--The date specified in this
clause is the earlier of the date--
``(I) on which the Secretary certifies that the parties are
at an impasse, or
``(II) which is 180 days after the date on which the
collective bargaining agreement described in clause (i)
expires.
``(4) Rehabilitation period.--For purposes of this
section--
``(A) In general.--The rehabilitation period for a plan in
critical status is the 10-year period beginning on the first
day of the first plan year of the multiemployer plan
following the earlier of--
``(i) the second anniversary of the date of the adoption of
the rehabilitation plan, or
``(ii) the expiration of the collective bargaining
agreements in effect on the date of the due date for the
actuarial certification of critical status for the initial
critical year under subsection (a)(1) and covering, as of
such date at least 75 percent of the active participants in
such multiemployer plan.
If a plan emerges from critical status as provided under
subparagraph (B) before the end of such 10-year period, the
rehabilitation period shall end with the plan year preceding
the plan year for which the determination under subparagraph
(B) is made.
``(B) Emergence.--A plan in critical status shall remain in
such status until a plan year for which the plan actuary
certifies, in accordance with subsection (b)(3)(A), that the
plan is not projected to have an accumulated funding
deficiency for the plan year or any of the 9 succeeding plan
years, without regard to the use of the shortfall method and
taking into account any extension of amortization periods
under section 304(d).
``(5) Rehabilitation plan adoption period.--For purposes of
this section, the term `rehabilitation plan adoption period'
means the period beginning on the date of the certification
under subsection (b)(3)(A) for the
[[Page H6067]]
initial critical year and ending on the day before the first
day of the rehabilitation period.
``(6) Limitation on reduction in rates of future
accruals.--Any reduction in the rate of future accruals under
the default schedule described in paragraph (1)(B)(i) shall
not reduce the rate of future accruals below--
``(A) a monthly benefit (payable as a single life annuity
commencing at the participant's normal retirement age) equal
to 1 percent of the contributions required to be made with
respect to a participant, or the equivalent standard accrual
rate for a participant or group of participants under the
collective bargaining agreements in effect as of the first
day of the initial critical year, or
``(B) if lower, the accrual rate under the plan on such
first day.
The equivalent standard accrual rate shall be determined by
the plan sponsor based on the standard or average
contribution base units which the plan sponsor determines to
be representative for active participants and such other
factors as the plan sponsor determines to be relevant.
Nothing in this paragraph shall be construed as limiting the
ability of the plan sponsor to prepare and provide the
bargaining parties with alternative schedules to the default
schedule that established lower or higher accrual and
contribution rates than the rates otherwise described in this
paragraph.
``(7) Automatic employer surcharge.--
``(A) Imposition of surcharge.--Each employer otherwise
obligated to make contributions for the initial critical year
shall be obligated to pay to the plan for such year a
surcharge equal to 5 percent of the contributions otherwise
required under the applicable collective bargaining agreement
(or other agreement pursuant to which the employer
contributes). For each succeeding plan year in which the plan
is in critical status for a consecutive period of years
beginning with the initial critical year, the surcharge shall
be 10 percent of the contributions otherwise so required.
``(B) Enforcement of surcharge.--The surcharges under
subparagraph (A) shall be due and payable on the same
schedule as the contributions on which the surcharges are
based. Any failure to make a surcharge payment shall be
treated as a delinquent contribution under section 515 and
shall be enforceable as such.
``(C) Surcharge to terminate upon collective bargaining
agreement renegotiation.--The surcharge under this paragraph
shall cease to be effective with respect to employees covered
by a collective bargaining agreement (or other agreement
pursuant to which the employer contributes), beginning on the
effective date of a collective bargaining agreement (or other
such agreement) that includes terms consistent with a
schedule presented by the plan sponsor under paragraph
(1)(B)(i), as modified under subparagraph (B) of paragraph
(3).
``(D) Surcharge not to apply until employer receives
notice.--The surcharge under this paragraph shall not apply
to an employer until 30 days after the employer has been
notified by the plan sponsor that the plan is in critical
status and that the surcharge is in effect.
``(E) Surcharge not to generate increased benefit
accruals.--Notwithstanding any provision of a plan to the
contrary, the amount of any surcharge under this paragraph
shall not be the basis for any benefit accrual under the
plan.
``(8) Benefit adjustments.--
``(A) Adjustable benefits.--
``(i) In general.--Notwithstanding section 204(g), the plan
sponsor shall, subject to the notice requirements in
subparagraph (C), make any reductions to adjustable benefits
which the plan sponsor deems appropriate, based upon the
outcome of collective bargaining over the schedule or
schedules provided under paragraph (1)(B)(i).
``(ii) Exception for retirees.--Except in the case of
adjustable benefits described in clause (iv)(III), the plan
sponsor of a plan in critical status shall not reduce
adjustable benefits of any participant or beneficiary whose
benefit commencement date is before the date on which the
plan provides notice to the participant or beneficiary under
subsection (b)(3)(D) for the initial critical year.
``(iii) Plan sponsor flexibility.--The plan sponsor shall
include in the schedules provided to the bargaining parties
an allowance for funding the benefits of participants with
respect to whom contributions are not currently required to
be made, and shall reduce their benefits to the extent
permitted under this title and considered appropriate by the
plan sponsor based on the plan's then current overall funding
status.
``(iv) Adjustable benefit defined.--For purposes of this
paragraph, the term `adjustable benefit' means--
``(I) benefits, rights, and features under the plan,
including post-retirement death benefits, 60-month
guarantees, disability benefits not yet in pay status, and
similar benefits,
``(II) any early retirement benefit or retirement-type
subsidy (within the meaning of section 204(g)(2)(A)) and any
benefit payment option (other than the qualified joint-and
survivor annuity), and
``(III) benefit increases that would not be eligible for a
guarantee under section 4022A on the first day of initial
critical year because the increases were adopted (or, if
later, took effect) less than 60 months before such first
day.
``(B) Normal retirement benefits protected.--Except as
provided in subparagraph (A)(iv)(III), nothing in this
paragraph shall be construed to permit a plan to reduce the
level of a participant's accrued benefit payable at normal
retirement age.
``(C) Notice requirements.--
``(i) In general.--No reduction may be made to adjustable
benefits under subparagraph (A) unless notice of such
reduction has been given at least 30 days before the general
effective date of such reduction for all participants and
beneficiaries to--
``(I) plan participants and beneficiaries,
``(II) each employer who has an obligation to contribute
(within the meaning of section 4212(a)) under the plan, and
``(III) each employee organization which, for purposes of
collective bargaining, represents plan participants employed
by such an employer.
``(ii) Content of notice.--The notice under clause (i)
shall contain--
``(I) sufficient information to enable participants and
beneficiaries to understand the effect of any reduction on
their benefits, including an estimate (on an annual or
monthly basis) of any affected adjustable benefit that a
participant or beneficiary would otherwise have been eligible
for as of the general effective date described in clause (i),
and
``(II) information as to the rights and remedies of plan
participants and beneficiaries as well as how to contact the
Department of Labor for further information and assistance
where appropriate.
``(iii) Form and manner.--Any notice under clause (i)--
``(I) shall be provided in a form and manner prescribed in
regulations of the Secretary,
``(II) shall be written in a manner so as to be understood
by the average plan participant, and
``(III) may be provided in written, electronic, or other
appropriate form to the extent such form is reasonably
accessible to persons to whom the notice is required to be
provided.
The Secretary shall in the regulations prescribed under
subclause (I) establish a model notice that a plan sponsor
may use to meet the requirements of this subparagraph.
``(9) Adjustments disregarded in withdrawal liability
determination.--
``(A) Benefit reductions.--Any benefit reductions under
this subsection shall be disregarded in determining a plan's
unfunded vested benefits for purposes of determining an
employer's withdrawal liability under section 4201.
``(B) Surcharges.--Any surcharges under paragraph (7) shall
be disregarded in determining an employer's withdrawal
liability under section 4211, except for purposes of
determining the unfunded vested benefits attributable to an
employer under section 4211(c)(4) or a comparable method
approved under section 4211(c)(5).
``(C) Simplified calculations.--The Pension Benefit
Guaranty Corporation shall prescribe simplified methods for
the application of this paragraph in determining withdrawal
liability.
``(f) Rules for Operation of Plan During Adoption and
Rehabilitation Period.--
``(1) Compliance with rehabilitation plan.--
``(A) In general.--A plan may not be amended after the date
of the adoption of a rehabilitation plan under subsection (e)
so as to be inconsistent with the rehabilitation plan.
``(B) Special rules for benefit increases.--A plan may not
be amended after the date of the adoption of a rehabilitation
plan under subsection (e) so as to increase benefits,
including future benefit accruals, unless the plan actuary
certifies that such increase is paid for out of additional
contributions not contemplated by the rehabilitation plan,
and, after taking into account the benefit increase, the
multiemployer plan still is reasonably expected to emerge
from critical status by the end of the rehabilitation period
on the schedule contemplated in the rehabilitation plan.
``(2) Restriction on lump sums and similar benefits.--
``(A) In general.--Effective on the date the notice of
certification of the plan's critical status for the initial
critical year under subsection (b)(3)(D) is sent, and
notwithstanding section 204(g), the plan shall not pay--
``(i) any payment, in excess of the monthly amount paid
under a single life annuity (plus any social security
supplements described in the last sentence of section
204(b)(1)(G)),
``(ii) any payment for the purchase of an irrevocable
commitment from an insurer to pay benefits, and
``(iii) any other payment specified by the Secretary of the
Treasury by regulations.
``(B) Exception.--Subparagraph (A) shall not apply to a
benefit which under section 203(e) may be immediately
distributed without the consent of the participant or to any
makeup payment in the case of a retroactive annuity starting
date or any similar payment of benefits owed with respect to
a prior period.
``(3) Adjustments disregarded in withdrawal liability
determination.--Any benefit reductions under this subsection
shall be disregarded in determining a plan's unfunded vested
benefits for purposes of determining an employer's withdrawal
liability under section 4201.
``(4) Special rules for plan adoption period.--During the
rehabilitation plan adoption period--
[[Page H6068]]
``(A) the plan sponsor may not accept a collective
bargaining agreement or participation agreement with respect
to the multiemployer plan that provides for--
``(i) a reduction in the level of contributions for any
participants,
``(ii) a suspension of contributions with respect to any
period of service, or
``(iii) any new direct or indirect exclusion of younger or
newly hired employees from plan participation, and
``(B) no amendment of the plan which increases the
liabilities of the plan by reason of any increase in
benefits, any change in the accrual of benefits, or any
change in the rate at which benefits become nonforfeitable
under the plan may be adopted unless the amendment is
required as a condition of qualification under part I of
subchapter D of chapter 1 of the Internal Revenue Code of
1986 or to comply with other applicable law.
``(g) Expedited Resolution of Plan Sponsor Decisions.--If,
within 60 days of the due date for adoption of a funding
improvement plan or a rehabilitation plan under subsection
(e), the plan sponsor of a plan in endangered status or a
plan in critical status has not agreed on a funding
improvement plan or rehabilitation plan, then any member of
the board or group that constitutes the plan sponsor may
require that the plan sponsor enter into an expedited dispute
resolution procedure for the development and adoption of a
funding improvement plan or rehabilitation plan.
``(h) Nonbargained Participation.--
``(1) Both bargained and nonbargained employee-
participants.--In the case of an employer that contributes to
a multiemployer plan with respect to both employees who are
covered by one or more collective bargaining agreements and
employees who are not so covered, if the plan is in
endangered status or in critical status, benefits of and
contributions for the nonbargained employees, including
surcharges on those contributions, shall be determined as if
those nonbargained employees were covered under the first to
expire of the employer's collective bargaining agreements in
effect when the plan entered endangered or critical status.
``(2) Nonbargained employees only.--In the case of an
employer that contributes to a multiemployer plan only with
respect to employees who are not covered by a collective
bargaining agreement, this section shall be applied as if the
employer were the bargaining party, and its participation
agreement with the plan were a collective bargaining
agreement with a term ending on the first day of the plan
year beginning after the employer is provided the schedule or
schedules described in subsections (c) and (e).
``(i) Definitions; Actuarial Method.--For purposes of this
section--
``(1) Bargaining party.--The term `bargaining party'
means--
``(A)(i) except as provided in clause (ii), an employer who
has an obligation to contribute under the plan; or
``(ii) in the case of a plan described under section 404(c)
of the Internal Revenue Code of 1986, or a continuation of
such a plan, the association of employers that is the
employer settlor of the plan; and
``(B) an employee organization which, for purposes of
collective bargaining, represents plan participants employed
by an employer who has an obligation to contribute under the
plan.
``(2) Funded percentage.--The term `funded percentage'
means the percentage equal to a fraction--
``(A) the numerator of which is the value of the plan's
assets, as determined under section 304(c)(2), and
``(B) the denominator of which is the accrued liability of
the plan, determined using actuarial assumptions described in
section 304(c)(3).
``(3) Accumulated funding deficiency.--The term
`accumulated funding deficiency' has the meaning given such
term in section 304(a).
``(4) Active participant.--The term `active participant'
means, in connection with a multiemployer plan, a participant
who is in covered service under the plan.
``(5) Inactive participant.--The term `inactive
participant' means, in connection with a multiemployer plan,
a participant, or the beneficiary or alternate payee of a
participant, who--
``(A) is not in covered service under the plan, and
``(B) is in pay status under the plan or has a
nonforfeitable right to benefits under the plan.
``(6) Pay status.--A person is in pay status under a
multiemployer plan if--
``(A) at any time during the current plan year, such person
is a participant or beneficiary under the plan and is paid an
early, late, normal, or disability retirement benefit under
the plan (or a death benefit under the plan related to a
retirement benefit), or
``(B) to the extent provided in regulations of the
Secretary of the Treasury, such person is entitled to such a
benefit under the plan.
``(7) Obligation to contribute.--The term `obligation to
contribute' has the meaning given such term under section
4212(a).
``(8) Actuarial method.--Notwithstanding any other
provision of this section, the actuary's determinations with
respect to a plan's normal cost, actuarial accrued liability,
and improvements in a plan's funded percentage under this
section shall be based upon the unit credit funding method
(whether or not that method is used for the plan's actuarial
valuation).
``(9) Plan sponsor.--In the case of a plan described under
section 404(c) of the Internal Revenue Code of 1986, or a
continuation of such a plan, the term `plan sponsor' means
the bargaining parties described under paragraph (1).
``(10) Benefit commencement date.--The term `benefit
commencement date' means the annuity starting date (or in the
case of a retroactive annuity starting date, the date on
which benefit payments begin).''.
(b) Enforcement.--Section 502 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1132) is amended--
(1) in subsection (a)(6) by striking ``(6), or (7)'' and
inserting ``(6), (7), or (8)'';
(2) by redesignating subsection (c)(8) as subsection
(c)(9); and
(3) by inserting after subsection (c)(7) the following new
paragraph:
``(8) The Secretary may assess against any plan sponsor of
a multiemployer plan a civil penalty of not more than $1,100
per day--
``(A) for each violation by such sponsor of the requirement
under section 305 to adopt by the deadline established in
that section a funding improvement plan or rehabilitation
plan with respect to a multiemployer which is in endangered
or critical status, or
``(B) in the case of a plan in endangered status which is
not in seriously endangered status, for failure by the plan
to meet the applicable benchmarks under section 305 by the
end of the funding improvement period with respect to the
plan.''.
(c) Cause of Action To Compel Adoption or Implementation of
Funding Improvement or Rehabilitation Plan.--Section 502(a)
of the Employee Retirement Income Security Act of 1974 is
amended by striking ``or'' at the end of paragraph (8), by
striking the period at the end of paragraph (9) and inserting
``; or'' and by adding at the end the following:
``(10) in the case of a multiemployer plan that has been
certified by the actuary to be in endangered or critical
status under section 305, if the plan sponsor--
``(A) has not adopted a funding improvement or
rehabilitation plan under that section by the deadline
established in such section, or
``(B) fails to update or comply with the terms of the
funding improvement or rehabilitation plan in accordance with
the requirements of such section,
by an employer that has an obligation to contribute with
respect to the multiemployer plan or an employee organization
that represents active participants in the multiemployer
plan, for an order compelling the plan sponsor to adopt a
funding improvement or rehabilitation plan or to update or
comply with the terms of the funding improvement or
rehabilitation plan in accordance with the requirements of
such section and the funding improvement or rehabilitation
plan.''.
(d) No Additional Contributions Required.--Section 302(b)
of the Employee Retirement Income Security Act of 1974, as
amended by this Act, is amended by adding at the end the
following new paragraph:
``(3) Multiemployer plans in critical status.--Paragraph
(1) shall not apply in the case of a multiemployer plan for
any plan year in which the plan is in critical status
pursuant to section 305. This paragraph shall only apply if
the plan adopts a rehabilitation plan in accordance with
section 305(e) and complies with the terms of such
rehabilitation plan (and any updates or modifications of the
plan).''.
(e) Conforming Amendment.--The table of contents in section
1 of such Act (as amended by the preceding provisions of this
Act) is amended by inserting after the item relating to
section 304 the following new item:
``Sec. 305. Additional funding rules for multiemployer plans in
endangered status or critical status.''.
(f) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply with respect to plan years beginning after 2007.
(2) Special rule for certain notices.--In any case in which
a plan's actuary certifies that it is reasonably expected
that a multiemployer plan will be in critical status under
section 305(b)(3) of the Employee Retirement Income Security
Act of 1974, as added by this section, with respect to the
first plan year beginning after 2007, the notice required
under subparagraph (D) of such section may be provided at any
time after the date of enactment, so long as it is provided
on or before the last date for providing the notice under
such subparagraph.
(3) Special rule for certain restored benefits.--In the
case of a multiemployer plan--
(A) with respect to which benefits were reduced pursuant to
a plan amendment adopted on or after January 1, 2002, and
before June 30, 2005, and
(B) which, pursuant to the plan document, the trust
agreement, or a formal written communication from the plan
sponsor to participants provided before June 30, 2005,
provided for the restoration of such benefits,
the amendments made by this section shall not apply to such
benefit restorations to the extent that any restriction on
the providing or accrual of such benefits would otherwise
apply by reason of such amendments.
SEC. 203. MEASURES TO FORESTALL INSOLVENCY OF MULTIEMPLOYER
PLANS.
(a) Advance Determination of Impending Insolvency Over 5
Years.--Section
[[Page H6069]]
4245(d)(1) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1426(d)(1)) is amended--
(1) by striking ``3 plan years'' the second place it
appears and inserting ``5 plan years''; and
(2) by adding at the end the following new sentence: ``If
the plan sponsor makes such a determination that the plan
will be insolvent in any of the next 5 plan years, the plan
sponsor shall make the comparison under this paragraph at
least annually until the plan sponsor makes a determination
that the plan will not be insolvent in any of the next 5 plan
years.''.
(b) Effective Date.--The amendments made by this section
shall apply with respect to determinations made in plan years
beginning after 2007.
SEC. 204. WITHDRAWAL LIABILITY REFORMS.
(a) Update of Rules Relating to Limitations on Withdrawal
Liability.--
(1) Increase in limits.--Section 4225(a)(2) of such Act (29
U.S.C. 1405(a)(2)) is amended by striking the table contained
therein and inserting the following new table:
------------------------------------------------------------------------
``If the liquidation or distribution
value of the employer after the sale or The portion is--
exchange is--
------------------------------------------------------------------------
Not more than $5,000,000............... 30 percent of the amount.
More than $5,000,000, but not more than $1,500,000, plus 35 percent of
$10,000,000. the amount in excess of
$5,000,000.
More than $10,000,000, but not more $3,250,000, plus 40 percent of
than $15,000,000. the amount in excess of
$10,000,000.
More than $15,000,000, but not more $5,250,000, plus 45 percent of
than $17,500,000. the amount in excess of
$15,000,000.
More than $17,500,000, but not more $6,375,000, plus 50 percent of
than $20,000,000. the amount in excess of
$17,500,000.
More than $20,000,000, but not more $7,625,000, plus 60 percent of
than $22,500,000. the amount in excess of
$20,000,000.
More than $22,500,000, but not more $9,125,000, plus 70 percent of
than $25,000,000. the amount in excess of
$22,500,000.
More than $25,000,000.................. $10,875,000, plus 80 percent of
the amount in excess of
$25,000,000.''.
------------------------------------------------------------------------
(2) Plans using attributable method.--Section 4225(a)(1)(B)
of such Act (29 U.S.C. 1405(a)(1)(B)) is amended to read as
follows:
``(B) in the case of a plan using the attributable method
of allocating withdrawal liability, the unfunded vested
benefits attributable to employees of the employer.''.
(3) Effective date.--The amendments made by this subsection
shall apply to sales occurring on or after January 1, 2007.
(b) Withdrawal Liability Continues if Work Contracted
Out.--
(1) In general.--Clause (i) of section 4205(b)(2)(A) of
such Act (29 U.S.C. 1385(b)(2)(A)) is amended by inserting
``or to an entity or entities owned or controlled by the
employer'' after ``to another location''.
(2) Effective date.--The amendment made by this subsection
shall apply with respect to work transferred on or after the
date of the enactment of this Act.
(c) Application of Rules to Plans Primarily Covering
Employees in the Building and Construction Industry.--
(1) In general.--Section 4210(b) of such Act (29 U.S.C.
1390(b)) is amended--
(A) by striking paragraph (1); and
(B) by redesignating paragraphs (2) through (4) as
paragraphs (1) through (3), respectively.
(2) Fresh start option.--Section 4211(c)(5) of such Act (29
U.S.C. 1391(c)(5)) is amended by adding at the end the
following new subparagraph:
``(E) Fresh start option.--Notwithstanding paragraph (1), a
plan may be amended to provide that the withdrawal liability
method described in subsection (b) shall be applied by
substituting the plan year which is specified in the
amendment and for which the plan has no unfunded vested
benefits for the plan year ending before September 26,
1980.''.
(3) Effective date.--The amendments made by this subsection
shall apply with respect to plan withdrawals occurring on or
after January 1, 2007.
(d) Procedures Applicable to Disputes Involving Pension
Plan Withdrawal Liability.--
(1) In general.--Section 4221 of Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1401) is amended by adding at
the end the following:
``(g) Procedures Applicable to Certain Disputes.--
``(1) In general.--If--
``(A) a plan sponsor of a plan determines that--
``(i) a complete or partial withdrawal of an employer has
occurred, or
``(ii) an employer is liable for withdrawal liability
payments with respect to such complete or partial withdrawal,
and
``(B) such determination is based in whole or in part on a
finding by the plan sponsor under section 4212(c) that a
principal purpose of any transaction which occurred after
December 31, 1998, and at least 5 years (2 years in the case
of a small employer) before the date of the complete or
partial withdrawal was to evade or avoid withdrawal liability
under this subtitle,
then the person against which the withdrawal liability is
assessed based solely on the application of section 4212(c)
may elect to use the special rule under paragraph (2) in
applying subsection (d) of this section and section 4219(c)
to such person.
``(2) Special rule.--Notwithstanding subsection (d) and
section 4219(c), if an electing person contests the plan
sponsor's determination with respect to withdrawal liability
payments under paragraph (1) through an arbitration
proceeding pursuant to subsection (a), through an action
brought in a court of competent jurisdiction for review of
such an arbitration decision, or as otherwise permitted by
law, the electing person shall not be obligated to make the
withdrawal liability payments until a final decision in the
arbitration proceeding, or in court, upholds the plan
sponsor's determination, but only if the electing person--
``(A) provides notice to the plan sponsor of its election
to apply the special rule in this paragraph within 90 days
after the plan sponsor notifies the electing person of its
liability by reason of the application of section 4212(c);
and
``(B) if a final decision in the arbitration proceeding, or
in court, of the withdrawal liability dispute has not been
rendered within 12 months from the date of such notice, the
electing person provides to the plan, effective as of the
first day following the 12-month period, a bond issued by a
corporate surety company that is an acceptable surety for
purposes of section 412 of this Act, or an amount held in
escrow by a bank or similar financial institution
satisfactory to the plan, in an amount equal to the sum of
the withdrawal liability payments that would otherwise be due
under subsection (d) and section 4219(c) for the 12-month
period beginning with the first anniversary of such notice.
Such bond or escrow shall remain in effect until there is a
final decision in the arbitration proceeding, or in court, of
the withdrawal liability dispute, at which time such bond or
escrow shall be paid to the plan if such final decision
upholds the plan sponsor's determination.
``(3) Definition of small employer.--For purposes of this
subsection--
``(A) In general.--The term `small employer' means any
employer which, for the calendar year in which the
transaction referred to in paragraph (1)(B) occurred and for
each of the 3 preceding years, on average--
``(i) employs not more than 500 employees, and
``(ii) is required to make contributions to the plan for
not more than 250 employees.
``(B) Controlled group.--Any group treated as a single
employer under subsection (b)(1) of section 4001, without
regard to any transaction that was a basis for the plan's
finding under section 4212, shall be treated as a single
employer for purposes of this subparagraph.
``(4) Additional security pending resolution of dispute.--
If a withdrawal liability dispute to which this subsection
applies is not concluded by 12 months after the electing
person posts the bond or escrow described in paragraph (2),
the electing person shall, at the start of each succeeding
12-month period, provide an additional bond or amount held in
escrow equal to the sum of the withdrawal liability payments
that would otherwise be payable to the plan during that
period.
``(5) The liability of the party furnishing a bond or
escrow under this subsection shall be reduced, upon the
payment of the bond or escrow to the plan, by the amount
thereof.''
(2) Effective date.--The amendments made by this subsection
shall apply to any person that receives a notification under
section 4219(b)(1) of the Employee Retirement Income Security
Act of 1974 on or after the date of enactment of this Act
with respect to a transaction that occurred after December
31, 1998.
SEC. 205. PROHIBITION ON RETALIATION AGAINST EMPLOYERS
EXERCISING THEIR RIGHTS TO PETITION THE FEDERAL
GOVERNMENT.
Section 510 of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1140) is amended by inserting before the
last sentence thereof the following new sentence:``In the
case of a multiemployer plan, it shall be unlawful for the
plan sponsor or any other person to discriminate against any
contributing employer for exercising rights under this Act or
for giving information or testifying in any inquiry or
proceeding relating to this Act before Congress.''
SEC. 206. SPECIAL RULE FOR CERTAIN BENEFITS FUNDED UNDER AN
AGREEMENT APPROVED BY THE PENSION BENEFIT
GUARANTY CORPORATION.
In the case of a multiemployer plan that is a party to an
agreement that was approved by the Pension Benefit Guaranty
Corporation prior to June 30, 2005, and that--
(1) increases benefits, and
(2) provides for special withdrawal liability rules under
section 4203(f) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1383),
[[Page H6070]]
the amendments made by sections 201, 202, 211, and 212 of
this Act shall not apply to the benefit increases under any
plan amendment adopted prior to June 30, 2005, that are
funded pursuant to such agreement if the plan is funded in
compliance with such agreement (and any amendments thereto).
Subtitle B--Amendments to Internal Revenue Code of 1986
SEC. 211. FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT
PLANS.
(a) In General.--Subpart A of part III of subchapter D of
chapter 1 of the Internal Revenue Code of 1986 (as added by
this Act) is amended by inserting after section 430 the
following new section:
``SEC. 431. MINIMUM FUNDING STANDARDS FOR MULTIEMPLOYER
PLANS.
``(a) In General.--For purposes of section 412, the
accumulated funding deficiency of a multiemployer plan for
any plan year is--
``(1) except as provided in paragraph (2), the amount,
determined as of the end of the plan year, equal to the
excess (if any) of the total charges to the funding standard
account of the plan for all plan years (beginning with the
first plan year for which this part applies to the plan) over
the total credits to such account for such years, and
``(2) if the multiemployer plan is in reorganization for
any plan year, the accumulated funding deficiency of the plan
determined under section 4243 of the Employee Retirement
Income Security Act of 1974.
``(b) Funding Standard Account.--
``(1) Account required.--Each multiemployer plan to which
this part applies shall establish and maintain a funding
standard account. Such account shall be credited and charged
solely as provided in this section.
``(2) Charges to account.--For a plan year, the funding
standard account shall be charged with the sum of--
``(A) the normal cost of the plan for the plan year,
``(B) the amounts necessary to amortize in equal annual
installments (until fully amortized)--
``(i) in the case of a plan which comes into existence on
or after January 1, 2008, the unfunded past service liability
under the plan on the first day of the first plan year to
which this section applies, over a period of 15 plan years,
``(ii) separately, with respect to each plan year, the net
increase (if any) in unfunded past service liability under
the plan arising from plan amendments adopted in such year,
over a period of 15 plan years,
``(ii) separately, with respect to each plan year, the net
increase (if any) in unfunded past service liability under
the plan arising from plan amendments adopted in such year,
over a period of 15 plan years,
``(iii) separately, with respect to each plan year, the net
experience loss (if any) under the plan, over a period of 15
plan years, and
``(iv) separately, with respect to each plan year, the net
loss (if any) resulting from changes in actuarial assumptions
used under the plan, over a period of 15 plan years,
``(C) the amount necessary to amortize each waived funding
deficiency (within the meaning of section 412(c)(3)) for each
prior plan year in equal annual installments (until fully
amortized) over a period of 15 plan years,
``(D) the amount necessary to amortize in equal annual
installments (until fully amortized) over a period of 5 plan
years any amount credited to the funding standard account
under section 412(b)(3)(D) (as in effect on the day before
the date of the enactment of the Pension Protection Act of
2006), and
``(E) the amount necessary to amortize in equal annual
installments (until fully amortized) over a period of 20
years the contributions which would be required to be made
under the plan but for the provisions of section
412(c)(7)(A)(i)(I) (as in effect on the day before the date
of the enactment of the Pension Protection Act of 2006).
``(3) Credits to account.--For a plan year, the funding
standard account shall be credited with the sum of--
``(A) the amount considered contributed by the employer to
or under the plan for the plan year,
``(B) the amount necessary to amortize in equal annual
installments (until fully amortized)--
``(i) separately, with respect to each plan year, the net
decrease (if any) in unfunded past service liability under
the plan arising from plan amendments adopted in such year,
over a period of 15 plan years,
``(ii) separately, with respect to each plan year, the net
experience gain (if any) under the plan, over a period of 15
plan years, and
``(iii) separately, with respect to each plan year, the net
gain (if any) resulting from changes in actuarial assumptions
used under the plan, over a period of 15 plan years,
``(C) the amount of the waived funding deficiency (within
the meaning of section 412(c)(3)) for the plan year, and
``(D) in the case of a plan year for which the accumulated
funding deficiency is determined under the funding standard
account if such plan year follows a plan year for which such
deficiency was determined under the alternative minimum
funding standard under section 412(g) (as in effect on the
day before the date of the enactment of the Pension
Protection Act of 2006), the excess (if any) of any debit
balance in the funding standard account (determined without
regard to this subparagraph) over any debit balance in the
alternative minimum funding standard account.
``(4) Special rule for amounts first amortized in plan
years before 2008.--In the case of any amount amortized under
section 412(b) (as in effect on the day before the date of
the enactment of the Pension Protection Act of 2006) over any
period beginning with a plan year beginning before 2008 in
lieu of the amortization described in paragraphs (2)(B) and
(3)(B), such amount shall continue to be amortized under such
section as so in effect.
``(5) Combining and offsetting amounts to be amortized.--
Under regulations prescribed by the Secretary, amounts
required to be amortized under paragraph (2) or paragraph
(3), as the case may be--
``(A) may be combined into one amount under such paragraph
to be amortized over a period determined on the basis of the
remaining amortization period for all items entering into
such combined amount, and
``(B) may be offset against amounts required to be
amortized under the other such paragraph, with the resulting
amount to be amortized over a period determined on the basis
of the remaining amortization periods for all items entering
into whichever of the two amounts being offset is the
greater.
``(6) Interest.--The funding standard account (and items
therein) shall be charged or credited (as determined under
regulations prescribed by the Secretary of the Treasury) with
interest at the appropriate rate consistent with the rate or
rates of interest used under the plan to determine costs.
``(7) Special rules relating to charges and credits to
funding standard account.--For purposes of this part--
``(A) Withdrawal liability.--Any amount received by a
multiemployer plan in payment of all or part of an employer's
withdrawal liability under part 1 of subtitle E of title IV
of the Employee Retirement Income Security Act of 1974 shall
be considered an amount contributed by the employer to or
under the plan. The Secretary may prescribe by regulation
additional charges and credits to a multiemployer plan's
funding standard account to the extent necessary to prevent
withdrawal liability payments from being unduly reflected as
advance funding for plan liabilities.
``(B) Adjustments when a multiemployer plan leaves
reorganization.--If a multiemployer plan is not in
reorganization in the plan year but was in reorganization in
the immediately preceding plan year, any balance in the
funding standard account at the close of such immediately
preceding plan year--
``(i) shall be eliminated by an offsetting credit or charge
(as the case may be), but
``(ii) shall be taken into account in subsequent plan years
by being amortized in equal annual installments (until fully
amortized) over 30 plan years.
The preceding sentence shall not apply to the extent of any
accumulated funding deficiency under section 4243(a) of such
Act as of the end of the last plan year that the plan was in
reorganization.
``(C) Plan payments to supplemental program or withdrawal
liability payment fund.--Any amount paid by a plan during a
plan year to the Pension Benefit Guaranty Corporation
pursuant to section 4222 of such Act or to a fund exempt
under section 501(c)(22) pursuant to section 4223 of such Act
shall reduce the amount of contributions considered received
by the plan for the plan year.
``(D) Interim withdrawal liability payments.--Any amount
paid by an employer pending a final determination of the
employer's withdrawal liability under part 1 of subtitle E of
title IV of such Act and subsequently refunded to the
employer by the plan shall be charged to the funding standard
account in accordance with regulations prescribed by the
Secretary.
``(E) Election for deferral of charge for portion of net
experience loss.--If an election is in effect under section
412(b)(7)(F) (as in effect on the day before the date of the
enactment of the Pension Protection Act of 2006) for any plan
year, the funding standard account shall be charged in the
plan year to which the portion of the net experience loss
deferred by such election was deferred with the amount so
deferred (and paragraph (2)(B)(iii) shall not apply to the
amount so charged).
``(F) Financial assistance.--Any amount of any financial
assistance from the Pension Benefit Guaranty Corporation to
any plan, and any repayment of such amount, shall be taken
into account under this section and section 412 in such
manner as is determined by the Secretary.
``(G) Short-term benefits.--To the extent that any plan
amendment increases the unfunded past service liability under
the plan by reason of an increase in benefits which are not
payable as a life annuity but are payable under the terms of
the plan for a period that does not exceed 14 years from the
effective date of the amendment, paragraph (2)(B)(ii) shall
be applied separately with respect to such increase in
unfunded past service liability by substituting the number of
years of the period during which such benefits are payable
for `15'.
``(c) Additional Rules.--
``(1) Determinations to be made under funding method.--For
purposes of this part, normal costs, accrued liability, past
service liabilities, and experience gains and losses shall be
determined under the funding method used to determine costs
under the plan.
``(2) Valuation of assets.--
``(A) In general.--For purposes of this part, the value of
the plan's assets shall be determined on the basis of any
reasonable actuarial method of valuation which takes
[[Page H6071]]
into account fair market value and which is permitted under
regulations prescribed by the Secretary.
``(B) Election with respect to bonds.--The value of a bond
or other evidence of indebtedness which is not in default as
to principal or interest may, at the election of the plan
administrator, be determined on an amortized basis running
from initial cost at purchase to par value at maturity or
earliest call date. Any election under this subparagraph
shall be made at such time and in such manner as the
Secretary shall by regulations provide, shall apply to all
such evidences of indebtedness, and may be revoked only with
the consent of the Secretary.
``(3) Actuarial assumptions must be reasonable.--For
purposes of this section, all costs, liabilities, rates of
interest, and other factors under the plan shall be
determined on the basis of actuarial assumptions and
methods--
``(A) each of which is reasonable (taking into account the
experience of the plan and reasonable expectations), and
``(B) which, in combination, offer the actuary's best
estimate of anticipated experience under the plan.
``(4) Treatment of certain changes as experience gain or
loss.--For purposes of this section, if--
``(A) a change in benefits under the Social Security Act or
in other retirement benefits created under Federal or State
law, or
``(B) a change in the definition of the term `wages' under
section 3121, or a change in the amount of such wages taken
into account under regulations prescribed for purposes of
section 401(a)(5),
results in an increase or decrease in accrued liability under
a plan, such increase or decrease shall be treated as an
experience loss or gain.
``(5) Full funding.--If, as of the close of a plan year, a
plan would (without regard to this paragraph) have an
accumulated funding deficiency in excess of the full funding
limitation--
``(A) the funding standard account shall be credited with
the amount of such excess, and
``(B) all amounts described in subparagraphs (B), (C), and
(D) of subsection (b) (2) and subparagraph (B) of subsection
(b)(3) which are required to be amortized shall be considered
fully amortized for purposes of such subparagraphs.
``(6) Full-funding limitation.--
``(A) In general.--For purposes of paragraph (5), the term
`full-funding limitation' means the excess (if any) of--
``(i) the accrued liability (including normal cost) under
the plan (determined under the entry age normal funding
method if such accrued liability cannot be directly
calculated under the funding method used for the plan), over
``(ii) the lesser of--
``(I) the fair market value of the plan's assets, or
``(II) the value of such assets determined under paragraph
(2).
``(B) Minimum amount.--
``(i) In general.--In no event shall the full-funding
limitation determined under subparagraph (A) be less than the
excess (if any) of--
``(I) 90 percent of the current liability of the plan
(including the expected increase in current liability due to
benefits accruing during the plan year), over
``(II) the value of the plan's assets determined under
paragraph (2).
``(ii) Assets.--For purposes of clause (i), assets shall
not be reduced by any credit balance in the funding standard
account.
``(C) Full funding limitation.--For purposes of this
paragraph, unless otherwise provided by the plan, the accrued
liability under a multiemployer plan shall not include
benefits which are not nonforfeitable under the plan after
the termination of the plan (taking into consideration
section 411(d)(3)).
``(D) Current liability.--For purposes of this paragraph--
``(i) In general.--The term `current liability' means all
liabilities to employees and their beneficiaries under the
plan.
``(ii) Treatment of unpredictable contingent event
benefits.--For purposes of clause (i), any benefit contingent
on an event other than--
``(I) age, service, compensation, death, or disability, or
``(II) an event which is reasonably and reliably
predictable (as determined by the Secretary),
shall not be taken into account until the event on which the
benefit is contingent occurs.
``(iii) Interest rate used.--The rate of interest used to
determine current liability under this paragraph shall be the
rate of interest determined under subparagraph (E).
``(iv) Mortality tables.--
``(I) Commissioners' standard table.--In the case of plan
years beginning before the first plan year to which the first
tables prescribed under subclause (II) apply, the mortality
table used in determining current liability under this
paragraph shall be the table prescribed by the Secretary
which is based on the prevailing commissioners' standard
table (described in section 807(d)(5)(A)) used to determine
reserves for group annuity contracts issued on January 1,
1993.
``(II) Secretarial authority.--The Secretary may by
regulation prescribe for plan years beginning after December
31, 1999, mortality tables to be used in determining current
liability under this subsection. Such tables shall be based
upon the actual experience of pension plans and projected
trends in such experience. In prescribing such tables, the
Secretary shall take into account results of available
independent studies of mortality of individuals covered by
pension plans.
``(v) Separate mortality tables for the disabled.--
Notwithstanding clause (iv)--
``(I) In general.--The Secretary shall establish mortality
tables which may be used (in lieu of the tables under clause
(iv)) to determine current liability under this subsection
for individuals who are entitled to benefits under the plan
on account of disability. The Secretary shall establish
separate tables for individuals whose disabilities occur in
plan years beginning before January 1, 1995, and for
individuals whose disabilities occur in plan years beginning
on or after such date.
``(II) Special rule for disabilities occurring after
1994.--In the case of disabilities occurring in plan years
beginning after December 31, 1994, the tables under subclause
(I) shall apply only with respect to individuals described in
such subclause who are disabled within the meaning of title
II of the Social Security Act and the regulations thereunder.
``(vi) Periodic review.--The Secretary shall periodically
(at least every 5 years) review any tables in effect under
this subparagraph and shall, to the extent such Secretary
determines necessary, by regulation update the tables to
reflect the actual experience of pension plans and projected
trends in such experience.
``(E) Required change of interest rate.--For purposes of
determining a plan's current liability for purposes of this
paragraph--
``(i) In general.--If any rate of interest used under the
plan under subsection (b)(6) to determine cost is not within
the permissible range, the plan shall establish a new rate of
interest within the permissible range.
``(ii) Permissible range.--For purposes of this
subparagraph--
``(I) In general.--Except as provided in subclause (II),
the term `permissible range' means a rate of interest which
is not more than 5 percent above, and not more than 10
percent below, the weighted average of the rates of interest
on 30-year Treasury securities during the 4-year period
ending on the last day before the beginning of the plan year.
``(II) Secretarial authority.--If the Secretary finds that
the lowest rate of interest permissible under subclause (I)
is unreasonably high, the Secretary may prescribe a lower
rate of interest, except that such rate may not be less than
80 percent of the average rate determined under such
subclause.
``(iii) Assumptions.--Notwithstanding paragraph (3)(A), the
interest rate used under the plan shall be--
``(I) determined without taking into account the experience
of the plan and reasonable expectations, but
``(II) consistent with the assumptions which reflect the
purchase rates which would be used by insurance companies to
satisfy the liabilities under the plan.
``(7) Annual valuation.--
``(A) In general.--For purposes of this section, a
determination of experience gains and losses and a valuation
of the plan's liability shall be made not less frequently
than once every year, except that such determination shall be
made more frequently to the extent required in particular
cases under regulations prescribed by the Secretary.
``(B) Valuation date.--
``(i) Current year.--Except as provided in clause (ii), the
valuation referred to in subparagraph (A) shall be made as of
a date within the plan year to which the valuation refers or
within one month prior to the beginning of such year.
``(ii) Use of prior year valuation.--The valuation referred
to in subparagraph (A) may be made as of a date within the
plan year prior to the year to which the valuation refers if,
as of such date, the value of the assets of the plan are not
less than 100 percent of the plan's current liability (as
defined in paragraph (6)(D) without regard to clause (iv)
thereof).
``(iii) Adjustments.--Information under clause (ii) shall,
in accordance with regulations, be actuarially adjusted to
reflect significant differences in participants.
``(iv) Limitation.--A change in funding method to use a
prior year valuation, as provided in clause (ii), may not be
made unless as of the valuation date within the prior plan
year, the value of the assets of the plan are not less than
125 percent of the plan's current liability (as defined in
paragraph (6)(D) without regard to clause (iv) thereof).
``(8) Time when certain contributions deemed made.--For
purposes of this section, any contributions for a plan year
made by an employer after the last day of such plan year, but
not later than two and one-half months after such day, shall
be deemed to have been made on such last day. For purposes of
this subparagraph, such two and one-half month period may be
extended for not more than six months under regulations
prescribed by the Secretary.
``(d) Extension of Amortization Periods for Multiemployer
Plans.--
``(1) Automatic extension upon application by certain
plans.--
``(A) In general.--If the plan sponsor of a multiemployer
plan--
``(i) submits to the Secretary an application for an
extension of the period of years required to amortize any
unfunded liability
[[Page H6072]]
described in any clause of subsection (b)(2)(B) or described
in subsection (b)(4), and
``(ii) includes with the application a certification by the
plan's actuary described in subparagraph (B),
the Secretary shall extend the amortization period for the
period of time (not in excess of 5 years) specified in the
application. Such extension shall be in addition to any
extension under paragraph (2).
``(B) Criteria.--A certification with respect to a
multiemployer plan is described in this subparagraph if the
plan's actuary certifies that, based on reasonable
assumptions--
``(i) absent the extension under subparagraph (A), the plan
would have an accumulated funding deficiency in the current
plan year or any of the 9 succeeding plan years,
``(ii) the plan sponsor has adopted a plan to improve the
plan's funding status,
``(iii) the plan is projected to have sufficient assets to
timely pay expected benefits and anticipated expenditures
over the amortization period as extended, and
``(iv) the notice required under paragraph (3)(A) has been
provided.
``(C) Termination.--The preceding provisions of this
paragraph shall not apply with respect to any application
submitted after December 31, 2014.
``(2) Alternative extension.--
``(A) In general.--If the plan sponsor of a multiemployer
plan submits to the Secretary an application for an extension
of the period of years required to amortize any unfunded
liability described in any clause of subsection (b)(2)(B) or
described in subsection (b)(4), the Secretary may extend the
amortization period for a period of time (not in excess of 10
years reduced by the number of years of any extension under
paragraph (1) with respect to such unfunded liability) if the
Secretary makes the determination described in subparagraph
(B). Such extension shall be in addition to any extension
under paragraph (1).
``(B) Determination.--The Secretary may grant an extension
under subparagraph (A) if the Secretary determines that--
``(i) such extension would carry out the purposes of this
Act and would provide adequate protection for participants
under the plan and their beneficiaries, and
``(ii) the failure to permit such extension would--
``(I) result in a substantial risk to the voluntary
continuation of the plan, or a substantial curtailment of
pension benefit levels or employee compensation, and
``(II) be adverse to the interests of plan participants in
the aggregate.
``(C) Action by secretary.--The Secretary shall act upon
any application for an extension under this paragraph within
180 days of the submission of such application. If the
Secretary rejects the application for an extension under this
paragraph, the Secretary shall provide notice to the plan
detailing the specific reasons for the rejection, including
references to the criteria set forth above.
``(3) Advance notice.--
``(A) In general.--The Secretary shall, before granting an
extension under this subsection, require each applicant to
provide evidence satisfactory to such Secretary that the
applicant has provided notice of the filing of the
application for such extension to each affected party (as
defined in section 4001(a)(21) of the Employee Retirement
Income Security Act of 1974) with respect to the affected
plan. Such notice shall include a description of the extent
to which the plan is funded for benefits which are guaranteed
under title IV of such Act and for benefit liabilities.
``(B) Consideration of relevant information.--The Secretary
shall consider any relevant information provided by a person
to whom notice was given under paragraph (1).''.
(b) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to plan years beginning after 2007.
(2) Special rule for certain amortization extensions.--If
the Secretary of the Treasury grants an extension under
section 304 of the Employee Retirement Income Security Act of
1974 and section 412(e) of the Internal Revenue Code of 1986
with respect to any application filed with the Secretary of
the Treasury on or before June 30, 2005, the extension (and
any modification thereof) shall be applied and administered
under the rules of such sections as in effect before the
enactment of this Act, including the use of the rate of
interest determined under section 6621(b) of such Code.
SEC. 212. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS IN
ENDANGERED OR CRITICAL STATUS.
(a) In General.--Subpart A of part III of subchapter D of
chapter 1 of the Internal Revenue Code of 1986 (as amended by
this Act) is amended by inserting after section 431 the
following new section:
``SEC. 432. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS
IN ENDANGERED STATUS OR CRITICAL STATUS.
``(a) General Rule.--For purposes of this part, in the case
of a multiemployer plan in effect on July 16, 2006 --
``(1) if the plan is in endangered status--
``(A) the plan sponsor shall adopt and implement a funding
improvement plan in accordance with the requirements of
subsection (c), and
``(B) the requirements of subsection (d) shall apply during
the funding plan adoption period and the funding improvement
period, and
``(2) if the plan is in critical status--
``(A) the plan sponsor shall adopt and implement a
rehabilitation plan in accordance with the requirements of
subsection (e), and
``(B) the requirements of subsection (f) shall apply during
the rehabilitation plan adoption period and the
rehabilitation period.
``(b) Determination of Endangered and Critical Status.--For
purposes of this section--
``(1) Endangered status.--A multiemployer plan is in
endangered status for a plan year if, as determined by the
plan actuary under paragraph (3), the plan is not in critical
status for the plan year and, as of the beginning of the plan
year, either--
``(A) the plan's funded percentage for such plan year is
less than 80 percent, or
``(B) the plan has an accumulated funding deficiency for
such plan year, or is projected to have such an accumulated
funding deficiency for any of the 6 succeeding plan years,
taking into account any extension of amortization periods
under section 431(d).
For purposes of this section, a plan shall be treated as in
seriously endangered status for a plan year if the plan is
described in both subparagraphs (A) and (B).
``(2) Critical status.--A multiemployer plan is in critical
status for a plan year if, as determined by the plan actuary
under paragraph (3), the plan is described in 1 or more of
the following subparagraphs as of the beginning of the plan
year:
``(A) A plan is described in this subparagraph if--
``(i) the funded percentage of the plan is less than 65
percent, and
``(ii) the sum of--
``(I) the fair market value of plan assets, plus
``(II) the present value of the reasonably anticipated
employer contributions for the current plan year and each of
the 6 succeeding plan years, assuming that the terms of all
collective bargaining agreements pursuant to which the plan
is maintained for the current plan year continue in effect
for succeeding plan years,
is less than the present value of all nonforfeitable benefits
projected to be payable under the plan during the current
plan year and each of the 6 succeeding plan years (plus
administrative expenses for such plan years).
``(B) A plan is described in this subparagraph if--
``(i) the plan has an accumulated funding deficiency for
the current plan year, not taking into account any extension
of amortization periods under section 431(d), or
``(ii) the plan is projected to have an accumulated funding
deficiency for any of the 3 succeeding plan years (4
succeeding plan years if the funded percentage of the plan is
65 percent or less), not taking into account any extension of
amortization periods under section 431(d).
``(C) A plan is described in this subparagraph if--
``(i)(I) the plan's normal cost for the current plan year,
plus interest (determined at the rate used for determining
costs under the plan) for the current plan year on the amount
of unfunded benefit liabilities under the plan as of the last
date of the preceding plan year, exceeds
``(II) the present value of the reasonably anticipated
employer and employee contributions for the current plan
year,
``(ii) the present value, as of the beginning of the
current plan year, of nonforfeitable benefits of inactive
participants is greater than the present value of
nonforfeitable benefits of active participants, and
``(iii) the plan has an accumulated funding deficiency for
the current plan year, or is projected to have such a
deficiency for any of the 4 succeeding plan years, not taking
into account any extension of amortization periods under
section 431(d).
``(D) A plan is described in this subparagraph if the sum
of--
``(i) the fair market value of plan assets, plus
``(ii) the present value of the reasonably anticipated
employer contributions for the current plan year and each of
the 4 succeeding plan years, assuming that the terms of all
collective bargaining agreements pursuant to which the plan
is maintained for the current plan year continue in effect
for succeeding plan years,
is less than the present value of all benefits projected to
be payable under the plan during the current plan year and
each of the 4 succeeding plan years (plus administrative
expenses for such plan years).
``(3) Annual certification by plan actuary.--
``(A) In general.--Not later than the 90th day of each plan
year of a multiemployer plan, the plan actuary shall certify
to the Secretary and to the plan sponsor--
``(i) whether or not the plan is in endangered status for
such plan year and whether or not the plan is or will be in
critical status for such plan year, and
``(ii) in the case of a plan which is in a funding
improvement or rehabilitation period, whether or not the plan
is making the scheduled progress in meeting the requirements
of its funding improvement or rehabilitation plan.
``(B) Actuarial projections of assets and liabilities.--
``(i) In general.--In making the determinations and
projections under this subsection, the plan actuary shall
make projections required for the current and succeeding plan
years of the current value of the assets
[[Page H6073]]
of the plan and the present value of all liabilities to
participants and beneficiaries under the plan for the current
plan year as of the beginning of such year. The actuary's
projections shall be based on reasonable actuarial estimates,
assumptions, and methods that, except as provided in clause
(iii), offer the actuary's best estimate of anticipated
experience under the plan. The projected present value of
liabilities as of the beginning of such year shall be
determined based on the most recent of either--
``(I) the actuarial statement required under section 103(d)
of the Employee Retirement Income Security Act of 1974 with
respect to the most recently filed annual report, or
``(II) the actuarial valuation for the preceding plan year.
``(ii) Determinations of future contributions.--Any
actuarial projection of plan assets shall assume--
``(I) reasonably anticipated employer contributions for the
current and succeeding plan years, assuming that the terms of
the one or more collective bargaining agreements pursuant to
which the plan is maintained for the current plan year
continue in effect for succeeding plan years, or
``(II) that employer contributions for the most recent plan
year will continue indefinitely, but only if the plan actuary
determines there have been no significant demographic changes
that would make such assumption unreasonable.
``(iii) Projected industry activity.--Any projection of
activity in the industry or industries covered by the plan,
including future covered employment and contribution levels,
shall be based on information provided by the plan sponsor,
which shall act reasonably and in good faith.
``(C) Penalty for failure to secure timely actuarial
certification.--Any failure of the plan's actuary to certify
the plan's status under this subsection by the date specified
in subparagraph (A) shall be treated for purposes of section
502(c)(2) of the Employee Retirement Income Security Act of
1974 as a failure or refusal by the plan administrator to
file the annual report required to be filed with the
Secretary under section 101(b)(4) of such Act.
``(D) Notice.--
``(i) In general.--In any case in which it is certified
under subparagraph (A) that a multiemployer plan is or will
be in endangered or critical status for a plan year, the plan
sponsor shall, not later than 30 days after the date of the
certification, provide notification of the endangered or
critical status to the participants and beneficiaries, the
bargaining parties, the Pension Benefit Guaranty Corporation,
and the Secretary of Labor.
``(ii) Plans in critical status.--If it is certified under
subparagraph (A) that a multiemployer plan is or will be in
critical status, the plan sponsor shall include in the notice
under clause (i) an explanation of the possibility that--
``(I) adjustable benefits (as defined in subsection (e)(8))
may be reduced, and
``(II) such reductions may apply to participants and
beneficiaries whose benefit commencement date is on or after
the date such notice is provided for the first plan year in
which the plan is in critical status.
``(iii) Model notice.--The Secretary of Labor shall
prescribe a model notice that a multiemployer plan may use to
satisfy the requirements under clause (ii).
``(c) Funding Improvement Plan Must Be Adopted for
Multiemployer Plans in Endangered Status.--
``(1) In general.--In any case in which a multiemployer
plan is in endangered status for a plan year, the plan
sponsor, in accordance with this subsection--
``(A) shall adopt a funding improvement plan not later than
240 days following the required date for the actuarial
certification of endangered status under subsection
(b)(3)(A), and
``(B) within 30 days after the adoption of the funding
improvement plan--
``(i) shall provide to the bargaining parties 1 or more
schedules showing revised benefit structures, revised
contribution structures, or both, which, if adopted, may
reasonably be expected to enable the multiemployer plan to
meet the applicable benchmarks in accordance with the funding
improvement plan, including--
``(I) one proposal for reductions in the amount of future
benefit accruals necessary to achieve the applicable
benchmarks, assuming no amendments increasing contributions
under the plan (other than amendments increasing
contributions necessary to achieve the applicable benchmarks
after amendments have reduced future benefit accruals to the
maximum extent permitted by law), and
``(II) one proposal for increases in contributions under
the plan necessary to achieve the applicable benchmarks,
assuming no amendments reducing future benefit accruals under
the plan, and
``(ii) may, if the plan sponsor deems appropriate, prepare
and provide the bargaining parties with additional
information relating to contribution rates or benefit
reductions, alternative schedules, or other information
relevant to achieving the applicable benchmarks in accordance
with the funding improvement plan.
For purposes of this section, the term `applicable
benchmarks' means the requirements applicable to the
multiemployer plan under paragraph (3) (as modified by
paragraph (5)).
``(2) Exception for years after process begins.--Paragraph
(1) shall not apply to a plan year if such year is in a
funding plan adoption period or funding improvement period by
reason of the plan being in endangered status for a preceding
plan year. For purposes of this section, such preceding plan
year shall be the initial determination year with respect to
the funding improvement plan to which it relates.
``(3) Funding improvement plan.--For purposes of this
section--
``(A) In general.--A funding improvement plan is a plan
which consists of the actions, including options or a range
of options to be proposed to the bargaining parties,
formulated to provide, based on reasonably anticipated
experience and reasonable actuarial assumptions, for the
attainment by the plan during the funding improvement period
of the following requirements:
``(i) Increase in plan's funding percentage.--The plan's
funded percentage as of the close of the funding improvement
period equals or exceeds a percentage equal to the sum of--
``(I) such percentage as of the beginning of such period,
plus
``(II) 33 percent of the difference between 100 percent and
the percentage under subclause (I).
``(ii) Avoidance of accumulated funding deficiencies.--No
accumulated funding deficiency for any plan year during the
funding improvement period (taking into account any extension
of amortization periods under section 304(d)).
``(B) Seriously endangered plans.--In the case of a plan in
seriously endangered status, except as provided in paragraph
(5), subparagraph (A)(i)(II) shall be applied by substituting
`20 percent' for `33 percent'.
``(4) Funding improvement period.--For purposes of this
section--
``(A) In general.--The funding improvement period for any
funding improvement plan adopted pursuant to this subsection
is the 10-year period beginning on the first day of the first
plan year of the multiemployer plan beginning after the
earlier of--
``(i) the second anniversary of the date of the adoption of
the funding improvement plan, or
``(ii) the expiration of the collective bargaining
agreements in effect on the due date for the actuarial
certification of endangered status for the initial
determination year under subsection (b)(3)(A) and covering,
as of such due date, at least 75 percent of the active
participants in such multiemployer plan.
``(B) Seriously endangered plans.--In the case of a plan in
seriously endangered status, except as provided in paragraph
(5), subparagraph (A) shall be applied by substituting `15-
year period' for `10-year period'.
``(C) Coordination with changes in status.--
``(i) Plans no longer in endangered status.--If the plan's
actuary certifies under subsection (b)(3)(A) for a plan year
in any funding plan adoption period or funding improvement
period that the plan is no longer in endangered status and is
not in critical status, the funding plan adoption period or
funding improvement period, whichever is applicable, shall
end as of the close of the preceding plan year.
``(ii) Plans in critical status.--If the plan's actuary
certifies under subsection (b)(3)(A) for a plan year in any
funding plan adoption period or funding improvement period
that the plan is in critical status, the funding plan
adoption period or funding improvement period, whichever is
applicable, shall end as of the close of the plan year
preceding the first plan year in the rehabilitation period
with respect to such status.
``(D) Plans in endangered status at end of period.--If the
plan's actuary certifies under subsection (b)(3)(A) for the
first plan year following the close of the period described
in subparagraph (A) that the plan is in endangered status,
the provisions of this subsection and subsection (d) shall be
applied as if such first plan year were an initial
determination year, except that the plan may not be amended
in a manner inconsistent with the funding improvement plan in
effect for the preceding plan year until a new funding
improvement plan is adopted.
``(5) Special rules for seriously endangered plans more
than 70 percent funded.--
``(A) In general.--If the funded percentage of a plan in
seriously endangered status was more than 70 percent as of
the beginning of the initial determination year--
``(i) paragraphs (3)(B) and (4)(B) shall apply only if the
plan's actuary certifies, within 30 days after the
certification under subsection (b)(3)(A) for the initial
determination year, that, based on the terms of the plan and
the collective bargaining agreements in effect at the time of
such certification, the plan is not projected to meet the
requirements of paragraph (3)(A) (without regard to
paragraphs (3)(B) and (4)(B)), and
``(ii) if there is a certification under clause (i), the
plan may, in formulating its funding improvement plan, only
take into account the rules of paragraph (3)(B) and (4)(B)
for plan years in the funding improvement period beginning on
or before the date on which the last of the collective
bargaining agreements described in paragraph (4)(A)(ii)
expires.
``(B) Special rule after expiration of agreements.--
Notwithstanding subparagraph (A)(ii), if, for any plan year
ending after the date described in subparagraph (A)(ii), the
plan actuary certifies (at the time of the annual
certification under subsection (b)(3)(A) for such plan year)
that,
[[Page H6074]]
based on the terms of the plan and collective bargaining
agreements in effect at the time of that annual
certification, the plan is not projected to be able to meet
the requirements of paragraph (3)(A) (without regard to
paragraphs (3)(B) and (4)(B)), paragraphs (3)(B) and (4)(B)
shall continue to apply for such year.
``(6) Updates to funding improvement plans and schedules.--
``(A) Funding improvement plan.--The plan sponsor shall
annually update the funding improvement plan and shall file
the update with the plan's annual report under section 104 of
the Employee Retirement Income Security Act of 1974.
``(B) Schedules.--The plan sponsor shall annually update
any schedule of contribution rates provided under this
subsection to reflect the experience of the plan.
``(C) Duration of schedule.--A schedule of contribution
rates provided by the plan sponsor and relied upon by
bargaining parties in negotiating a collective bargaining
agreement shall remain in effect for the duration of that
collective bargaining agreement.
``(7) Imposition of default schedule where failure to adopt
funding improvement plan.--
``(A) In general.--If--
``(i) a collective bargaining agreement providing for
contributions under a multiemployer plan that was in effect
at the time the plan entered endangered status expires, and
``(ii) after receiving one or more schedules from the plan
sponsor under paragraph (1)(B), the bargaining parties with
respect to such agreement fail to agree on changes to
contribution or benefit schedules necessary to meet the
applicable benchmarks in accordance with the funding
improvement plan,
the plan sponsor shall implement the schedule described in
paragraph (1)(B)(i)(I) beginning on the date specified in
subparagraph (B).
``(B) Date of implementation.--The date specified in this
subparagraph is the earlier of the date--
``(i) on which the Secretary of Labor certifies that the
parties are at an impasse, or
``(ii) which is 180 days after the date on which the
collective bargaining agreement described in subparagraph (A)
expires.
``(8) Funding plan adoption period.--For purposes of this
section, the term `funding plan adoption period' means the
period beginning on the date of the certification under
subsection (b)(3)(A) for the initial determination year and
ending on the day before the first day of the funding
improvement period.
``(d) Rules for Operation of Plan During Adoption and
Improvement Periods.--
``(1) Special rules for plan adoption period.--During the
funding plan adoption period--
``(A) the plan sponsor may not accept a collective
bargaining agreement or participation agreement with respect
to the multiemployer plan that provides for--
``(i) a reduction in the level of contributions for any
participants,
``(ii) a suspension of contributions with respect to any
period of service, or
``(iii) any new direct or indirect exclusion of younger or
newly hired employees from plan participation,
``(B) no amendment of the plan which increases the
liabilities of the plan by reason of any increase in
benefits, any change in the accrual of benefits, or any
change in the rate at which benefits become nonforfeitable
under the plan may be adopted unless the amendment is
required as a condition of qualification under part I of
subchapter D of chapter 1 or to comply with other applicable
law, and
``(C) in the case of a plan in seriously endangered status,
the plan sponsor shall take all reasonable actions which are
consistent with the terms of the plan and applicable law and
which are expected, based on reasonable assumptions, to
achieve--
``(i) an increase in the plan's funded percentage, and
``(ii) postponement of an accumulated funding deficiency
for at least 1 additional plan year.
Actions under subparagraph (C) include applications for
extensions of amortization periods under section 431(d), use
of the shortfall funding method in making funding standard
account computations, amendments to the plan's benefit
structure, reductions in future benefit accruals, and other
reasonable actions consistent with the terms of the plan and
applicable law.
``(2) Compliance with funding improvement plan.--
``(A) In general.--A plan may not be amended after the date
of the adoption of a funding improvement plan so as to be
inconsistent with the funding improvement plan.
``(B) No reduction in contributions.--A plan sponsor may
not during any funding improvement period accept a collective
bargaining agreement or participation agreement with respect
to the multiemployer plan that provides for--
``(i) a reduction in the level of contributions for any
participants,
``(ii) a suspension of contributions with respect to any
period of service, or
``(iii) any new direct or indirect exclusion of younger or
newly hired employees from plan participation.
``(C) Special rules for benefit increases.--A plan may not
be amended after the date of the adoption of a funding
improvement plan so as to increase benefits, including future
benefit accruals, unless the plan actuary certifies that the
benefit increase is consistent with the funding improvement
plan and is paid for out of contributions not required by the
funding improvement plan to meet the applicable benchmark in
accordance with the schedule contemplated in the funding
improvement plan.
``(e) Rehabilitation Plan Must Be Adopted for Multiemployer
Plans in Critical Status.--
``(1) In general.--In any case in which a multiemployer
plan is in critical status for a plan year, the plan sponsor,
in accordance with this subsection--
``(A) shall adopt a rehabilitation plan not later than 240
days following the required date for the actuarial
certification of critical status under subsection (b)(3)(A),
and
``(B) within 30 days after the adoption of the
rehabilitation plan--
``(i) shall provide to the bargaining parties 1 or more
schedules showing revised benefit structures, revised
contribution structures, or both, which, if adopted, may
reasonably be expected to enable the multiemployer plan to
emerge from critical status in accordance with the
rehabilitation plan, and
``(ii) may, if the plan sponsor deems appropriate, prepare
and provide the bargaining parties with additional
information relating to contribution rates or benefit
reductions, alternative schedules, or other information
relevant to emerging from critical status in accordance with
the rehabilitation plan.
The schedule or schedules described in subparagraph (B)(i)
shall reflect reductions in future benefit accruals and
adjustable benefits, and increases in contributions, that the
plan sponsor determines are reasonably necessary to emerge
from critical status. One schedule shall be designated as the
default schedule and such schedule shall assume that there
are no increases in contributions under the plan other than
the increases necessary to emerge from critical status after
future benefit accruals and other benefits (other than
benefits the reduction or elimination of which are not
permitted under section 411(d)(6)) have been reduced to the
maximum extent permitted by law.
``(2) Exception for years after process begins.--Paragraph
(1) shall not apply to a plan year if such year is in a
rehabilitation plan adoption period or rehabilitation period
by reason of the plan being in critical status for a
preceding plan year. For purposes of this section, such
preceding plan year shall be the initial critical year with
respect to the rehabilitation plan to which it relates.
``(3) Rehabilitation plan.--For purposes of this section--
``(A) In general.--A rehabilitation plan is a plan which
consists of--
``(i) actions, including options or a range of options to
be proposed to the bargaining parties, formulated, based on
reasonably anticipated experience and reasonable actuarial
assumptions, to enable the plan to cease to be in critical
status by the end of the rehabilitation period and may
include reductions in plan expenditures (including plan
mergers and consolidations), reductions in future benefit
accruals or increases in contributions, if agreed to by the
bargaining parties, or any combination of such actions, or
``(ii) if the plan sponsor determines that, based on
reasonable actuarial assumptions and upon exhaustion of all
reasonable measures, the plan can not reasonably be expected
to emerge from critical status by the end of the
rehabilitation period, reasonable measures to emerge from
critical status at a later time or to forestall possible
insolvency (within the meaning of section 4245 of the
Employee Retirement Income Security Act of 1974).
A rehabilitation plan must provide annual standards for
meeting the requirements of such rehabilitation plan. Such
plan shall also include the schedules required to be provided
under paragraph (1)(B)(i) and if clause (ii) applies, shall
set forth the alternatives considered, explain why the plan
is not reasonably expected to emerge from critical status by
the end of the rehabilitation period, and specify when, if
ever, the plan is expected to emerge from critical status in
accordance with the rehabilitation plan.
``(B) Updates to rehabilitation plan and schedules.--
``(i) Rehabilitation plan.--The plan sponsor shall annually
update the rehabilitation plan and shall file the update with
the plan's annual report under section 104 of the Employee
Retirement Income Security Act of 1974.
``(ii) Schedules.--The plan sponsor shall annually update
any schedule of contribution rates provided under this
subsection to reflect the experience of the plan.
``(iii) Duration of schedule.--A schedule of contribution
rates provided by the plan sponsor and relied upon by
bargaining parties in negotiating a collective bargaining
agreement shall remain in effect for the duration of that
collective bargaining agreement.
``(C) Imposition of default schedule where failure to adopt
rehabilitation plan.--
``(i) In general.--If--
``(I) a collective bargaining agreement providing for
contributions under a multiemployer plan that was in effect
at the time the plan entered critical status expires, and
``(II) after receiving one or more schedules from the plan
sponsor under paragraph (1)(B), the bargaining parties with
respect to such agreement fail to adopt a contribution or
benefit schedules with terms consistent with the
rehabilitation plan and the schedule
[[Page H6075]]
from the plan sponsor under paragraph (1)(B)(i),
the plan sponsor shall implement the default schedule
described in the last sentence of paragraph (1) beginning on
the date specified in clause (ii).
``(ii) Date of implementation.--The date specified in this
clause is the earlier of the date--
``(I) on which the Secretary of Labor certifies that the
parties are at an impasse, or
``(II) which is 180 days after the date on which the
collective bargaining agreement described in clause (i)
expires.
``(4) Rehabilitation period.--For purposes of this
section--
``(A) In general.--The rehabilitation period for a plan in
critical status is the 10-year period beginning on the first
day of the first plan year of the multiemployer plan
following the earlier of--
``(i) the second anniversary of the date of the adoption of
the rehabilitation plan, or
``(ii) the expiration of the collective bargaining
agreements in effect on the date of the due date for the
actuarial certification of critical status for the initial
critical year under subsection (a)(1) and covering, as of
such date at least 75 percent of the active participants in
such multiemployer plan.
If a plan emerges from critical status as provided under
subparagraph (B) before the end of such 10-year period, the
rehabilitation period shall end with the plan year preceding
the plan year for which the determination under subparagraph
(B) is made.
``(B) Emergence.--A plan in critical status shall remain in
such status until a plan year for which the plan actuary
certifies, in accordance with subsection (b)(3)(A), that the
plan is not projected to have an accumulated funding
deficiency for the plan year or any of the 9 succeeding plan
years, without regard to the use of the shortfall method and
taking into account any extension of amortization periods
under section 431(d).
``(5) Rehabilitation plan adoption period.--For purposes of
this section, the term `rehabilitation plan adoption period'
means the period beginning on the date of the certification
under subsection (b)(3)(A) for the initial critical year and
ending on the day before the first day of the rehabilitation
period.
``(6) Limitation on reduction in rates of future
accruals.--Any reduction in the rate of future accruals under
the default schedule described in paragraph (1)(B)(i) shall
not reduce the rate of future accruals below--
``(A) a monthly benefit (payable as a single life annuity
commencing at the participant's normal retirement age) equal
to 1 percent of the contributions required to be made with
respect to a participant, or the equivalent standard accrual
rate for a participant or group of participants under the
collective bargaining agreements in effect as of the first
day of the initial critical year, or
``(B) if lower, the accrual rate under the plan on such
first day.
The equivalent standard accrual rate shall be determined by
the plan sponsor based on the standard or average
contribution base units which the plan sponsor determines to
be representative for active participants and such other
factors as the plan sponsor determines to be relevant.
Nothing in this paragraph shall be construed as limiting the
ability of the plan sponsor to prepare and provide the
bargaining parties with alternative schedules to the default
schedule that established lower or higher accrual and
contribution rates than the rates otherwise described in this
paragraph.
``(7) Automatic employer surcharge.--
``(A) Imposition of surcharge.--Each employer otherwise
obligated to make a contribution for the initial critical
year shall be obligated to pay to the plan for such year a
surcharge equal to 5 percent of the contribution otherwise
required under the applicable collective bargaining agreement
(or other agreement pursuant to which the employer
contributes). For each succeeding plan year in which the plan
is in critical status for a consecutive period of years
beginning with the initial critical year, the surcharge shall
be 10 percent of the contribution otherwise so required.
``(B) Enforcement of surcharge.--The surcharges under
subparagraph (A) shall be due and payable on the same
schedule as the contributions on which the surcharges are
based. Any failure to make a surcharge payment shall be
treated as a delinquent contribution under section 515 of the
Employee Retirement Income Security Act of 1974 and shall be
enforceable as such.
``(C) Surcharge to terminate upon collective bargaining
agreement renegotiation.--The surcharge under this paragraph
shall cease to be effective with respect to employees covered
by a collective bargaining agreement (or other agreement
pursuant to which the employer contributes), beginning on the
effective date of a collective bargaining agreement (or other
such agreement) that includes terms consistent with a
schedule presented by the plan sponsor under paragraph
(1)(B)(i), as modified under subparagraph (B) of paragraph
(3).
``(D) Surcharge not to apply until employer receives
notice.--The surcharge under this paragraph shall not apply
to an employer until 30 days after the employer has been
notified by the plan sponsor that the plan is in critical
status and that the surcharge is in effect.
``(E) Surcharge not to generate increased benefit
accruals.--Notwithstanding any provision of a plan to the
contrary, the amount of any surcharge under this paragraph
shall not be the basis for any benefit accrual under the
plan.
``(8) Benefit adjustments.--
``(A) Adjustable benefits.--
``(i) In general.--Notwithstanding section 204(g), the plan
sponsor shall, subject to the notice requirement under
subparagraph (C), make any reductions to adjustable benefits
which the plan sponsor deems appropriate, based upon the
outcome of collective bargaining over the schedule or
schedules provided under paragraph (1)(B)(i).
``(ii) Exception for retirees.--Except in the case of
adjustable benefits described in clause (iv)(III), the plan
sponsor of a plan in critical status shall not reduce
adjustable benefits of any participant or beneficiary whose
benefit commencement date is before the date on which the
plan provides notice to the participant or beneficiary under
subsection (b)(3)(D) for the initial critical year .
``(iii) Plan sponsor flexibility.--The plan sponsor shall
include in the schedules provided to the bargaining parties
an allowance for funding the benefits of participants with
respect to whom contributions are not currently required to
be made, and shall reduce their benefits to the extent
permitted under this title and considered appropriate by the
plan sponsor based on the plan's then current overall funding
status.
``(iv) Adjustable benefit defined.--For purposes of this
paragraph, the term `adjustable benefit' means--
``(I) benefits, rights, and features under the plan,
including post-retirement death benefits, 60-month
guarantees, disability benefits not yet in pay status, and
similar benefits,
``(II) any early retirement benefit or retirement-type
subsidy (within the meaning of section 411(d)(6)(B)(i)) and
any benefit payment option (other than the qualified joint-
and survivor annuity), and
``(III) benefit increases that would not be eligible for a
guarantee under section 4022A of the Employee Retirement
Income Security Act of 1974 on the first day of initial
critical year because the increases were adopted (or, if
later, took effect) less than 60 months before such first
day.
``(B) Normal retirement benefits protected.--Except as
provided in subparagraph (A)(iv)(III), nothing in this
paragraph shall be construed to permit a plan to reduce the
level of a participant's accrued benefit payable at normal
retirement age.
``(C) Notice requirements.--
``(i) In general.--No reduction may be made to adjustable
benefits under subparagraph (A) unless notice of such
reduction has been given at least 30 days before the general
effective date of such reduction for all participants and
beneficiaries to--
``(I) plan participants and beneficiaries,
``(II) each employer who has an obligation to contribute
(within the meaning of section 4212(a)) under the plan, and
``(III) each employee organization which, for purposes of
collective bargaining, represents plan participants employed
by such an employer.
``(ii) Content of notice.--The notice under clause (i)
shall contain--
``(I) sufficient information to enable participants and
beneficiaries to understand the effect of any reduction on
their benefits, including an estimate (on an annual or
monthly basis) of any affected adjustable benefit that a
participant or beneficiary would otherwise have been eligible
for as of the general effective date described in clause (i),
and
``(II) information as to the rights and remedies of plan
participants and beneficiaries as well as how to contact the
Department of Labor for further information and assistance
where appropriate.
``(iii) Form and manner.--Any notice under clause (i)--
``(I) shall be provided in a form and manner prescribed in
regulations of the Secretary of Labor,
``(II) shall be written in a manner so as to be understood
by the average plan participant, and
``(III) may be provided in written, electronic, or other
appropriate form to the extent such form is reasonably
accessible to persons to whom the notice is required to be
provided.
The Secretary of Labor shall in the regulations prescribed
under subclause (I) establish a model notice that a plan
sponsor may use to meet the requirements of this
subparagraph.
``(9) Adjustments disregarded in withdrawal liability
determination.--
``(A) Benefit reductions.--Any benefit reductions under
this subsection shall be disregarded in determining a plan's
unfunded vested benefits for purposes of determining an
employer's withdrawal liability under section 4201 of the
Employee Retirement Income Security Act of 1974.
``(B) Surcharges.--Any surcharges under paragraph (7) shall
be disregarded in determining an employer's withdrawal
liability under section 4211 of such Act, except for purposes
of determining the unfunded vested benefits attributable to
an employer under section 4211(c)(4) of such Act or a
comparable method approved under section 4211(c)(5) of such
Act.
``(C) Simplified calculations.--The Pension Benefit
Guaranty Corporation shall prescribe simplified methods for
the application of this paragraph in determining withdrawal
liability.
``(f) Rules for Operation of Plan During Adoption and
Rehabilitation Period.--
[[Page H6076]]
``(1) Compliance with rehabilitation plan.--
``(A) In general.--A plan may not be amended after the date
of the adoption of a rehabilitation plan under subsection (e)
so as to be inconsistent with the rehabilitation plan.
``(B) Special rules for benefit increases.--A plan may not
be amended after the date of the adoption of a rehabilitation
plan under subsection (e) so as to increase benefits,
including future benefit accruals, unless the plan actuary
certifies that such increase is paid for out of additional
contributions not contemplated by the rehabilitation plan,
and, after taking into account the benefit increase, the
multiemployer plan still is reasonably expected to emerge
from critical status by the end of the rehabilitation period
on the schedule contemplated in the rehabilitation plan.
``(2) Restriction on lump sums and similar benefits.--
``(A) In general.--Effective on the date the notice of
certification of the plan's critical status for the initial
critical year under subsection (b)(3)(D) is sent, and
notwithstanding section 411(d)(6), the plan shall not pay--
``(i) any payment, in excess of the monthly amount paid
under a single life annuity (plus any social security
supplements described in the last sentence of section
411(b)(1)(A)),
``(ii) any payment for the purchase of an irrevocable
commitment from an insurer to pay benefits, and
``(iii) any other payment specified by the Secretary by
regulations.
``(B) Exception.--Subparagraph (A) shall not apply to a
benefit which under section 411(a)(11) may be immediately
distributed without the consent of the participant or to any
makeup payment in the case of a retroactive annuity starting
date or any similar payment of benefits owed with respect to
a prior period.
``(3) Adjustments disregarded in withdrawal liability
determination.--Any benefit reductions under this subsection
shall be disregarded in determining a plan's unfunded vested
benefits for purposes of determining an employer's withdrawal
liability under section 4201 of the Employee Retirement
Income Security Act of 1974.
``(4) Special rules for plan adoption period.--During the
rehabilitation plan adoption period--
``(A) the plan sponsor may not accept a collective
bargaining agreement or participation agreement with respect
to the multiemployer plan that provides for--
``(i) a reduction in the level of contributions for any
participants,
``(ii) a suspension of contributions with respect to any
period of service, or
``(iii) any new direct or indirect exclusion of younger or
newly hired employees from plan participation, and
``(B) no amendment of the plan which increases the
liabilities of the plan by reason of any increase in
benefits, any change in the accrual of benefits, or any
change in the rate at which benefits become nonforfeitable
under the plan may be adopted unless the amendment is
required as a condition of qualification under part I of
subchapter D of chapter 1 or to comply with other applicable
law.
``(g) Expedited Resolution of Plan Sponsor Decisions.--If,
within 60 days of the due date for adoption of a funding
improvement plan or a rehabilitation plan under subsection
(e), the plan sponsor of a plan in endangered status or a
plan in critical status has not agreed on a funding
improvement plan or rehabilitation plan, then any member of
the board or group that constitutes the plan sponsor may
require that the plan sponsor enter into an expedited dispute
resolution procedure for the development and adoption of a
funding improvement plan or rehabilitation plan.
``(h) Nonbargained Participation.--
``(1) Both bargained and nonbargained employee-
participants.--In the case of an employer that contributes to
a multiemployer plan with respect to both employees who are
covered by one or more collective bargaining agreements and
employees who are not so covered, if the plan is in
endangered status or in critical status, benefits of and
contributions for the nonbargained employees, including
surcharges on those contributions, shall be determined as if
those nonbargained employees were covered under the first to
expire of the employer's collective bargaining agreements in
effect when the plan entered endangered or critical status.
``(2) Nonbargained employees only.--In the case of an
employer that contributes to a multiemployer plan only with
respect to employees who are not covered by a collective
bargaining agreement, this section shall be applied as if the
employer were the bargaining party, and its participation
agreement with the plan were a collective bargaining
agreement with a term ending on the first day of the plan
year beginning after the employer is provided the schedule or
schedules described in subsections (c) and (e).
``(i) Definitions; Actuarial Method.--For purposes of this
section--
``(1) Bargaining party.--The term `bargaining party'
means--
``(A)(i) except as provided in clause (ii), an employer who
has an obligation to contribute under the plan; or
``(ii) in the case of a plan described under section
404(c), or a continuation of such a plan, the association of
employers that is the employer settlor of the plan; and
``(B) an employee organization which, for purposes of
collective bargaining, represents plan participants employed
by an employer who has an obligation to contribute under the
plan.
``(2) Funded percentage.--The term `funded percentage'
means the percentage equal to a fraction--
``(A) the numerator of which is the value of the plan's
assets, as determined under section 431(c)(2), and
``(B) the denominator of which is the accrued liability of
the plan, determined using actuarial assumptions described in
section 431(c)(3).
``(3) Accumulated funding deficiency.--The term
`accumulated funding deficiency' has the meaning given such
term in section 412(a).
``(4) Active participant.--The term `active participant'
means, in connection with a multiemployer plan, a participant
who is in covered service under the plan.
``(5) Inactive participant.--The term `inactive
participant' means, in connection with a multiemployer plan,
a participant, or the beneficiary or alternate payee of a
participant, who--
``(A) is not in covered service under the plan, and
``(B) is in pay status under the plan or has a
nonforfeitable right to benefits under the plan.
``(6) Pay status.--A person is in pay status under a
multiemployer plan if--
``(A) at any time during the current plan year, such person
is a participant or beneficiary under the plan and is paid an
early, late, normal, or disability retirement benefit under
the plan (or a death benefit under the plan related to a
retirement benefit), or
``(B) to the extent provided in regulations of the
Secretary, such person is entitled to such a benefit under
the plan.
``(7) Obligation to contribute.--The term `obligation to
contribute' has the meaning given such term under section
4212(a) of the Employee Retirement Income Security Act of
1974.
``(8) Actuarial method.--Notwithstanding any other
provision of this section, the actuary's determinations with
respect to a plan's normal cost, actuarial accrued liability,
and improvements in a plan's funded percentage under this
section shall be based upon the unit credit funding method
(whether or not that method is used for the plan's actuarial
valuation).
``(9) Plan sponsor.--In the case of a plan described under
section 404(c), or a continuation of such a plan, the term
`plan sponsor' means the bargaining parties described under
paragraph (1).
``(10) Benefit commencement date.--The term `benefit
commencement date' means the annuity starting date (or in the
case of a retroactive annuity starting date, the date on
which benefit payments begin).''
(b) Excise Taxes on Failures Relating to Multiemployer
Plans in Endangered or Critical Status.--
(1) In general.--Section 4971 of the Internal Revenue Code
of 1986 is amended by redesignating subsection (g) as
subsection (h) and by inserting after subsection (f) the
following:
``(g) Multiemployer Plans in Endangered or Critical
Status.--
``(1) In general.--Except as provided in this subsection--
``(A) no tax shall be imposed under this section for a
taxable year with respect to a multiemployer plan if, for the
plan years ending with or within the taxable year, the plan
is in critical status pursuant to section 432, and
``(B) any tax imposed under this subsection for a taxable
year with respect to a multiemployer plan if, for the plan
years ending with or within the taxable year, the plan is in
endangered status pursuant to section 432 shall be in
addition to any other tax imposed by this section.
``(2) Failure to comply with funding improvement or
rehabilitation plan.--
``(A) In general.--If any funding improvement plan or
rehabilitation plan in effect under section 432 with respect
to a multiemployer plan requires an employer to make a
contribution to the plan, there is hereby imposed a tax on
each failure of the employer to make the required
contribution within the time required under such plan.
``(B) Amount of tax.--The amount of the tax imposed by
subparagraph (A) shall be equal to the amount of the required
contribution the employer failed to make in a timely manner.
``(C) Liability for tax.--The tax imposed by subparagraph
(A) shall be paid by the employer responsible for
contributing to or under the rehabilitation plan which fails
to make the contribution.
``(3) Failure to meet requirements for plans in endangered
or critical status.--If--
``(A) a plan which is in seriously endangered status fails
to meet the applicable benchmarks by the end of the funding
improvement period, or
``(B) a plan which is in critical status either--
``(i) fails to meet the requirements of section 432(e) by
the end of the rehabilitation period, or
``(ii) has received a certification under section
432(b)(3)(A)(ii) for 3 consecutive plan years that the plan
is not making the scheduled progress in meeting its
requirements under the rehabilitation plan,
the plan shall be treated as having an accumulated funding
deficiency for purposes of
[[Page H6077]]
this section for the last plan year in such funding
improvement, rehabilitation, or 3-consecutive year period
(and each succeeding plan year until such benchmarks or
requirements are met) in an amount equal to the greater of
the amount of the contributions necessary to meet such
benchmarks or requirements or the amount of such accumulated
funding deficiency without regard to this paragraph.
``(4) Failure to adopt rehabilitation plan.--
``(A) In general.--In the case of a multiemployer plan
which is in critical status, there is hereby imposed a tax on
the failure of such plan to adopt a rehabilitation plan
within the time prescribed under section 432.
``(B) Amount of tax.--The amount of the tax imposed under
subparagraph (A) with respect to any plan sponsor for any
taxable year shall be the greater of--
``(i) the amount of tax imposed under subsection (a) for
the taxable year (determined without regard to this
subsection), or
``(ii) the amount equal to $1,100 multiplied by the number
of days during the taxable year which are included in the
period beginning on the first day of the 240-day period
described in section 432(e)(1)(A) and ending on the day on
which the rehabilitation plan is adopted.
``(C) Liability for tax.--
``(i) In general.--The tax imposed by subparagraph (A)
shall be paid by each plan sponsor.
``(ii) Plan sponsor.--For purposes of clause (i), the term
`plan sponsor' in the case of a multiemployer plan means the
association, committee, joint board of trustees, or other
similar group of representatives of the parties who establish
or maintain the plan.
``(5) Waiver.--In the case of a failure described in
paragraph (2) or (3) which is due to reasonable cause and not
to willful neglect, the Secretary may waive part or all of
the tax imposed by this subsection. For purposes of this
paragraph, reasonable cause includes unanticipated and
material market fluctuations, the loss of a significant
contributing employer, or other factors to the extent that
the payment of tax under this subsection with respect to the
failure would be excessive or otherwise inequitable relative
to the failure involved.
``(6) Terms used in section 432.--For purposes of this
subsection, any term used in this subsection which is also
used in section 432 shall have the meaning given such term by
section 432.''.
(2) Controlled groups.--Section 4971(c)(2) of such Code is
amended--
(A) by striking ``In the case of a plan other than a
multiemployer plan, if the'' and inserting ``If an'', and
(B) by striking ``or (f)'' and inserting ``(f), or (g)''.
(c) No Additional Contribution Required.--Section 412(b) of
the Internal Revenue Code of 1986, as amended by this Act, is
amended by adding at the end the following new paragraph:
``(3) Multiemployer plans in critical status.--Paragraph
(1) shall not apply in the case of a multiemployer plan for
any plan year in which the plan is in critical status
pursuant to section 432. This paragraph shall only apply if
the plan adopts a rehabilitation plan in accordance with
section 432(e) and complies with such rehabilitation plan
(and any modifications of the plan).''.
(d) Clerical Amendment.--The table of sections for subpart
A of part III of subchapter D of chapter 1 of such Code is
amended by adding at the end the following new item:
``Sec. 432. Additional funding rules for multiemployer plans in
endangered status or critical status.''.
(e) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply with respect to plan years beginning after 2007.
(2) Special rule for certain notices.--In any case in which
a plan's actuary certifies that it is reasonably expected
that a multiemployer plan will be in critical status under
section 305(b)(3) of the Employee Retirement Income Security
Act of 1974, as added by this section, with respect to the
first plan year beginning after 2007, the notice required
under subparagraph (D) of such section may be provided at any
time after the date of enactment, so long as it is provided
on or before the last date for providing the notice under
such subparagraph.
(3) Special rule for certain restored benefits.--In the
case of a multiemployer plan--
(A) with respect to which benefits were reduced pursuant to
a plan amendment adopted on or after January 1, 2002, and
before June 30, 2005, and
(B) which, pursuant to the plan document, the trust
agreement, or a formal written communication from the plan
sponsor to participants provided before June 30, 2005,
provided for the restoration of such benefits,
the amendments made by this section shall not apply to such
benefit restorations to the extent that any restriction on
the providing or accrual of such benefits would otherwise
apply by reason of such amendments.
SEC. 213. MEASURES TO FORESTALL INSOLVENCY OF MULTIEMPLOYER
PLANS.
(a) Advance Determination of Impending Insolvency Over 5
Years.--Section 418E(d)(1) of the Internal Revenue Code of
1986 is amended--
(1) by striking ``3 plan years'' the second place it
appears and inserting ``5 plan years''; and
(2) by adding at the end the following new sentence: ``If
the plan sponsor makes such a determination that the plan
will be insolvent in any of the next 5 plan years, the plan
sponsor shall make the comparison under this paragraph at
least annually until the plan sponsor makes a determination
that the plan will not be insolvent in any of the next 5 plan
years.''.
(b) Effective Date.--The amendments made by this section
shall apply with respect to the determinations made in plan
years beginning after 2007.
SEC. 214. EXEMPTION FROM EXCISE TAXES FOR CERTAIN
MULTIEMPLOYER PENSION PLANS.
(a) In General.--Notwithstanding any other provision of
law, no tax shall be imposed under subsection (a) or (b) of
section 4971 of the Internal Revenue Code of 1986 with
respect to any accumulated funding deficiency of a plan
described in subsection (b) of this section for any taxable
year beginning before the earlier of--
(1) the taxable year in which the plan sponsor adopts a
rehabilitation plan under section 305(e) of the Employee
Retirement Income Security Act of 1974 and section 432(e) of
such Code (as added by this Act); or
(2) the taxable year that contains January 1, 2009.
(b) Plan Described.--A plan described under this subsection
is a multiemployer pension plan--
(1) with less than 100 participants;
(2) with respect to which the contributing employers
participated in a Federal fishery capacity reduction program;
(3) with respect to which employers under the plan
participated in the Northeast Fisheries Assistance Program;
and
(4) with respect to which the annual normal cost is less
than $100,000 and the plan is experiencing a funding
deficiency on the date of enactment of this Act.
Subtitle C--Sunset of Additional Funding Rules
SEC. 221. SUNSET OF ADDITIONAL FUNDING RULES.
(a) Report.--Not later than December 31, 2011, the
Secretary of Labor, the Secretary of the Treasury, and the
Executive Director of the Pension Benefit Guaranty
Corporation shall conduct a study of the effect of the
amendments made by this subtitle on the operation and funding
status of multiemployer plans and shall report the results of
such study, including any recommendations for legislation, to
the Congress.
(b) Matters Included in Study.--The study required under
subsection (a) shall include--
(1) the effect of funding difficulties, funding rules in
effect before the date of the enactment of this Act, and the
amendments made by this subtitle on small businesses
participating in multiemployer plans,
(2) the effect on the financial status of small employers
of--
(A) funding targets set in funding improvement and
rehabilitation plans and associated contribution increases,
(B) funding deficiencies,
(C) excise taxes,
(D) withdrawal liability,
(E) the possibility of alternatives schedules and
procedures for financially-troubled employers, and
(F) other aspects of the multiemployer system, and
(3) the role of the multiemployer pension plan system in
helping small employers to offer pension benefits.
(c) Sunset.--
(1) In general.--Except as provided in this subsection,
notwithstanding any other provision of this Act, the
provisions of, and the amendments made by, sections 201(b),
202, and 212 shall not apply to plan years beginning after
December 31, 2014.
(2) Funding improvement and rehabilitation plans.--If a
plan is operating under a funding improvement or
rehabilitation plan under section 305 of such Act or 432 of
such Code for its last year beginning before January 1, 2015,
such plan shall continue to operate under such funding
improvement or rehabilitation plan during any period after
December 31, 2014, such funding improvement or rehabilitation
plan is in effect and all provisions of such Act or Code
relating to the operation of such funding improvement or
rehabilitation plan shall continue in effect during such
period.
TITLE III--INTEREST RATE ASSUMPTIONS
SEC. 301. EXTENSION OF REPLACEMENT OF 30-YEAR TREASURY RATES.
(a) Amendments of ERISA.--
(1) Determination of range.--Subclause (II) of section
302(b)(5)(B)(ii) of the Employee Retirement Income Security
Act of 1974 is amended--
(A) by striking ``2006'' and inserting ``2008'', and
(B) by striking ``AND 2005'' in the heading and inserting
``, 2005, 2006, AND 2007''.
(2) Determination of current liability.--Subclause (IV) of
section 302(d)(7)(C)(i) of such Act is amended--
(A) by striking ``or 2005'' and inserting ``, 2005, 2006,
or 2007'', and
(B) by striking ``AND 2005'' in the heading and inserting
``, 2005, 2006, AND 2007''.
(3) PBGC premium rate.--Subclause (V) of section
4006(a)(3)(E)(iii) of such Act is amended by striking
``2006'' and inserting ``2008''.
(b) Amendments of Internal Revenue Code.--
(1) Determination of range.--Subclause (II) of section
412(b)(5)(B)(ii) of the Internal Revenue Code of 1986 is
amended--
[[Page H6078]]
(A) by striking ``2006'' and inserting ``2008'', and
(B) by striking ``AND 2005'' in the heading and inserting
``, 2005, 2006, AND 2007''.
(2) Determination of current liability.--Subclause (IV) of
section 412(l)(7)(C)(i) of such Code is amended--
(A) by striking ``or 2005'' and inserting ``, 2005, 2006,
or 2007'', and
(B) by striking ``AND 2005'' in the heading and inserting
``, 2005, 2006, AND 2007''.
(c) Plan Amendments.--Clause (ii) of section 101(c)(2)(A)
of the Pension Funding Equity Act of 2004 is amended by
striking ``2006'' and inserting ``2008''.
SEC. 302. INTEREST RATE ASSUMPTION FOR DETERMINATION OF LUMP
SUM DISTRIBUTIONS.
(a) Amendment to Employee Retirement Income Security Act of
1974.--Paragraph (3) of section 205(g) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1055(g)(3))
is amended to read as follows:
``(3)(A) For purposes of paragraphs (1) and (2), the
present value shall not be less than the present value
calculated by using the applicable mortality table and the
applicable interest rate.
``(B) For purposes of subparagraph (A)--
``(i) The term `applicable mortality table' means a
mortality table, modified as appropriate by the Secretary of
the Treasury, based on the mortality table specified for the
plan year under subparagraph (A) of section 303(h)(3)
(without regard to subparagraph (C) or (D) of such section).
``(ii) The term `applicable interest rate' means the
adjusted first, second, and third segment rates applied under
rules similar to the rules of section 303(h)(2)(C) for the
month before the date of the distribution or such other time
as the Secretary of the Treasury may by regulations
prescribe.
``(iii) For purposes of clause (ii), the adjusted first,
second, and third segment rates are the first, second, and
third segment rates which would be determined under section
303(h)(2)(C) if--
``(I) section 303(h)(2)(D) were applied by substituting the
average yields for the month described in clause (ii) for the
average yields for the 24-month period described in such
section,
``(II) section 303(h)(2)(G)(i)(II) were applied by
substituting `section 205(g)(3)(B)(iii)(II)' for `section
302(b)(5)(B)(ii)(II)', and
``(III) the applicable percentage under section
303(h)(2)(G) were determined in accordance with the following
table:
In the case of plan years beginning in: The applicable percentage is:
2008.......................................................20 percent
2009.......................................................40 percent
2010.......................................................60 percent
2011...................................................80 percent.''.
(b) Amendment to Internal Revenue Code of 1986.--Paragraph
(3) of section 417(e) of the Internal Revenue Code of 1986 is
amended to read as follows:
``(3) Determination of present value.--
``(A) In general.--For purposes of paragraphs (1) and (2),
the present value shall not be less than the present value
calculated by using the applicable mortality table and the
applicable interest rate.
``(B) Applicable mortality table.--For purposes of
subparagraph (A), the term `applicable mortality table' means
a mortality table, modified as appropriate by the Secretary,
based on the mortality table specified for the plan year
under subparagraph (A) of section 430(h)(3) (without regard
to subparagraph (C) or (D) of such section).
``(C) Applicable interest rate.--For purposes of
subparagraph (A), the term `applicable interest rate' means
the adjusted first, second, and third segment rates applied
under rules similar to the rules of section 430(h)(2)(C) for
the month before the date of the distribution or such other
time as the Secretary may by regulations prescribe.
``(D) Applicable segment rates.--For purposes of
subparagraph (C), the adjusted first, second, and third
segment rates are the first, second, and third segment rates
which would be determined under section 430(h)(2)(C) if--
``(i) section 430(h)(2)(D) were applied by substituting the
average yields for the month described in clause (ii) for the
average yields for the 24-month period described in such
section,
``(ii) section 430(h)(2)(G)(i)(II) were applied by
substituting `section 417(e)(3)(A)(ii)(II)' for `section
412(b)(5)(B)(ii)(II)', and
``(iii) the applicable percentage under section
430(h)(2)(G) were determined in accordance with the following
table:
In the case of plan years beginning in: The applicable percentage is:
2008.......................................................20 percent
2009.......................................................40 percent
2010.......................................................60 percent
2011...................................................80 percent.''.
(c) Effective Date.--The amendments made by this section
shall apply with respect to plan years beginning after
December 31, 2007.
SEC. 303. INTEREST RATE ASSUMPTION FOR APPLYING BENEFIT
LIMITATIONS TO LUMP SUM DISTRIBUTIONS.
(a) In General.--Clause (ii) of section 415(b)(2)(E) of the
Internal Revenue Code of 1986 is amended to read as follows:
``(ii) For purposes of adjusting any benefit under
subparagraph (B) for any form of benefit subject to section
417(e)(3), the interest rate assumption shall not be less
than the greatest of--
``(I) 5.5 percent,
``(II) the rate that provides a benefit of not more than
105 percent of the benefit that would be provided if the
applicable interest rate (as defined in section 417(e)(3))
were the interest rate assumption, or
``(III) the rate specified under the plan.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to distributions made in years beginning after
December 31, 2005.
TITLE IV--PBGC GUARANTEE AND RELATED PROVISIONS
SEC. 401. PBGC PREMIUMS.
(a) Variable-Rate Premiums.--
(1) Conforming amendments related to funding rules for
single-employer plans.--Section 4006(a)(3)(E) of the Employee
Retirement Income and Security Act of 1974 (29 U.S.C.
1306(a)(3)(E)) is amended by striking clauses (iii) and (iv)
and inserting the following:
``(iii) For purposes of clause (ii), the term `unfunded
vested benefits' means, for a plan year, the excess (if any)
of--
``(I) the funding target of the plan as determined under
section 303(d) for the plan year by only taking into account
vested benefits and by using the interest rate described in
clause (iv), over
``(II) the fair market value of plan assets for the plan
year which are held by the plan on the valuation date.
``(iv) The interest rate used in valuing benefits for
purposes of subclause (I) of clause (iii) shall be equal to
the first, second, or third segment rate for the month
preceding the month in which the plan year begins, which
would be determined under section 303(h)(2)(C) if section
303(h)(2)(D) were applied by using the monthly yields for the
month preceding the month in which the plan year begins on
investment grade corporate bonds with varying maturities and
in the top 3 quality levels rather than the average of such
yields for a 24-month period.''.
(2) Effective date.--The amendments made by paragraph (1)
shall apply with respect to plan years beginning after 2007.
(b) Termination Premiums.--
(1) Repeal of sunset provision.--Subparagraph (E) of
section 4006(a)(7) of such Act is repealed.
(2) Technical correction.--
(A) In general.--Section 4006(a)(7)(C)(ii) of such Act is
amended by striking ``subparagraph (B)(i)(I)'' and inserting
``subparagraph (B)''.
(B) Effective date.--The amendment made by this paragraph
shall take effect as if included in the provision of the
Deficit Reduction Act of 2005 to which it relates.
SEC. 402. SPECIAL FUNDING RULES FOR CERTAIN PLANS MAINTAINED
BY COMMERCIAL AIRLINES.
(a) In General.--The plan sponsor of an eligible plan may
elect to either--
(1) have the rules of subsection (b) apply, or
(2) have section 303 of the Employee Retirement Income
Security Act of 1974 and section 430 of the Internal Revenue
Code of 1986 applied to its first taxable year beginning in
2008 by amortizing the shortfall amortization base for such
taxable year over a period of 10 plan years (rather than 7
plan years) beginning with such plan year.
(b) Alternative Funding Schedule.--
(1) In general.--If an election is made under subsection
(a)(1) to have this subsection apply to an eligible plan and
the requirements of paragraphs (2) and (3) are met with
respect to the plan--
(A) in the case of any applicable plan year beginning
before January 1, 2008, the plan shall not have an
accumulated funding deficiency for purposes of section 302 of
the Employee Retirement Income Security Act of 1974 and
sections 412 and 4971 of the Internal Revenue Code of 1986 if
contributions to the plan for the plan year are not less than
the minimum required contribution determined under subsection
(e) for the plan for the plan year, and
(B) in the case of any applicable plan year beginning on or
after January 1, 2008, the minimum required contribution
determined under sections 303 of such Act and 430 of such
Code shall, for purposes of sections 302 and 303 of such Act
and sections 412, 430, and 4971 of such Code, be equal to the
minimum required contribution determined under subsection (e)
for the plan for the plan year.
(2) Accrual restrictions.--
(A) In general.--The requirements of this paragraph are met
if, effective as of the first day of the first applicable
plan year and at all times thereafter while an election under
this section is in effect, the plan provides that--
(i) the accrued benefit, any death or disability benefit,
and any social security supplement described in the last
sentence of section 411(a)(9) of such Code and section
204(b)(1)(G) of such Act, of each participant are frozen at
the amount of such benefit or supplement immediately before
such first day, and
(ii) all other benefits under the plan are eliminated,
but only to the extent the freezing or elimination of such
benefits would have been permitted under section 411(d)(6) of
such Code and section 204(g) of such Act if they had been
implemented by a plan amendment adopted immediately before
such first day.
(B) Increases in section 415 limits.--If a plan provides
that an accrued benefit of a participant which has been
subject to any limitation under section 415 of such Code will
be increased if such limitation is increased, the plan shall
not be treated as meeting the requirements of this section
unless, effective as of the first day of the first
[[Page H6079]]
applicable plan year (or, if later, the date of the enactment
of this Act) and at all times thereafter while an election
under this section is in effect, the plan provides that any
such increase shall not take effect. A plan shall not fail to
meet the requirements of section 411(d)(6) of such Code and
section 204(g) of such Act solely because the plan is amended
to meet the requirements of this subparagraph.
(3) Restriction on applicable benefit increases.--
(A) In general.--The requirements of this paragraph are met
if no applicable benefit increase takes effect at any time
during the period beginning on July 26, 2005, and ending on
the day before the first day of the first applicable plan
year.
(B) Applicable benefit increase.--For purposes of this
paragraph, the term ``applicable benefit increase'' means,
with respect to any plan year, any increase in liabilities of
the plan by plan amendment (or otherwise provided in
regulations provided by the Secretary) which, but for this
paragraph, would occur during the plan year by reason of--
(i) any increase in benefits,
(ii) any change in the accrual of benefits, or
(iii) any change in the rate at which benefits become
nonforfeitable under the plan.
(4) Exception for imputed disability service.--Paragraphs
(2) and (3) shall not apply to any accrual or increase with
respect to imputed service provided to a participant during
any period of the participant's disability occurring on or
after the effective date of the plan amendment providing the
restrictions under paragraph (2) (or on or after July 26,
2005, in the case of the restrictions under paragraph (3)) if
the participant--
(A) was receiving disability benefits as of such date, or
(B) was receiving sick pay and subsequently determined to
be eligible for disability benefits as of such date.
(c) Definitions.--For purposes of this section--
(1) Eligible plan.--The term ``eligible plan'' means a
defined benefit plan (other than a multiemployer plan) to
which sections 302 of such Act and 412 of such Code applies
which is sponsored by an employer--
(A) which is a commercial airline passenger airline, or
(B) the principal business of which is providing catering
services to a commercial passenger airline.
(2) Applicable plan year.--The term ``applicable plan
year'' means each plan year to which the election under
subsection (a)(1) applies under subsection (d)(1)(A).
(d) Elections and Related Terms.--
(1) Years for which election made.--
(A) Alternative funding schedule.--If an election under
subsection (a)(1) was made with respect to an eligible plan,
the plan sponsor may select either a plan year beginning in
2006 or a plan year beginning in 2007 as the first plan year
to which such election applies. The election shall apply to
such plan year and all subsequent years. The election shall
be made--
(i) not later than December 31, 2006, in the case of an
election for a plan year beginning in 2006, or
(ii) not later than December 31, 2007, in the case of an
election for a plan year beginning in 2007.
(B) 10 year amortization.--An election under subsection
(a)(2) shall be made not later than December 31, 2007.
(C) Election of new plan year for alternative funding
schedule.--In the case of an election under subsection
(a)(1), the plan sponsor may specify a new plan year in such
election and the plan year of the plan may be changed to such
new plan year without the approval of the Secretary of the
Treasury.
(2) Manner of election.--A plan sponsor shall make any
election under subsection (a) in such manner as the Secretary
of the Treasury may prescribe. Such election, once made, may
be revoked only with the consent of such Secretary.
(e) Minimum Required Contribution.--In the case of an
eligible plan with respect to which an election is made under
subsection (a)(1)--
(1) In general.--In the case of any applicable plan year
during the amortization period, the minimum required
contribution shall be the amount necessary to amortize the
unfunded liability of the plan, determined as of the first
day of the plan year, in equal annual installments (until
fully amortized) over the remainder of the amortization
period. Such amount shall be separately determined for each
applicable plan year.
(2) Years after amortization period.--In the case of any
plan year beginning after the end of the amortization period,
section 302(a)(2)(A) of such Act and section 412(a)(2)(A) of
such Code shall apply to such plan, but the prefunding
balance and funding standard carryover balance as of the
first day of the first of such years under section 303(f) of
such Act and section 430(f) of such Code shall be zero.
(3) Definitions.--For purposes of this section--
(A) Unfunded liability.--The term ``unfunded liability''
means the unfunded accrued liability under the plan,
determined under the unit credit funding method.
(B) Amortization period.--The term ``amortization period''
means the 17-plan year period beginning with the first
applicable plan year.
(4) Other rules.--In determining the minimum required
contribution and amortization amount under this subsection--
(A) the provisions of section 302(c)(3) of such Act and
section 412(c)(3) of such Code, as in effect before the date
of enactment of this section, shall apply,
(B) a rate of interest of 8.85 percent shall be used for
all calculations requiring an interest rate, and
(C) the value of plan assets shall be equal to their fair
market value.
(5) Special rule for certain plan spinoffs.--For purposes
of subsection (b), if, with respect to any eligible plan to
which this subsection applies--
(A) any applicable plan year includes the date of the
enactment of this Act,
(B) a plan was spun off from the eligible plan during the
plan year but before such date of enactment,
the minimum required contribution under paragraph (1) for the
eligible plan for such applicable plan year shall be an
aggregate amount determined as if the plans were a single
plan for that plan year (based on the full 12-month plan year
in effect prior to the spin-off). The employer shall
designate the allocation of such aggregate amount between
such plans for the applicable plan year.
(f) Special Rules for Certain Balances and Waivers.--In the
case of an eligible plan with respect to which an election is
made under subsection (a)(1)--
(1) Funding standard account and credit balances.--Any
charge or credit in the funding standard account under
section 302 of such Act or section 412 of such Code, and any
prefunding balance or funding standard carryover balance
under section 303 of such Act or section 430 of such Code, as
of the day before the first day of the first applicable plan
year, shall be reduced to zero.
(2) Waived funding deficiencies.--Any waived funding
deficiency under sections 302 and 303 of such Act or section
412 of such Code, as in effect before the date of enactment
of this section, shall be deemed satisfied as of the first
day of the first applicable plan year and the amount of such
waived funding deficiency shall be taken into account in
determining the plan's unfunded liability under subsection
(e)(3)(A). In the case of a plan amendment adopted to satisfy
the requirements of subsection (b)(2), the plan shall not be
deemed to violate section 304(b) of such Act or section
412(f) of such Code, as so in effect, by reason of such
amendment or any increase in benefits provided to such plan's
participants under a separate plan that is a defined
contribution plan or a multiemployer plan.
(g) Other Rules for Plans Making Election Under This
Section.--
(1) Successor plans to certain plans.--If--
(A) an election under paragraph (1) or (2) of subsection
(a) is in effect with respect to any eligible plan, and
(B) the eligible plan is maintained by an employer that
establishes or maintains 1 or more other defined benefit
plans (other than any multiemployer plan), and such other
plans in combination provide benefit accruals to any
substantial number of successor employees,
the Secretary of the Treasury may, in the Secretary's
discretion, determine that any trust of which any other such
plan is a part does not constitute a qualified trust under
section 401(a) of the Internal Revenue Code of 1986 unless
all benefit obligations of the eligible plan have been
satisfied. For purposes of this paragraph, the term
``successor employee'' means any employee who is or was
covered by the eligible plan and any employees who perform
substantially the same type of work with respect to the same
business operations as an employee covered by such eligible
plan.
(2) Special rules for terminations.--
(A) PBGC liability limited.--Section 4022 of the Employee
Retirement Income Security Act of 1974, as amended by this
Act, is amended by adding at the end the following new
subsection:
``(h) Special Rule for Plans Electing Certain Funding
Requirements.--If any plan makes an election under section
402(a)(1) of the Pension Protection Act of 2006 and is
terminated effective before the end of the 10-year period
beginning on the first day of the first applicable plan
year--
``(1) this section shall be applied--
``(A) by treating the first day of the first applicable
plan year as the termination date of the plan, and
``(B) by determining the amount of guaranteed benefits on
the basis of plan assets and liabilities as of such assumed
termination date, and
``(2) notwithstanding section 4044(a), plan assets shall
first be allocated to pay the amount, if any, by which--
``(A) the amount of guaranteed benefits under this section
(determined without regard to paragraph (1) and on the basis
of plan assets and liabilities as of the actual date of plan
termination), exceeds
``(B) the amount determined under paragraph (1).''.
(B) Termination premium.--In applying section 4006(a)(7)(A)
of the Employee Retirement Income Security Act of 1974 to an
eligible plan during any period in which an election under
subsection (a)(1) is in effect--
(i) ``$2,500'' shall be substituted for ``$1,250'' in such
section if such plan terminates during the 5-year period
beginning on the first day of the first applicable plan year
with respect to such plan, and
(ii) such section shall be applied without regard to
subparagraph (B) of section
[[Page H6080]]
8101(d)(2) of the Deficit Reduction Act of 2005 (relating to
special rule for plans terminated in bankruptcy).
The substitution described in clause (i) shall not apply with
respect to any plan if the Secretary of Labor determines that
such plan terminated as a result of extraordinary
circumstances such as a terrorist attack or other similar
event.
(3) Limitation on deductions under certain plans.--Section
404(a)(7)(C)(iv) of the Internal Revenue Code of 1986, as
added by this Act, shall not apply with respect to any
taxable year of a plan sponsor of an eligible plan if any
applicable plan year with respect to such plan ends with or
within such taxable year.
(4) Notice.--In the case of a plan amendment adopted in
order to comply with this section, any notice required under
section 204(h) of such Act or section 4980F(e) of such Code
shall be provided within 15 days of the effective date of
such plan amendment. This subsection shall not apply to any
plan unless such plan is maintained pursuant to one or more
collective bargaining agreements between employee
representatives and 1 or more employers.
(h) Exclusion of Certain Employees From Minimum Coverage
Requirements.--
(1) In general.--Section 410(b)(3) of such Code is amended
by striking the last sentence and inserting the following:
``For purposes of subparagraph (B), management pilots who are
not represented in accordance with title II of the Railway
Labor Act shall be treated as covered by a collective
bargaining agreement described in such subparagraph if the
management pilots manage the flight operations of air pilots
who are so represented and the management pilots are,
pursuant to the terms of the agreement, included in the group
of employees benefitting under the trust described in such
subparagraph. Subparagraph (B) shall not apply in the case of
a plan which provides contributions or benefits for employees
whose principal duties are not customarily performed aboard
an aircraft in flight (other than management pilots described
in the preceding sentence).''
(2) Effective date.--The amendment made by this subsection
shall apply to years beginning before, on, or after the date
of the enactment of this Act.
(i) Extension of Special Rule for Additional Funding
Requirements.--In the case of an employer which is a
commercial passenger airline, section 302(d)(12) of the
Employee Retirement Income Security Act of 1974 and section
412(l)(12) of the Internal Revenue Code of 1986, as in effect
before the date of the enactment of this Act, shall each be
applied--
(1) by substituting ``December 28, 2007'' for ``December
28, 2005'' in subparagraph (D)(i) thereof, and
(2) without regard to subparagraph (D)(ii).
(j) Effective Date.--Except as otherwise provided in this
section, the provisions of and amendments made by this
section shall apply to plan years ending after the date of
the enactment of this Act.
SEC. 403. LIMITATION ON PBGC GUARANTEE OF SHUTDOWN AND OTHER
BENEFITS.
(a) In General.--Section 4022(b) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1322(b)) is amended by
adding at the end the following:
``(8) If an unpredictable contingent event benefit (as
defined in section 206(g)(1)) is payable by reason of the
occurrence of any event, this section shall be applied as if
a plan amendment had been adopted on the date such event
occurred.''.
(b) Effective Date.--The amendment made by this section
shall apply to benefits that become payable as a result of an
event which occurs after July 26, 2005.
SEC. 404. RULES RELATING TO BANKRUPTCY OF EMPLOYER.
(a) Guarantee.--Section 4022 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1322) is amended by
adding at the end the following:
``(g) Bankruptcy Filing Substituted for Termination Date.--
If a contributing sponsor of a plan has filed or has had
filed against such person a petition seeking liquidation or
reorganization in a case under title 11, United States Code,
or under any similar Federal law or law of a State or
political subdivision, and the case has not been dismissed as
of the termination date of the plan, then this section shall
be applied by treating the date such petition was filed as
the termination date of the plan.''.
(b) Allocation of Assets Among Priority Groups in
Bankruptcy Proceedings.--Section 4044 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1344) is
amended by adding at the end the following:
``(e) Bankruptcy Filing Substituted for Termination Date.--
If a contributing sponsor of a plan has filed or has had
filed against such person a petition seeking liquidation or
reorganization in a case under title 11, United States Code,
or under any similar Federal law or law of a State or
political subdivision, and the case has not been dismissed as
of the termination date of the plan, then subsection (a)(3)
shall be applied by treating the date such petition was filed
as the termination date of the plan.''.
(c) Effective Date.--The amendments made this section shall
apply with respect to proceedings initiated under title 11,
United States Code, or under any similar Federal law or law
of a State or political subdivision, on or after the date
that is 30 days after the date of enactment of this Act.
SEC. 405. PBGC PREMIUMS FOR SMALL PLANS.
(a) Small Plans.--Paragraph (3) of section 4006(a) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1306(a)) is amended--
(1) by striking ``The additional'' in subparagraph (E)(i)
and inserting ``Except as provided in subparagraph (H), the
additional'', and
(2) by inserting after subparagraph (G) the following new
subparagraph:
``(H)(i) In the case of an employer who has 25 or fewer
employees on the first day of the plan year, the additional
premium determined under subparagraph (E) for each
participant shall not exceed $5 multiplied by the number of
participants in the plan as of the close of the preceding
plan year.
``(ii) For purposes of clause (i), whether an employer has
25 or fewer employees on the first day of the plan year is
determined by taking into consideration all of the employees
of all members of the contributing sponsor's controlled
group. In the case of a plan maintained by two or more
contributing sponsors, the employees of all contributing
sponsors and their controlled groups shall be aggregated for
purposes of determining whether the 25-or-fewer-employees
limitation has been satisfied.''
(b) Effective Dates.--The amendment made by this section
shall apply to plan years beginning after December 31, 2006.
SEC. 406. AUTHORIZATION FOR PBGC TO PAY INTEREST ON PREMIUM
OVERPAYMENT REFUNDS.
(a) In General.--Section 4007(b) of the Employment
Retirement Income Security Act of 1974 (29 U.S.C. 1307(b)) is
amended--
(1) by striking ``(b)'' and inserting ``(b)(1)'', and
(2) by inserting at the end the following new paragraph:
``(2) The corporation is authorized to pay, subject to
regulations prescribed by the corporation, interest on the
amount of any overpayment of premium refunded to a designated
payor. Interest under this paragraph shall be calculated at
the same rate and in the same manner as interest is
calculated for underpayments under paragraph (1).''
(b) Effective Date.--The amendments made by subsection (a)
shall apply to interest accruing for periods beginning not
earlier than the date of the enactment of this Act.
SEC. 407. RULES FOR SUBSTANTIAL OWNER BENEFITS IN TERMINATED
PLANS.
(a) Modification of Phase-In of Guarantee.--Section
4022(b)(5) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1322(b)(5)) is amended to read as follows:
``(5)(A) For purposes of this paragraph, the term `majority
owner' means an individual who, at any time during the 60-
month period ending on the date the determination is being
made--
``(i) owns the entire interest in an unincorporated trade
or business,
``(ii) in the case of a partnership, is a partner who owns,
directly or indirectly, 50 percent or more of either the
capital interest or the profits interest in such partnership,
or
``(iii) in the case of a corporation, owns, directly or
indirectly, 50 percent or more in value of either the voting
stock of that corporation or all the stock of that
corporation.
For purposes of clause (iii), the constructive ownership
rules of section 1563(e) of the Internal Revenue Code of 1986
(other than paragraph (3)(C) thereof) shall apply, including
the application of such rules under section 414(c) of such
Code.
``(B) In the case of a participant who is a majority owner,
the amount of benefits guaranteed under this section shall
equal the product of--
``(i) a fraction (not to exceed 1) the numerator of which
is the number of years from the later of the effective date
or the adoption date of the plan to the termination date, and
the denominator of which is 10, and
``(ii) the amount of benefits that would be guaranteed
under this section if the participant were not a majority
owner.''
(b) Modification of Allocation of Assets.--
(1) Section 4044(a)(4)(B) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1344(a)(4)(B)) is amended by
striking ``section 4022(b)(5)'' and inserting ``section
4022(b)(5)(B)''.
(2) Section 4044(b) of such Act (29 U.S.C. 1344(b)) is
amended--
(A) by striking ``(5)'' in paragraph (2) and inserting
``(4), (5),'', and
(B) by redesignating paragraphs (3) through (6) as
paragraphs (4) through (7), respectively, and by inserting
after paragraph (2) the following new paragraph:
``(3) If assets available for allocation under paragraph
(4) of subsection (a) are insufficient to satisfy in full the
benefits of all individuals who are described in that
paragraph, the assets shall be allocated first to benefits
described in subparagraph (A) of that paragraph. Any
remaining assets shall then be allocated to benefits
described in subparagraph (B) of that paragraph. If assets
allocated to such subparagraph (B) are insufficient to
satisfy in full the benefits described in that subparagraph,
the assets shall be allocated pro rata among individuals on
the basis of the present value (as of the termination date)
of their respective benefits described in that
subparagraph.''
(c) Conforming Amendments.--
(1) Section 4021 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1321) is amended--
(A) in subsection (b)(9), by striking ``as defined in
section 4022(b)(6)'', and
[[Page H6081]]
(B) by adding at the end the following new subsection:
``(d) For purposes of subsection (b)(9), the term
`substantial owner' means an individual who, at any time
during the 60-month period ending on the date the
determination is being made--
``(1) owns the entire interest in an unincorporated trade
or business,
``(2) in the case of a partnership, is a partner who owns,
directly or indirectly, more than 10 percent of either the
capital interest or the profits interest in such partnership,
or
``(3) in the case of a corporation, owns, directly or
indirectly, more than 10 percent in value of either the
voting stock of that corporation or all the stock of that
corporation.
For purposes of paragraph (3), the constructive ownership
rules of section 1563(e) of the Internal Revenue Code of 1986
(other than paragraph (3)(C) thereof) shall apply, including
the application of such rules under section 414(c) of such
Code.''
(2) Section 4043(c)(7) of such Act (29 U.S.C. 1343(c)(7))
is amended by striking ``section 4022(b)(6)'' and inserting
``section 4021(d)''.
(d) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to plan
terminations--
(A) under section 4041(c) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1341(c)) with respect to
which notices of intent to terminate are provided under
section 4041(a)(2) of such Act (29 U.S.C. 1341(a)(2)) after
December 31, 2005, and
(B) under section 4042 of such Act (29 U.S.C. 1342) with
respect to which notices of determination are provided under
such section after such date.
(2) Conforming amendments.--The amendments made by
subsection (c) shall take effect on January 1, 2006.
SEC. 408. ACCELERATION OF PBGC COMPUTATION OF BENEFITS
ATTRIBUTABLE TO RECOVERIES FROM EMPLOYERS.
(a) Modification of Average Recovery Percentage of
Outstanding Amount of Benefit Liabilities Payable by
Corporation to Participants and Beneficiaries.--Section
4022(c)(3)(B)(ii) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1322(c)(3)(B)(ii)) is amended to read
as follows:
``(ii) notices of intent to terminate were provided (or in
the case of a termination by the corporation, a notice of
determination under section 4042 was issued) during the 5-
Federal fiscal year period ending with the third fiscal year
preceding the fiscal year in which occurs the date of the
notice of intent to terminate (or the notice of determination
under section 4042) with respect to the plan termination for
which the recovery ratio is being determined.''
(b) Valuation of Section 4062(c) Liability for Determining
Amounts Payable by Corporation to Participants and
Beneficiaries.--
(1) Single-employer plan benefits guaranteed.--Section
4022(c)(3)(A) of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 13) is amended to read as follows:
``(A) In general.--Except as provided in subparagraph (C),
the term `recovery ratio' means the ratio which--
``(i) the sum of the values of all recoveries under section
4062, 4063, or 4064, determined by the corporation in
connection with plan terminations described under
subparagraph (B), bears to
``(ii) the sum of all unfunded benefit liabilities under
such plans as of the termination date in connection with any
such prior termination.''.
(2) Allocation of assets.--Section 4044 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1362) is
amended by adding at the end the following new subsection:
``(e) Valuation of Section 4062(c) Liability for
Determining Amounts Payable by Corporation to Participants
and Beneficiaries.--
``(1) In general.--In the case of a terminated plan, the
value of the recovery of liability under section 4062(c)
allocable as a plan asset under this section for purposes of
determining the amount of benefits payable by the corporation
shall be determined by multiplying--
``(A) the amount of liability under section 4062(c) as of
the termination date of the plan, by
``(B) the applicable section 4062(c) recovery ratio.
``(2) Section 4062(c) recovery ratio.--For purposes of this
subsection--
``(A) In general.--Except as provided in subparagraph (C),
the term `section 4062(c) recovery ratio' means the ratio
which--
``(i) the sum of the values of all recoveries under section
4062(c) determined by the corporation in connection with plan
terminations described under subparagraph (B), bears to
``(ii) the sum of all the amounts of liability under
section 4062(c) with respect to such plans as of the
termination date in connection with any such prior
termination.
``(B) Prior terminations.--A plan termination described in
this subparagraph is a termination with respect to which--
``(i) the value of recoveries under section 4062(c) have
been determined by the corporation, and
``(ii) notices of intent to terminate were provided (or in
the case of a termination by the corporation, a notice of
determination under section 4042 was issued) during the 5-
Federal fiscal year period ending with the third fiscal year
preceding the fiscal year in which occurs the date of the
notice of intent to terminate (or the notice of determination
under section 4042) with respect to the plan termination for
which the recovery ratio is being determined.
``(C) Exception.--In the case of a terminated plan with
respect to which the outstanding amount of benefit
liabilities exceeds $20,000,000, the term `section 4062(c)
recovery ratio' means, with respect to the termination of
such plan, the ratio of--
``(i) the value of the recoveries on behalf of the plan
under section 4062(c), to
``(ii) the amount of the liability owed under section
4062(c) as of the date of plan termination to the trustee
appointed under section 4042 (b) or (c).
``(3) Subsection not to apply.--This subsection shall not
apply with respect to the determination of--
``(A) whether the amount of outstanding benefit liabilities
exceeds $20,000,000, or
``(B) the amount of any liability under section 4062 to the
corporation or the trustee appointed under section 4042 (b)
or (c).
``(4) Determinations.--Determinations under this subsection
shall be made by the corporation. Such determinations shall
be binding unless shown by clear and convincing evidence to
be unreasonable.''
(c) Effective Date.--The amendments made by this section
shall apply for any termination for which notices of intent
to terminate are provided (or in the case of a termination by
the corporation, a notice of determination under section 4042
under the Employee Retirement Income Security Act of 1974 is
issued) on or after the date which is 30 days after the date
of enactment of this section.
SEC. 409. TREATMENT OF CERTAIN PLANS WHERE CESSATION OR
CHANGE IN MEMBERSHIP OF A CONTROLLED GROUP.
(a) In General.--Section 4041(b) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1341(b)) is amended by
adding at the end the following new paragraph:
``(5) Special rule for certain plans where cessation or
change in membership of a controlled group.--
``(A) In general.--Except as provided in subparagraph (B),
if--
``(i) there is transaction or series of transactions which
result in a person ceasing to be a member of a controlled
group, and
``(ii) such person immediately before the transaction or
series of transactions maintained a single-employer plan
which is a defined benefit plan which is fully funded,
then the interest rate used in determining whether the plan
is sufficient for benefit liabilities or to otherwise assess
plan liabilities for purposes of this subsection or section
4042(a)(4) shall be not less than the interest rate used in
determining whether the plan is fully funded.
``(B) Limitations.--Subparagraph (A) shall not apply to any
transaction or series of transactions unless--
``(i) any employer maintaining the plan immediately before
or after such transaction or series of transactions--
``(I) has an outstanding senior unsecured debt instrument
which is rated investment grade by each of the nationally
recognized statistical rating organizations for corporate
bonds that has issued a credit rating for such instrument, or
``(II) if no such debt instrument of such employer has been
rated by such an organization but 1 or more of such
organizations has made an issuer credit rating for such
employer, all such organizations which have so rated the
employer have rated such employer investment grade, and
``(ii) the employer maintaining the plan after the
transaction or series of transactions employs at least 20
percent of the employees located in the United States who
were employed by such employer immediately before the
transaction or series of transactions.
``(C) Fully funded.--For purposes of subparagraph (A), a
plan shall be treated as fully funded with respect to any
transaction or series of transactions if--
``(i) in the case of a transaction or series of
transactions which occur in a plan year beginning before
January 1, 2008, the funded current liability percentage
determined under section 302(d) for the plan year is at least
100 percent, and
``(ii) in the case of a transaction or series of
transactions which occur in a plan year beginning on or after
such date, the funding target attainment percentage
determined under section 303 is, as of the valuation date for
such plan year, at least 100 percent.
``(D) 2 year limitation.--Subparagraph (A) shall not apply
to any transaction or series of transaction if the plan
referred to in subparagraph (A)(ii) is terminated under
section 4041(c) or 4042 after the close of the 2-year period
beginning on the date on which the first such transaction
occurs.''
(b) Effective Date.--The amendments made by this section
shall apply to any transaction or series of transactions
occurring on and after the date of the enactment of this Act.
SEC. 410. MISSING PARTICIPANTS.
(a) In General.--Section 4050 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1350) is amended by
redesignating subsection (c) as subsection (e) and by
inserting after subsection (b) the following new subsections:
[[Page H6082]]
``(c) Multiemployer Plans.--The corporation shall prescribe
rules similar to the rules in subsection (a) for
multiemployer plans covered by this title that terminate
under section 4041A.
``(d) Plans Not Otherwise Subject to Title.--
``(1) Transfer to corporation.--The plan administrator of a
plan described in paragraph (4) may elect to transfer a
missing participant's benefits to the corporation upon
termination of the plan.
``(2) Information to the corporation.--To the extent
provided in regulations, the plan administrator of a plan
described in paragraph (4) shall, upon termination of the
plan, provide the corporation information with respect to
benefits of a missing participant if the plan transfers such
benefits--
``(A) to the corporation, or
``(B) to an entity other than the corporation or a plan
described in paragraph (4)(B)(ii).
``(3) Payment by the corporation.--If benefits of a missing
participant were transferred to the corporation under
paragraph (1), the corporation shall, upon location of the
participant or beneficiary, pay to the participant or
beneficiary the amount transferred (or the appropriate
survivor benefit) either--
``(A) in a single sum (plus interest), or
``(B) in such other form as is specified in regulations of
the corporation.
``(4) Plans described.--A plan is described in this
paragraph if--
``(A) the plan is a pension plan (within the meaning of
section 3(2))--
``(i) to which the provisions of this section do not apply
(without regard to this subsection), and
``(ii) which is not a plan described in paragraphs (2)
through (11) of section 4021(b), and
``(B) at the time the assets are to be distributed upon
termination, the plan--
``(i) has missing participants, and
``(ii) has not provided for the transfer of assets to pay
the benefits of all missing participants to another pension
plan (within the meaning of section 3(2)).
``(5) Certain provisions not to apply.--Subsections (a)(1)
and (a)(3) shall not apply to a plan described in paragraph
(4).''.
(b) Conforming Amendments.--Section 206(f) of such Act (29
U.S.C. 1056(f)) is amended--
(1) by striking ``title IV'' and inserting ``section
4050''; and
(2) by striking ``the plan shall provide that,''.
(c) Effective Date.--The amendments made by this section
shall apply to distributions made after final regulations
implementing subsections (c) and (d) of section 4050 of the
Employee Retirement Income Security Act of 1974 (as added by
subsection (a)), respectively, are prescribed.
SEC. 411. DIRECTOR OF THE PENSION BENEFIT GUARANTY
CORPORATION.
(a) In General.--Title IV of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1301 et seq.) is amended--
(1) by striking the second sentence of section 4002(a) and
inserting the following: ``In carrying out its functions
under this title, the corporation shall be administered by a
Director, who shall be appointed by the President, by and
with the advice and consent of the Senate, and who shall act
in accordance with the policies established by the board.'';
and
(2) in section 4003(b), by--
(A) striking ``under this title, any member'' and inserting
``under this title, the Director, any member''; and
(B) striking ``designated by the chairman'' and inserting
``designated by the Director or chairman''.
(b) Compensation of Director.--Section 5314 of title 5,
United States Code, is amended by adding at the end the
following new item:
``Director, Pension Benefit Guaranty Corporation.''.
(c) Jurisdiction of Nomination.--
(1) In general.--The Committee on Finance of the Senate and
the Committee on Health, Education, Labor, and Pensions of
the Senate shall have joint jurisdiction over the nomination
of a person nominated by the President to fill the position
of Director of the Pension Benefit Guaranty Corporation under
section 4002 of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1302) (as amended by this Act), and if one
committee votes to order reported such a nomination, the
other shall report within 30 calendar days, or be
automatically discharged.
(2) Rulemaking of the senate.--This subsection is enacted
by Congress--
(A) as an exercise of rulemaking power of the Senate, and
as such it is deemed a part of the rules of the Senate, but
applicable only with respect to the procedure to be followed
in the Senate in the case of a nomination described in such
sentence, and it supersedes other rules only to the extent
that it is inconsistent with such rules; and
(B) with full recognition of the constitutional right of
the Senate to change the rules (so far as relating to the
procedure of the Senate) at any time, in the same manner and
to the same extent as in the case of any other rule of the
Senate.
(d) Transition.--The term of the individual serving as
Executive Director of the Pension Benefit Guaranty
Corporation on the date of enactment of this Act shall expire
on such date of enactment. Such individual, or any other
individual, may serve as interim Director of such Corporation
until an individual is appointed as Director of such
Corporation under section 4002 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1302) (as amended by
this Act).
SEC. 412. INCLUSION OF INFORMATION IN THE PBGC ANNUAL REPORT.
Section 4008 of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1308) is amended by--
(1) striking ``As soon as practicable'' and inserting ``(a)
As soon as practicable''; and
(2) adding at the end the following:
``(b) The report under subsection (a) shall include--
``(1) a summary of the Pension Insurance Modeling System
microsimulation model, including the specific simulation
parameters, specific initial values, temporal parameters, and
policy parameters used to calculate the financial statements
for the corporation;
``(2) a comparison of--
``(A) the average return on investments earned with respect
to assets invested by the corporation for the year to which
the report relates; and
``(B) an amount equal to 60 percent of the average return
on investment for such year in the Standard & Poor's 500
Index, plus 40 percent of the average return on investment
for such year in the Lehman Aggregate Bond Index (or in a
similar fixed income index); and
``(3) a statement regarding the deficit or surplus for such
year that the corporation would have had if the corporation
had earned the return described in paragraph (2)(B) with
respect to assets invested by the corporation.''.
TITLE V--DISCLOSURE
SEC. 501. DEFINED BENEFIT PLAN FUNDING NOTICE.
(a) In General.--Section 101(f) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1021(f)) is amended to
read as follows:
``(f) Defined Benefit Plan Funding Notices.--
``(1) In general.--The administrator of a defined benefit
plan to which title IV applies shall for each plan year
provide a plan funding notice to the Pension Benefit Guaranty
Corporation, to each plan participant and beneficiary, to
each labor organization representing such participants or
beneficiaries, and, in the case of a multiemployer plan, to
each employer that has an obligation to contribute to the
plan.
``(2) Information contained in notices.--
``(A) Identifying information.--Each notice required under
paragraph (1) shall contain identifying information,
including the name of the plan, the address and phone number
of the plan administrator and the plan's principal
administrative officer, each plan sponsor's employer
identification number, and the plan number of the plan.
``(B) Specific information.--A plan funding notice under
paragraph (1) shall include--
``(i)(I) in the case of a single-employer plan, a statement
as to whether the plan's funding target attainment percentage
(as defined in section 303(d)(2)) for the plan year to which
the notice relates, and for the 2 preceding plan years, is at
least 100 percent (and, if not, the actual percentages), or
``(II) in the case of a multiemployer plan, a statement as
to whether the plan's funded percentage (as defined in
section 305(i)) for the plan year to which the notice
relates, and for the 2 preceding plan years, is at least 100
percent (and, if not, the actual percentages),
``(ii)(I) in the case of a single-employer plan, a
statement of--
``(aa) the total assets (separately stating the prefunding
balance and the funding standard carryover balance) and
liabilities of the plan, determined in the same manner as
under section 303, for the plan year for which the latest
annual report filed under section 104(a) was filed and for
the 2 preceding plan years, as reported in the annual report
for each such plan year, and
``(bb) the value of the plan's assets and liabilities for
the plan year to which the notice relates as of the last day
of the plan year to which the notice relates determined using
the asset valuation under subclause (II) of section
4006(a)(3)(E)(iii) and the interest rate under section
4006(a)(3)(E)(iv), and
``(II) in the case of a multiemployer plan, a statement of
the value of the plan's assets and liabilities for the plan
year to which the notice relates as the last day of such plan
year and the preceding 2 plan years,
``(iii) a statement of the number of participants who are--
``(I) retired or separated from service and are receiving
benefits,
``(II) retired or separated participants entitled to future
benefits, and
``(III) active participants under the plan,
``(iv) a statement setting forth the funding policy of the
plan and the asset allocation of investments under the plan
(expressed as percentages of total assets) as of the end of
the plan year to which the notice relates,
``(v) in the case of a multiemployer plan, whether the plan
was in critical or endangered status under section 305 for
such plan year and, if so--
``(I) a statement describing how a person may obtain a copy
of the plan's funding improvement or rehabilitation plan, as
appropriate, adopted under section 305 and the actuarial and
financial data that demonstrate any action taken by the plan
toward fiscal improvement, and
[[Page H6083]]
``(II) a summary of any funding improvement plan,
rehabilitation plan, or modification thereof adopted under
section 305 during the plan year to which the notice relates,
``(vi) in the case of any plan amendment, scheduled benefit
increase or reduction, or other known event taking effect in
the current plan year and having a material effect on plan
liabilities or assets for the year (as defined in regulations
by the Secretary), an explanation of the amendment, schedule
increase or reduction, or event, and a projection to the end
of such plan year of the effect of the amendment, scheduled
increase or reduction, or event on plan liabilities,
``(vii)(I) in the case of a single-employer plan, a summary
of the rules governing termination of single-employer plans
under subtitle C of title IV, or
``(II) in the case of a multiemployer plan, a summary of
the rules governing reorganization or insolvency, including
the limitations on benefit payments,
``(viii) a general description of the benefits under the
plan which are eligible to be guaranteed by the Pension
Benefit Guaranty Corporation, along with an explanation of
the limitations on the guarantee and the circumstances under
which such limitations apply,
``(ix) a statement that a person may obtain a copy of the
annual report of the plan filed under section 104(a) upon
request, through the Internet website of the Department of
Labor, or through an Intranet website maintained by the
applicable plan sponsor (or plan administrator on behalf of
the plan sponsor), and
``(x) if applicable, a statement that each contributing
sponsor, and each member of the contributing sponsor's
controlled group, of the single-employer plan was required to
provide the information under section 4010 for the plan year
to which the notice relates.
``(C) Other information.--Each notice under paragraph (1)
shall include--
``(i) in the case of a multiemployer plan, a statement that
the plan administrator shall provide, upon written request,
to any labor organization representing plan participants and
beneficiaries and any employer that has an obligation to
contribute to the plan, a copy of the annual report filed
with the Secretary under section 104(a), and
``(ii) any additional information which the plan
administrator elects to include to the extent not
inconsistent with regulations prescribed by the Secretary.
``(3) Time for providing notice.--
``(A) In general.--Any notice under paragraph (1) shall be
provided not later than 120 days after the end of the plan
year to which the notice relates.
``(B) Exception for small plans.--In the case of a small
plan (as such term is used under section 303(g)(2)(B)) any
notice under paragraph (1) shall be provided upon filing of
the annual report under section 104(a).
``(4) Form and manner.--Any notice under paragraph (1)--
``(A) shall be provided in a form and manner prescribed in
regulations of the Secretary,
``(B) shall be written in a manner so as to be understood
by the average plan participant, and
``(C) may be provided in written, electronic, or other
appropriate form to the extent such form is reasonably
accessible to persons to whom the notice is required to be
provided.''.
(b) Repeal of Notice to Participants of Funding Status.--
(1) In general.--Title IV of such Act (29 U.S.C. 1301 et
seq.) is amended by striking section 4011.
(2) Clerical amendment.--Section 1 of such Act is amended
in the table of contents by striking the item relating to
section 4011.
(c) Model Notice.--Not later than 1 year after the date of
the enactment of this Act, the Secretary of Labor shall
publish a model version of the notice required by section
101(f) of the Employee Retirement Income Security Act of
1974. The Secretary of Labor may promulgate any interim final
rules as the Secretary determines appropriate to carry out
the provisions of this subsection.
(d) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to plan years beginning after December 31, 2007, except
that the amendment made by subsection (b) shall apply to plan
years beginning after December 31, 2006.
(2) Transition rule.--Any requirement under section 101(f)
of the Employee Retirement Income Security Act of 1974 (as
amended by this section) to report the funding target
attainment percentage or funded percentage of a plan with
respect to any plan year beginning before January 1, 2008,
shall be treated as met if the plan reports--
(A) in the case of a plan year beginning in 2006, the
funded current liability percentage (as defined in section
302(d)(8) of such Act) of the plan for such plan year, and
(B) in the case of a plan year beginning in 2007, the
funding target attainment percentage or funded percentage as
determined using such methods of estimation as the Secretary
of the Treasury may provide.
SEC. 502. ACCESS TO MULTIEMPLOYER PENSION PLAN INFORMATION.
(a) Financial Information With Respect to Multiemployer
Plans.--
(1) In general.--Section 101 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1021), as amended by
section 103, is amended--
(A) by redesignating subsection (k) as subsection (l); and
(B) by inserting after subsection (j) the following new
subsection:
``(k) Multiemployer Plan Information Made Available on
Request.--
``(1) In general.--Each administrator of a multiemployer
plan shall, upon written request, furnish to any plan
participant or beneficiary, employee representative, or any
employer that has an obligation to contribute to the plan--
``(A) a copy of any periodic actuarial report (including
any sensitivity testing) received by the plan for any plan
year which has been in the plan's possession for at least 30
days,
``(B) a copy of any quarterly, semi-annual, or annual
financial report prepared for the plan by any plan investment
manager or advisor or other fiduciary which has been in the
plan's possession for at least 30 days, and
``(C) a copy of any application filed with the Secretary of
the Treasury requesting an extension under section 304 of
this Act or section 431(d) of the Internal Revenue Code of
1986 and the determination of such Secretary pursuant to such
application.
``(2) Compliance.--Information required to be provided
under paragraph (1) --
``(A) shall be provided to the requesting participant,
beneficiary, or employer within 30 days after the request in
a form and manner prescribed in regulations of the Secretary,
``(B) may be provided in written, electronic, or other
appropriate form to the extent such form is reasonably
accessible to persons to whom the information is required to
be provided, and
``(C) shall not--
``(i) include any individually identifiable information
regarding any plan participant, beneficiary, employee,
fiduciary, or contributing employer, or
``(ii) reveal any proprietary information regarding the
plan, any contributing employer, or entity providing services
to the plan.
``(3) Limitations.--In no case shall a participant,
beneficiary, or employer be entitled under this subsection to
receive more than one copy of any report or application
described in paragraph (1) during any one 12-month period.
The administrator may make a reasonable charge to cover
copying, mailing, and other costs of furnishing copies of
information pursuant to paragraph (1). The Secretary may by
regulations prescribe the maximum amount which will
constitute a reasonable charge under the preceding
sentence.''.
(2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C.
1132(c)(4)) is amended by striking ``section 101(j)'' and
inserting ``subsection (j) or (k) of section 101''.
(3) Regulations.--The Secretary shall prescribe regulations
under section 101(k)(2) of the Employee Retirement Income
Security Act of 1974 (as added by paragraph (1)) not later
than 1 year after the date of the enactment of this Act.
(b) Notice of Potential Withdrawal Liability to
Multiemployer Plans.--
(1) In general.--Section 101 of such Act (as amended by
subsection (a)) is amended--
(A) by redesignating subsection (l) as subsection (m); and
(B) by inserting after subsection (k) the following new
subsection:
``(l) Notice of Potential Withdrawal Liability.--
``(1) In general.--The plan sponsor or administrator of a
multiemployer plan shall, upon written request, furnish to
any employer who has an obligation to contribute to the plan
a notice of--
``(A) the estimated amount which would be the amount of
such employer's withdrawal liability under part 1 of subtitle
E of title IV if such employer withdrew on the last day of
the plan year preceding the date of the request, and
``(B) an explanation of how such estimated liability amount
was determined, including the actuarial assumptions and
methods used to determine the value of the plan liabilities
and assets, the data regarding employer contributions,
unfunded vested benefits, annual changes in the plan's
unfunded vested benefits, and the application of any relevant
limitations on the estimated withdrawal liability.
For purposes of subparagraph (B), the term `employer
contribution' means, in connection with a participant, a
contribution made by an employer as an employer of such
participant.
``(2) Compliance.--Any notice required to be provided under
paragraph (1)--
``(A) shall be provided in a form and manner prescribed in
regulations of the Secretary to the requesting employer
within--
``(i) 180 days after the request, or
``(ii) subject to regulations of the Secretary, such longer
time as may be necessary in the case of a plan that
determines withdrawal liability based on any method described
under paragraph (4) or (5) of section 4211(c); and
``(B) may be provided in written, electronic, or other
appropriate form to the extent such form is reasonably
accessible to employers to whom the information is required
to be provided.
``(3) Limitations.--In no case shall an employer be
entitled under this subsection to receive more than one
notice described in paragraph (1) during any one 12-month
period. The person required to provide such notice may make a
reasonable charge to cover
[[Page H6084]]
copying, mailing, and other costs of furnishing such notice
pursuant to paragraph (1). The Secretary may by regulations
prescribe the maximum amount which will constitute a
reasonable charge under the preceding sentence.''.
(2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C.
1132(c)(4)) is amended by striking ``section 101(j) or (k)''
and inserting ``subsection (j), (k), or (l) of section 101''.
(c) Notice of Amendment Reducing Future Accruals.--
(1) Amendment of erisa.--Section 204(h)(1) of such Act (29
U.S.C. 1054(h)(1)) is amended by inserting at the end before
the period the following: ``and to each employer who has an
obligation to contribute to the plan.''.
(2) Amendment of internal revenue code.--Section
4980F(e)(1) of such Code is amended by adding at the end
before the period the following: ``and to each employer who
has an obligation to contribute to the plan.''.
(d) Effective Date.--The amendments made by this section
shall apply to plan years beginning after December 31, 2007.
SEC. 503. ADDITIONAL ANNUAL REPORTING REQUIREMENTS.
(a) Additional Annual Reporting Requirements With Respect
to Defined Benefit Plans.--
(1) In general.--Section 103 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1023) is amended--
(A) in subsection (a)(1)(B), by striking ``subsections (d)
and (e)'' and inserting ``subsections (d), (e), and (f)'';
and
(B) by adding at the end the following new subsection:
``(f) Additional Information With Respect to Defined
Benefit Plans.--
``(1) Liabilities under 2 or more plans.--
``(A) In general.--In any case in which any liabilities to
participants or their beneficiaries under a defined benefit
plan as of the end of a plan year consist (in whole or in
part) of liabilities to such participants and beneficiaries
under 2 or more pension plans as of immediately before such
plan year, an annual report under this section for such plan
year shall include the funded percentage of each of such 2 or
more pension plans as of the last day of such plan year and
the funded percentage of the plan with respect to which the
annual report is filed as of the last day of such plan year.
``(B) Funded percentage.--For purposes of this paragraph,
the term `funded percentage'--
``(i) in the case of a single-employer plan, means the
funding target attainment percentage, as defined in section
303(d)(2), and
``(ii) in the case of a multiemployer plan, has the meaning
given such term in section 305(i)(2).
``(2) Additional information for multiemployer plans.--With
respect to any defined benefit plan which is a multiemployer
plan, an annual report under this section for a plan year
shall include, in addition to the information required under
paragraph (1), the following, as of the end of the plan year
to which the report relates:
``(A) The number of employers obligated to contribute to
the plan.
``(B) A list of the employers that contributed more than 5
percent of the total contributions to the plan during such
plan year.
``(C) The number of participants under the plan on whose
behalf no contributions were made by an employer as an
employer of the participant for such plan year and for each
of the 2 preceding plan years.
``(D) The ratios of--
``(i) the number of participants under the plan on whose
behalf no employer had an obligation to make an employer
contribution during the plan year, to
``(ii) the number of participants under the plan on whose
behalf no employer had an obligation to make an employer
contribution during each of the 2 preceding plan years.
``(E) Whether the plan received an amortization extension
under section 304(d) of this Act or section 431(d) of the
Internal Revenue Code of 1986 for such plan year and, if so,
the amount of the difference between the minimum required
contribution for the year and the minimum required
contribution which would have been required without regard to
the extension, and the period of such extension.
``(F) Whether the plan used the shortfall funding method
(as such term is used in section 305) for such plan year and,
if so, the amount of the difference between the minimum
required contribution for the year and the minimum required
contribution which would have been required without regard to
the use of such method, and the period of use of such method.
``(G) Whether the plan was in critical or endangered status
under section 305 for such plan year, and if so, a summary of
any funding improvement or rehabilitation plan (or
modification thereto) adopted during the plan year, and the
funded percentage of the plan.
``(H) The number of employers that withdrew from the plan
during the preceding plan year and the aggregate amount of
withdrawal liability assessed, or estimated to be assessed,
against such withdrawn employers.
``(I) In the case of a multiemployer plan that has merged
with another plan or to which assets and liabilities have
been transferred, the actuarial valuation of the assets and
liabilities of each affected plan during the year preceding
the effective date of the merger or transfer, based upon the
most recent data available as of the day before the first day
of the plan year, or other valuation method performed under
standards and procedures as the Secretary may prescribe by
regulation.''.
(2) Guidance by secretary of labor.--Not later than 1 year
after the date of enactment of this Act, the Secretary of
Labor shall publish guidance to assist multiemployer defined
benefit plans to--
(A) identify and enumerate plan participants for whom there
is no employer with an obligation to make an employer
contribution under the plan; and
(B) report such information under section 103(f)(2)(D) of
the Employee Retirement Income Security Act of 1974 (as added
by this section).
(b) Additional Information in Annual Actuarial Statement
Regarding Plan Retirement Projections.--Section 103(d) of
such Act (29 U.S.C. 1023(d)) is amended--
(1) by redesignating paragraphs (12) and (13) as paragraphs
(13) and (14), respectively; and
(2) by inserting after paragraph (11) the following new
paragraph:
``(12) A statement explaining the actuarial assumptions and
methods used in projecting future retirements and forms of
benefit distributions under the plan.''.
(c) Repeal of Summary Annual Report Requirement for Defined
Benefit Plans.--
(1) In general.--Section 104(b)(3) of such Act (29 U.S.C.
1024(b)(3)) is amended by inserting ``(other than an
administrator of a defined benefit plan to which the
requirements of section 103(f) applies)'' after ``the
administrators''.
(2) Conforming amendments.--Section 101(a)(2) of such Act
(29 U.S.C. 1021(a)(2)) is amended by inserting ``subsection
(f) and'' before ``sections 104(b)(3) and 105(a) and (c)''.
(d) Furnishing Summary Plan Information to Employers and
Employee Representatives of Multiemployer Plans.--Section 104
of such Act (29 U.S.C. 1024) is amended--
(1) in the header, by striking ``PARTICIPANTS'' and
inserting ``PARTICIPANTS AND CERTAIN EMPLOYERS'';
(2) redesignating subsection (d) as subsection (e); and
(3) inserting after subsection (c) the following:
``(d) Furnishing Summary Plan Information to Employers and
Employee Representatives of Multiemployer Plans.--
``(1) In general.--With respect to a multiemployer plan
subject to this section, within 30 days after the due date
under subsection (a)(1) for the filing of the annual report
for the fiscal year of the plan, the administrators shall
furnish to each employee organization and to each employer
with an obligation to contribute to the plan a report that
contains--
``(A) a description of the contribution schedules and
benefit formulas under the plan, and any modification to such
schedules and formulas, during such plan year;
``(B) the number of employers obligated to contribute to
the plan;
``(C) a list of the employers that contributed more than 5
percent of the total contributions to the plan during such
plan year;
``(D) the number of participants under the plan on whose
behalf no contributions were made by an employer as an
employer of the participant for such plan year and for each
of the 2 preceding plan years; ``(E) whether the plan was
in critical or endangered status under section 305 for
such plan year and, if so, include--
``(i) a list of the actions taken by the plan to improve
its funding status; and
``(ii) a statement describing how a person may obtain a
copy of the plan's improvement or rehabilitation plan, as
applicable, adopted under section 305 and the actuarial and
financial data that demonstrate any action taken by the plan
toward fiscal improvement;
``(F) the number of employers that withdrew from the plan
during the preceding plan year and the aggregate amount of
withdrawal liability assessed, or estimated to be assessed,
against such withdrawn employers, as reported on the annual
report for the plan year to which the report under this
subsection relates;
``(G) in the case of a multiemployer plan that has merged
with another plan or to which assets and liabilities have
been transferred, the actuarial valuation of the assets and
liabilities of each affected plan during the year preceding
the effective date of the merger or transfer, based upon the
most recent data available as of the day before the first day
of the plan year, or other valuation method performed under
standards and procedures as the Secretary may prescribe by
regulation;
``(H) a description as to whether the plan--
``(i) sought or received an amortization extension under
section 304(d) of this Act or section 431(d) of the Internal
Revenue Code of 1986 for such plan year; or
``(ii) used the shortfall funding method (as such term is
used in section 305) for such plan year; and
``(I) notification of the right under this section of the
recipient to a copy of the annual report filed with the
Secretary under subsection (a), summary plan description,
summary of any material modification of the plan, upon
written request, but that--
``(i) in no case shall a recipient be entitled to receive
more than one copy of any such document described during any
one 12-month period; and
``(ii) the administrator may make a reasonable charge to
cover copying, mailing,
[[Page H6085]]
and other costs of furnishing copies of information pursuant
to this subparagraph.
``(2) Effect of subsection.--Nothing in this subsection
waives any other provision under this title requiring plan
administrators to provide, upon request, information to
employers that have an obligation to contribute under the
plan.''.
(e) Model Form.--Not later than 1 year after the date of
the enactment of this Act, the Secretary of Labor shall
publish a model form for providing the statements, schedules,
and other material required to be provided under section
101(f) of the Employee Retirement Income Security Act of
1974, as amended by this section. The Secretary of Labor may
promulgate any interim final rules as the Secretary
determines appropriate to carry out the provisions of this
subsection.
(f) Effective Date.--The amendments made by this section
shall apply to plan years beginning after December 31, 2007.
SEC. 504. ELECTRONIC DISPLAY OF ANNUAL REPORT INFORMATION.
(a) Electronic Display of Information.--Section 104(b) of
such Act (29 U.S.C. 1024(b)) is amended by adding at the end
the following:
``(5) Identification and basic plan information and
actuarial information included in the annual report for any
plan year shall be filed with the Secretary in an electronic
format which accommodates display on the Internet, in
accordance with regulations which shall be prescribed by the
Secretary. The Secretary shall provide for display of such
information included in the annual report, within 90 days
after the date of the filing of the annual report, on an
Internet website maintained by the Secretary and other
appropriate media. Such information shall also be displayed
on any Intranet website maintained by the plan sponsor (or by
the plan administrator on behalf of the plan sponsor) for the
purpose of communicating with employees and not the public,
in accordance with regulations which shall be prescribed by
the Secretary.''.
(b) Effective Date.--The amendments made by this section
shall apply to plan years beginning after December 31, 2007.
SEC. 505. SECTION 4010 FILINGS WITH THE PBGC.
(a) Change in Criteria for Persons Required To Provide
Information to PBGC.--Section 4010(b) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1310(b)) is
amended by striking paragraph (1) and inserting the
following:
``(1) the funding target attainment percentage (as defined
in subsection (d)) at the end of the preceding plan year of a
plan maintained by the contributing sponsor or any member of
its controlled group is less than 80 percent;''.
(b) Additional Information Required.--Section 4010 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1310) is amended by adding at the end the following new
subsection:
``(d) Additional Information Required.--
``(1) In general.--The information submitted to the
corporation under subsection (a) shall include--
``(A) the amount of benefit liabilities under the plan
determined using the assumptions used by the corporation in
determining liabilities;
``(B) the funding target of the plan determined as if the
plan has been in at-risk status for at least 5 plan years;
and
``(C) the funding target attainment percentage of the plan.
``(2) Definitions.--For purposes of this subsection:
``(A) Funding target.--The term `funding target' has the
meaning provided under section 303(d)(1).
``(B) Funding target attainment percentage.--The term
`funding target attainment percentage' has the meaning
provided under section 302(d)(2).
``(C) At-risk status.--The term `at-risk status' has the
meaning provided in section 303(i)(4).
``(e) Notice to Congress.--The corporation shall, on an
annual basis, submit to the Committee on Health, Education,
Labor, and Pensions and the Committee on Finance of the
Senate and the Committee on Education and the Workforce and
the Committee on Ways and Means of the House of
Representatives, a summary report in the aggregate of the
information submitted to the corporation under this
section.''.
(c) Effective Date.--The amendments made by this section
shall apply with respect to years beginning after 2007.
SEC. 506. DISCLOSURE OF TERMINATION INFORMATION TO PLAN
PARTICIPANTS.
(a) Distress Terminations.--
(1) In general.--Section 4041(c)(2) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1341(c)(2))
is amended by adding at the end the following:
``(D) Disclosure of termination information.--
``(i) In general.--A plan administrator that has filed a
notice of intent to terminate under subsection (a)(2) shall
provide to an affected party any information provided to the
corporation under subsection (a)(2) not later than 15 days
after--
``(I) receipt of a request from the affected party for the
information; or
``(II) the provision of new information to the corporation
relating to a previous request.
``(ii) Confidentiality.--
``(I) In general.--The plan administrator shall not provide
information under clause (i) in a form that includes any
information that may directly or indirectly be associated
with, or otherwise identify, an individual participant or
beneficiary.
``(II) Limitation.--A court may limit disclosure under this
subparagraph of confidential information described in section
552(b) of title 5, United States Code, to any authorized
representative of the participants or beneficiaries that
agrees to ensure the confidentiality of such information.
``(iii) Form and manner of information; charges.--
``(I) Form and manner.--The corporation may prescribe the
form and manner of the provision of information under this
subparagraph, which shall include delivery in written,
electronic, or other appropriate form to the extent that such
form is reasonably accessible to individuals to whom the
information is required to be provided.
``(II) Reasonable charges.--A plan administrator may charge
a reasonable fee for any information provided under this
subparagraph in other than electronic form.
``(iv) Authorized representative.--For purposes of this
subparagraph, the term `authorized representative' means any
employee organization representing participants in the
pension plan.''.
(2) Conforming amendment.--Section 4041(c)(1) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1341(c)(1)) is amended in subparagraph (C) by striking
``subparagraph (B)'' and inserting ``subparagraphs (B) and
(D)''.
(b) Involuntary Terminations.--
(1) In general.--Section 4042(c) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1342(c)) is amended
by--
(A) striking ``(c) If the'' and inserting ``(c)(1) If
the'';
(B) redesignating paragraph (3) as paragraph (2); and
(C) adding at the end the following:
``(3) Disclosure of termination information.--
``(A) In general.--
``(i) Information from plan sponsor or administrator.--A
plan sponsor or plan administrator of a single-employer plan
that has received a notice from the corporation of a
determination that the plan should be terminated under this
section shall provide to an affected party any information
provided to the corporation in connection with the plan
termination.
``(ii) Information from corporation.--The corporation shall
provide a copy of the administrative record, including the
trusteeship decision record of a termination of a plan
described under clause (i).
``(B) Timing of disclosure.--The plan sponsor, plan
administrator, or the corporation, as applicable, shall
provide the information described in subparagraph (A) not
later than 15 days after--
``(i) receipt of a request from an affected party for such
information; or
``(ii) in the case of information described under
subparagraph (A)(i), the provision of any new information to
the corporation relating to a previous request by an affected
party.
``(C) Confidentiality.--
``(i) In general.--The plan administrator and plan sponsor
shall not provide information under subparagraph (A)(i) in a
form which includes any information that may directly or
indirectly be associated with, or otherwise identify, an
individual participant or beneficiary.
``(ii) Limitation.--A court may limit disclosure under this
paragraph of confidential information described in section
552(b) of title 5, United States Code, to authorized
representatives (within the meaning of section
4041(c)(2)(D)(iv)) of the participants or beneficiaries that
agree to ensure the confidentiality of such information.
``(D) Form and manner of information; charges.--
``(i) Form and manner.--The corporation may prescribe the
form and manner of the provision of information under this
paragraph, which shall include delivery in written,
electronic, or other appropriate form to the extent that such
form is reasonably accessible to individuals to whom the
information is required to be provided.
``(ii) Reasonable charges.--A plan sponsor may charge a
reasonable fee for any information provided under this
paragraph in other than electronic form.''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to any plan termination under title IV of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1301 et
seq.) with respect to which the notice of intent to terminate
(or in the case of a termination by the Pension Benefit
Guaranty Corporation, a notice of determination under section
4042 of such Act (29 U.S.C. 1342)) occurs after the date of
enactment of this Act.
(2) Transition rule.--If notice under section 4041(c)(2)(D)
or 4042(c)(3) of the Employee Retirement Income Security Act
of 1974 (as added by this section) would otherwise be
required to be provided before the 90th day after the date of
the enactment of this Act, such notice shall not be required
to be provided until such 90th day.
SEC. 507. NOTICE OF FREEDOM TO DIVEST EMPLOYER SECURITIES.
(a) In General.--Section 101 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1021), as amended by
this Act, is amended by redesignating subsection (m) as
subsection (n) and by inserting after subsection (l) the
following:
[[Page H6086]]
``(m) Notice of Right To Divest.--Not later than 30 days
before the first date on which an applicable individual of an
applicable individual account plan is eligible to exercise
the right under section 204(j) to direct the proceeds from
the divestment of employer securities with respect to any
type of contribution, the administrator shall provide to such
individual a notice--
``(1) setting forth such right under such section, and
``(2) describing the importance of diversifying the
investment of retirement account assets.
The notice required by this subsection shall be written in a
manner calculated to be understood by the average plan
participant and may be delivered in written, electronic, or
other appropriate form to the extent that such form is
reasonably accessible to the recipient.''
(b) Penalties.--Section 502(c)(7) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1132(c)(7))
is amended by striking ``section 101(i)'' and inserting
``subsection (i) or (m) of section 101''.
(c) Model Notice.--The Secretary of the Treasury shall,
within 180 days after the date of the enactment of this
subsection, prescribe a model notice for purposes of
satisfying the requirements of the amendments made by this
section.
(d) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply to plan years beginning after December 31, 2006.
(2) Transition rule.--If notice under section 101(m) of the
Employee Retirement Income Security Act of 1974 (as added by
this section) would otherwise be required to be provided
before the 90th day after the date of the enactment of this
Act, such notice shall not be required to be provided until
such 90th day.
SEC. 508. PERIODIC PENSION BENEFIT STATEMENTS.
(a) Amendments of ERISA.--
(1) In general.--Section 105(a) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1025(a)) is amended to
read as follows:
``(a) Requirements To Provide Pension Benefit Statements.--
``(1) Requirements.--
``(A) Individual account plan.--The administrator of an
individual account plan (other than a one-participant
retirement plan described in section 101(i)(8)(B)) shall
furnish a pension benefit statement--
``(i) at least once each calendar quarter to a participant
or beneficiary who has the right to direct the investment of
assets in his or her account under the plan,
``(ii) at least once each calendar year to a participant or
beneficiary who has his or her own account under the plan but
does not have the right to direct the investment of assets in
that account, and
``(iii) upon written request to a plan beneficiary not
described in clause (i) or (ii).
``(B) Defined benefit plan.--The administrator of a defined
benefit plan (other than a one-participant retirement plan
described in section 101(i)(8)(B)) shall furnish a pension
benefit statement--
``(i) at least once every 3 years to each participant with
a nonforfeitable accrued benefit and who is employed by the
employer maintaining the plan at the time the statement is to
be furnished, and
``(ii) to a participant or beneficiary of the plan upon
written request.
Information furnished under clause (i) to a participant may
be based on reasonable estimates determined under regulations
prescribed by the Secretary, in consultation with the Pension
Benefit Guaranty Corporation.
``(2) Statements.--
``(A) In general.--A pension benefit statement under
paragraph (1)--
``(i) shall indicate, on the basis of the latest available
information--
``(I) the total benefits accrued, and
``(II) the nonforfeitable pension benefits, if any, which
have accrued, or the earliest date on which benefits will
become nonforfeitable,
``(ii) shall include an explanation of any permitted
disparity under section 401(l) of the Internal Revenue Code
of 1986 or any floor-offset arrangement that may be applied
in determining any accrued benefits described in clause (i),
``(iii) shall be written in a manner calculated to be
understood by the average plan participant, and
``(iv) may be delivered in written, electronic, or other
appropriate form to the extent such form is reasonably
accessible to the participant or beneficiary.
``(B) Additional information.--In the case of an individual
account plan, any pension benefit statement under clause (i)
or (ii) of paragraph (1)(A) shall include--
``(i) the value of each investment to which assets in the
individual account have been allocated, determined as of the
most recent valuation date under the plan, including the
value of any assets held in the form of employer securities,
without regard to whether such securities were contributed by
the plan sponsor or acquired at the direction of the plan or
of the participant or beneficiary, and
``(ii) in the case of a pension benefit statement under
paragraph (1)(A)(i)--
``(I) an explanation of any limitations or restrictions on
any right of the participant or beneficiary under the plan to
direct an investment,
``(II) an explanation, written in a manner calculated to be
understood by the average plan participant, of the
importance, for the long-term retirement security of
participants and beneficiaries, of a well-balanced and
diversified investment portfolio, including a statement of
the risk that holding more than 20 percent of a portfolio in
the security of one entity (such as employer securities) may
not be adequately diversified, and
``(III) a notice directing the participant or beneficiary
to the Internet website of the Department of Labor for
sources of information on individual investing and
diversification.
``(C) Alternative notice.--The requirements of subparagraph
(A)(i)(II) are met if, at least annually and in accordance
with requirements of the Secretary, the plan--
``(i) updates the information described in such paragraph
which is provided in the pension benefit statement, or
``(ii) provides in a separate statement such information as
is necessary to enable a participant or beneficiary to
determine their nonforfeitable vested benefits.
``(3) Defined benefit plans.--
``(A) Alternative notice.--In the case of a defined benefit
plan, the requirements of paragraph (1)(B)(i) shall be
treated as met with respect to a participant if at least once
each year the administrator provides to the participant
notice of the availability of the pension benefit statement
and the ways in which the participant may obtain such
statement. Such notice may be delivered in written,
electronic, or other appropriate form to the extent such form
is reasonably accessible to the participant.
``(B) Years in which no benefits accrue.--The Secretary may
provide that years in which no employee or former employee
benefits (within the meaning of section 410(b) of the
Internal Revenue Code of 1986) under the plan need not be
taken into account in determining the 3-year period under
paragraph (1)(B)(i).''
(2) Conforming amendments.--
(A) Section 105 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1025) is amended by striking
subsection (d).
(B) Section 105(b) of such Act (29 U.S.C. 1025(b)) is
amended to read as follows:
``(b) Limitation on Number of Statements.--In no case shall
a participant or beneficiary of a plan be entitled to more
than 1 statement described in subparagraph (A)(iii) or
(B)(ii) of subsection (a)(1), whichever is applicable, in any
12-month period.''
(C) Section 502(c)(1) of such Act (29 U.S.C. 1132(c)(1)) is
amended by striking ``or section 101(f)'' and inserting
``section 101(f), or section 105(a)''.
(b) Model Statements.--
(1) In general.--The Secretary of Labor shall, within 1
year after the date of the enactment of this section, develop
1 or more model benefit statements that are written in a
manner calculated to be understood by the average plan
participant and that may be used by plan administrators in
complying with the requirements of section 105 of the
Employee Retirement Income Security Act of 1974.
(2) Interim final rules.--The Secretary of Labor may
promulgate any interim final rules as the Secretary
determines appropriate to carry out the provisions of this
subsection.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to plan years beginning after December 31, 2006.
(2) Special rule for collectively bargained agreements.--In
the case of a plan maintained pursuant to 1 or more
collective bargaining agreements between employee
representatives and 1 or more employers ratified on or before
the date of the enactment of this Act, paragraph (1) shall be
applied to benefits pursuant to, and individuals covered by,
any such agreement by substituting for ``December 31, 2006''
the earlier of--
(A) the later of--
(i) December 31, 2007, or
(ii) the date on which the last of such collective
bargaining agreements terminates (determined without regard
to any extension thereof after such date of enactment), or
(B) December 31, 2008.
SEC. 509. NOTICE TO PARTICIPANTS OR BENEFICIARIES OF BLACKOUT
PERIODS.
(a) In General.--Section 101(i)(8)(B) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1021(i)(8)(B)) is amended by striking clauses (i) through
(iv), by redesignating clause (v) as clause (ii), and by
inserting before clause (ii), as so redesignated, the
following new clause:
``(i) on the first day of the plan year--
``(I) covered only one individual (or the individual and
the individual's spouse) and the individual (or the
individual and the individual's spouse) owned 100 percent of
the plan sponsor (whether or not incorporated), or
``(II) covered only one or more partners (or partners and
their spouses) in the plan sponsor, and''.
(b) Effective Date.--The amendments made by this subsection
shall take effect as if included in the provisions of section
306 of Public Law 107-204 (116 Stat. 745 et seq.).
TITLE VI--INVESTMENT ADVICE, PROHIBITED TRANSACTIONS, AND FIDUCIARY
RULES
Subtitle A--Investment Advice
SEC. 601. PROHIBITED TRANSACTION EXEMPTION FOR PROVISION OF
INVESTMENT ADVICE.
(a) Amendments to the Employee Retirement Income Security
Act of 1974.--
[[Page H6087]]
(1) Exemption from prohibited transactions.--Section 408(b)
of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1108(b)) is amended by adding at the end the following
new paragraph:
``(14) Any transaction in connection with the provision of
investment advice described in section 3(21)(A)(ii) to a
participant or beneficiary of an individual account plan that
permits such participant or beneficiary to direct the
investment of assets in their individual account, if--
``(A) the transaction is--
``(i) the provision of the investment advice to the
participant or beneficiary of the plan with respect to a
security or other property available as an investment under
the plan,
``(ii) the acquisition, holding, or sale of a security or
other property available as an investment under the plan
pursuant to the investment advice, or
``(iii) the direct or indirect receipt of fees or other
compensation by the fiduciary adviser or an affiliate thereof
(or any employee, agent, or registered representative of the
fiduciary adviser or affiliate) in connection with the
provision of the advice or in connection with an acquisition,
holding, or sale of a security or other property available as
an investment under the plan pursuant to the investment
advice; and
``(B) the requirements of subsection (g) are met.''.
(2) Requirements.--Section 408 of such Act is amended
further by adding at the end the following new subsection:
``(g) Provision of Investment Advice to Participant and
Beneficiaries.--
``(1) In general.--The prohibitions provided in section 406
shall not apply to transactions described in subsection
(b)(14) if the investment advice provided by a fiduciary
adviser is provided under an eligible investment advice
arrangement.
``(2) Eligible investment advice arrangement.--For purposes
of this subsection, the term `eligible investment advice
arrangement' means an arrangement--
``(A) which either--
``(i) provides that any fees (including any commission or
other compensation) received by the fiduciary adviser for
investment advice or with respect to the sale, holding, or
acquisition of any security or other property for purposes of
investment of plan assets do not vary depending on the basis
of any investment option selected, or
``(ii) uses a computer model under an investment advice
program meeting the requirements of paragraph (3) in
connection with the provision of investment advice by a
fiduciary adviser to a participant or beneficiary, and
``(B) with respect to which the requirements of paragraph
(4), (5), (6), (7), (8), and (9) are met.
``(3) Investment advice program using computer model.--
``(A) In general.--An investment advice program meets the
requirements of this paragraph if the requirements of
subparagraphs (B), (C), and (D) are met.
``(B) Computer model.--The requirements of this
subparagraph are met if the investment advice provided under
the investment advice program is provided pursuant to a
computer model that--
``(i) applies generally accepted investment theories that
take into account the historic returns of different asset
classes over defined periods of time,
``(ii) utilizes relevant information about the participant,
which may include age, life expectancy, retirement age, risk
tolerance, other assets or sources of income, and preferences
as to certain types of investments,
``(iii) utilizes prescribed objective criteria to provide
asset allocation portfolios comprised of investment options
available under the plan,
``(iv) operates in a manner that is not biased in favor of
investments offered by the fiduciary adviser or a person with
a material affiliation or contractual relationship with the
fiduciary adviser, and
``(v) takes into account all investment options under the
plan in specifying how a participant's account balance should
be invested and is not inappropriately weighted with respect
to any investment option.
``(C) Certification.--
``(i) In general.--The requirements of this subparagraph
are met with respect to any investment advice program if an
eligible investment expert certifies, prior to the
utilization of the computer model and in accordance with
rules prescribed by the Secretary, that the computer model
meets the requirements of subparagraph (B).
``(ii) Renewal of certifications.--If, as determined under
regulations prescribed by the Secretary, there are material
modifications to a computer model, the requirements of this
subparagraph are met only if a certification described in
clause (i) is obtained with respect to the computer model as
so modified.
``(iii) Eligible investment expert.--The term `eligible
investment expert' means any person--
``(I) which meets such requirements as the Secretary may
provide, and
``(II) does not bear any material affiliation or
contractual relationship with any investment adviser or a
related person thereof (or any employee, agent, or registered
representative of the investment adviser or related person).
``(D) Exclusivity of recommendation.--The requirements of
this subparagraph are met with respect to any investment
advice program if--
``(i) the only investment advice provided under the program
is the advice generated by the computer model described in
subparagraph (B), and
``(ii) any transaction described in subsection
(b)(14)(B)(ii) occurs solely at the direction of the
participant or beneficiary.
Nothing in the preceding sentence shall preclude the
participant or beneficiary from requesting investment advice
other than that described in subparagraph (A), but only if
such request has not been solicited by any person connected
with carrying out the arrangement.
``(4) Express authorization by separate fiduciary.--The
requirements of this paragraph are met with respect to an
arrangement if the arrangement is expressly authorized by a
plan fiduciary other than the person offering the investment
advice program, any person providing investment options under
the plan, or any affiliate of either.
``(5) Annual audit.--The requirements of this paragraph are
met if an independent auditor, who has appropriate technical
training or experience and proficiency and so represents in
writing--
``(A) conducts an annual audit of the arrangement for
compliance with the requirements of this subsection, and
``(B) following completion of the annual audit, issues a
written report to the fiduciary who authorized use of the
arrangement which presents its specific findings regarding
compliance of the arrangement with the requirements of this
subsection.
For purposes of this paragraph, an auditor is considered
independent if it is not related to the person offering the
arrangement to the plan and is not related to any person
providing investment options under the plan.
``(6) Disclosure.--The requirements of this paragraph are
met if--
``(A) the fiduciary adviser provides to a participant or a
beneficiary before the initial provision of the investment
advice with regard to any security or other property offered
as an investment option, a written notification (which may
consist of notification by means of electronic
communication)--
``(i) of the role of any party that has a material
affiliation or contractual relationship with the financial
adviser in the development of the investment advice program
and in the selection of investment options available under
the plan,
``(ii) of the past performance and historical rates of
return of the investment options available under the plan,
``(iii) of all fees or other compensation relating to the
advice that the fiduciary adviser or any affiliate thereof is
to receive (including compensation provided by any third
party) in connection with the provision of the advice or in
connection with the sale, acquisition, or holding of the
security or other property,
``(iv) of any material affiliation or contractual
relationship of the fiduciary adviser or affiliates thereof
in the security or other property,
``(v) the manner, and under what circumstances, any
participant or beneficiary information provided under the
arrangement will be used or disclosed,
``(vi) of the types of services provided by the fiduciary
adviser in connection with the provision of investment advice
by the fiduciary adviser,
``(vii) that the adviser is acting as a fiduciary of the
plan in connection with the provision of the advice, and
``(viii) that a recipient of the advice may separately
arrange for the provision of advice by another adviser, that
could have no material affiliation with and receive no fees
or other compensation in connection with the security or
other property, and
``(B) at all times during the provision of advisory
services to the participant or beneficiary, the fiduciary
adviser--
``(i) maintains the information described in subparagraph
(A) in accurate form and in the manner described in paragraph
(8),
``(ii) provides, without charge, accurate information to
the recipient of the advice no less frequently than annually,
``(iii) provides, without charge, accurate information to
the recipient of the advice upon request of the recipient,
and
``(iv) provides, without charge, accurate information to
the recipient of the advice concerning any material change to
the information required to be provided to the recipient of
the advice at a time reasonably contemporaneous to the change
in information.
``(7) Other conditions.--The requirements of this paragraph
are met if--
``(A) the fiduciary adviser provides appropriate
disclosure, in connection with the sale, acquisition, or
holding of the security or other property, in accordance with
all applicable securities laws,
``(B) the sale, acquisition, or holding occurs solely at
the direction of the recipient of the advice,
``(C) the compensation received by the fiduciary adviser
and affiliates thereof in connection with the sale,
acquisition, or holding of the security or other property is
reasonable, and
``(D) the terms of the sale, acquisition, or holding of the
security or other property are at least as favorable to the
plan as an arm's length transaction would be.
``(8) Standards for presentation of information.--
``(A) In general.--The requirements of this paragraph are
met if the notification required to be provided to
participants and
[[Page H6088]]
beneficiaries under paragraph (6)(A) is written in a clear
and conspicuous manner and in a manner calculated to be
understood by the average plan participant and is
sufficiently accurate and comprehensive to reasonably apprise
such participants and beneficiaries of the information
required to be provided in the notification.
``(B) Model form for disclosure of fees and other
compensation.--The Secretary shall issue a model form for the
disclosure of fees and other compensation required in
paragraph (6)(A)(iii) which meets the requirements of
subparagraph (A).
``(9) Maintenance for 6 years of evidence of compliance.--
The requirements of this paragraph are met if a fiduciary
adviser who has provided advice referred to in paragraph (1)
maintains, for a period of not less than 6 years after the
provision of the advice, any records necessary for
determining whether the requirements of the preceding
provisions of this subsection and of subsection (b)(14) have
been met. A transaction prohibited under section 406 shall
not be considered to have occurred solely because the records
are lost or destroyed prior to the end of the 6-year period
due to circumstances beyond the control of the fiduciary
adviser.
``(10) Exemption for plan sponsor and certain other
fiduciaries.--
``(A) In general.--Subject to subparagraph (B), a plan
sponsor or other person who is a fiduciary (other than a
fiduciary adviser) shall not be treated as failing to meet
the requirements of this part solely by reason of the
provision of investment advice referred to in section
3(21)(A)(ii) (or solely by reason of contracting for or
otherwise arranging for the provision of the advice), if--
``(i) the advice is provided by a fiduciary adviser
pursuant to an eligible investment advice arrangement between
the plan sponsor or other fiduciary and the fiduciary adviser
for the provision by the fiduciary adviser of investment
advice referred to in such section,
``(ii) the terms of the eligible investment advice
arrangement require compliance by the fiduciary adviser with
the requirements of this subsection, and
``(iii) the terms of the eligible investment advice
arrangement include a written acknowledgment by the fiduciary
adviser that the fiduciary adviser is a fiduciary of the plan
with respect to the provision of the advice.
``(B) Continued duty of prudent selection of adviser and
periodic review.--Nothing in subparagraph (A) shall be
construed to exempt a plan sponsor or other person who is a
fiduciary from any requirement of this part for the prudent
selection and periodic review of a fiduciary adviser with
whom the plan sponsor or other person enters into an eligible
investment advice arrangement for the provision of investment
advice referred to in section 3(21)(A)(ii). The plan sponsor
or other person who is a fiduciary has no duty under this
part to monitor the specific investment advice given by the
fiduciary adviser to any particular recipient of the advice.
``(C) Availability of plan assets for payment for advice.--
Nothing in this part shall be construed to preclude the use
of plan assets to pay for reasonable expenses in providing
investment advice referred to in section 3(21)(A)(ii).
``(11) Definitions.--For purposes of this subsection and
subsection (b)(14)--
``(A) Fiduciary adviser.--The term `fiduciary adviser'
means, with respect to a plan, a person who is a fiduciary of
the plan by reason of the provision of investment advice
referred to in section 3(21)(A)(ii) by the person to the
participant or beneficiary of the plan and who is--
``(i) registered as an investment adviser under the
Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) or
under the laws of the State in which the fiduciary maintains
its principal office and place of business,
``(ii) a bank or similar financial institution referred to
in section 408(b)(4) or a savings association (as defined in
section 3(b)(1) of the Federal Deposit Insurance Act (12
U.S.C. 1813(b)(1)), but only if the advice is provided
through a trust department of the bank or similar financial
institution or savings association which is subject to
periodic examination and review by Federal or State banking
authorities,
``(iii) an insurance company qualified to do business under
the laws of a State,
``(iv) a person registered as a broker or dealer under the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
``(v) an affiliate of a person described in any of clauses
(i) through (iv), or
``(vi) an employee, agent, or registered representative of
a person described in clauses (i) through (v) who satisfies
the requirements of applicable insurance, banking, and
securities laws relating to the provision of the advice.
For purposes of this part, a person who develops the computer
model described in paragraph (3)(B) or markets the investment
advice program or computer model shall be treated as a person
who is a fiduciary of the plan by reason of the provision of
investment advice referred to in section 3(21)(A)(ii) to the
participant or beneficiary and shall be treated as a
fiduciary adviser for purposes of this subsection and
subsection (b)(14), except that the Secretary may prescribe
rules under which only 1 fiduciary adviser may elect to be
treated as a fiduciary with respect to the plan.
``(B) Affiliate.--The term `affiliate' of another entity
means an affiliated person of the entity (as defined in
section 2(a)(3) of the Investment Company Act of 1940 (15
U.S.C. 80a-2(a)(3))).
``(C) Registered representative.--The term `registered
representative' of another entity means a person described in
section 3(a)(18) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)(18)) (substituting the entity for the broker or
dealer referred to in such section) or a person described in
section 202(a)(17) of the Investment Advisers Act of 1940 (15
U.S.C. 80b-2(a)(17)) (substituting the entity for the
investment adviser referred to in such section).''.
(3) Effective date.--The amendments made by this subsection
shall apply with respect to advice referred to in section
3(21)(A)(ii) of the Employee Retirement Income Security Act
of 1974 provided after December 31, 2006.
(b) Amendments to Internal Revenue Code of 1986.--
(1) Exemption from prohibited transactions.--Subsection (d)
of section 4975 of the Internal Revenue Code of 1986
(relating to exemption from tax on prohibited transactions)
is amended--
(A) in paragraph (15), by striking ``or'' at the end;
(B) in paragraph (16), by striking the period at the end
and inserting ``;or''; and
(C) by adding at the end the following new paragraph:
``(17) Any transaction in connection with the provision of
investment advice described in subsection (e)(3)(B) to a
participant or beneficiary in a plan and that permits such
participant or beneficiary to direct the investment of plan
assets in an individual account, if--
``(A) the transaction is--
``(i) the provision of the investment advice to the
participant or beneficiary of the plan with respect to a
security or other property available as an investment under
the plan,
``(ii) the acquisition, holding, or sale of a security or
other property available as an investment under the plan
pursuant to the investment advice, or
``(iii) the direct or indirect receipt of fees or other
compensation by the fiduciary adviser or an affiliate thereof
(or any employee, agent, or registered representative of the
fiduciary adviser or affiliate) in connection with the
provision of the advice or in connection with an acquisition,
holding, or sale of a security or other property available as
an investment under the plan pursuant to the investment
advice; and
``(B) the requirements of subsection (f)(8) are met.''.
(2) Requirements.--Subsection (f) of such section 4975
(relating to other definitions and special rules) is amended
by adding at the end the following new paragraph:
``(8) Provision of investment advice to participant and
beneficiaries.--
``(A) In general.--The prohibitions provided in subsection
(c) shall not apply to transactions described in subsection
(b)(14) if the investment advice provided by a fiduciary
adviser is provided under an eligible investment advice
arrangement.
``(B) Eligible investment advice arrangement.--For purposes
of this paragraph, the term `eligible investment advice
arrangement' means an arrangement--
``(i) which either--
``(I) provides that any fees (including any commission or
other compensation) received by the fiduciary adviser for
investment advice or with respect to the sale, holding, or
acquisition of any security or other property for purposes of
investment of plan assets do not vary depending on the basis
of any investment option selected, or
``(II) uses a computer model under an investment advice
program meeting the requirements of subparagraph (C) in
connection with the provision of investment advice by a
fiduciary adviser to a participant or beneficiary, and
``(ii) with respect to which the requirements of
subparagraphs (D), (E), (F), (G), (H), and (I) are met.
``(C) Investment advice program using computer model.--
``(i) In general.--An investment advice program meets the
requirements of this subparagraph if the requirements of
clauses (ii), (iii), and (iv) are met.
``(ii) Computer model.--The requirements of this clause are
met if the investment advice provided under the investment
advice program is provided pursuant to a computer model
that--
``(I) applies generally accepted investment theories that
take into account the historic returns of different asset
classes over defined periods of time,
``(II) utilizes relevant information about the participant,
which may include age, life expectancy, retirement age, risk
tolerance, other assets or sources of income, and preferences
as to certain types of investments,
``(III) utilizes prescribed objective criteria to provide
asset allocation portfolios comprised of investment options
available under the plan,
``(IV) operates in a manner that is not biased in favor of
investments offered by the fiduciary adviser or a person with
a material affiliation or contractual relationship with the
fiduciary adviser, and
``(V) takes into account all investment options under the
plan in specifying how a participant's account balance should
be invested and is not inappropriately weighted with respect
to any investment option.
``(iii) Certification.--
[[Page H6089]]
``(I) In general.--The requirements of this clause are met
with respect to any investment advice program if an eligible
investment expert certifies, prior to the utilization of the
computer model and in accordance with rules prescribed by the
Secretary of Labor, that the computer model meets the
requirements of clause (ii).
``(II) Renewal of certifications.--If, as determined under
regulations prescribed by the Secretary of Labor, there are
material modifications to a computer model, the requirements
of this clause are met only if a certification described in
subclause (I) is obtained with respect to the computer model
as so modified.
``(III) Eligible investment expert.--The term `eligible
investment expert' means any person which meets such
requirements as the Secretary of Labor may provide and which
does not bear any material affiliation or contractual
relationship with any investment adviser or a related person
thereof (or any employee, agent, or registered representative
of the investment adviser or related person).
``(iv) Exclusivity of recommendation.--The requirements of
this clause are met with respect to any investment advice
program if--
``(I) the only investment advice provided under the program
is the advice generated by the computer model described in
clause (ii), and
``(II) any transaction described in subsection
(b)(14)(B)(ii) occurs solely at the direction of the
participant or beneficiary.
Nothing in the preceding sentence shall preclude the
participant or beneficiary from requesting investment advice
other than that described in clause (i), but only if such
request has not been solicited by any person connected with
carrying out the arrangement.
``(D) Express authorization by separate fiduciary.--The
requirements of this subparagraph are met with respect to an
arrangement if the arrangement is expressly authorized by a
plan fiduciary other than the person offering the investment
advice program, any person providing investment options under
the plan, or any affiliate of either.
``(E) Audits.--
``(i) In general.--The requirements of this subparagraph
are met if an independent auditor, who has appropriate
technical training or experience and proficiency and so
represents in writing--
``(I) conducts an annual audit of the arrangement for
compliance with the requirements of this paragraph, and
``(II) following completion of the annual audit, issues a
written report to the fiduciary who authorized use of the
arrangement which presents its specific findings regarding
compliance of the arrangement with the requirements of this
paragraph.
``(ii) Special rule for individual retirement and similar
plans.--In the case of a plan described in subparagraphs (B)
through (F) (and so much of subparagraph (G) as relates to
such subparagraphs) of subsection (e)(1), in lieu of the
requirements of clause (i), audits of the arrangement shall
be conducted at such times and in such manner as the
Secretary of Labor may prescribe.
``(iii) Independent auditor.--For purposes of this
subparagraph, an auditor is considered independent if it is
not related to the person offering the arrangement to the
plan and is not related to any person providing investment
options under the plan.
``(F) Disclosure.--The requirements of this subparagraph
are met if--
``(i) the fiduciary adviser provides to a participant or a
beneficiary before the initial provision of the investment
advice with regard to any security or other property offered
as an investment option, a written notification (which may
consist of notification by means of electronic
communication)--
``(I) of the role of any party that has a material
affiliation or contractual relationship with the financial
adviser in the development of the investment advice program
and in the selection of investment options available under
the plan,
``(II) of the past performance and historical rates of
return of the investment options available under the plan,
``(III) of all fees or other compensation relating to the
advice that the fiduciary adviser or any affiliate thereof is
to receive (including compensation provided by any third
party) in connection with the provision of the advice or in
connection with the sale, acquisition, or holding of the
security or other property,
``(IV) of any material affiliation or contractual
relationship of the fiduciary adviser or affiliates thereof
in the security or other property,
``(V) the manner, and under what circumstances, any
participant or beneficiary information provided under the
arrangement will be used or disclosed,
``(VI) of the types of services provided by the fiduciary
adviser in connection with the provision of investment advice
by the fiduciary adviser,
``(VII) that the adviser is acting as a fiduciary of the
plan in connection with the provision of the advice, and
``(VIII) that a recipient of the advice may separately
arrange for the provision of advice by another adviser, that
could have no material affiliation with and receive no fees
or other compensation in connection with the security or
other property, and
``(ii) at all times during the provision of advisory
services to the participant or beneficiary, the fiduciary
adviser--
``(I) maintains the information described in clause (i) in
accurate form and in the manner described in subparagraph
(H),
``(II) provides, without charge, accurate information to
the recipient of the advice no less frequently than annually,
``(III) provides, without charge, accurate information to
the recipient of the advice upon request of the recipient,
and
``(IV) provides, without charge, accurate information to
the recipient of the advice concerning any material change to
the information required to be provided to the recipient of
the advice at a time reasonably contemporaneous to the change
in information.
``(G) Other conditions.--The requirements of this
subparagraph are met if--
``(i) the fiduciary adviser provides appropriate
disclosure, in connection with the sale, acquisition, or
holding of the security or other property, in accordance with
all applicable securities laws,
``(ii) the sale, acquisition, or holding occurs solely at
the direction of the recipient of the advice,
``(iii) the compensation received by the fiduciary adviser
and affiliates thereof in connection with the sale,
acquisition, or holding of the security or other property is
reasonable, and
``(iv) the terms of the sale, acquisition, or holding of
the security or other property are at least as favorable to
the plan as an arm's length transaction would be.
``(H) Standards for presentation of information.--
``(i) In general.--The requirements of this subparagraph
are met if the notification required to be provided to
participants and beneficiaries under subparagraph (F)(i) is
written in a clear and conspicuous manner and in a manner
calculated to be understood by the average plan participant
and is sufficiently accurate and comprehensive to reasonably
apprise such participants and beneficiaries of the
information required to be provided in the notification.
``(ii) Model form for disclosure of fees and other
compensation.--The Secretary of Labor shall issue a model
form for the disclosure of fees and other compensation
required in subparagraph (F)(i)(III) which meets the
requirements of clause (i).
``(I) Maintenance for 6 years of evidence of compliance.--
The requirements of this subparagraph are met if a fiduciary
adviser who has provided advice referred to in subparagraph
(A) maintains, for a period of not less than 6 years after
the provision of the advice, any records necessary for
determining whether the requirements of the preceding
provisions of this paragraph and of subsection (d)(17) have
been met. A transaction prohibited under section 406 shall
not be considered to have occurred solely because the records
are lost or destroyed prior to the end of the 6-year period
due to circumstances beyond the control of the fiduciary
adviser.
``(J) Definitions.--For purposes of this paragraph and
subsection (d)(17)--
``(i) Fiduciary adviser.--The term `fiduciary adviser'
means, with respect to a plan, a person who is a fiduciary of
the plan by reason of the provision of investment advice by
the person to the participant or beneficiary of the plan and
who is--
``(I) registered as an investment adviser under the
Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) or
under the laws of the State in which the fiduciary maintains
its principal office and place of business,
``(II) a bank or similar financial institution referred to
in section 408(b)(4) or a savings association (as defined in
section 3(b)(1) of the Federal Deposit Insurance Act (12
U.S.C. 1813(b)(1)), but only if the advice is provided
through a trust department of the bank or similar financial
institution or savings association which is subject to
periodic examination and review by Federal or State banking
authorities,
``(III) an insurance company qualified to do business under
the laws of a State,
``(IV) a person registered as a broker or dealer under the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
``(V) an affiliate of a person described in any of
subclauses (I) through (IV), or
``(VI) an employee, agent, or registered representative of
a person described in subclauses (I) through (V) who
satisfies the requirements of applicable insurance, banking,
and securities laws relating to the provision of the advice.
For purposes of this title, a person who develops the
computer model described in subparagraph (C)(ii) or markets
the investment advice program or computer model shall be
treated as a person who is a fiduciary of the plan by reason
of the provision of investment advice referred to in
subsection (e)(3)(B) to the participant or beneficiary and
shall be treated as a fiduciary adviser for purposes of this
paragraph and subsection (d)(17), except that the Secretary
of Labor may prescribe rules under which only 1 fiduciary
adviser may elect to be treated as a fiduciary with respect
to the plan.
``(ii) Affiliate.--The term `affiliate' of another entity
means an affiliated person of the entity (as defined in
section 2(a)(3) of the Investment Company Act of 1940 (15
U.S.C. 80a-2(a)(3))).
``(iii) Registered representative.--The term `registered
representative' of another entity means a person described in
section 3(a)(18) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)(18)) (substituting the entity for the broker or
dealer referred to in
[[Page H6090]]
such section) or a person described in section 202(a)(17) of
the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(17))
(substituting the entity for the investment adviser referred
to in such section).''.
(3) Determination of feasibility of application of computer
model investment advice programs for individual retirement
and similar plans.--
(A) Solicitation of information.--As soon as practicable
after the date of the enactment of this Act, the Secretary of
Labor, in consultation with the Secretary of the Treasury,
shall--
(i) solicit information as to the feasibility of the
application of computer model investment advice programs for
plans described in subparagraphs (B) through (F) (and so much
of subparagraph (G) as relates to such subparagraphs) of
section 4975(e)(1) of the Internal Revenue Code of 1986,
including soliciting information from--
(I) at least the top 50 trustees of such plans, determined
on the basis of assets held by such trustees, and
(II) other persons offering computer model investment
advice programs based on nonproprietary products, and
(ii) shall on the basis of such information make the
determination under subparagraph (B).
The information solicited by the Secretary of Labor under
clause (i) from persons described in subclauses (I) and (II)
of clause (i) shall include information on computer modeling
capabilities of such persons with respect to the current year
and preceding year, including such capabilities for
investment accounts maintained by such persons.
(B) Determination of feasibility.--The Secretary of Labor,
in consultation with the Secretary of the Treasury, shall, on
the basis of information received under subparagraph (A),
determine whether there is any computer model investment
advice program which may be utilized by a plan described in
subparagraph (A)(i) to provide investment advice to the
account beneficiary of the plan which--
(i) utilizes relevant information about the account
beneficiary, which may include age, life expectancy,
retirement age, risk tolerance, other assets or sources of
income, and preferences as to certain types of investments,
(ii) takes into account the full range of investments,
including equities and bonds, in determining the options for
the investment portfolio of the account beneficiary, and
(iii) allows the account beneficiary, in directing the
investment of assets, sufficient flexibility in obtaining
advice to evaluate and select investment options.
The Secretary of Labor shall report the results of such
determination to the committees of Congress referred to in
subparagraph (D)(ii) not later than December 31, 2007.
(C) Application of computer model investment advice
program.--
(i) Certification required for use of computer model.--
(I) Restriction on use.--Subclause (II) of section
4975(f)(8)(B)(i) of the Internal Revenue Code of 1986 shall
not apply to a plan described in subparagraph (A)(i).
(II) Restriction lifted if model certified.--If the
Secretary of Labor determines under subparagraph (B) or (D)
that there is a computer model investment advice program
described in subparagraph (B), subclause (I) shall cease to
apply as of the date of such determination.
(ii) Class exemption if no initial certification by
secretary.--If the Secretary of Labor determines under
subparagraph (B) that there is no computer model investment
advice program described in subparagraph (B), the Secretary
of Labor shall grant a class exemption from treatment as a
prohibited transaction under section 4975(c) of the Internal
Revenue Code of 1986 to any transaction described in section
4975(d)(17)(A) of such Code with respect to plans described
in subparagraph (A)(i), subject to such conditions as set
forth in such exemption as are in the interests of the plan
and its account beneficiary and protective of the rights of
the account beneficiary and as are necessary to--
(I) ensure the requirements of sections 4975(d)(17) and
4975(f)(8) (other than subparagraph (C) thereof) of the
Internal Revenue Code of 1986 are met, and
(II) ensure the investment advice provided under the
investment advice program utilizes prescribed objective
criteria to provide asset allocation portfolios comprised of
securities or other property available as investments under
the plan.
If the Secretary of Labor solicits any information under
subparagraph (A) from a person and such person does not
provide such information within 60 days after the
solicitation, then, unless such failure was due to reasonable
cause and not wilful neglect, such person shall not be
entitled to utilize the class exemption under this clause.
(D) Subsequent determination.--
(i) In general.--If the Secretary of Labor initially makes
a determination described in subparagraph (C)(ii), the
Secretary may subsequently determine that there is a computer
model investment advice program described in subparagraph
(B). If the Secretary makes such subsequent determination,
then the class exemption described in subparagraph (C)(ii)
shall cease to apply after the later of--
(I) the date which is 2 years after such subsequent
determination, or
(II) the date which is 3 years after the first date on
which such exemption took effect.
(ii) Requests for determination.--Any person may request
the Secretary of Labor to make a determination under this
subparagraph with respect to any computer model investment
advice program, and the Secretary of Labor shall make a
determination with respect to such request within 90 days. If
the Secretary of Labor makes a determination that such
program is not described in subparagraph (B), the Secretary
shall, within 10 days of such determination, notify the
Committee on Ways and Means and the Committee on Education
and the Workforce of the House of Representatives and the
Committee on Finance and the Committee on Health, Education,
Labor, and Pensions of the Senate of such determination and
the reasons for such determination.
(E) Effective date.--The provisions of this paragraph shall
take effect on the date of the enactment of this Act.
(4) Effective date.--Except as provided in this subsection,
the amendments made by this subsection shall apply with
respect to advice referred to in section 4975(c)(3)(B) of the
Internal Revenue Code of 1986 provided after December 31,
2006.
(c) Coordination With Existing Exemptions.--Any exemption
under section 408(b) of the Employee Retirement Income
Security Act of 1974 and section 4975(d) of the Internal
Revenue Code of 1986 provided by the amendments made by this
section shall not in any manner alter existing individual or
class exemptions, provided by statute or administrative
action.
Subtitle B--Prohibited Transactions
SEC. 611. PROHIBITED TRANSACTION RULES RELATING TO FINANCIAL
INVESTMENTS.
(a) Exemption for Block Trading.--
(1) Amendments to employee retirement income security act
of 1974.--Section 408(b) of such Act (29 U.S.C. 1108(b)), as
amended by section 601, is amended by adding at the end the
following new paragraph:
``(15)(A) Any transaction involving the purchase or sale of
securities, or other property (as determined by the
Secretary), between a plan and a party in interest (other
than a fiduciary described in section 3(21)(A)) with respect
to a plan if--
``(i) the transaction involves a block trade,
``(ii) at the time of the transaction, the interest of the
plan (together with the interests of any other plans
maintained by the same plan sponsor), does not exceed 10
percent of the aggregate size of the block trade,
``(iii) the terms of the transaction, including the price,
are at least as favorable to the plan as an arm's length
transaction, and
``(iv) the compensation associated with the purchase and
sale is not greater than the compensation associated with an
arm's length transaction with an unrelated party.
``(B) For purposes of this paragraph, the term `block
trade' means any trade of at least 10,000 shares or with a
market value of at least $200,000 which will be allocated
across two or more unrelated client accounts of a
fiduciary.''.
(2) Amendments to internal revenue code of 1986.--
(A) In general.--Subsection (d) of section 4975 of the
Internal Revenue Code of 1986 (relating to exemptions), as
amended by section 601, is amended by striking ``or'' at the
end of paragraph (16), by striking the period at the end of
paragraph (17) and inserting ``, or'', and by adding at the
end the following new paragraph:
``(18) any transaction involving the purchase or sale of
securities, or other property (as determined by the Secretary
of Labor), between a plan and a party in interest (other than
a fiduciary described in subsection (e)(3)(B)) with respect
to a plan if--
``(A) the transaction involves a block trade,
``(B) at the time of the transaction, the interest of the
plan (together with the interests of any other plans
maintained by the same plan sponsor), does not exceed 10
percent of the aggregate size of the block trade,
``(C) the terms of the transaction, including the price,
are at least as favorable to the plan as an arm's length
transaction, and
``(D) the compensation associated with the purchase and
sale is not greater than the compensation associated with an
arm's length transaction with an unrelated party.''.
(B) Special rule relating to block trade.--Subsection (f)
of section 4975 of such Code (relating to other definitions
and special rules), as amended by section 601, is amended by
adding at the end the following new paragraph:
``(9) Block trade.--The term `block trade' means any trade
of at least 10,000 shares or with a market value of at least
$200,000 which will be allocated across two or more unrelated
client accounts of a fiduciary.''.
(b) Bonding Relief.--Section 412(a) of such Act (29 U.S.C.
1112(a)) is amended--
(1) by redesignating paragraph (2) as paragraph (3),
(2) by striking ``and'' at the end of paragraph (1), and
(3) by inserting after paragraph (1) the following new
paragraph:
``(2) no bond shall be required of any entity which is
registered as a broker or a dealer under section 15(b) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o(b)) if the
broker or dealer is subject to the fidelity bond requirements
of a self-regulatory organization (within the meaning of
section 3(a)(26) of such Act (15 U.S.C. 78c(a)(26)).''.
(c) Exemption for Electronic Communication Network.--
[[Page H6091]]
(1) Amendments to employee retirement income security act
of 1974.--Section 408(b) of such Act, as amended by
subsection (a), is amended by adding at the end the
following:
``(16) Any transaction involving the purchase or sale of
securities, or other property (as determined by the
Secretary), between a plan and a party in interest if--
``(A) the transaction is executed through an electronic
communication network, alternative trading system, or similar
execution system or trading venue subject to regulation and
oversight by--
``(i) the applicable Federal regulating entity, or
``(ii) such foreign regulatory entity as the Secretary may
determine by regulation,
``(B) either--
``(i) the transaction is effected pursuant to rules
designed to match purchases and sales at the best price
available through the execution system in accordance with
applicable rules of the Securities and Exchange Commission or
other relevant governmental authority, or
``(ii) neither the execution system nor the parties to the
transaction take into account the identity of the parties in
the execution of trades,
``(C) the price and compensation associated with the
purchase and sale are not greater than the price and
compensation associated with an arm's length transaction with
an unrelated party,
``(D) if the party in interest has an ownership interest in
the system or venue described in subparagraph (A), the system
or venue has been authorized by the plan sponsor or other
independent fiduciary for transactions described in this
paragraph, and
``(E) not less than 30 days prior to the initial
transaction described in this paragraph executed through any
system or venue described in subparagraph (A), a plan
fiduciary is provided written or electronic notice of the
execution of such transaction through such system or
venue.''.
(2) Amendments to internal revenue code of 1986.--
Subsection (d) of section 4975 of the Internal Revenue Code
of 1986 (relating to exemptions), as amended by subsection
(a), is amended by striking ``or'' at the end of paragraph
(17), by striking the period at the end of paragraph (18) and
inserting ``, or'', and by adding at the end the following
new paragraph:
``(19) any transaction involving the purchase or sale of
securities, or other property (as determined by the Secretary
of Labor), between a plan and a party in interest if--
``(A) the transaction is executed through an electronic
communication network, alternative trading system, or similar
execution system or trading venue subject to regulation and
oversight by--
``(i) the applicable Federal regulating entity, or
``(ii) such foreign regulatory entity as the Secretary of
Labor may determine by regulation,
``(B) either--
``(i) the transaction is effected pursuant to rules
designed to match purchases and sales at the best price
available through the execution system in accordance with
applicable rules of the Securities and Exchange Commission or
other relevant governmental authority, or
``(ii) neither the execution system nor the parties to the
transaction take into account the identity of the parties in
the execution of trades,
``(C) the price and compensation associated with the
purchase and sale are not greater than the price and
compensation associated with an arm's length transaction with
an unrelated party,
``(D) if the party in interest has an ownership interest in
the system or venue described in subparagraph (A), the system
or venue has been authorized by the plan sponsor or other
independent fiduciary for transactions described in this
paragraph, and
``(E) not less than 30 days prior to the initial
transaction described in this paragraph executed through any
system or venue described in subparagraph (A), a plan
fiduciary is provided written or electronic notice of the
execution of such transaction through such system or
venue.''.
(d) Exemption for Service Providers.--
(1) Amendments to employee retirement income security act
of 1974.--Section 408(b) of such Act (29 U.S.C. 1106), as
amended by subsection (c), is amended by adding at the end
the following new paragraph:
``(17)(A) Transactions described in subparagraphs (A), (B),
and (D) of section 406(a)(1) between a plan and a person that
is a party in interest other than a fiduciary (or an
affiliate) who has or exercises any discretionary authority
or control with respect to the investment of the plan assets
involved in the transaction or renders investment advice
(within the meaning of section 3(21)(A)(ii)) with respect to
those assets, solely by reason of providing services to the
plan or solely by reason of a relationship to such a service
provider described in subparagraph (F), (G), (H), or (I) of
section 3(14), or both, but only if in connection with such
transaction the plan receives no less, nor pays no more, than
adequate consideration.
``(B) For purposes of this paragraph, the term `adequate
consideration' means--
``(i) in the case of a security for which there is a
generally recognized market--
``(I) the price of the security prevailing on a national
securities exchange which is registered under section 6 of
the Securities Exchange Act of 1934, taking into account
factors such as the size of the transaction and marketability
of the security, or
``(II) if the security is not traded on such a national
securities exchange, a price not less favorable to the plan
than the offering price for the security as established by
the current bid and asked prices quoted by persons
independent of the issuer and of the party in interest,
taking into account factors such as the size of the
transaction and marketability of the security, and
``(ii) in the case of an asset other than a security for
which there is a generally recognized market, the fair market
value of the asset as determined in good faith by a fiduciary
or fiduciaries in accordance with regulations prescribed by
the Secretary.''.
(2) Amendment to internal revenue code of 1986.--
(A) In general.--Subsection (d) of section 4975 of the
Internal Revenue Code of 1986 (relating to exemptions), as
amended by subsection (c), is amended by striking ``or'' at
the end of paragraph (18), by striking the period at the end
of paragraph (19) and inserting ``, or'', and by adding at
the end the following new paragraph:
``(20) transactions described in subparagraphs (A), (B),
and (D) of subsection (c)(1) between a plan and a person that
is a party in interest other than a fiduciary (or an
affiliate) who has or exercises any discretionary authority
or control with respect to the investment of the plan assets
involved in the transaction or renders investment advice
(within the meaning of subsection (e)(3)(B)) with respect to
those assets, solely by reason of providing services to the
plan or solely by reason of a relationship to such a service
provider described in subparagraph (F), (G), (H), or (I) of
subsection (e)(2), or both, but only if in connection with
such transaction the plan receives no less, nor pays no more,
than adequate consideration.''.
(B) Special rule relating to service providers.--Subsection
(f) of section 4975 of such Code (relating to other
definitions and special rules), as amended by subsection (a),
is amended by adding at the end the following new paragraph:
``(10) Adequate consideration.--The term `adequate
consideration' means--
``(A) in the case of a security for which there is a
generally recognized market--
``(i) the price of the security prevailing on a national
securities exchange which is registered under section 6 of
the Securities Exchange Act of 1934, taking into account
factors such as the size of the transaction and marketability
of the security, or
``(ii) if the security is not traded on such a national
securities exchange, a price not less favorable to the plan
than the offering price for the security as established by
the current bid and asked prices quoted by persons
independent of the issuer and of the party in interest,
taking into account factors such as the size of the
transaction and marketability of the security, and
``(B) in the case of an asset other than a security for
which there is a generally recognized market, the fair market
value of the asset as determined in good faith by a fiduciary
or fiduciaries in accordance with regulations prescribed by
the Secretary of Labor.''.
(e) Relief for Foreign Exchange Transactions.--
(1) Amendments to employee retirement income security act
of 1974.--Section 408(b) of such Act (29 U.S.C. 1108(b)), as
amended by subsection (d), is amended by adding at the end
the following new paragraph:
``(18) Foreign exchange transactions.--Any foreign exchange
transactions, between a bank or broker-dealer (or any
affiliate of either), and a plan (as defined in section 3(3))
with respect to which such bank or broker-dealer (or
affiliate) is a trustee, custodian, fiduciary, or other party
in interest, if--
``(A) the transaction is in connection with the purchase,
holding, or sale of securities or other investment assets
(other than a foreign exchange transaction unrelated to any
other investment in securities or other investment assets),
``(B) at the time the foreign exchange transaction is
entered into, the terms of the transaction are not less
favorable to the plan than the terms generally available in
comparable arm's length foreign exchange transactions between
unrelated parties, or the terms afforded by the bank or
broker-dealer (or any affiliate of either) in comparable
arm's-length foreign exchange transactions involving
unrelated parties,
``(C) the exchange rate used by such bank or broker-dealer
(or affiliate) for a particular foreign exchange transaction
does not deviate by more or less than 3 percent from the
interbank bid and asked rates for transactions of comparable
size and maturity at the time of the transaction as displayed
on an independent service that reports rates of exchange in
the foreign currency market for such currency, and
``(D) the bank or broker-dealer (or any affiliate of
either) does not have investment discretion, or provide
investment advice, with respect to the transaction.''.
(2) Amendment to internal revenue code of 1986.--Subsection
(d) of section 4975 of the Internal Revenue Code of 1986
(relating to exemptions), as amended by subsection (d), is
amended by striking ``or'' at the end of paragraph (19), by
striking the period at the end of paragraph (20) and
inserting ``, or'', and by adding at the end the following
new paragraph:
``(21) any foreign exchange transactions, between a bank or
broker-dealer (or any affiliate of either) and a plan (as
defined in
[[Page H6092]]
this section) with respect to which such bank or broker-
dealer (or affiliate) is a trustee, custodian, fiduciary, or
other party in interest person, if--
``(A) the transaction is in connection with the purchase,
holding, or sale of securities or other investment assets
(other than a foreign exchange transaction unrelated to any
other investment in securities or other investment assets),
``(B) at the time the foreign exchange transaction is
entered into, the terms of the transaction are not less
favorable to the plan than the terms generally available in
comparable arm's length foreign exchange transactions between
unrelated parties, or the terms afforded by the bank or
broker-dealer (or any affiliate of either) in comparable
arm's-length foreign exchange transactions involving
unrelated parties,
``(C) the exchange rate used by such bank or broker-dealer
(or affiliate) for a particular foreign exchange transaction
does not deviate by more or less than 3 percent from the
interbank bid and asked rates for transactions of comparable
size and maturity at the time of the transaction as displayed
on an independent service that reports rates of exchange in
the foreign currency market for such currency, and
``(D) the bank or broker-dealer (or any affiliate of
either) does not have investment discretion, or provide
investment advice, with respect to the transaction.''.
(f) Definition of Plan Asset Vehicle.--Section 3 of such
Act (29 U.S.C. 1002) is amended by adding at the end the
following new paragraph:
``(42) the term `plan assets' means plan assets as defined
by such regulations as the Secretary may prescribe, except
that under such regulations the assets of any entity shall
not be treated as plan assets if, immediately after the most
recent acquisition of any equity interest in the entity, less
than 25 percent of the total value of each class of equity
interest in the entity is held by benefit plan investors. For
purposes of determinations pursuant to this paragraph, the
value of any equity interest held by a person (other than
such a benefit plan investor) who has discretionary authority
or control with respect to the assets of the entity or any
person who provides investment advice for a fee (direct or
indirect) with respect to such assets, or any affiliate of
such a person, shall be disregarded for purposes of
calculating the 25 percent threshold. An entity shall be
considered to hold plan assets only to the extent of the
percentage of the equity interest held by benefit plan
investors. For purposes of this paragraph, the term `benefit
plan investor' means an employee benefit plan subject to part
4, any plan to which section 4975 of the Internal Revenue
Code of 1986 applies, and any entity whose underlying assets
include plan assets by reason of a plan's investment in such
entity.''.
(g) Exemption for Cross Trading.--
(1) Amendments to employee retirement income security act
of 1974.--Section 408(b) of such Act (29 U.S.C. 1108(b)), as
amended by subsection (e), is amended by adding at the end
the following new paragraph:
``(19) Cross trading.--Any transaction described in
sections 406(a)(1)(A) and 406(b)(2) involving the purchase
and sale of a security between a plan and any other account
managed by the same investment manager, if--
``(A) the transaction is a purchase or sale, for no
consideration other than cash payment against prompt delivery
of a security for which market quotations are readily
available,
``(B) the transaction is effected at the independent
current market price of the security (within the meaning of
section 270.17a-7(b) of title 17, Code of Federal
Regulations),
``(C) no brokerage commission, fee (except for customary
transfer fees, the fact of which is disclosed pursuant to
subparagraph (D)), or other remuneration is paid in
connection with the transaction,
``(D) a fiduciary (other than the investment manager
engaging in the cross-trades or any affiliate) for each plan
participating in the transaction authorizes in advance of any
cross-trades (in a document that is separate from any other
written agreement of the parties) the investment manager to
engage in cross trades at the investment manager's
discretion, after such fiduciary has received disclosure
regarding the conditions under which cross trades may take
place (but only if such disclosure is separate from any other
agreement or disclosure involving the asset management
relationship), including the written policies and procedures
of the investment manager described in subparagraph (H),
``(E) each plan participating in the transaction has assets
of at least $100,000,000, except that if the assets of a plan
are invested in a master trust containing the assets of plans
maintained by employers in the same controlled group (as
defined in section 407(d)(7)), the master trust has assets of
at least $100,000,000,
``(F) the investment manager provides to the plan fiduciary
who authorized cross trading under subparagraph (D) a
quarterly report detailing all cross trades executed by the
investment manager in which the plan participated during such
quarter, including the following information, as applicable:
(i) the identity of each security bought or sold; (ii) the
number of shares or units traded, (iii) the parties involved
in the cross-trade; and (iv) trade price and the method used
to establish the trade price,
``(G) the investment manager does not base its fee schedule
on the plan`s consent to cross trading, and no other service
(other than the investment opportunities and cost savings
available through a cross trade) is conditioned on the plan's
consent to cross trading,
``(H) the investment manager has adopted, and cross-trades
are effected in accordance with, written cross-trading
policies and procedures that are fair and equitable to all
accounts participating in the cross-trading program, and that
include a description of the manager's pricing policies and
procedures, and the manager's policies and procedures for
allocating cross trades in an objective manner among accounts
participating in the cross-trading program, and
``(I) the investment manager has designated an individual
responsible for periodically reviewing such purchases and
sales to ensure compliance with the written policies and
procedures described in subparagraph (H), and following such
review, the individual shall issue an annual written report
no later than 90 days following the period to which it
relates signed under penalty of perjury to the plan fiduciary
who authorized cross trading under subparagraph (D)
describing the steps performed during the course of the
review, the level of compliance, and any specific instances
of non-compliance.
The written report under subparagraph (I) shall also notify
the plan fiduciary of the plan's right to terminate
participation in the investment manager's cross-trading
program at any time.''.
(2) Amendments of internal revenue code of 1986.--
Subsection (d) of section 4975 of the Internal Revenue Code
of 1986 (relating to exemptions), as amended by subsection
(e), is amended by striking ``or'' at the end of paragraph
(20), by striking the period at the end of paragraph (21) and
inserting ``, or'', and by adding at the end the following
new paragraph:
``(22) any transaction described in subsection (c)(1)(A)
involving the purchase and sale of a security between a plan
and any other account managed by the same investment manager,
if--
``(A) the transaction is a purchase or sale, for no
consideration other than cash payment against prompt delivery
of a security for which market quotations are readily
available,
``(B) the transaction is effected at the independent
current market price of the security (within the meaning of
section 270.17a-7(b) of title 17, Code of Federal
Regulations),
``(C) no brokerage commission, fee (except for customary
transfer fees, the fact of which is disclosed pursuant to
subparagraph (D)), or other remuneration is paid in
connection with the transaction,
``(D) a fiduciary (other than the investment manager
engaging in the cross-trades or any affiliate) for each plan
participating in the transaction authorizes in advance of any
cross-trades (in a document that is separate from any other
written agreement of the parties) the investment manager to
engage in cross trades at the investment manager's
discretion, after such fiduciary has received disclosure
regarding the conditions under which cross trades may take
place (but only if such disclosure is separate from any other
agreement or disclosure involving the asset management
relationship), including the written policies and procedures
of the investment manager described in subparagraph (H),
``(E) each plan participating in the transaction has assets
of at least $100,000,000, except that if the assets of a plan
are invested in a master trust containing the assets of plans
maintained by employers in the same controlled group (as
defined in section 407(d)(7) of the Employee Retirement
Income Security Act of 1974), the master trust has assets of
at least $100,000,000,
``(F) the investment manager provides to the plan fiduciary
who authorized cross trading under subparagraph (D) a
quarterly report detailing all cross trades executed by the
investment manager in which the plan participated during such
quarter, including the following information, as applicable:
(i) the identity of each security bought or sold; (ii) the
number of shares or units traded, (iii) the parties involved
in the cross-trade; and (iv) trade price and the method used
to establish the trade price,
``(G) the investment manager does not base its fee schedule
on the plan`s consent to cross trading, and no other service
(other than the investment opportunities and cost savings
available through a cross trade) is conditioned on the plan's
consent to cross trading,
``(H) the investment manager has adopted, and cross-trades
are effected in accordance with, written cross-trading
policies and procedures that are fair and equitable to all
accounts participating in the cross-trading program, and that
include a description of the manager's pricing policies and
procedures, and the manager's policies and procedures for
allocating cross trades in an objective manner among accounts
participating in the cross-trading program, and
``(I) the investment manager has designated an individual
responsible for periodically reviewing such purchases and
sales to ensure compliance with the written policies and
procedures described in subparagraph (H), and following such
review, the individual shall issue an annual written report
no later than 90 days following the period to which it
relates signed under penalty of perjury to the plan fiduciary
who authorized
[[Page H6093]]
cross trading under subparagraph (D) describing the steps
performed during the course of the review, the level of
compliance, and any specific instances of non-compliance.
The written report shall also notify the plan fiduciary of
the plan's right to terminate participation in the investment
manager's cross-trading program at any time.''.
(3) Regulations.--No later than 180 days after the date of
the enactment of this Act, the Secretary of Labor, after
consultation with the Securities and Exchange Commission,
shall issue regulations regarding the content of policies and
procedures required to be adopted by an investment manager
under section 408(b)(19) of the Employee Retirement Income
Security Act of 1974.
(h) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to transactions
occurring after the date of the enactment of this Act.
(2) Bonding rule.--The amendments made by subsection (b)
shall apply to plan years beginning after such date.
SEC. 612. CORRECTION PERIOD FOR CERTAIN TRANSACTIONS
INVOLVING SECURITIES AND COMMODITIES.
(a) Amendment of Employee Retirement Income Security Act of
1974.--Section 408(b) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1108(b)), as amended by
sections 601 and 611, is further amended by adding at the end
the following new paragraph:
``(20)(A) Except as provided in subparagraphs (B) and (C),
a transaction described in section 406(a) in connection with
the acquisition, holding, or disposition of any security or
commodity, if the transaction is corrected before the end of
the correction period.
``(B) Subparagraph (A) does not apply to any transaction
between a plan and a plan sponsor or its affiliates that
involves the acquisition or sale of an employer security (as
defined in section 407(d)(1)) or the acquisition, sale, or
lease of employer real property (as defined in section
407(d)(2)).
``(C) In the case of any fiduciary or other party in
interest (or any other person knowingly participating in such
transaction), subparagraph (A) does not apply to any
transaction if, at the time the transaction occurs, such
fiduciary or party in interest (or other person) knew (or
reasonably should have known) that the transaction would
(without regard to this paragraph) constitute a violation of
section 406(a).
``(D) For purposes of this paragraph, the term `correction
period' means, in connection with a fiduciary or party in
interest (or other person knowingly participating in the
transaction), the 14-day period beginning on the date on
which such fiduciary or party in interest (or other person)
discovers, or reasonably should have discovered, that the
transaction would (without regard to this paragraph)
constitute a violation of section 406(a).
``(E) For purposes of this paragraph--
``(i) The term `security' has the meaning given such term
by section 475(c)(2) of the Internal Revenue Code of 1986
(without regard to subparagraph (F)(iii) and the last
sentence thereof).
``(ii) The term `commodity' has the meaning given such term
by section 475(e)(2) of such Code (without regard to
subparagraph (D)(iii) thereof).
``(iii) The term `correct' means, with respect to a
transaction--
``(I) to undo the transaction to the extent possible and in
any case to make good to the plan or affected account any
losses resulting from the transaction, and
``(II) to restore to the plan or affected account any
profits made through the use of assets of the plan.''.
(b) Amendment of Internal Revenue Code of 1986.--
(1) In general.--Subsection (d) of section 4975 of the
Internal Revenue Code of 1986 (relating to exemptions), as
amended by sections 601 and 611, is amended by striking
``or'' at the end of paragraph (21), by striking the period
at the end of paragraph (22) and inserting ``, or'', and by
adding at the end the following new paragraph:
``(23) except as provided in subsection (f)(11), a
transaction described in subparagraph (A), (B), (C), or (D)
of subsection (c)(1) in connection with the acquisition,
holding, or disposition of any security or commodity, if the
transaction is corrected before the end of the correction
period.''.
(2) Special rules relating to correction period.--
Subsection (f) of section 4975 of such Code (relating to
other definitions and special rules), as amended by sections
601 and 611, is amended by adding at the end the following
new paragraph:
``(11) Correction period.--
``(A) In general.--For purposes of subsection (d)(23), the
term `correction period' means the 14-day period beginning on
the date on which the disqualified person discovers, or
reasonably should have discovered, that the transaction would
(without regard to this paragraph and subsection (d)(23))
constitute a prohibited transaction.
``(B) Exceptions.--
``(i) Employer securities.--Subsection (d)(23) does not
apply to any transaction between a plan and a plan sponsor or
its affiliates that involves the acquisition or sale of an
employer security (as defined in section 407(d)(1)) or the
acquisition, sale, or lease of employer real property (as
defined in section 407(d)(2)).
``(ii) Knowing prohibited transaction.--In the case of any
disqualified person, subsection (d)(23) does not apply to a
transaction if, at the time the transaction is entered into,
the disqualified person knew (or reasonably should have
known) that the transaction would (without regard to this
paragraph) constitute a prohibited transaction.
``(C) Abatement of tax where there is a correction.--If a
transaction is not treated as a prohibited transaction by
reason of subsection (d)(23), then no tax under subsection
(a) and (b) shall be assessed with respect to such
transaction, and if assessed the assessment shall be abated,
and if collected shall be credited or refunded as an
overpayment.
``(D) Definitions.--For purposes of this paragraph and
subsection (d)(23)--
``(i) Security.--The term `security' has the meaning given
such term by section 475(c)(2) (without regard to
subparagraph (F)(iii) and the last sentence thereof).
``(ii) Commodity.--The term `commodity' has the meaning
given such term by section 475(e)(2) (without regard to
subparagraph (D)(iii) thereof).
``(iii) Correct.--The term `correct' means, with respect to
a transaction--
``(I) to undo the transaction to the extent possible and in
any case to make good to the plan or affected account any
losses resulting from the transaction, and
``(II) to restore to the plan or affected account any
profits made through the use of assets of the plan.''.
(c) Effective Date.--The amendments made by this section
shall apply to any transaction which the fiduciary or
disqualified person discovers, or reasonably should have
discovered, after the date of the enactment of this Act
constitutes a prohibited transaction.
Subtitle C--Fiduciary and Other Rules
SEC. 621. INAPPLICABILITY OF RELIEF FROM FIDUCIARY LIABILITY
DURING SUSPENSION OF ABILITY OF PARTICIPANT OR
BENEFICIARY TO DIRECT INVESTMENTS.
(a) In General.--Section 404(c) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1104(c)) is amended--
(1) in paragraph (1)--
(A) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii), respectively, and by inserting ``(A)'' after
``(c)(1)'',
(B) in subparagraph (A)(ii) (as redesignated by paragraph
(1)), by inserting before the period the following: ``,
except that this clause shall not apply in connection with
such participant or beneficiary for any blackout period
during which the ability of such participant or beneficiary
to direct the investment of the assets in his or her account
is suspended by a plan sponsor or fiduciary'', and
(C) by adding at the end the following new subparagraphs:
``(B) If a person referred to in subparagraph (A)(ii) meets
the requirements of this title in connection with authorizing
and implementing the blackout period, any person who is
otherwise a fiduciary shall not be liable under this title
for any loss occurring during such period.
``(C) For purposes of this paragraph, the term `blackout
period' has the meaning given such term by section
101(i)(7).''; and
(2) by adding at the end the following:
``(4)(A) In any case in which a qualified change in
investment options occurs in connection with an individual
account plan, a participant or beneficiary shall not be
treated for purposes of paragraph (1) as not exercising
control over the assets in his account in connection with
such change if the requirements of subparagraph (C) are met
in connection with such change.
``(B) For purposes of subparagraph (A), the term `qualified
change in investment options' means, in connection with an
individual account plan, a change in the investment options
offered to the participant or beneficiary under the terms of
the plan, under which--
``(i) the account of the participant or beneficiary is
reallocated among one or more remaining or new investment
options which are offered in lieu of one or more investment
options offered immediately prior to the effective date of
the change, and
``(ii) the stated characteristics of the remaining or new
investment options provided under clause (i), including
characteristics relating to risk and rate of return, are, as
of immediately after the change, reasonably similar to those
of the existing investment options as of immediately before
the change.
``(C) The requirements of this subparagraph are met in
connection with a qualified change in investment options if--
``(i) at least 30 days and no more than 60 days prior to
the effective date of the change, the plan administrator
furnishes written notice of the change to the participants
and beneficiaries, including information comparing the
existing and new investment options and an explanation that,
in the absence of affirmative investment instructions from
the participant or beneficiary to the contrary, the account
of the participant or beneficiary will be invested in the
manner described in subparagraph (B),
``(ii) the participant or beneficiary has not provided to
the plan administrator, in advance of the effective date of
the change, affirmative investment instructions contrary to
the change, and
``(iii) the investments under the plan of the participant
or beneficiary as in effect immediately prior to the
effective date of the change were the product of the exercise
by
[[Page H6094]]
such participant or beneficiary of control over the assets of
the account within the meaning of paragraph (1).''.
(b) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to plan years beginning after December 31, 2007.
(2) Special rule for collectively bargained agreements.--In
the case of a plan maintained pursuant to 1 or more
collective bargaining agreements between employee
representatives and 1 or more employers ratified on or before
the date of the enactment of this Act, paragraph (1) shall be
applied to benefits pursuant to, and individuals covered by,
any such agreement by substituting for ``December 31, 2007''
the earlier of--
(A) the later of--
(i) December 31, 2008, or
(ii) the date on which the last of such collective
bargaining agreements terminates (determined without regard
to any extension thereof after such date of enactment), or
(B) December 31, 2009.
SEC. 622. INCREASE IN MAXIMUM BOND AMOUNT.
(a) In General.--Section 412(a) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1112), as amended by
section 611(b), is amended by adding at the end the
following: ``In the case of a plan that holds employer
securities (within the meaning of section 407(d)(1)), this
subsection shall be applied by substituting `$1,000,000' for
`$500,000' each place it appears.''
(b) Effective Date.--The amendment made by this section
shall apply to plan years beginning after December 31, 2007.
SEC. 623. INCREASE IN PENALTIES FOR COERCIVE INTERFERENCE
WITH EXERCISE OF ERISA RIGHTS.
(a) In General.--Section 511 of the Employment Retirement
Income Security Act of 1974 (29 U.S.C. 1141) is amended--
(1) by striking ``$10,000'' and inserting ``$100,000'', and
(2) by striking ``one year'' and inserting ``10 years''.
(b) Effective Date.--The amendments made by this section
shall apply to violations occurring on and after the date of
the enactment of this Act.
SEC. 624. TREATMENT OF INVESTMENT OF ASSETS BY PLAN WHERE
PARTICIPANT FAILS TO EXERCISE INVESTMENT
ELECTION.
(a) In General.--Section 404(c) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1104(c)), as amended
by section 622, is amended by adding at the end the following
new paragraph:
``(5) Default investment arrangements.--
``(A) In general.--For purposes of paragraph (1), a
participant in an individual account plan meeting the notice
requirements of subparagraph (B) shall be treated as
exercising control over the assets in the account with
respect to the amount of contributions and earnings which, in
the absence of an investment election by the participant, are
invested by the plan in accordance with regulations
prescribed by the Secretary. The regulations under this
subparagraph shall provide guidance on the appropriateness of
designating default investments that include a mix of asset
classes consistent with capital preservation or long-term
capital appreciation, or a blend of both.
``(B) Notice requirements.--
``(i) In general.--The requirements of this subparagraph
are met if each participant--
``(I) receives, within a reasonable period of time before
each plan year, a notice explaining the employee's right
under the plan to designate how contributions and earnings
will be invested and explaining how, in the absence of any
investment election by the participant, such contributions
and earnings will be invested, and
``(II) has a reasonable period of time after receipt of
such notice and before the beginning of the plan year to make
such designation.
``(ii) Form of notice.--The requirements of clauses (i) and
(ii) of section 401(k)(12)(D) of the Internal Revenue Code of
1986 shall apply with respect to the notices described in
this subparagraph.''.
(b) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to plan years beginning after December 31, 2006.
(2) Regulations.--Final regulations under section
404(c)(5)(A) of the Employee Retirement Income Security Act
of 1974 (as added by this section) shall be issued no later
than 6 months after the date of the enactment of this Act.
SEC. 625. CLARIFICATION OF FIDUCIARY RULES.
(a) In General.--Not later than 1 year after the date of
the enactment of this Act, the Secretary of Labor shall issue
final regulations clarifying that the selection of an annuity
contract as an optional form of distribution from an
individual account plan to a participant or beneficiary--
(1) is not subject to the safest available annuity standard
under Interpretive Bulletin 95-1 (29 C.F.R. 2509.95-1), and
(2) is subject to all otherwise applicable fiduciary
standards.
(b) Effective Date.--This section shall take effect on the
date of enactment of this Act.
TITLE VII--BENEFIT ACCRUAL STANDARDS
SEC. 701. BENEFIT ACCRUAL STANDARDS.
(a) Amendments to the Employee Retirement Income Security
Act of 1974.--
(1) Rules relating to reduction in rate of benefit
accrual.--Section 204(b) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1054(b)) is amended by adding
at the end the following new paragraph:
``(5) Special rules relating to age.--
``(A) Comparison to similarly situated younger
individual.--
``(i) In general.--A plan shall not be treated as failing
to meet the requirements of paragraph (1)(H)(i) if a
participant's accrued benefit, as determined as of any date
under the terms of the plan, would be equal to or greater
than that of any similarly situated, younger individual who
is or could be a participant.
``(ii) Similarly situated.--For purposes of this
subparagraph, a participant is similarly situated to any
other individual if such participant is identical to such
other individual in every respect (including period of
service, compensation, position, date of hire, work history,
and any other respect) except for age.
``(iii) Disregard of subsidized early retirement
benefits.--In determining the accrued benefit as of any date
for purposes of this clause, the subsidized portion of any
early retirement benefit or retirement-type subsidy shall be
disregarded.
``(iv) Accrued benefit.--For purposes of this subparagraph,
the accrued benefit may, under the terms of the plan, be
expressed as an annuity payable at normal retirement age, the
balance of a hypothetical account, or the current value of
the accumulated percentage of the employee's final average
compensation.
``(B) Applicable defined benefit plans.--
``(i) Interest credits.--
``(I) In general.--An applicable defined benefit plan shall
be treated as failing to meet the requirements of paragraph
(1)(H) unless the terms of the plan provide that any interest
credit (or an equivalent amount) for any plan year shall be
at a rate which is not greater than a market rate of return.
A plan shall not be treated as failing to meet the
requirements of this subclause merely because the plan
provides for a reasonable minimum guaranteed rate of return
or for a rate of return that is equal to the greater of a
fixed or variable rate of return.
``(II) Preservation of capital.--An interest credit (or an
equivalent amount) of less than zero shall in no event result
in the account balance or similar amount being less than the
aggregate amount of contributions credited to the account.
``(III) Market rate of return.--The Secretary of the
Treasury may provide by regulation for rules governing the
calculation of a market rate of return for purposes of
subclause (I) and for permissible methods of crediting
interest to the account (including fixed or variable interest
rates) resulting in effective rates of return meeting the
requirements of subclause (I).
``(ii) Special rule for plan conversions.--If, after June
29, 2005, an applicable plan amendment is adopted, the plan
shall be treated as failing to meet the requirements of
paragraph (1)(H) unless the requirements of clause (iii) are
met with respect to each individual who was a participant in
the plan immediately before the adoption of the amendment.
``(iii) Rate of benefit accrual.--Subject to clause (iv),
the requirements of this clause are met with respect to any
participant if the accrued benefit of the participant under
the terms of the plan as in effect after the amendment is not
less than the sum of--
``(I) the participant's accrued benefit for years of
service before the effective date of the amendment,
determined under the terms of the plan as in effect before
the amendment, plus
``(II) the participant's accrued benefit for years of
service after the effective date of the amendment, determined
under the terms of the plan as in effect after the amendment.
``(iv) Special rules for early retirement subsidies.--For
purposes of clause (iii)(I), the plan shall credit the
accumulation account or similar amount with the amount of any
early retirement benefit or retirement-type subsidy for the
plan year in which the participant retires if, as of such
time, the participant has met the age, years of service, and
other requirements under the plan for entitlement to such
benefit or subsidy.
``(v) Applicable plan amendment.--For purposes of this
subparagraph--
``(I) In general.--The term `applicable plan amendment'
means an amendment to a defined benefit plan which has the
effect of converting the plan to an applicable defined
benefit plan.
``(II) Special rule for coordinated benefits.--If the
benefits of 2 or more defined benefit plans established or
maintained by an employer are coordinated in such a manner as
to have the effect of the adoption of an amendment described
in subclause (I), the sponsor of the defined benefit plan or
plans providing for such coordination shall be treated as
having adopted such a plan amendment as of the date such
coordination begins.
``(III) Multiple amendments.--The Secretary of the Treasury
shall issue regulations to prevent the avoidance of the
purposes of this subparagraph through the use of 2 or more
plan amendments rather than a single amendment.
``(IV) Applicable defined benefit plan.--For purposes of
this subparagraph, the term `applicable defined benefit plan'
has the meaning given such term by section 203(f)(3).
``(vi) Termination requirements.--An applicable defined
benefit plan shall not be treated as meeting the requirements
of
[[Page H6095]]
clause (i) unless the plan provides that, upon the
termination of the plan--
``(I) if the interest credit rate (or an equivalent amount)
under the plan is a variable rate, the rate of interest used
to determine accrued benefits under the plan shall be equal
to the average of the rates of interest used under the plan
during the 5-year period ending on the termination date, and
``(II) the interest rate and mortality table used to
determine the amount of any benefit under the plan payable in
the form of an annuity payable at normal retirement age shall
be the rate and table specified under the plan for such
purpose as of the termination date, except that if such
interest rate is a variable rate, the interest rate shall be
determined under the rules of subclause (I).
``(C) Certain offsets permitted.--A plan shall not be
treated as failing to meet the requirements of paragraph
(1)(H)(i) solely because the plan provides offsets against
benefits under the plan to the extent such offsets are
allowable in applying the requirements of section 401(a) of
the Internal Revenue Code of 1986.
``(D) Permitted disparities in plan contributions or
benefits.--A plan shall not be treated as failing to meet the
requirements of paragraph (1)(H) solely because the plan
provides a disparity in contributions or benefits with
respect to which the requirements of section 401(l) of the
Internal Revenue Code of 1986 are met.
``(E) Indexing permitted.--
``(i) In general.--A plan shall not be treated as failing
to meet the requirements of paragraph (1)(H) solely because
the plan provides for indexing of accrued benefits under the
plan.
``(ii) Protection against loss.--Except in the case of any
benefit provided in the form of a variable annuity, clause
(i) shall not apply with respect to any indexing which
results in an accrued benefit less than the accrued benefit
determined without regard to such indexing.
``(iii) Indexing.--For purposes of this subparagraph, the
term `indexing' means, in connection with an accrued benefit,
the periodic adjustment of the accrued benefit by means of
the application of a recognized investment index or
methodology.
``(F) Early retirement benefit or retirement-type
subsidy.--For purposes of this paragraph, the terms `early
retirement benefit' and `retirement-type subsidy' have the
meaning given such terms in subsection (g)(2)(A).
``(G) Benefit accrued to date.--For purposes of this
paragraph, any reference to the accrued benefit shall be a
reference to such benefit accrued to date.''.
(2) Determinations of accrued benefit as balance of benefit
account or equivalent amounts.--Section 203 of such Act (29
U.S.C. 1053) is amended by adding at the end the following
new subsection:
``(f) Special Rules for Plans Computing Accrued Benefits by
Reference to Hypothetical Account Balance or Equivalent
Amounts.--
``(1) In general.--An applicable defined benefit plan shall
not be treated as failing to meet--
``(A) subject to paragraph (2), the requirements of
subsection (a)(2), or
``(B) the requirements of section 204(c) or section 205(g)
with respect to contributions other than employee
contributions,
solely because the present value of the accrued benefit (or
any portion thereof) of any participant is, under the terms
of the plan, equal to the amount expressed as the balance in
the hypothetical account described in paragraph (3) or as an
accumulated percentage of the participant's final average
compensation.
``(2) 3-year vesting.--In the case of an applicable defined
benefit plan, such plan shall be treated as meeting the
requirements of subsection (a)(2) only if an employee who has
completed at least 3 years of service has a nonforfeitable
right to 100 percent of the employee's accrued benefit
derived from employer contributions.
``(3) Applicable defined benefit plan and related rules.--
For purposes of this subsection--
``(A) In general.--The term `applicable defined benefit
plan' means a defined benefit plan under which the accrued
benefit (or any portion thereof) is calculated as the balance
of a hypothetical account maintained for the participant or
as an accumulated percentage of the participant's final
average compensation.
``(B) Regulations to include similar plans.--The Secretary
of the Treasury shall issue regulations which include in the
definition of an applicable defined benefit plan any defined
benefit plan (or any portion of such a plan) which has an
effect similar to an applicable defined benefit plan.''.
(b) Amendments to the Internal Revenue Code of 1986.--
(1) Rules relating to reduction in rate of benefit
accrual.--Subsection (b) of section 411 of the Internal
Revenue Code of 1986 is amended by adding at the end the
following new paragraph:
``(5) Special rules relating to age.--
``(A) Comparison to similarly situated younger
individual.--
``(i) In general.--A plan shall not be treated as failing
to meet the requirements of paragraph (1)(H)(i) if a
participant's accrued benefit, as determined as of any date
under the terms of the plan, would be equal to or greater
than that of any similarly situated, younger individual who
is or could be a participant.
``(ii) Similarly situated.--For purposes of this
subparagraph, a participant is similarly situated to any
other individual if such participant is identical to such
other individual in every respect (including period of
service, compensation, position, date of hire, work history,
and any other respect) except for age.
``(iii) Disregard of subsidized early retirement
benefits.--In determining the accrued benefit as of any date
for purposes of this clause, the subsidized portion of any
early retirement benefit or retirement-type subsidy shall be
disregarded.
``(iv) Accrued benefit.--For purposes of this subparagraph,
the accrued benefit may, under the terms of the plan, be
expressed as an annuity payable at normal retirement age, the
balance of a hypothetical account, or the current value of
the accumulated percentage of the employee's final average
compensation.
``(B) Applicable defined benefit plans.--
``(i) Interest credits.--
``(I) In general.--An applicable defined benefit plan shall
be treated as failing to meet the requirements of paragraph
(1)(H) unless the terms of the plan provide that any interest
credit (or an equivalent amount) for any plan year shall be
at a rate which is not greater than a market rate of return.
A plan shall not be treated as failing to meet the
requirements of this subclause merely because the plan
provides for a reasonable minimum guaranteed rate of return
or for a rate of return that is equal to the greater of a
fixed or variable rate of return.
``(II) Preservation of capital.--An interest credit (or an
equivalent amount) of less than zero shall in no event result
in the account balance or similar amount being less than the
aggregate amount of contributions credited to the account.
``(III) Market rate of return.--The Secretary may provide
by regulation for rules governing the calculation of a market
rate of return for purposes of subclause (I) and for
permissible methods of crediting interest to the account
(including fixed or variable interest rates) resulting in
effective rates of return meeting the requirements of
subclause (I).
``(ii) Special rule for plan conversions.--If, after June
29, 2005, an applicable plan amendment is adopted, the plan
shall be treated as failing to meet the requirements of
paragraph (1)(H) unless the requirements of clause (iii) are
met with respect to each individual who was a participant in
the plan immediately before the adoption of the amendment.
``(iii) Rate of benefit accrual.--Subject to clause (iv),
the requirements of this clause are met with respect to any
participant if the accrued benefit of the participant under
the terms of the plan as in effect after the amendment is not
less than the sum of--
``(I) the participant's accrued benefit for years of
service before the effective date of the amendment,
determined under the terms of the plan as in effect before
the amendment, plus
``(II) the participant's accrued benefit for years of
service after the effective date of the amendment, determined
under the terms of the plan as in effect after the amendment.
``(iv) Special rules for early retirement subsidies.--For
purposes of clause (iii)(I), the plan shall credit the
accumulation account or similar amount with the amount of any
early retirement benefit or retirement-type subsidy for the
plan year in which the participant retires if, as of such
time, the participant has met the age, years of service, and
other requirements under the plan for entitlement to such
benefit or subsidy.
``(v) Applicable plan amendment.--For purposes of this
subparagraph--
``(I) In general.--The term `applicable plan amendment'
means an amendment to a defined benefit plan which has the
effect of converting the plan to an applicable defined
benefit plan.
``(II) Special rule for coordinated benefits.--If the
benefits of 2 or more defined benefit plans established or
maintained by an employer are coordinated in such a manner as
to have the effect of the adoption of an amendment described
in subclause (I), the sponsor of the defined benefit plan or
plans providing for such coordination shall be treated as
having adopted such a plan amendment as of the date such
coordination begins.
``(III) Multiple amendments.--The Secretary shall issue
regulations to prevent the avoidance of the purposes of this
subparagraph through the use of 2 or more plan amendments
rather than a single amendment.
``(IV) Applicable defined benefit plan.--For purposes of
this subparagraph, the term `applicable defined benefit plan'
has the meaning given such term by section 411(a)(13).
``(vi) Termination requirements.--An applicable defined
benefit plan shall not be treated as meeting the requirements
of clause (i) unless the plan provides that, upon the
termination of the plan--
``(I) if the interest credit rate (or an equivalent amount)
under the plan is a variable rate, the rate of interest used
to determine accrued benefits under the plan shall be equal
to the average of the rates of interest used under the plan
during the 5-year period ending on the termination date, and
``(II) the interest rate and mortality table used to
determine the amount of any benefit under the plan payable in
the form of an annuity payable at normal retirement age shall
[[Page H6096]]
be the rate and table specified under the plan for such
purpose as of the termination date, except that if such
interest rate is a variable rate, the interest rate shall be
determined under the rules of subclause (I).
``(C) Certain offsets permitted.--A plan shall not be
treated as failing to meet the requirements of paragraph
(1)(H)(i) solely because the plan provides offsets against
benefits under the plan to the extent such offsets are
allowable in applying the requirements of section 401(a).
``(D) Permitted disparities in plan contributions or
benefits.--A plan shall not be treated as failing to meet the
requirements of paragraph (1)(H) solely because the plan
provides a disparity in contributions or benefits with
respect to which the requirements of section 401(l) are met.
``(E) Indexing permitted.--
``(i) In general.--A plan shall not be treated as failing
to meet the requirements of paragraph (1)(H) solely because
the plan provides for indexing of accrued benefits under the
plan.
``(ii) Protection against loss.--Except in the case of any
benefit provided in the form of a variable annuity, clause
(i) shall not apply with respect to any indexing which
results in an accrued benefit less than the accrued benefit
determined without regard to such indexing.
``(iii) Indexing.--For purposes of this subparagraph, the
term `indexing' means, in connection with an accrued benefit,
the periodic adjustment of the accrued benefit by means of
the application of a recognized investment index or
methodology.
``(F) Early retirement benefit or retirement-type
subsidy.--For purposes of this paragraph, the terms `early
retirement benefit' and `retirement-type subsidy' have the
meaning given such terms in subsection (d)(6)(B)(i).
``(G) Benefit accrued to date.--For purposes of this
paragraph, any reference to the accrued benefit shall be a
reference to such benefit accrued to date.''.
(2) Determinations of accrued benefit as balance of benefit
account or equivalent amounts.--Subsection (a) of section 411
of such Code is amended by adding at the end the following
new paragraph:
``(13) Special rules for plans computing accrued benefits
by reference to hypothetical account balance or equivalent
amounts.--
``(A) In general.--An applicable defined benefit plan shall
not be treated as failing to meet--
``(i) subject to paragraph (2), the requirements of
subsection (a)(2), or
``(ii) the requirements of subsection (c) or section 417(e)
with respect to contributions other than employee
contributions,
solely because the present value of the accrued benefit (or
any portion thereof) of any participant is, under the terms
of the plan, equal to the amount expressed as the balance in
the hypothetical account described in paragraph (3) or as an
accumulated percentage of the participant's final average
compensation.
``(B) 3-year vesting.--In the case of an applicable defined
benefit plan, such plan shall be treated as meeting the
requirements of subsection (a)(2) only if an employee who has
completed at least 3 years of service has a nonforfeitable
right to 100 percent of the employee's accrued benefit
derived from employer contributions.
``(C) Applicable defined benefit plan and related rules.--
For purposes of this subsection--
``(i) In general.--The term `applicable defined benefit
plan' means a defined benefit plan under which the accrued
benefit (or any portion thereof) is calculated as the balance
of a hypothetical account maintained for the participant or
as an accumulated percentage of the participant's final
average compensation.
``(ii) Regulations to include similar plans.--The Secretary
shall issue regulations which include in the definition of an
applicable defined benefit plan any defined benefit plan (or
any portion of such a plan) which has an effect similar to an
applicable defined benefit plan.''.
(c) Amendments to Age Discrimination in Employment Act.--
Section 4(i) of the Age Discrimination in Employment Act of
1967 (29 U.S.C. 623(i)) is amended by adding at the end the
following new paragraph:
``(10) Special rules relating to age.--
``(A) Comparison to similarly situated younger
individual.--
``(i) In general.--A plan shall not be treated as failing
to meet the requirements of paragraph (1) if a participant's
accrued benefit, as determined as of any date under the terms
of the plan, would be equal to or greater than that of any
similarly situated, younger individual who is or could be a
participant.
``(ii) Similarly situated.--For purposes of this
subparagraph, a participant is similarly situated to any
other individual if such participant is identical to such
other individual in every respect (including period of
service, compensation, position, date of hire, work history,
and any other respect) except for age.
``(iii) Disregard of subsidized early retirement
benefits.--In determining the accrued benefit as of any date
for purposes of this clause, the subsidized portion of any
early retirement benefit or retirement-type subsidy shall be
disregarded.
``(iv) Accrued benefit.--For purposes of this subparagraph,
the accrued benefit may, under the terms of the plan, be
expressed as an annuity payable at normal retirement age, the
balance of a hypothetical account, or the current value of
the accumulated percentage of the employee's final average
compensation.
``(B) Applicable defined benefit plans.--
``(i) Interest credits.--
``(I) In general.--An applicable defined benefit plan shall
be treated as failing to meet the requirements of paragraph
(1) unless the terms of the plan provide that any interest
credit (or an equivalent amount) for any plan year shall be
at a rate which is not greater than a market rate of return.
A plan shall not be treated as failing to meet the
requirements of this subclause merely because the plan
provides for a reasonable minimum guaranteed rate of return
or for a rate of return that is equal to the greater of a
fixed or variable rate of return.
``(II) Preservation of capital.--An interest credit (or an
equivalent amount) of less than zero shall in no event result
in the account balance or similar amount being less than the
aggregate amount of contributions credited to the account.
``(III) Market rate of return.--The Secretary of the
Treasury may provide by regulation for rules governing the
calculation of a market rate of return for purposes of
subclause (I) and for permissible methods of crediting
interest to the account (including fixed or variable interest
rates) resulting in effective rates of return meeting the
requirements of subclause (I).
``(ii) Special rule for plan conversions.--If, after June
29, 2005, an applicable plan amendment is adopted, the plan
shall be treated as failing to meet the requirements of
paragraph (1)(H) unless the requirements of clause (iii) are
met with respect to each individual who was a participant in
the plan immediately before the adoption of the amendment.
``(iii) Rate of benefit accrual.--Subject to clause (iv),
the requirements of this clause are met with respect to any
participant if the accrued benefit of the participant under
the terms of the plan as in effect after the amendment is not
less than the sum of--
``(I) the participant's accrued benefit for years of
service before the effective date of the amendment,
determined under the terms of the plan as in effect before
the amendment, plus
``(II) the participant's accrued benefit for years of
service after the effective date of the amendment, determined
under the terms of the plan as in effect after the amendment.
``(iv) Special rules for early retirement subsidies.--For
purposes of clause (iii)(I), the plan shall credit the
accumulation account or similar amount with the amount of any
early retirement benefit or retirement-type subsidy for the
plan year in which the participant retires if, as of such
time, the participant has met the age, years of service, and
other requirements under the plan for entitlement to such
benefit or subsidy.
``(v) Applicable plan amendment.--For purposes of this
subparagraph--
``(I) In general.--The term `applicable plan amendment'
means an amendment to a defined benefit plan which has the
effect of converting the plan to an applicable defined
benefit plan.
``(II) Special rule for coordinated benefits.--If the
benefits of 2 or more defined benefit plans established or
maintained by an employer are coordinated in such a manner as
to have the effect of the adoption of an amendment described
in subclause (I), the sponsor of the defined benefit plan or
plans providing for such coordination shall be treated as
having adopted such a plan amendment as of the date such
coordination begins.
``(III) Multiple amendments.--The Secretary of the Treasury
shall issue regulations to prevent the avoidance of the
purposes of this subparagraph through the use of 2 or more
plan amendments rather than a single amendment.
``(IV) Applicable defined benefit plan.--For purposes of
this subparagraph, the term `applicable defined benefit plan'
has the meaning given such term by section 203(f)(3) of the
Employee Retirement Income Security Act of 1974.
``(vi) Termination requirements.--An applicable defined
benefit plan shall not be treated as meeting the requirements
of clause (i) unless the plan provides that, upon the
termination of the plan--
``(I) if the interest credit rate (or an equivalent amount)
under the plan is a variable rate, the rate of interest used
to determine accrued benefits under the plan shall be equal
to the average of the rates of interest used under the plan
during the 5-year period ending on the termination date, and
``(II) the interest rate and mortality table used to
determine the amount of any benefit under the plan payable in
the form of an annuity payable at normal retirement age shall
be the rate and table specified under the plan for such
purpose as of the termination date, except that if such
interest rate is a variable rate, the interest rate shall be
determined under the rules of subclause (I).
``(C) Certain offsets permitted.--A plan shall not be
treated as failing to meet the requirements of paragraph (1)
solely because the plan provides offsets against benefits
under the plan to the extent such offsets are allowable in
applying the requirements of section 401(a) of the Internal
Revenue Code of 1986.
``(D) Permitted disparities in plan contributions or
benefits.--A plan shall not be treated as failing to meet the
requirements
[[Page H6097]]
of paragraph (1) solely because the plan provides a disparity
in contributions or benefits with respect to which the
requirements of section 401(l) of the Internal Revenue Code
of 1986 are met.
``(E) Indexing permitted.--
``(i) In general.--A plan shall not be treated as failing
to meet the requirements of paragraph (1) solely because the
plan provides for indexing of accrued benefits under the
plan.
``(ii) Protection against loss.--Except in the case of any
benefit provided in the form of a variable annuity, clause
(i) shall not apply with respect to any indexing which
results in an accrued benefit less than the accrued benefit
determined without regard to such indexing.
``(iii) Indexing.--For purposes of this subparagraph, the
term `indexing' means, in connection with an accrued benefit,
the periodic adjustment of the accrued benefit by means of
the application of a recognized investment index or
methodology.
``(F) Early retirement benefit or retirement-type
subsidy.--For purposes of this paragraph, the terms `early
retirement benefit' and `retirement-type subsidy' have the
meaning given such terms in section 203(g)(2)(A) of the
Employee Retirement Income Security Act of 1974.
``(G) Benefit accrued to date.--For purposes of this
paragraph, any reference to the accrued benefit shall be a
reference to such benefit accrued to date.''.
(d) No Inference.--Nothing in the amendments made by this
section shall be construed to create an inference with
respect to--
(1) the treatment of applicable defined benefit plans or
conversions to applicable defined benefit plans under
sections 204(b)(1)(H) of the Employee Retirement Income
Security Act of 1974, 4(i)(1) of the Age Discrimination in
Employment Act of 1967, and 411(b)(1)(H) of the Internal
Revenue Code of 1986, as in effect before such amendments, or
(2) the determination of whether an applicable defined
benefit plan fails to meet the requirements of sections
203(a)(2), 204(c), or 204(g) of the Employee Retirement
Income Security Act of 1974 or sections 411(a)(2), 411(c), or
417(e) of such Code, as in effect before such amendments,
solely because the present value of the accrued benefit (or
any portion thereof) of any participant is, under the terms
of the plan, equal to the amount expressed as the balance in
a hypothetical account or as an accumulated percentage of the
participant's final average compensation.
For purposes of this subsection, the term ``applicable
defined benefit plan'' has the meaning given such term by
section 203(f)(3) of the Employee Retirement Income Security
Act of 1974 and section 411(a)(13)(C) of such Code, as in
effect after such amendments.
(e) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to periods beginning on or after June 29, 2005.
(2) Present value of accrued benefit.--The amendments made
by subsections (a)(2) and (b)(2) shall apply to distributions
made after the date of the enactment of this Act.
(3) Vesting and interest credit requirements.--In the case
of a plan in existence on June 29, 2005, the requirements of
clause (i) of section 411(b)(5)(B) of the Internal Revenue
Code of 1986, clause (i) of section 204(b)(5)(B) of the
Employee Retirement Income Security Act of 1974, and clause
(i) of section 4(i)(10)(B) of the Age Discrimination in
Employment Act of 1967 (as added by this Act) and the
requirements of 203(f)(2) of the Employee Retirement Income
Security Act of 1974 and section 411(a)(13)(B) of the
Internal Revenue Code of 1986 (as so added) shall, for
purposes of applying the amendments made by subsections (a)
and (b), apply to years beginning after December 31, 2007,
unless the plan sponsor elects the application of such
requirements for any period after June 29, 2005, and before
the first year beginning after December 31, 2007.
(4) Special rule for collectively bargained plans.--In the
case of a plan maintained pursuant to 1 or more collective
bargaining agreements between employee representatives and 1
or more employers ratified on or before the date of the
enactment of this Act, the requirements described in
paragraph (3) shall, for purposes of applying the amendments
made by subsections (a) and (b), not apply to plan years
beginning before--
(A) the earlier of--
(i) the date on which the last of such collective
bargaining agreements terminates (determined without regard
to any extension thereof on or after such date of enactment),
or
(ii) January 1, 2008, or
(B) January 1, 2010.
(5) Conversions.--The requirements of clause (ii) of
section 411(b)(5)(B) of the Internal Revenue Code of 1986,
clause (ii) of section 204(b)(5)(B) of the Employee
Retirement Income Security Act of 1974, and clause (ii) of
section 4(i)(10)(B) of the Age Discrimination in Employment
Act of 1967 (as added by this Act), shall apply to plan
amendments adopted after, and taking effect after, June 29,
2005, except that the plan sponsor may elect to have such
amendments apply to plan amendments adopted before, and
taking effect after, such date.
SEC. 702. REGULATIONS RELATING TO MERGERS AND ACQUISITIONS.
The Secretary of the Treasury or his delegate shall, not
later than 12 months after the date of the enactment of this
Act, prescribe regulations for the application of the
amendments made by, and the provisions of, this title in
cases where the conversion of a plan to an applicable defined
benefit plan is made with respect to a group of employees who
become employees by reason of a merger, acquisition, or
similar transaction.
TITLE VIII--PENSION RELATED REVENUE PROVISIONS
Subtitle A--Deduction Limitations
SEC. 801. INCREASE IN DEDUCTION LIMIT FOR SINGLE-EMPLOYER
PLANS.
(a) In General.--Section 404 of the Internal Revenue Code
of 1986 (relating to deduction for contributions of an
employer to an employees' trust or annuity plan and
compensation under a deferred payment plan) is amended--
(1) in subsection (a)(1)(A), by inserting ``in the case of
a defined benefit plan other than a multiemployer plan, in an
amount determined under subsection (o), and in the case of
any other plan'' after ``section 501(a),'', and
(2) by inserting at the end the following new subsection:
``(o) Deduction Limit for Single-Employer Plans.--For
purposes of subsection (a)(1)(A)--
``(1) In general.--In the case of a defined benefit plan to
which subsection (a)(1)(A) applies (other than a
multiemployer plan), the amount determined under this
subsection for any taxable year shall be equal to the greater
of--
``(A) the sum of the amounts determined under paragraph (2)
with respect to each plan year ending with or within the
taxable year, or
``(B) the sum of the minimum required contributions under
section 430 for such plan years.
``(2) Determination of amount.--
``(A) In general.--The amount determined under this
paragraph for any plan year shall be equal to the excess (if
any) of--
``(i) the sum of--
``(I) the funding target for the plan year,
``(II) the target normal cost for the plan year, and
``(III) the cushion amount for the plan year, over
``(ii) the value (determined under section 430(g)(2)) of
the assets of the plan which are held by the plan as of the
valuation date for the plan year.
``(B) Special rule for certain employers.--If section
430(i) does not apply to a plan for a plan year, the amount
determined under subparagraph (A)(i) for the plan year shall
in no event be less than the sum of--
``(i) the funding target for the plan year (determined as
if section 430(i) applied to the plan), plus
``(ii) the target normal cost for the plan year (as so
determined).
``(3) Cushion amount.--For purposes of paragraph
(2)(A)(i)(III)--
``(A) In general.--The cushion amount for any plan year is
the sum of--
``(i) 50 percent of the funding target for the plan year,
and
``(ii) the amount by which the funding target for the plan
year would increase if the plan were to take into account--
``(I) increases in compensation which are expected to occur
in succeeding plan years, or
``(II) if the plan does not base benefits for service to
date on compensation, increases in benefits which are
expected to occur in succeeding plan years (determined on the
basis of the average annual increase in benefits over the 6
immediately preceding plan years).
``(B) Limitations.--
``(i) In general.--In making the computation under
subparagraph (A)(ii), the plan's actuary shall assume that
the limitations under subsection (l) and section 415(b) shall
apply.
``(ii) Expected increases.--In the case of a plan year
during which a plan is covered under section 4021 of the
Employee Retirement Income Security Act of 1974, the plan's
actuary may, notwithstanding subsection (l), take into
account increases in the limitations which are expected to
occur in succeeding plan years.
``(4) Special rules for plans with 100 or fewer
participants.--
``(A) In general.--For purposes of determining the amount
under paragraph (3) for any plan year, in the case of a plan
which has 100 or fewer participants for the plan year, the
liability of the plan attributable to benefit increases for
highly compensated employees (as defined in section 414(q))
resulting from a plan amendment which is made or becomes
effective, whichever is later, within the last 2 years shall
not be taken into account in determining the target
liability.
``(B) Rule for determining number of participants.--For
purposes of determining the number of plan participants, all
defined benefit plans maintained by the same employer (or any
member of such employer's controlled group (within the
meaning of section 412(f)(4))) shall be treated as one plan,
but only participants of such member or employer shall be
taken into account.
``(5) Special rule for terminating plans.--In the case of a
plan which, subject to section 4041 of the Employee
Retirement Income Security Act of 1974, terminates during the
plan year, the amount determined under paragraph (2) shall in
no event be less than the amount required to make the plan
sufficient for benefit liabilities (within the meaning of
section 4041(d) of such Act).
[[Page H6098]]
``(6) Actuarial assumptions.--Any computation under this
subsection for any plan year shall use the same actuarial
assumptions which are used for the plan year under section
430.
``(7) Definitions.--Any term used in this subsection which
is also used in section 430 shall have the same meaning given
such term by section 430.''.
(b) Exception From Limitation on Deduction Where
Combination of Defined Contribution and Defined Benefit
Plans.--Section 404(a)(7)(C) of such Code, as amended by this
Act, is amended by adding at the end the following new
clause:
``(iv) Guaranteed plans.--In applying this paragraph, any
single-employer plan covered under section 4021 of the
Employee Retirement Income Security Act of 1974 shall not be
taken into account.''.
(c) Technical and Conforming Amendments.--
(1) The last sentence of section 404(a)(1)(A) of such Code
is amended by striking ``section 412'' each place it appears
and inserting ``section 431''.
(2) Section 404(a)(1)(B) of such Code is amended--
(A) by striking ``In the case of a plan'' and inserting
``In the case of a multiemployer plan'',
(B) by striking ``section 412(c)(7)'' each place it appears
and inserting ``section 431(c)(6)'',
(C) by striking ``section 412(c)(7)(B)'' and inserting
``section 431(c)(6)(A)(ii)'',
(D) by striking ``section 412(c)(7)(A)'' and inserting
``section 431(c)(6)(A)(i)'', and
(E) by striking ``section 412'' and inserting ``section
431''.
(3) Section 404(a)(7) of such Code, as amended by this Act,
is amended--
(A) by adding at the end of subparagraph (A) the following
new sentence: ``In the case of a defined benefit plan which
is a single employer plan, the amount necessary to satisfy
the minimum funding standard provided by section 412 shall
not be less than the plan's funding shortfall determined
under section 430.'', and
(B) by striking subparagraph (D) and inserting:
``(D) Insurance contract plans.--For purposes of this
paragraph, a plan described in section 412(e)(3) shall be
treated as a defined benefit plan.''.
(4) Section 404A(g)(3)(A) of such Code is amended by
striking ``paragraphs (3) and (7) of section 412(c)'' and
inserting ``paragraphs (3) and (6) of section 431(c)''.
(d) Special Rule for 2006 and 2007.--
(1) In general.--Clause (i) of section 404(a)(1)(D) of the
Internal Revenue Code of 1986 (relating to special rule in
case of certain plans) is amended by striking ``section
412(l)'' and inserting ``section 412(l)(8)(A), except that
section 412(l)(8)(A) shall be applied for purposes of this
clause by substituting `150 percent (140 percent in the case
of a multiemployer plan) of current liability' for `the
current liability' in clause (i).''
(2) Conforming amendment.--Section 404(a)(1) of the
Internal Revenue Code of 1986 is amended by striking
subparagraph (F).
(e) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to years
beginning after December 31, 2007.
(2) Special rules.--The amendments made by subsection (d)
shall apply to years beginning after December 31, 2005.
SEC. 802. DEDUCTION LIMITS FOR MULTIEMPLOYER PLANS.
(a) Increase in Deduction.--Section 404(a)(1)(D) of the
Internal Revenue Code of 1986, as amended by this Act, is
amended to read as follows:
``(D) Amount determined on basis of unfunded current
liability.--In the case of a defined benefit plan which is a
multiemployer plan, except as provided in regulations, the
maximum amount deductible under the limitations of this
paragraph shall not be less than the excess (if any) of--
``(i) 140 percent of the current liability of the plan
determined under section 431(c)(6)(C), over
``(ii) the value of the plan's assets determined under
section 431(c)(2).''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to years beginning after December 31, 2007.
SEC. 803. UPDATING DEDUCTION RULES FOR COMBINATION OF PLANS.
(a) In General.--Subparagraph (C) of section 404(a)(7) of
the Internal Revenue Code of 1986 (relating to limitation on
deductions where combination of defined contribution plan and
defined benefit plan) is amended by adding after clause (ii)
the following new clause:
``(iii) Limitation.--In the case of employer contributions
to 1 or more defined contribution plans, this paragraph shall
only apply to the extent that such contributions exceed 6
percent of the compensation otherwise paid or accrued during
the taxable year to the beneficiaries under such plans. For
purposes of this clause, amounts carried over from preceding
taxable years under subparagraph (B) shall be treated as
employer contributions to 1 or more defined contributions to
the extent attributable to employer contributions to such
plans in such preceding taxable years.''.
(b) Exception From Limitation on Deduction Where
Combination of Defined Contribution and Defined Benefit
Plans.--Section 404(a)(7)(C) of such Code, as amended by this
Act, is amended by adding at the end the following new
clause:
``(v) Multiemployer plans.--In applying this paragraph, any
multiemployer plan shall not be taken into account.''.
(c) Conforming Amendment.--Subparagraph (A) of section
4972(c)(6) of such Code (relating to nondeductible
contributions) is amended to read as follows:
``(A) so much of the contributions to 1 or more defined
contribution plans which are not deductible when contributed
solely because of section 404(a)(7) as does not exceed the
amount of contributions described in section 401(m)(4)(A),
or''.
(d) Effective Date.--The amendments made by this section
shall apply to contributions for taxable years beginning
after December 31, 2005.
Subtitle B--Certain Pension Provisions Made Permanent
SEC. 811. PENSIONS AND INDIVIDUAL RETIREMENT ARRANGEMENT
PROVISIONS OF ECONOMIC GROWTH AND TAX RELIEF
RECONCILIATION ACT OF 2001 MADE PERMANENT.
Title IX of the Economic Growth and Tax Relief
Reconciliation Act of 2001 shall not apply to the provisions
of, and amendments made by, subtitles A through F of title VI
of such Act (relating to pension and individual retirement
arrangement provisions).
SEC. 812. SAVER'S CREDIT.
Section 25B of the Internal Revenue Code of 1986 (relating
to elective deferrals and IRA contributions by certain
individuals) is amended by striking subsection (h).
Subtitle C--Improvements in Portability, Distribution, and Contribution
Rules
SEC. 821. CLARIFICATIONS REGARDING PURCHASE OF PERMISSIVE
SERVICE CREDIT.
(a) In General.--Section 415(n) of the Internal Revenue
Code of 1986 (relating to special rules for the purchase of
permissive service credit) is amended--
(1) by striking ``an employee'' in paragraph (1) and
inserting ``a participant'', and
(2) by adding at the end of paragraph (3)(A) the following
new flush sentence:
``Such term may include service credit for periods for which
there is no performance of service, and, notwithstanding
clause (ii), may include service credited in order to provide
an increased benefit for service credit which a participant
is receiving under the plan.''.
(b) Special Rules for Trustee-to-Trustee Transfers.--
Section 415(n)(3) of such Code is amended by adding at the
end the following new subparagraph:
``(D) Special rules for trustee-to-trustee transfers.--In
the case of a trustee-to-trustee transfer to which section
403(b)(13)(A) or 457(e)(17)(A) applies (without regard to
whether the transfer is made between plans maintained by the
same employer)--
``(i) the limitations of subparagraph (B) shall not apply
in determining whether the transfer is for the purchase of
permissive service credit, and
``(ii) the distribution rules applicable under this title
to the defined benefit governmental plan to which any amounts
are so transferred shall apply to such amounts and any
benefits attributable to such amounts.''.
(c) Nonqualified Service.--Section 415(n)(3) of such Code
is amended--
(1) by striking ``permissive service credit attributable to
nonqualified service'' each place it appears in subparagraph
(B) and inserting ``nonqualified service credit'',
(2) by striking so much of subparagraph (C) as precedes
clause (i) and inserting:
``(C) Nonqualified service credit.--For purposes of
subparagraph (B), the term `nonqualified service credit'
means permissive service credit other than that allowed with
respect to--'', and
(3) by striking ``elementary or secondary education
(through grade 12), as determined under State law'' in
subparagraph (C)(ii) and inserting ``elementary or secondary
education (through grade 12), or a comparable level of
education, as determined under the applicable law of the
jurisdiction in which the service was performed''.
(d) Effective Dates.--
(1) In general.--The amendments made by subsections (a) and
(c) shall take effect as if included in the amendments made
by section 1526 of the Taxpayer Relief Act of 1997.
(2) Subsection (b).--The amendments made by subsection (b)
shall take effect as if included in the amendments made by
section 647 of the Economic Growth and Tax Relief
Reconciliation Act of 2001.
SEC. 822. ALLOW ROLLOVER OF AFTER-TAX AMOUNTS IN ANNUITY
CONTRACTS.
(a) In General.--Subparagraph (A) of section 402(c)(2)
(relating to the maximum amount which may be rolled over) is
amended--
(1) by striking ``which is part of a plan which is a
defined contribution plan and which agrees to separately
account'' and inserting ``or to an annuity contract described
in section 403(b) and such trust or contract provides for
separate accounting''; and
(2) by inserting ``(and earnings thereon)'' after ``so
transferred''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to taxable years beginning after December 31,
2006.
SEC. 823. CLARIFICATION OF MINIMUM DISTRIBUTION RULES FOR
GOVERNMENTAL PLANS.
The Secretary of the Treasury shall issue regulations under
which a governmental plan (as defined in section 414(d) of
the Internal Revenue Code of 1986) shall, for all years to
which section 401(a)(9) of such Code applies to such plan, be
treated as having complied with such section 401(a)(9) if
such plan
[[Page H6099]]
complies with a reasonable good faith interpretation of such
section 401(a)(9).
SEC. 824. ALLOW DIRECT ROLLOVERS FROM RETIREMENT PLANS TO
ROTH IRAS.
(a) In General.--Subsection (e) of section 408A of the
Internal Revenue Code of 1986 (defining qualified rollover
contribution) is amended to read as follows:
``(e) Qualified Rollover Contribution.--For purposes of
this section, the term `qualified rollover contribution'
means a rollover contribution--
``(1) to a Roth IRA from another such account,
``(2) from an eligible retirement plan, but only if--
``(A) in the case of an individual retirement plan, such
rollover contribution meets the requirements of section
408(d)(3), and
``(B) in the case of any eligible retirement plan (as
defined in section 402(c)(8)(B) other than clauses (i) and
(ii) thereof), such rollover contribution meets the
requirements of section 402(c), 403(b)(8), or 457(e)(16), as
applicable.
For purposes of section 408(d)(3)(B), there shall be
disregarded any qualified rollover contribution from an
individual retirement plan (other than a Roth IRA) to a Roth
IRA.''.
(b) Conforming Amendments.--
(1) Section 408A(c)(3)(B) of such Code, as in effect before
the Tax Increase Prevention and Reconciliation Act of 2005,
is amended--
(A) in the text by striking ``individual retirement plan''
and inserting ``an eligible retirement plan (as defined by
section 402(c)(8)(B))'', and
(B) in the heading by striking ``IRA'' the first place it
appears and inserting ``eligible retirement plan''.
(2) Section 408A(d)(3) of such Code is amended--
(A) in subparagraph (A), by striking ``section 408(d)(3)''
inserting ``sections 402(c), 403(b)(8), 408(d)(3), and
457(e)(16)'',
(B) in subparagraph (B), by striking ``individual
retirement plan'' and inserting ``eligible retirement plan
(as defined by section 402(c)(8)(B))'',
(C) in subparagraph (D), by inserting ``or 6047'' after
``408(i)'',
(D) in subparagraph (D), by striking ``or both'' and
inserting ``persons subject to section 6047(d)(1), or all of
the foregoing persons'', and
(E) in the heading, by striking ``IRA'' the first place it
appears and inserting ``eligible retirement plan''.
(c) Effective Date.--The amendments made by this section
shall apply to distributions after December 31, 2007.
SEC. 825. ELIGIBILITY FOR PARTICIPATION IN RETIREMENT PLANS.
An individual shall not be precluded from participating in
an eligible deferred compensation plan by reason of having
received a distribution under section 457(e)(9) of the
Internal Revenue Code of 1986, as in effect prior to the
enactment of the Small Business Job Protection Act of 1996.
SEC. 826. MODIFICATIONS OF RULES GOVERNING HARDSHIPS AND
UNFORSEEN FINANCIAL EMERGENCIES.
Within 180 days after the date of the enactment of this
Act, the Secretary of the Treasury shall modify the rules for
determining whether a participant has had a hardship for
purposes of section 401(k)(2)(B)(i)(IV) of the Internal
Revenue Code of 1986 to provide that if an event (including
the occurrence of a medical expense) would constitute a
hardship under the plan if it occurred with respect to the
participant's spouse or dependent (as defined in section 152
of such Code), such event shall, to the extent permitted
under a plan, constitute a hardship if it occurs with respect
to a person who is a beneficiary under the plan with respect
to the participant. The Secretary of the Treasury shall issue
similar rules for purposes of determining whether a
participant has had--
(1) a hardship for purposes of section 403(b)(11)(B) of
such Code; or
(2) an unforeseen financial emergency for purposes of
sections 409A(a)(2)(A)(vi), 409A(a)(2)(B)(ii), and
457(d)(1)(A)(iii) of such Code.
SEC. 827. PENALTY-FREE WITHDRAWALS FROM RETIREMENT PLANS FOR
INDIVIDUALS CALLED TO ACTIVE DUTY FOR AT LEAST
179 DAYS.
(a) In General.--Paragraph (2) of section 72(t) of the
Internal Revenue Code of 1986 (relating to 10-percent
additional tax on early distributions from qualified
retirement plans) is amended by adding at the end the
following new subparagraph:
``(G) Distributions from retirement plans to individuals
called to active duty.--
``(i) In general.--Any qualified reservist distribution.
``(ii) Amount distributed may be repaid.--Any individual
who receives a qualified reservist distribution may, at any
time during the 2-year period beginning on the day after the
end of the active duty period, make one or more contributions
to an individual retirement plan of such individual in an
aggregate amount not to exceed the amount of such
distribution. The dollar limitations otherwise applicable to
contributions to individual retirement plans shall not apply
to any contribution made pursuant to the preceding sentence.
No deduction shall be allowed for any contribution pursuant
to this clause.
``(iii) Qualified reservist distribution.--For purposes of
this subparagraph, the term `qualified reservist
distribution' means any distribution to an individual if--
``(I) such distribution is from an individual retirement
plan, or from amounts attributable to employer contributions
made pursuant to elective deferrals described in subparagraph
(A) or (C) of section 402(g)(3) or section
501(c)(18)(D)(iii),
``(II) such individual was (by reason of being a member of
a reserve component (as defined in section 101 of title 37,
United States Code)) ordered or called to active duty for a
period in excess of 179 days or for an indefinite period, and
``(III) such distribution is made during the period
beginning on the date of such order or call and ending at the
close of the active duty period.
``(iv) Application of subparagraph.--This subparagraph
applies to individuals ordered or called to active duty after
September 11, 2001, and before December 31, 2007. In no event
shall the 2-year period referred to in clause (ii) end before
the date which is 2 years after the date of the enactment of
this subparagraph.''.
(b) Conforming Amendments.--
(1) Section 401(k)(2)(B)(i) of such Code is amended by
striking ``or'' at the end of subclause (III), by striking
``and'' at the end of subclause (IV) and inserting ``or'',
and by inserting after subclause (IV) the following new
subclause:
``(V) in the case of a qualified reservist distribution (as
defined in section 72(t)(2)(G)(iii)), the date on which a
period referred to in subclause (III) of such section begins,
and''.
(2) Section 403(b)(7)(A)(ii) of such Code is amended by
inserting ``(unless such amount is a distribution to which
section 72(t)(2)(G) applies)'' after ``distributee''.
(3) Section 403(b)(11) of such Code is amended by striking
``or'' at the end of subparagraph (A), by striking the period
at the end of subparagraph (B) and inserting ``, or'', and by
inserting after subparagraph (B) the following new
subparagraph:
``(C) for distributions to which section 72(t)(2)(G)
applies.''.
(c) Effective Date; Waiver of Limitations.--
(1) Effective date.--The amendment made by this section
shall apply to distributions after September 11, 2001.
(2) Waiver of limitations.--If refund or credit of any
overpayment of tax resulting from the amendments made by this
section is prevented at any time before the close of the 1-
year period beginning on the date of the enactment of this
Act by the operation of any law or rule of law (including res
judicata), such refund or credit may nevertheless be made or
allowed if claim therefor is filed before the close of such
period.
SEC. 828. WAIVER OF 10 PERCENT EARLY WITHDRAWAL PENALTY TAX
ON CERTAIN DISTRIBUTIONS OF PENSION PLANS FOR
PUBLIC SAFETY EMPLOYEES.
(a) In General.--Section 72(t) of the Internal Revenue Code
of 1986 (relating to subsection not to apply to certain
distributions) is amended by adding at the end the following
new paragraph:
``(10) Distributions to qualified public safety employees
in governmental plans.--
``(A) In general.--In the case of a distribution to a
qualified public safety employee from a governmental plan
(within the meaning of section 414(d)) which is a defined
benefit plan, paragraph (2)(A)(v) shall be applied by
substituting `age 50' for `age 55'.
``(B) Qualified public safety employee.--For purposes of
this paragraph, the term `qualified public safety employee'
means any employee of a State or political subdivision of a
State who provides police protection, firefighting services,
or emergency medical services for any area within the
jurisdiction of such State or political subdivision.''
(b) Effective Date.--The amendment made by this section
shall apply to distributions after the date of the enactment
of this Act.
SEC. 829. ALLOW ROLLOVERS BY NONSPOUSE BENEFICIARIES OF
CERTAIN RETIREMENT PLAN DISTRIBUTIONS.
(a) In General.--
(1) Qualified plans.--Section 402(c) of the Internal
Revenue Code of 1986 (relating to rollovers from exempt
trusts) is amended by adding at the end the following new
paragraph:
``(11) Distributions to inherited individual retirement
plan of nonspouse beneficiary.--
``(A) In general.--If, with respect to any portion of a
distribution from an eligible retirement plan of a deceased
employee, a direct trustee-to-trustee transfer is made to an
individual retirement plan described in clause (i) or (ii) of
paragraph (8)(B) established for the purposes of receiving
the distribution on behalf of an individual who is a
designated beneficiary (as defined by section 401(a)(9)(E))
of the employee and who is not the surviving spouse of the
employee--
``(i) the transfer shall be treated as an eligible rollover
distribution for purposes of this subsection,
``(ii) the individual retirement plan shall be treated as
an inherited individual retirement account or individual
retirement annuity (within the meaning of section
408(d)(3)(C)) for purposes of this title, and
``(iii) section 401(a)(9)(B) (other than clause (iv)
thereof) shall apply to such plan.
``(B) Certain trusts treated as beneficiaries.--For
purposes of this paragraph, to the extent provided in rules
prescribed by the Secretary, a trust maintained for the
[[Page H6100]]
benefit of one or more designated beneficiaries shall be
treated in the same manner as a trust designated
beneficiary.''.
(2) Section 403(a) plans.--Subparagraph (B) of section
403(a)(4) of such Code (relating to rollover amounts) is
amended by inserting ``and (11)'' after ``(7)''.
(3) Section 403(b) plans.--Subparagraph (B) of section
403(b)(8) of such Code (relating to rollover amounts) is
amended by striking ``and (9)'' and inserting ``, (9), and
(11)''.
(4) Section 457 plans.--Subparagraph (B) of section
457(e)(16) of such Code (relating to rollover amounts) is
amended by striking ``and (9)'' and inserting ``, (9), and
(11)''.
(b) Effective Date.--The amendments made by this section
shall apply to distributions after December 31, 2006.
SEC. 830. DIRECT PAYMENT OF TAX REFUNDS TO INDIVIDUAL
RETIREMENT PLANS.
(a) In General.--The Secretary of the Treasury (or the
Secretary's delegate) shall make available a form (or modify
existing forms) for use by individuals to direct that a
portion of any refund of overpayment of tax imposed by
chapter 1 of the Internal Revenue Code of 1986 be paid
directly to an individual retirement plan (as defined in
section 7701(a)(37) of such Code) of such individual.
(b) Effective Date.--The form required by subsection (a)
shall be made available for taxable years beginning after
December 31, 2006.
SEC. 831. ALLOWANCE OF ADDITIONAL IRA PAYMENTS IN CERTAIN
BANKRUPTCY CASES.
(a) Allowance of Contributions.--Section 219(b)(5) of the
Internal Revenue Code of 1986 (relating to deductible amount)
is amended by redesignating subparagraph (C) as subparagraph
(D) and by inserting after subparagraph (B) the following new
subparagraph:
``(C) Catchup contributions for certain individuals.--
``(i) In general.--In the case of an applicable individual
who elects to make a qualified retirement contribution in
addition to the deductible amount determined under
subparagraph (A)--
``(I) the deductible amount for any taxable year shall be
increased by an amount equal to 3 times the applicable amount
determined under subparagraph (B) for such taxable year, and
``(II) subparagraph (B) shall not apply.
``(ii) Applicable individual.--For purposes of this
subparagraph, the term `applicable individual' means, with
respect to any taxable year, any individual who was a
qualified participant in a qualified cash or deferred
arrangement (as defined in section 401(k)) of an employer
described in clause (iii) under which the employer matched at
least 50 percent of the employee's contributions to such
arrangement with stock of such employer.
``(iii) Employer described.--An employer is described in
this clause if, in any taxable year preceding the taxable
year described in clause (ii)--
``(I) such employer (or any controlling corporation of such
employer) was a debtor in a case under title 11 of the United
States Code, or similar Federal or State law, and
``(II) such employer (or any other person) was subject to
an indictment or conviction resulting from business
transactions related to such case.
``(iv) Qualified participant.--For purposes of clause (ii),
the term `qualified participant' means any applicable
individual who was a participant in the cash or deferred
arrangement described in such clause on the date that is 6
months before the filing of the case described in clause
(iii).
``(v) Termination.--This subparagraph shall not apply to
taxable years beginning after December 31, 2009.''
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2006.
SEC. 832. DETERMINATION OF AVERAGE COMPENSATION FOR SECTION
415 LIMITS.
(a) In General.--Section 415(b)(3) of the Internal Revenue
Code of 1986 is amended by striking ``both was an active
participant in the plan and''.
(b) Effective Date.--The amendment made by this section
shall apply to years beginning after December 31, 2005.
SEC. 833. INFLATION INDEXING OF GROSS INCOME LIMITATIONS ON
CERTAIN RETIREMENT SAVINGS INCENTIVES.
(a) Saver's Credit.--Subsection (b) of section 25B of the
Internal Revenue Code of 1986 is amended to read as follows:
``(b) Applicable Percentage.--For purposes of this
section--
``(1) Joint returns.--In the case of a joint return, the
applicable percentage is--
``(A) if the adjusted gross income of the taxpayer is not
over $30,000, 50 percent,
``(B) if the adjusted gross income of the taxpayer is over
$30,000 but not over $32,500, 20 percent,
``(C) if the adjusted gross income of the taxpayer is over
$32,500 but not over $50,000, 10 percent, and
``(D) if the adjusted gross income of the taxpayer is over
$50,000, zero percent.
``(2) Other returns.--In the case of--
``(A) a head of household, the applicable percentage shall
be determined under paragraph (1) except that such paragraph
shall be applied by substituting for each dollar amount
therein (as adjusted under paragraph (3)) a dollar amount
equal to 75 percent of such dollar amount, and
``(B) any taxpayer not described in paragraph (1) or
subparagraph (A), the applicable percentage shall be
determined under paragraph (1) except that such paragraph
shall be applied by substituting for each dollar amount
therein (as adjusted under paragraph (3)) a dollar amount
equal to 50 percent of such dollar amount.
``(3) Inflation adjustment.--In the case of any taxable
year beginning in a calendar year after 2006, each of the
dollar amount in paragraph (1) shall be increased by an
amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, determined by substituting `calendar year 2005'
for `calendar year 1992' in subparagraph (B) thereof.
Any increase determined under the preceding sentence shall be
rounded to the nearest multiple of $500.''.
(b) Deduction of Retirement Contributions for Active
Participants.--Section 219(g) of such Code is amended by
adding at the end the following new paragraph:
``(8) Inflation adjustment.--In the case of any taxable
year beginning in a calendar year after 2006, the dollar
amount in the last row of the table contained in paragraph
(3)(B)(i), the dollar amount in the last row of the table
contained in paragraph (3)(B)(ii), and the dollar amount
contained in paragraph (7)(A), shall each be increased by an
amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, determined by substituting `calendar year 2005'
for `calendar year 1992' in subparagraph (B) thereof.
Any increase determined under the preceding sentence shall be
rounded to the nearest multiple of $1,000.''.
(c) Contribution Limitation for Roth IRAs.--Section
408A(c)(3) of such Code is amended by adding at the end the
following new subparagraph:
``(C) Inflation adjustment.--In the case of any taxable
year beginning in a calendar year after 2006, the dollar
amounts in subclauses (I) and (II) of subparagraph (C)(ii)
shall each be increased by an amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, determined by substituting `calendar year 2005'
for `calendar year 1992' in subparagraph (B) thereof.
Any increase determined under the preceding sentence shall be
rounded to the nearest multiple of $1,000.''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after 2006.
Subtitle D--Health and Medical Benefits
SEC. 841. USE OF EXCESS PENSION ASSETS FOR FUTURE RETIREE
HEALTH BENEFITS AND COLLECTIVELY BARGAINED
RETIREE HEALTH BENEFITS.
(a) In General.--Section 420 of the Internal Revenue Code
of 1986 (relating to transfers of excess pension assets to
retiree health accounts) is amended by adding at the end the
following new subsection:
``(f) Qualified Transfers to Cover Future Retiree Health
Costs and Collectively Bargained Retiree Health Benefits.--
``(1) In general.--An employer maintaining a defined
benefit plan (other than a multiemployer plan) may, in lieu
of a qualified transfer, elect for any taxable year to have
the plan make--
``(A) a qualified future transfer, or
``(B) a collectively bargained transfer.
Except as provided in this subsection, a qualified future
transfer and a collectively bargained transfer shall be
treated for purposes of this title and the Employee
Retirement Income Security Act of 1974 as if it were a
qualified transfer.
``(2) Qualified future and collectively bargained
transfers.--For purposes of this subsection--
``(A) In general.--The terms `qualified future transfer'
and `collectively bargained transfer' mean a transfer which
meets all of the requirements for a qualified transfer,
except that--
``(i) the determination of excess pension assets shall be
made under subparagraph (B),
``(ii) the limitation on the amount transferred shall be
determined under subparagraph (C),
``(iii) the minimum cost requirements of subsection (c)(3)
shall be modified as provided under subparagraph (D), and
``(iv) in the case of a collectively bargained transfer,
the requirements of subparagraph (E) shall be met with
respect to the transfer.
``(B) Excess pension assets.--
``(i) In general.--In determining excess pension assets for
purposes of this subsection, subsection (e)(2) shall be
applied by substituting `120 percent' for `125 percent'.
``(ii) Requirement to maintain funded status.--If, as of
any valuation date of any plan year in the transfer period,
the amount determined under subsection (e)(2)(B) (after
application of clause (i)) exceeds the amount determined
under subsection (e)(2)(A), either--
``(I) the employer maintaining the plan shall make
contributions to the plan in an amount not less than the
amount required to reduce such excess to zero as of such
date, or
``(II) there is transferred from the health benefits
account to the plan an amount not less than the amount
required to reduce such excess to zero as of such date.
[[Page H6101]]
``(C) Limitation on amount transferred.--Notwithstanding
subsection (b)(3), the amount of the excess pension assets
which may be transferred--
``(i) in the case of a qualified future transfer shall be
equal to the sum of--
``(I) if the transfer period includes the taxable year of
the transfer, the amount determined under subsection (b)(3)
for such taxable year, plus
``(II) in the case of all other taxable years in the
transfer period, the sum of the qualified current retiree
health liabilities which the plan reasonably estimates, in
accordance with guidance issued by the Secretary, will be
incurred for each of such years, and
``(ii) in the case of a collectively bargained transfer,
shall not exceed the amount which is reasonably estimated, in
accordance with the provisions of the collective bargaining
agreement and generally accepted accounting principles, to be
the amount the employer maintaining the plan will pay
(whether directly or through reimbursement) out of such
account during the collectively bargained cost maintenance
period for collectively bargained retiree health liabilities.
``(D) Minimum cost requirements.--
``(i) In general.--The requirements of subsection (c)(3)
shall be treated as met if--
``(I) in the case of a qualified future transfer, each
group health plan or arrangement under which applicable
health benefits are provided provides applicable health
benefits during the period beginning with the first year of
the transfer period and ending with the last day of the 4th
year following the transfer period such that the annual
average amount of such the applicable employer cost during
such period is not less than the applicable employer cost
determined under subsection (c)(3)(A) with respect to the
transfer, and
``(II) in the case of a collectively bargained transfer,
each collectively bargained group health plan under which
collectively bargained health benefits are provided provides
that the collectively bargained employer cost for each
taxable year during the collectively bargained cost
maintenance period shall not be less than the amount
specified by the collective bargaining agreement.
``(ii) Election to maintain benefits for future
transfers.--An employer may elect, in lieu of the
requirements of clause (i)(I), to meet the requirements of
subsection (c)(3) by meeting the requirements of such
subsection (as in effect before the amendments made by
section 535 of the Tax Relief Extension Act of 1999) for each
of the years described in the period under clause (i)(I).
``(iii) Collectively bargained employer cost.--For purposes
of this subparagraph, the term `collectively bargained
employer cost' means the average cost per covered individual
of providing collectively bargained retiree health benefits
as determined in accordance with the applicable collective
bargaining agreement. Such agreement may provide for an
appropriate reduction in the collectively bargained employer
cost to take into account any portion of the collectively
bargained retiree health benefits that is provided or
financed by a government program or other source.
``(E) Special rules for collectively bargained transfers.--
``(i) In general.--A collectively bargained transfer shall
only include a transfer which--
``(I) is made in accordance with a collective bargaining
agreement,
``(II) before the transfer, the employer designates, in a
written notice delivered to each employee organization that
is a party to the collective bargaining agreement, as a
collectively bargained transfer in accordance with this
section, and
``(III) involves a plan maintained by an employer which, in
its taxable year ending in 2005, provided health benefits or
coverage to retirees and their spouses and dependents under
all of the benefit plans maintained by the employer, but only
if the aggregate cost (including administrative expenses) of
such benefits or coverage which would have been allowable as
a deduction to the employer (if such benefits or coverage had
been provided directly by the employer and the employer used
the cash receipts and disbursements method of accounting) is
at least 5 percent of the gross receipts of the employer
(determined in accordance with the last sentence of
subsection (c)(2)(E)(ii)(II)) for such taxable year, or a
plan maintained by a successor to such employer.
``(ii) Use of assets.--Any assets transferred to a health
benefits account in a collectively bargained transfer (and
any income allocable thereto) shall be used only to pay
collectively bargained retiree health liabilities (other than
liabilities of key employees not taken into account under
paragraph (6)(B)(iii)) for the taxable year of the transfer
or for any subsequent taxable year during the collectively
bargained cost maintenance period (whether directly or
through reimbursement).
``(3) Coordination with other transfers.--In applying
subsection (b)(3) to any subsequent transfer during a taxable
year in a transfer period or collectively bargained cost
maintenance period, qualified current retiree health
liabilities shall be reduced by any such liabilities taken
into account with respect to the qualified future transfer or
collectively bargained transfer to which such period relates.
``(4) Special deduction rules for collectively bargained
transfers.--In the case of a collectively bargained
transfer--
``(A) the limitation under subsection (d)(1)(C) shall not
apply, and
``(B) notwithstanding subsection (d)(2), an employer may
contribute an amount to a health benefits account or welfare
benefit fund (as defined in section 419(e)(1)) with respect
to collectively bargained retiree health liabilities for
which transferred assets are required to be used under
subsection (c)(1)(B), and the deductibility of any such
contribution shall be governed by the limits applicable to
the deductibility of contributions to a welfare benefit fund
under a collective bargaining agreement (as determined under
section 419A(f)(5)(A)) without regard to whether such
contributions are made to a health benefits account or
welfare benefit fund and without regard to the provisions of
section 404 or the other provisions of this section.
The Secretary shall provide rules to ensure that the
application of this paragraph does not result in a deduction
being allowed more than once for the same contribution or for
2 or more contributions or expenditures relating to the same
collectively bargained retiree health liabilities.
``(5) Transfer period.--For purposes of this subsection,
the term `transfer period' means, with respect to any
transfer, a period of consecutive taxable years (not less
than 2) specified in the election under paragraph (1) which
begins and ends during the 10-taxable-year period beginning
with the taxable year of the transfer.
``(6) Terms relating to collectively bargained transfers.--
For purposes of this subsection--
``(A) Collectively bargained cost maintenance period.--The
term `collectively bargained cost maintenance period' means,
with respect to each covered retiree and his covered spouse
and dependents, the shorter of--
``(i) the remaining lifetime of such covered retiree and
his covered spouse and dependents, or
``(ii) the period of coverage provided by the collectively
bargained health plan (determined as of the date of the
collectively bargained transfer) with respect to such covered
retiree and his covered spouse and dependents.
``(B) Collectively bargained retiree health liabilities.--
``(i) In general.--The term `collectively bargained retiree
health liabilities' means the present value, as of the
beginning of a taxable year and determined in accordance with
the applicable collective bargaining agreement, of all
collectively bargained health benefits (including
administrative expenses) for such taxable year and all
subsequent taxable years during the collectively bargained
cost maintenance period.
``(ii) Reduction for amounts previously set aside.--The
amount determined under clause (i) shall be reduced by the
value (as of the close of the plan year preceding the year of
the collectively bargained transfer) of the assets in all
health benefits accounts or welfare benefit funds (as defined
in section 419(e)(1)) set aside to pay for the collectively
bargained retiree health liabilities.
``(iii) Key employees excluded.--If an employee is a key
employee (within the meaning of section 416(I)(1)) with
respect to any plan year ending in a taxable year, such
employee shall not be taken into account in computing
collectively bargained retiree health liabilities for such
taxable year or in calculating collectively bargained
employer cost under subsection (c)(3)(C).
``(C) Collectively bargained health benefits.--The term
`collectively bargained health benefits' means health
benefits or coverage which are provided to--
``(i) retired employees who, immediately before the
collectively bargained transfer, are entitled to receive such
benefits upon retirement and who are entitled to pension
benefits under the plan, and their spouses and dependents,
and
``(ii) if specified by the provisions of the collective
bargaining agreement governing the collectively bargained
transfer, active employees who, following their retirement,
are entitled to receive such benefits and who are entitled to
pension benefits under the plan, and their spouses and
dependents.
``(D) Collectively bargained health plan.--The term
`collectively bargained health plan' means a group health
plan or arrangement for retired employees and their spouses
and dependents that is maintained pursuant to 1 or more
collective bargaining agreements.''.
(b) Effective Date.--The amendments made by this section
shall apply to transfers after the date of the enactment of
this Act.
SEC. 842. TRANSFER OF EXCESS PENSION ASSETS TO MULTIEMPLOYER
HEALTH PLAN.
(a) In General.--Section 420 of the Internal Revenue Code
of 1986 is amended--
(1) by striking ``(other than a multiemployer plan)'' in
subsection (a), and
(2) by adding at the end of subsection (e) the following
new paragraph:
``(5) Application to multiemployer plans.--In the case of a
multiemployer plan, this section shall be applied to any such
plan--
``(A) by treating any reference in this section to an
employer as a reference to all employers maintaining the plan
(or, if appropriate, the plan sponsor), and
``(B) in accordance with such modifications of this section
(and the provisions of this title relating to this section)
as the Secretary determines appropriate to reflect the fact
the plan is not maintained by a single employer.''
[[Page H6102]]
(b) Effective Date.--The amendment made by this section
shall apply to transfers made in taxable years beginning
after December 31, 2006.
SEC. 843. ALLOWANCE OF RESERVE FOR MEDICAL BENEFITS OF PLANS
SPONSORED BY BONA FIDE ASSOCIATIONS.
(a) In General.--Section 419A(c) of the Internal Revenue
Code of 1986 (relating to account limit) is amended by adding
at the end the following new paragraph:
``(6) Additional reserve for medical benefits of bona fide
association plans.--
``(A) In general.--An applicable account limit for any
taxable year may include a reserve in an amount not to exceed
35 percent of the sum of--
``(i) the qualified direct costs, and
``(ii) the change in claims incurred but unpaid,
for such taxable year with respect to medical benefits (other
than post-retirement medical benefits).
``(B) Applicable account limit.--For purposes of this
subsection, the term `applicable account limit' means an
account limit for a qualified asset account with respect to
medical benefits provided through a plan maintained by a bona
fide association (as defined in section 2791(d)(3) of the
Public Health Service Act (42 U.S.C. 300gg-91(d)(3))''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after December 31,
2006.
SEC. 844. TREATMENT OF ANNUITY AND LIFE INSURANCE CONTRACTS
WITH A LONG-TERM CARE INSURANCE FEATURE.
(a) Exclusion From Gross Income.--Subsection (e) of section
72 of the Internal Revenue Code of 1986 (relating to amounts
not received as annuities) is amended by redesignating
paragraph (11) as paragraph (12) and by inserting after
paragraph (10) the following new paragraph:
``(11) Special rules for certain combination contracts
providing long-term care insurance.--Notwithstanding
paragraphs (2), (5)(C), and (10), in the case of any charge
against the cash value of an annuity contract or the cash
surrender value of a life insurance contract made as payment
for coverage under a qualified long-term care insurance
contract which is part of or a rider on such annuity or life
insurance contract--
``(A) the investment in the contract shall be reduced (but
not below zero) by such charge, and
``(B) such charge shall not be includible in gross
income.''.
(b) Tax-Free Exchanges Among Certain Insurance Policies.--
(1) Annuity contracts can include qualified long-term care
insurance riders.--Paragraph (2) of section 1035(b) of such
Code is amended by adding at the end the following new
sentence: ``For purposes of the preceding sentence, a
contract shall not fail to be treated as an annuity contract
solely because a qualified long-term care insurance contract
is a part of or a rider on such contract.''.
(2) Life insurance contracts can include qualified long-
term care insurance riders.--Paragraph (3) of section 1035(b)
of such Code is amended by adding at the end the following
new sentence: ``For purposes of the preceding sentence, a
contract shall not fail to be treated as a life insurance
contract solely because a qualified long-term care insurance
contract is a part of or a rider on such contract.''.
(3) Expansion of tax-free exchanges of life insurance,
endowment, and annuity contracts for long-term care
contracts.--Subsection (a) of section 1035 of such Code
(relating to certain exchanges of insurance policies) is
amended--
(A) in paragraph (1) by inserting ``or for a qualified
long-term care insurance contract'' before the semicolon at
the end,
(B) in paragraph (2) by inserting ``, or (C) for a
qualified long-term care insurance contract'' before the
semicolon at the end, and
(C) in paragraph (3) by inserting ``or for a qualified
long-term care insurance contract'' before the period at the
end.
(4) Tax-free exchanges of qualified long-term care
insurance contract.--Subsection (a) of section 1035 of such
Code (relating to certain exchanges of insurance policies) is
amended by striking ``or'' at the end of paragraph (2), by
striking the period at the end of paragraph (3) and inserting
``; or'', and by inserting after paragraph (3) the following
new paragraph:
``(4) a qualified long-term care insurance contract for a
qualified long-term care insurance contract.''.
(c) Treatment of Coverage Provided as Part of a Life
Insurance or Annuity Contract.--Subsection (e) of section
7702B of such Code (relating to treatment of qualified long-
term care insurance) is amended to read as follows:
``(e) Treatment of Coverage Provided as Part of a Life
Insurance or Annuity Contract.--Except as otherwise provided
in regulations prescribed by the Secretary, in the case of
any long-term care insurance coverage (whether or not
qualified) provided by a rider on or as part of a life
insurance contract or an annuity contract--
``(1) In general.--This title shall apply as if the portion
of the contract providing such coverage is a separate
contract.
``(2) Denial of deduction under section 213.--No deduction
shall be allowed under section 213(a) for any payment made
for coverage under a qualified long-term care insurance
contract if such payment is made as a charge against the cash
surrender value of a life insurance contract or the cash
value of an annuity contract.
``(3) Portion defined.--For purposes of this subsection,
the term `portion' means only the terms and benefits under a
life insurance contract or annuity contract that are in
addition to the terms and benefits under the contract without
regard to long-term care insurance coverage.
``(4) Annuity contracts to which paragraph (1) does not
apply.--For purposes of this subsection, none of the
following shall be treated as an annuity contract:
``(A) A trust described in section 401(a) which is exempt
from tax under section 501(a).
``(B) A contract--
``(i) purchased by a trust described in subparagraph (A),
``(ii) purchased as part of a plan described in section
403(a),
``(iii) described in section 403(b),
``(iv) provided for employees of a life insurance company
under a plan described in section 818(a)(3), or
``(v) from an individual retirement account or an
individual retirement annuity.
``(C) A contract purchased by an employer for the benefit
of the employee (or the employee's spouse).
Any dividend described in section 404(k) which is received by
a participant or beneficiary shall, for purposes of this
paragraph, be treated as paid under a separate contract to
which subparagraph (B)(i) applies.''.
(d) Information Reporting.--
(1) Subpart B of part III of subchapter A of chapter 61 of
such Code (relating to information concerning transactions
with other persons) is amended by adding at the end the
following new section:
``SEC. 6050U. CHARGES OR PAYMENTS FOR QUALIFIED LONG-TERM
CARE INSURANCE CONTRACTS UNDER COMBINED
ARRANGEMENTS.
``(a) Requirement of Reporting.--Any person who makes a
charge against the cash value of an annuity contract, or the
cash surrender value of a life insurance contract, which is
excludible from gross income under section 72(e)(11) shall
make a return, according to the forms or regulations
prescribed by the Secretary, setting forth--
``(1) the amount of the aggregate of such charges against
each such contract for the calendar year,
``(2) the amount of the reduction in the investment in each
such contract by reason of such charges, and
``(3) the name, address, and TIN of the individual who is
the holder of each such contract.
``(b) Statements to Be Furnished to Persons With Respect to
Whom Information Is Required.--Every person required to make
a return under subsection (a) shall furnish to each
individual whose name is required to be set forth in such
return a written statement showing--
``(1) the name, address, and phone number of the
information contact of the person making the payments, and
``(2) the information required to be shown on the return
with respect to such individual.
The written statement required under the preceding sentence
shall be furnished to the individual on or before January 31
of the year following the calendar year for which the return
under subsection (a) was required to be made.''.
(2) Penalty for failure to file.--
(A) Return.--Subparagraph (B) of section 6724(d)(1) of such
Code is amended by striking ``or'' at the end of clause
(xvii), by striking ``and'' at the end of clause (xviii) and
inserting ``or'', and by adding at the end the following new
clause:
``(xix) section 6050U (relating to charges or payments for
qualified long-term care insurance contracts under combined
arrangements), and''.
(B) Statement.--Paragraph (2) of section 6724(d) of such
Code is amended by striking ``or'' at the end of subparagraph
(AA), by striking the period at the end of subparagraph (BB),
and by inserting after subparagraph (BB) the following new
subparagraph:
``(CC) section 6050U (relating to charges or payments for
qualified long-term care insurance contracts under combined
arrangements).''.
(3) Clerical amendment.--The table of sections for subpart
B of part III of subchapter A of such chapter 61 of such Code
is amended by adding at the end the following new item:
``Sec. 6050U. Charges or payments for qualified long-term care
insurance contracts under combined arrangements.''.
(e) Treatment of Policy Acquisition Expenses.--Subsection
(e) of section 848 of such Code (relating to classification
of contracts) is amended by adding at the end the following
new paragraph:
``(6) Treatment of certain qualified long-term care
insurance contract arrangements.--An annuity or life
insurance contract which includes a qualified long-term care
insurance contract as a part of or a rider on such annuity or
life insurance contract shall be treated as a specified
insurance contract not described in subparagraph (A) or (B)
of subsection (c)(1).''.
(f) Technical Amendment.--Paragraph (1) of section 7702B(e)
of such Code (as in effect before amendment by subsection
(c)) is amended by striking ``section'' and inserting
``title''.
[[Page H6103]]
(g) Effective Dates.--
(1) In general.--Except as otherwise provided in this
subsection, the amendments made by this section shall apply
to contracts issued after December 31, 1996, but only with
respect to taxable years beginning after December 31, 2009.
(2) Tax-free exchanges.--The amendments made by subsection
(b) shall apply with respect to exchanges occurring after
December 31, 2009.
(3) Information reporting.--The amendments made by
subsection (d) shall apply to charges made after December 31,
2009.
(4) Policy acquisition expenses.--The amendment made by
subsection (e) shall apply to specified policy acquisition
expenses determined for taxable years beginning after
December 31, 2009.
(5) Technical amendment.--The amendment made by subsection
(f) shall take effect as if included in section 321(a) of the
Health Insurance Portability and Accountability Act of 1996.
SEC. 845. DISTRIBUTIONS FROM GOVERNMENTAL RETIREMENT PLANS
FOR HEALTH AND LONG-TERM CARE INSURANCE FOR
PUBLIC SAFETY OFFICERS.
(a) In General.--Section 402 of the Internal Revenue Code
of 1986 (relating to taxability of beneficiary of employees'
trust) is amended by adding at the end the following new
subsection:
``(l) Distributions From Governmental Plans for Health and
Long-Term Care Insurance.--
``(1) In general.--In the case of an employee who is an
eligible retired public safety officer who makes the election
described in paragraph (6) with respect to any taxable year
of such employee, gross income of such employee for such
taxable year does not include any distribution from an
eligible retirement plan to the extent that the aggregate
amount of such distributions does not exceed the amount paid
by such employee for qualified health insurance premiums of
the employee, his spouse, or dependents (as defined in
section 152) for such taxable year.
``(2) Limitation.--The amount which may be excluded from
gross income for the taxable year by reason of paragraph (1)
shall not exceed $3,000.
``(3) Distributions must otherwise be includible.--
``(A) In general.--An amount shall be treated as a
distribution for purposes of paragraph (1) only to the extent
that such amount would be includible in gross income without
regard to paragraph (1).
``(B) Application of section 72.--Notwithstanding section
72, in determining the extent to which an amount is treated
as a distribution for purposes of subparagraph (A), the
aggregate amounts distributed from an eligible retirement
plan in a taxable year (up to the amount excluded under
paragraph (1)) shall be treated as includible in gross income
(without regard to subparagraph (A)) to the extent that such
amount does not exceed the aggregate amount which would have
been so includible if all amounts distributed from all
eligible retirement plans were treated as 1 contract for
purposes of determining the inclusion of such distribution
under section 72. Proper adjustments shall be made in
applying section 72 to other distributions in such taxable
year and subsequent taxable years.
``(4) Definitions.--For purposes of this subsection--
``(A) Eligible retirement plan.--For purposes of paragraph
(1), the term `eligible retirement plan' means a governmental
plan (within the meaning of section 414(d)) which is
described in clause (iii), (iv), (v), or (vi) of subsection
(c)(8)(B).
``(B) Eligible retired public safety officer.--The term
`eligible retired public safety officer' means an individual
who, by reason of disability or attainment of normal
retirement age, is separated from service as a public safety
officer with the employer who maintains the eligible
retirement plan from which distributions subject to paragraph
(1) are made.
``(C) Public safety officer.--The term `public safety
officer' shall have the same meaning given such term by
section 1204(9)(A) of the Omnibus Crime Control and Safe
Streets Act of 1968 (42 U.S.C. 3796b(9)(A)).
``(D) Qualified health insurance premiums.--The term
`qualified health insurance premiums' means premiums for
coverage for the eligible retired public safety officer, his
spouse, and dependents, by an accident or health insurance
plan or qualified long-term care insurance contract (as
defined in section 7702B(b)).
``(5) Special rules.--For purposes of this subsection--
``(A) Direct payment to insurer required.--Paragraph (1)
shall only apply to a distribution if payment of the premiums
is made directly to the provider of the accident or health
insurance plan or qualified long-term care insurance contract
by deduction from a distribution from the eligible retirement
plan.
``(B) Related plans treated as 1.--All eligible retirement
plans of an employer shall be treated as a single plan.
``(6) Election described.--
``(A) In general.--For purposes of paragraph (1), an
election is described in this paragraph if the election is
made by an employee after separation from service with
respect to amounts not distributed from an eligible
retirement plan to have amounts from such plan distributed in
order to pay for qualified health insurance premiums.
``(B) Special rule.--A plan shall not be treated as
violating the requirements of section 401, or as engaging in
a prohibited transaction for purposes of section 503(b),
merely because it provides for an election with respect to
amounts that are otherwise distributable under the plan or
merely because of a distribution made pursuant to an election
described in subparagraph (A).
``(7) Coordination with medical expense deduction.--The
amounts excluded from gross income under paragraph (1) shall
not be taken into account under section 213.
``(8) Coordination with deduction for health insurance
costs of self-employed individuals.--The amounts excluded
from gross income under paragraph (1) shall not be taken into
account under section 162(l).''.
(b) Conforming Amendments.--
(1) Section 403(a) of such Code (relating to taxability of
beneficiary under a qualified annuity plan) is amended by
inserting after paragraph (1) the following new paragraph:
``(2) Special rule for health and long-term care
insurance.--To the extent provided in section 402(l),
paragraph (1) shall not apply to the amount distributed under
the contract which is otherwise includible in gross income
under this subsection.''.
(2) Section 403(b) of such Code (relating to taxability of
beneficiary under annuity purchased by section 501(c)(3)
organization or public school) is amended by inserting after
paragraph (1) the following new paragraph:
``(2) Special rule for health and long-term care
insurance.--To the extent provided in section 402(l),
paragraph (1) shall not apply to the amount distributed under
the contract which is otherwise includible in gross income
under this subsection.''.
(3) Section 457(a) of such Code (relating to year of
inclusion in gross income) is amended by adding at the end
the following new paragraph:
``(3) Special rule for health and long-term care
insurance.--In the case of a plan of an eligible employer
described in subsection (e)(1)(A), to the extent provided in
section 402(l), paragraph (1) shall not apply to amounts
otherwise includible in gross income under this
subsection.''.
(c) Effective Date.--The amendments made by this section
shall apply to distributions in taxable years beginning after
December 31, 2006.
Subtitle E--United States Tax Court Modernization
SEC. 851. COST-OF-LIVING ADJUSTMENTS FOR TAX COURT JUDICIAL
SURVIVOR ANNUITIES.
(a) In General.--Subsection (s) of section 7448 of the
Internal Revenue Code of 1986 (relating to annuities to
surviving spouses and dependent children of judges) is
amended to read as follows:
``(s) Increases in Survivor Annuities.--Each time that an
increase is made under section 8340(b) of title 5, United
States Code, in annuities payable under subchapter III of
chapter 83 of that title, each annuity payable from the
survivors annuity fund under this section shall be increased
at the same time by the same percentage by which annuities
are increased under such section 8340(b).''.
(b) Effective Date.--The amendment made by this section
shall apply with respect to increases made under section
8340(b) of title 5, United States Code, in annuities payable
under subchapter III of chapter 83 of that title, taking
effect after the date of the enactment of this Act.
SEC. 852. COST OF LIFE INSURANCE COVERAGE FOR TAX COURT
JUDGES AGE 65 OR OVER.
Section 7472 of the Internal Revenue Code of 1986 (relating
to expenditures) is amended by inserting after the first
sentence the following new sentence: ``Notwithstanding any
other provision of law, the Tax Court is authorized to pay on
behalf of its judges, age 65 or over, any increase in the
cost of Federal Employees' Group Life Insurance imposed after
the date of the enactment of the Pension Protection Act of
2006, including any expenses generated by such payments, as
authorized by the chief judge in a manner consistent with
such payments authorized by the Judicial Conference of the
United States pursuant to section 604(a)(5) of title 28,
United States Code.''
SEC. 853. PARTICIPATION OF TAX COURT JUDGES IN THE THRIFT
SAVINGS PLAN.
(a) In General.--Section 7447 of the Internal Revenue Code
of 1986 (relating to retirement of judges) is amended by
adding at the end the following new subsection:
``(j) Thrift Savings Plan.--
``(1) Election to contribute.--
``(A) In general.--A judge of the Tax Court may elect to
contribute to the Thrift Savings Fund established by section
8437 of title 5, United States Code.
``(B) Period of election.--An election may be made under
this paragraph only during a period provided under section
8432(b) of title 5, United States Code, for individuals
subject to chapter 84 of such title.
``(2) Applicability of title 5 provisions.--Except as
otherwise provided in this subsection, the provisions of
subchapters III and VII of chapter 84 of title 5, United
States Code, shall apply with respect to a judge who makes an
election under paragraph (1).
``(3) Special rules.--
``(A) Amount contributed.--The amount contributed by a
judge to the Thrift Savings Fund in any pay period shall not
exceed the maximum percentage of such judge's basic pay for
such period as allowable under section 8440f of title 5,
United States Code. Basic pay does not include any retired
pay paid pursuant to this section.
[[Page H6104]]
``(B) Contributions for benefit of judge.--No contributions
may be made for the benefit of a judge under section 8432(c)
of title 5, United States Code.
``(C) Applicability of section 8433(b) of title 5 whether
or not judge retires.--Section 8433(b) of title 5, United
States Code, applies with respect to a judge who makes an
election under paragraph (1) and who either--
``(i) retires under subsection (b), or
``(ii) ceases to serve as a judge of the Tax Court but does
not retire under subsection (b).
Retirement under subsection (b) is a separation from service
for purposes of subchapters III and VII of chapter 84 of that
title.
``(D) Applicability of section 8351(b)(5) of title 5.--The
provisions of section 8351(b)(5) of title 5, United States
Code, shall apply with respect to a judge who makes an
election under paragraph (1).
``(E) Exception.--Notwithstanding subparagraph (C), if any
judge retires under this section, or resigns without having
met the age and service requirements set forth under
subsection (b)(2), and such judge's nonforfeitable account
balance is less than an amount that the Executive Director of
the Federal Retirement Thrift Investment Board prescribes by
regulation, the Executive Director shall pay the
nonforfeitable account balance to the participant in a single
payment.''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act,
except that United States Tax Court judges may only begin to
participate in the Thrift Savings Plan at the next open
season beginning after such date.
SEC. 854. ANNUITIES TO SURVIVING SPOUSES AND DEPENDENT
CHILDREN OF SPECIAL TRIAL JUDGES OF THE TAX
COURT.
(a) Definitions.--Section 7448(a) of the Internal Revenue
Code of 1986 (relating to definitions), as amended by this
Act, is amended by redesignating paragraphs (5), (6), (7),
and (8) as paragraphs (7), (8), (9), and (10), respectively,
and by inserting after paragraph (4) the following new
paragraphs:
``(5) The term `special trial judge' means a judicial
officer appointed pursuant to section 7443A, including any
individual receiving an annuity under chapters 83 or 84 of
title 5, United States Code, whether or not performing
judicial duties under section 7443B.
``(6) The term `special trial judge's salary' means the
salary of a special trial judge received under section
7443A(d), any amount received as an annuity under chapters 83
or 84 of title 5, United States Code, and compensation
received under section 7443B.''.
(b) Election.--Subsection (b) of section 7448 of such Code
(relating to annuities to surviving spouses and dependent
children of judges) is amended--
(1) by striking the subsection heading and inserting the
following:
``(b) Election.--
``(1) Judges.--'',
(2) by moving the text 2 ems to the right, and
(3) by adding at the end the following new paragraph:
``(2) Special trial judges.--Any special trial judge may by
written election filed with the chief judge bring himself or
herself within the purview of this section. Such election
shall be filed not later than the later of 6 months after--
``(A) 6 months after the date of the enactment of this
paragraph,
``(B) the date the judge takes office, or
``(C) the date the judge marries.''.
(c) Conforming Amendments.--
(1) The heading of section 7448 of such Code is amended by
inserting ``AND SPECIAL TRIAL JUDGES'' after ``JUDGES''.
(2) The item relating to section 7448 in the table of
sections for part I of subchapter C of chapter 76 of such
Code is amended by inserting ``and special trial judges''
after ``judges''.
(3) Subsections (c)(1), (d), (f), (g), (h), (j), (m), (n),
and (u) of section 7448 of such Code, as amended by this Act,
are each amended--
(A) by inserting ``or special trial judge'' after ``judge''
each place it appears other than in the phrase ``chief
judge'', and
(B) by inserting ``or special trial judge's'' after
``judge's'' each place it appears.
(4) Section 7448(c) of such Code is amended--
(A) in paragraph (1), by striking ``Tax Court judges'' and
inserting ``Tax Court judicial officers'',
(B) in paragraph (2)--
(i) in subparagraph (A), by inserting ``and section
7443A(d)'' after ``(a)(4)'', and
(ii) in subparagraph (B), by striking ``subsection (a)(4)''
and inserting ``subsections (a)(4) and (a)(6)''.
(5) Section 7448(j)(1) of such Code is amended--
(A) in subparagraph (A), by striking ``service or retired''
and inserting ``service, retired'', and by inserting ``, or
receiving any annuity under chapters 83 or 84 of title 5,
United States Code,'' after ``section 7447'', and
(B) in the last sentence, by striking ``subsections (a) (6)
and (7)'' and inserting ``paragraphs (8) and (9) of
subsection (a)''.
(6) Section 7448(m)(1) of such Code, as amended by this
Act, is amended by inserting ``or any annuity under chapters
83 or 84 of title 5, United States Code'' after ``7447(d)''.
(7) Section 7448(n) of such Code is amended by inserting
``his years of service pursuant to any appointment under
section 7443A,'' after ``of the Tax Court,''.
(8) Section 3121(b)(5)(E) of such Code is amended by
inserting ``or special trial judge'' before ``of the United
States Tax Court''.
(9) Section 210(a)(5)(E) of the Social Security Act is
amended by inserting ``or special trial judge'' before ``of
the United States Tax Court''.
SEC. 855. JURISDICTION OF TAX COURT OVER COLLECTION DUE
PROCESS CASES.
(a) In General.--Paragraph (1) of section 6330(d) of the
Internal Revenue Code of 1986 (relating to proceeding after
hearing) is amended to read as follows:
``(1) Judicial review of determination.--The person may,
within 30 days of a determination under this section, appeal
such determination to the Tax Court (and the Tax Court shall
have jurisdiction with respect to such matter).''.
(b) Effective Date.--The amendment made by this section
shall apply to determinations made after the date which is 60
days after the date of the enactment of this Act.
SEC. 856. PROVISIONS FOR RECALL.
(a) In General.--Part I of subchapter C of chapter 76 of
the Internal Revenue Code of 1986 is amended by inserting
after section 7443A the following new section:
``SEC. 7443B. RECALL OF SPECIAL TRIAL JUDGES OF THE TAX
COURT.
``(a) Recalling of Retired Special Trial Judges.--Any
individual who has retired pursuant to the applicable
provisions of title 5, United States Code, upon reaching the
age and service requirements established therein, may at or
after retirement be called upon by the chief judge of the Tax
Court to perform such judicial duties with the Tax Court as
may be requested of such individual for any period or periods
specified by the chief judge; except that in the case of any
such individual--
``(1) the aggregate of such periods in any 1 calendar year
shall not (without such individual's consent) exceed 90
calendar days, and
``(2) such individual shall be relieved of performing such
duties during any period in which illness or disability
precludes the performance of such duties.
Any act, or failure to act, by an individual performing
judicial duties pursuant to this subsection shall have the
same force and effect as if it were the act (or failure to
act) of a special trial judge of the Tax Court.
``(b) Compensation.--For the year in which a period of
recall occurs, the special trial judge shall receive, in
addition to the annuity provided under the applicable
provisions of title 5, United States Code, an amount equal to
the difference between that annuity and the current salary of
the office to which the special trial judge is recalled.
``(c) Rulemaking Authority.--The provisions of this section
may be implemented under such rules as may be promulgated by
the Tax Court.''
(b) Conforming Amendment.--The table of sections for part I
of subchapter C of chapter 76 of such Code is amended by
inserting after the item relating to section 7443A the
following new item:
``Sec. 7443B. Recall of special trial judges of the Tax Court.''.
SEC. 857. AUTHORITY FOR SPECIAL TRIAL JUDGES TO HEAR AND
DECIDE CERTAIN EMPLOYMENT STATUS CASES.
(a) In General.--Section 7443A(b) of the Internal Revenue
Code of 1986 (relating to proceedings which may be assigned
to special trial judges) is amended by striking ``and'' at
the end of paragraph (4), by redesignating paragraph (5) as
paragraph (6), and by inserting after paragraph (4) the
following new paragraph:
``(5) any proceeding under section 7436(c), and''.
(b) Conforming Amendment.--Section 7443A(c) of such Code is
amended by striking ``or (4)'' and inserting ``(4), or (5)''.
(c) Effective Date.--The amendments made by this section
shall apply to any proceeding under section 7436(c) of the
Internal Revenue Code of 1986 with respect to which a
decision has not become final (as determined under section
7481 of such Code) before the date of the enactment of this
Act.
SEC. 858. CONFIRMATION OF AUTHORITY OF TAX COURT TO APPLY
DOCTRINE OF EQUITABLE RECOUPMENT.
(a) Confirmation of Authority of Tax Court To Apply
Doctrine of Equitable Recoupment.--Section 6214(b) of the
Internal Revenue Code of 1986 (relating to jurisdiction over
other years and quarters) is amended by adding at the end the
following new sentence: ``Notwithstanding the preceding
sentence, the Tax Court may apply the doctrine of equitable
recoupment to the same extent that it is available in civil
tax cases before the district courts of the United States and
the United States Court of Federal Claims.''.
(b) Effective Date.--The amendment made by this section
shall apply to any action or proceeding in the United States
Tax Court with respect to which a decision has not become
final (as determined under section 7481 of the Internal
Revenue Code of 1986) as of the date of the enactment of this
Act.
SEC. 859. TAX COURT FILING FEE IN ALL CASES COMMENCED BY
FILING PETITION.
(a) In General.--Section 7451 of the Internal Revenue Code
of 1986 (relating to fee for filing a Tax Court petition) is
amended by striking all that follows ``petition'' and
inserting a period.
[[Page H6105]]
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
SEC. 860. EXPANDED USE OF TAX COURT PRACTICE FEE FOR PRO SE
TAXPAYERS.
(a) In General.--Section 7475(b) of the Internal Revenue
Code of 1986 (relating to use of fees) is amended by
inserting before the period at the end ``and to provide
services to pro se taxpayers''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
Subtitle F--Other Provisions
SEC. 861. EXTENSION TO ALL GOVERNMENTAL PLANS OF CURRENT
MORATORIUM ON APPLICATION OF CERTAIN
NONDISCRIMINATION RULES APPLICABLE TO STATE AND
LOCAL PLANS.
(a) In General.--
(1) Subparagraph (G) of section 401(a)(5) and subparagraph
(G) of section 401(a)(26) of the Internal Revenue Code of
1986 are each amended by striking ``section 414(d))'' and all
that follows and inserting ``section 414(d)).''.
(2) Subparagraph (G) of section 401(k)(3) of such Code and
paragraph (2) of section 1505(d) of the Taxpayer Relief Act
of 1997 (Public Law 105-34; 111 Stat. 1063) are each amended
by striking ``maintained by a State or local government or
political subdivision thereof (or agency or instrumentality
thereof)''.
(b) Conforming Amendments.--
(1) The heading of subparagraph (G) of section 401(a)(5) of
the Internal Revenue Code of 1986 is amended by striking
``State and local governmental'' and inserting
``Governmental''.
(2) The heading of subparagraph (G) of section 401(a)(26)
of such Code is amended by striking ``Exception for state and
local'' and inserting ``Exception for''.
(3) Section 401(k)(3)(G) of such Code is amended by
inserting ``Governmental plan.--'' after ``(G)''.
(c) Effective Date.--The amendments made by this section
shall apply to any year beginning after the date of the
enactment of this Act.
SEC. 862. ELIMINATION OF AGGREGATE LIMIT FOR USAGE OF EXCESS
FUNDS FROM BLACK LUNG DISABILITY TRUSTS.
(a) In General.--So much of section 501(c)(21)(C) of the
Internal Revenue Code of 1986 (relating to black lung
disability trusts) as precedes the last sentence is amended
to read as follows:
``(C) Payments described in subparagraph (A)(i)(IV) may be
made from such trust during a taxable year only to the extent
that the aggregate amount of such payments during such
taxable year does not exceed the excess (if any), as of the
close of the preceding taxable year, of--
``(i) the fair market value of the assets of the trust,
over
``(ii) 110 percent of the present value of the liability
described in subparagraph (A)(i)(I) of such person.''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2006.
SEC. 863. TREATMENT OF DEATH BENEFITS FROM CORPORATE-OWNED
LIFE INSURANCE.
(a) In General.--Section 101 of the Internal Revenue Code
of 1986 (relating to certain death benefits) is amended by
adding at the end the following new subsection:
``(j) Treatment of Certain Employer-Owned Life Insurance
Contracts.--
``(1) General rule.--In the case of an employer-owned life
insurance contract, the amount excluded from gross income of
an applicable policyholder by reason of paragraph (1) of
subsection (a) shall not exceed an amount equal to the sum of
the premiums and other amounts paid by the policyholder for
the contract.
``(2) Exceptions.--In the case of an employer-owned life
insurance contract with respect to which the notice and
consent requirements of paragraph (4) are met, paragraph (1)
shall not apply to any of the following:
``(A) Exceptions based on insured's status.--Any amount
received by reason of the death of an insured who, with
respect to an applicable policyholder--
``(i) was an employee at any time during the 12-month
period before the insured's death, or
``(ii) is, at the time the contract is issued--
``(I) a director,
``(II) a highly compensated employee within the meaning of
section 414(q) (without regard to paragraph (1)(B)(ii)
thereof), or
``(III) a highly compensated individual within the meaning
of section 105(h)(5), except that `35 percent' shall be
substituted for `25 percent' in subparagraph (C) thereof.
``(B) Exception for amounts paid to insured's heirs.--Any
amount received by reason of the death of an insured to the
extent--
``(i) the amount is paid to a member of the family (within
the meaning of section 267(c)(4)) of the insured, any
individual who is the designated beneficiary of the insured
under the contract (other than the applicable policyholder),
a trust established for the benefit of any such member of the
family or designated beneficiary, or the estate of the
insured, or
``(ii) the amount is used to purchase an equity (or capital
or profits) interest in the applicable policyholder from any
person described in clause (i).
``(3) Employer-owned life insurance contract.--
``(A) In general.--For purposes of this subsection, the
term `employer-owned life insurance contract' means a life
insurance contract which--
``(i) is owned by a person engaged in a trade or business
and under which such person (or a related person described in
subparagraph (B)(ii)) is directly or indirectly a beneficiary
under the contract, and
``(ii) covers the life of an insured who is an employee
with respect to the trade or business of the applicable
policyholder on the date the contract is issued.
For purposes of the preceding sentence, if coverage for each
insured under a master contract is treated as a separate
contract for purposes of sections 817(h), 7702, and 7702A,
coverage for each such insured shall be treated as a separate
contract.
``(B) Applicable policyholder.--For purposes of this
subsection--
``(i) In general.--The term `applicable policyholder'
means, with respect to any employer-owned life insurance
contract, the person described in subparagraph (A)(i) which
owns the contract.
``(ii) Related persons.--The term `applicable policyholder'
includes any person which--
``(I) bears a relationship to the person described in
clause (i) which is specified in section 267(b) or 707(b)(1),
or
``(II) is engaged in trades or businesses with such person
which are under common control (within the meaning of
subsection (a) or (b) of section 52).
``(4) Notice and consent requirements.--The notice and
consent requirements of this paragraph are met if, before the
issuance of the contract, the employee--
``(A) is notified in writing that the applicable
policyholder intends to insure the employee's life and the
maximum face amount for which the employee could be insured
at the time the contract was issued,
``(B) provides written consent to being insured under the
contract and that such coverage may continue after the
insured terminates employment, and
``(C) is informed in writing that an applicable
policyholder will be a beneficiary of any proceeds payable
upon the death of the employee.
``(5) Definitions.--For purposes of this subsection--
``(A) Employee.--The term `employee' includes an officer,
director, and highly compensated employee (within the meaning
of section 414(q)).
``(B) Insured.--The term `insured' means, with respect to
an employer-owned life insurance contract, an individual
covered by the contract who is a United States citizen or
resident. In the case of a contract covering the joint lives
of 2 individuals, references to an insured include both of
the individuals.''.
(b) Reporting Requirements.--Subpart A of part III of
subchapter A of chapter 61 of the Internal Revenue Code of
1986 (relating to information concerning persons subject to
special provisions) is amended by inserting after section
6039H the following new section:
``SEC. 6039I. RETURNS AND RECORDS WITH RESPECT TO EMPLOYER-
OWNED LIFE INSURANCE CONTRACTS.
``(a) In General.--Every applicable policyholder owning 1
or more employer-owned life insurance contracts issued after
the date of the enactment of this section shall file a return
(at such time and in such manner as the Secretary shall by
regulations prescribe) showing for each year such contracts
are owned--
``(1) the number of employees of the applicable
policyholder at the end of the year,
``(2) the number of such employees insured under such
contracts at the end of the year,
``(3) the total amount of insurance in force at the end of
the year under such contracts,
``(4) the name, address, and taxpayer identification number
of the applicable policyholder and the type of business in
which the policyholder is engaged, and
``(5) that the applicable policyholder has a valid consent
for each insured employee (or, if all such consents are not
obtained, the number of insured employees for whom such
consent was not obtained).
``(b) Recordkeeping Requirement.--Each applicable
policyholder owning 1 or more employer-owned life insurance
contracts during any year shall keep such records as may be
necessary for purposes of determining whether the
requirements of this section and section 101(j) are met.
``(c) Definitions.--Any term used in this section which is
used in section 101(j) shall have the same meaning given such
term by section 101(j).''.
(c) Conforming Amendments.--
(1) Paragraph (1) of section 101(a) of the Internal Revenue
Code of 1986 is amended by striking ``and subsection (f)''
and inserting ``subsection (f), and subsection (j)''.
(2) The table of sections for subpart A of part III of
subchapter A of chapter 61 of such Code is amended by
inserting after the item relating to section 6039H the
following new item:
``Sec. 6039I. Returns and records with respect to employer-owned life
insurance contracts.''.
(d) Effective Date.--The amendments made by this section
shall apply to life insurance contracts issued after the date
of the enactment of this Act, except for a contract issued
after such date pursuant to an exchange described in section
1035 of the Internal Revenue Code of 1986 for a contract
issued on or prior to that date. For purposes
[[Page H6106]]
of the preceding sentence, any material increase in the death
benefit or other material change shall cause the contract to
be treated as a new contract except that, in the case of a
master contract (within the meaning of section 264(f)(4)(E)
of such Code), the addition of covered lives shall be treated
as a new contract only with respect to such additional
covered lives.
SEC. 864. TREATMENT OF TEST ROOM SUPERVISORS AND PROCTORS WHO
ASSIST IN THE ADMINISTRATION OF COLLEGE
ENTRANCE AND PLACEMENT EXAMS.
(a) In General.--Section 530 of the Revenue Reconciliation
Act of 1978 is amended by adding at the end the following new
subsection:
``(f) Treatment of Test Room Supervisors and Proctors Who
Assist in the Administration of College Entrance and
Placement Exams.--
``(1) In general.--In the case of an individual described
in paragraph (2) who is providing services as a test proctor
or room supervisor by assisting in the administration of
college entrance or placement examinations, this section
shall be applied to such services performed after December
31, 2006 (and remuneration paid for such services) without
regard to subsection (a)(3) thereof.
``(2) Applicability.--An individual is described in this
paragraph if the individual--
``(A) is providing the services described in subsection (a)
to an organization described in section 501(c), and exempt
from tax under section 501(a), of the Internal Revenue Code
of 1986, and
``(B) is not otherwise treated as an employee of such
organization for purposes of subtitle C of such Code
(relating to employment taxes).''.
(b) Effective Date.--The amendment made by this section
shall apply to remuneration for services performed after
December 31, 2006.
SEC. 865. GRANDFATHER RULE FOR CHURCH PLANS WHICH SELF-
ANNUITIZE.
(a) In General.--In the case of any plan year ending after
the date of the enactment of this Act, annuity payments
provided with respect to any account maintained for a
participant or beneficiary under a qualified church plan
shall not fail to satisfy the requirements of section
401(a)(9) of the Internal Revenue Code of 1986 merely because
the payments are not made under an annuity contract purchased
from an insurance company if such payments would not fail
such requirements if provided with respect to a retirement
income account described in section 403(b)(9) of such Code.
(b) Qualified Church Plan.--For purposes of this section,
the term ``qualified church plan'' means any money purchase
pension plan described in section 401(a) of such Code which--
(1) is a church plan (as defined in section 414(e) of such
Code) with respect to which the election provided by section
410(d) of such Code has not been made, and
(2) was in existence on April 17, 2002.
SEC. 866. EXEMPTION FOR INCOME FROM LEVERAGED REAL ESTATE
HELD BY CHURCH PLANS.
(a) In General.--Section 514(c)(9)(C) of the Internal
Revenue Code of 1986 is amended by striking ``or'' after
clause (ii), by striking the period at the end of clause
(iii) and inserting ``; or'', and by inserting after clause
(iii) the following:
``(iv) a retirement income account described in section
403(b)(9).''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to taxable years beginning on or after the date
of enactment of this Act.
SEC. 867. CHURCH PLAN RULE.
(a) In General.--Paragraph (11) of section 415(b) of the
Internal Revenue Code of 1986 is amended by adding at the end
the following: ``Subparagraph (B) of paragraph (1) shall not
apply to a plan maintained by an organization described in
section 3121(w)(3)(A) except with respect to highly
compensated benefits. For purposes of this paragraph, the
term `highly compensated benefits' means any benefits accrued
for an employee in any year on or after the first year in
which such employee is a highly compensated employee (as
defined in section 414(q)) of the organization described in
section 3121(w)(3)(A). For purposes of applying paragraph
(1)(B) to highly compensated benefits, all benefits of the
employee otherwise taken into account (without regard to this
paragraph) shall be taken into account.''.
(b) Effective Date.--The amendment made by this section
shall apply to years beginning after December 31, 2006.
SEC. 868. GRATUITOUS TRANSFER FOR BENEFITS OF EMPLOYEES.
(a) In General.--Subparagraph (E) of section 664(g)(3) of
the Internal Revenue Code of 1986 is amended by inserting
``(determined on the basis of fair market value of securities
when allocated to participants)'' after ``paragraph (7)''.
(b) Effective Date.--The amendment made by this section
shall take effect on the date of the enactment of this Act.
TITLE IX--INCREASE IN PENSION PLAN DIVERSIFICATION AND PARTICIPATION
AND OTHER PENSION PROVISIONS
SEC. 901. DEFINED CONTRIBUTION PLANS REQUIRED TO PROVIDE
EMPLOYEES WITH FREEDOM TO INVEST THEIR PLAN
ASSETS.
(a) Amendments of Internal Revenue Code.--
(1) Qualification requirement.--Section 401(a) of the
Internal Revenue Code of 1986 (relating to qualified pension,
profit-sharing, and stock bonus plans) is amended by
inserting after paragraph (34) the following new paragraph:
``(35) Diversification requirements for certain defined
contribution plans.--
``(A) In general.--A trust which is part of an applicable
defined contribution plan shall not be treated as a qualified
trust unless the plan meets the diversification requirements
of subparagraphs (B), (C), and (D).
``(B) Employee contributions and elective deferrals
invested in employer securities.--In the case of the portion
of an applicable individual's account attributable to
employee contributions and elective deferrals which is
invested in employer securities, a plan meets the
requirements of this subparagraph if the applicable
individual may elect to direct the plan to divest any such
securities and to reinvest an equivalent amount in other
investment options meeting the requirements of subparagraph
(D).
``(C) Employer contributions invested in employer
securities.--In the case of the portion of the account
attributable to employer contributions other than elective
deferrals which is invested in employer securities, a plan
meets the requirements of this subparagraph if each
applicable individual who--
``(i) is a participant who has completed at least 3 years
of service, or
``(ii) is a beneficiary of a participant described in
clause (i) or of a deceased participant,
may elect to direct the plan to divest any such securities
and to reinvest an equivalent amount in other investment
options meeting the requirements of subparagraph (D).
``(D) Investment options.--
``(i) In general.--The requirements of this subparagraph
are met if the plan offers not less than 3 investment
options, other than employer securities, to which an
applicable individual may direct the proceeds from the
divestment of employer securities pursuant to this paragraph,
each of which is diversified and has materially different
risk and return characteristics.
``(ii) Treatment of certain restrictions and conditions.--
``(I) Time for making investment choices.--A plan shall not
be treated as failing to meet the requirements of this
subparagraph merely because the plan limits the time for
divestment and reinvestment to periodic, reasonable
opportunities occurring no less frequently than quarterly.
``(II) Certain restrictions and conditions not allowed.--
Except as provided in regulations, a plan shall not meet the
requirements of this subparagraph if the plan imposes
restrictions or conditions with respect to the investment of
employer securities which are not imposed on the investment
of other assets of the plan. This subclause shall not apply
to any restrictions or conditions imposed by reason of the
application of securities laws.
``(E) Applicable defined contribution plan.--For purposes
of this paragraph--
``(i) In general.--The term `applicable defined
contribution plan' means any defined contribution plan which
holds any publicly traded employer securities.
``(ii) Exception for certain esops.--Such term does not
include an employee stock ownership plan if--
``(I) there are no contributions to such plan (or earnings
thereunder) which are held within such plan and are subject
to subsection (k) or (m), and
``(II) such plan is a separate plan for purposes of section
414(l) with respect to any other defined benefit plan or
defined contribution plan maintained by the same employer or
employers.
``(iii) Exception for one participant plans.--Such term
does not include a one-participant retirement plan.
``(iv) One-participant retirement plan.--For purposes of
clause (iii), the term `one-participant retirement plan'
means a retirement plan that--
``(I) on the first day of the plan year covered only one
individual (or the individual and the individual's spouse)
and the individual owned 100 percent of the plan sponsor
(whether or not incorporated), or covered only one or more
partners (or partners and their spouses) in the plan sponsor,
``(II) meets the minimum coverage requirements of section
410(b) without being combined with any other plan of the
business that covers the employees of the business,
``(III) does not provide benefits to anyone except the
individual (and the individual's spouse) or the partners (and
their spouses),
``(IV) does not cover a business that is a member of an
affiliated service group, a controlled group of corporations,
or a group of businesses under common control, and
``(V) does not cover a business that uses the services of
leased employees (within the meaning of section 414(n)).
For purposes of this clause, the term `partner' includes a 2-
percent shareholder (as defined in section 1372(b)) of an S
corporation.
``(F) Certain plans treated as holding publicly traded
employer securities.--
``(i) In general.--Except as provided in regulations or in
clause (ii), a plan holding employer securities which are not
publicly traded employer securities shall be treated as
holding publicly traded employer securities if any employer
corporation, or any member of a controlled group of
corporations which includes such employer corporation, has
issued a class of stock which is a publicly traded employer
security.
[[Page H6107]]
``(ii) Exception for certain controlled groups with
publicly traded securities.--Clause (i) shall not apply to a
plan if--
``(I) no employer corporation, or parent corporation of an
employer corporation, has issued any publicly traded employer
security, and
``(II) no employer corporation, or parent corporation of an
employer corporation, has issued any special class of stock
which grants particular rights to, or bears particular risks
for, the holder or issuer with respect to any corporation
described in clause (i) which has issued any publicly traded
employer security.
``(iii) Definitions.--For purposes of this subparagraph,
the term--
``(I) `controlled group of corporations' has the meaning
given such term by section 1563(a), except that `50 percent'
shall be substituted for `80 percent' each place it appears,
``(II) `employer corporation' means a corporation which is
an employer maintaining the plan, and
``(III) `parent corporation' has the meaning given such
term by section 424(e).
``(G) Other definitions.--For purposes of this paragraph--
``(i) Applicable individual.--The term `applicable
individual' means--
``(I) any participant in the plan, and
``(II) any beneficiary who has an account under the plan
with respect to which the beneficiary is entitled to exercise
the rights of a participant.
``(ii) Elective deferral.--The term `elective deferral'
means an employer contribution described in section
402(g)(3)(A).
``(iii) Employer security.--The term `employer security'
has the meaning given such term by section 407(d)(1) of the
Employee Retirement Income Security Act of 1974.
``(iv) Employee stock ownership plan.--The term `employee
stock ownership plan' has the meaning given such term by
section 4975(e)(7).
``(v) Publicly traded employer securities.--The term
`publicly traded employer securities' means employer
securities which are readily tradable on an established
securities market.
``(vi) Year of service.--The term `year of service' has the
meaning given such term by section 411(a)(5).
``(H) Transition rule for securities attributable to
employer contributions.--
``(i) Rules phased in over 3 years.--
``(I) In general.--In the case of the portion of an account
to which subparagraph (C) applies and which consists of
employer securities acquired in a plan year beginning before
January 1, 2007, subparagraph (C) shall only apply to the
applicable percentage of such securities. This subparagraph
shall be applied separately with respect to each class of
securities.
``(II) Exception for certain participants aged 55 or
over.--Subclause (I) shall not apply to an applicable
individual who is a participant who has attained age 55 and
completed at least 3 years of service before the first plan
year beginning after December 31, 2005.
``(ii) Applicable percentage.--For purposes of clause (i),
the applicable percentage shall be determined as follows:
``Plan year to which The applicable
subparagraph (C) applies: percentage is:
1st...............................................................33
2d................................................................66
3d and following..............................................100.''.
(2) Conforming amendments.--
(A) Section 401(a)(28)(B) of such Code (relating to
additional requirements relating to employee stock ownership
plans) is amended by adding at the end the following new
clause:
``(v) Exception.--This subparagraph shall not apply to an
applicable defined contribution plan (as defined in paragraph
(35)(E)).''
(B) Section 409(h)(7) of such Code is amended by inserting
``or subparagraph (B) or (C) of section 401(a)(35)'' before
the period at the end.
(C) Section 4980(c)(3)(A) of such Code is amended by
striking ``if--'' and all that follows and inserting ``if the
requirements of subparagraphs (B), (C), and (D) are met.''
(b) Amendments of ERISA.--
(1) In general.--Section 204 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1054) is amended by
redesignating subsection (j) as subsection (k) and by
inserting after subsection (i) the following new subsection:
``(j) Diversification Requirements for Certain Individual
Account Plans.--
``(1) In general.--An applicable individual account plan
shall meet the diversification requirements of paragraphs
(2), (3), and (4).
``(2) Employee contributions and elective deferrals
invested in employer securities.--In the case of the portion
of an applicable individual's account attributable to
employee contributions and elective deferrals which is
invested in employer securities, a plan meets the
requirements of this paragraph if the applicable individual
may elect to direct the plan to divest any such securities
and to reinvest an equivalent amount in other investment
options meeting the requirements of paragraph (4).
``(3) Employer contributions invested in employer
securities.--In the case of the portion of the account
attributable to employer contributions other than elective
deferrals which is invested in employer securities, a plan
meets the requirements of this paragraph if each applicable
individual who--
``(A) is a participant who has completed at least 3 years
of service, or
``(B) is a beneficiary of a participant described in
subparagraph (A) or of a deceased participant,
may elect to direct the plan to divest any such securities
and to reinvest an equivalent amount in other investment
options meeting the requirements of paragraph (4).
``(4) Investment options.--
``(A) In general.--The requirements of this paragraph are
met if the plan offers not less than 3 investment options,
other than employer securities, to which an applicable
individual may direct the proceeds from the divestment of
employer securities pursuant to this subsection, each of
which is diversified and has materially different risk and
return characteristics.
``(B) Treatment of certain restrictions and conditions.--
``(i) Time for making investment choices.--A plan shall not
be treated as failing to meet the requirements of this
paragraph merely because the plan limits the time for
divestment and reinvestment to periodic, reasonable
opportunities occurring no less frequently than quarterly.
``(ii) Certain restrictions and conditions not allowed.--
Except as provided in regulations, a plan shall not meet the
requirements of this paragraph if the plan imposes
restrictions or conditions with respect to the investment of
employer securities which are not imposed on the investment
of other assets of the plan. This subparagraph shall not
apply to any restrictions or conditions imposed by reason of
the application of securities laws.
``(5) Applicable individual account plan.--For purposes of
this subsection--
``(A) In general.--The term `applicable individual account
plan' means any individual account plan (as defined in
section 3(34)) which holds any publicly traded employer
securities.
``(B) Exception for certain esops.--Such term does not
include an employee stock ownership plan if--
``(i) there are no contributions to such plan (or earnings
thereunder) which are held within such plan and are subject
to subsection (k) or (m) of section 401 of the Internal
Revenue Code of 1986, and
``(ii) such plan is a separate plan (for purposes of
section 414(l) of such Code) with respect to any other
defined benefit plan or individual account plan maintained by
the same employer or employers.
``(C) Exception for one participant plans.--Such term shall
not include a one-participant retirement plan (as defined in
section 101(i)(8)(B)).
``(D) Certain plans treated as holding publicly traded
employer securities.--
``(i) In general.--Except as provided in regulations or in
clause (ii), a plan holding employer securities which are not
publicly traded employer securities shall be treated as
holding publicly traded employer securities if any employer
corporation, or any member of a controlled group of
corporations which includes such employer corporation, has
issued a class of stock which is a publicly traded employer
security.
``(ii) Exception for certain controlled groups with
publicly traded securities.--Clause (i) shall not apply to a
plan if--
``(I) no employer corporation, or parent corporation of an
employer corporation, has issued any publicly traded employer
security, and
``(II) no employer corporation, or parent corporation of an
employer corporation, has issued any special class of stock
which grants particular rights to, or bears particular risks
for, the holder or issuer with respect to any corporation
described in clause (i) which has issued any publicly traded
employer security.
``(iii) Definitions.--For purposes of this subparagraph,
the term--
``(I) `controlled group of corporations' has the meaning
given such term by section 1563(a) of the Internal Revenue
Code of 1986, except that `50 percent' shall be substituted
for `80 percent' each place it appears,
``(II) `employer corporation' means a corporation which is
an employer maintaining the plan, and
``(III) `parent corporation' has the meaning given such
term by section 424(e) of such Code.
``(6) Other definitions.--For purposes of this paragraph--
``(A) Applicable individual.--The term `applicable
individual' means--
``(i) any participant in the plan, and
``(ii) any beneficiary who has an account under the plan
with respect to which the beneficiary is entitled to exercise
the rights of a participant.
``(B) Elective deferral.--The term `elective deferral'
means an employer contribution described in section
402(g)(3)(A) of the Internal Revenue Code of 1986.
``(C) Employer security.--The term `employer security' has
the meaning given such term by section 407(d)(1).
``(D) Employee stock ownership plan.--The term `employee
stock ownership plan' has the meaning given such term by
section 4975(e)(7) of such Code.
``(E) Publicly traded employer securities.--The term
`publicly traded employer securities' means employer
securities which are readily tradable on an established
securities market.
``(F) Year of service.--The term `year of service' has the
meaning given such term by section 203(b)(2).
[[Page H6108]]
``(7) Transition rule for securities attributable to
employer contributions.--
``(A) Rules phased in over 3 years.--
``(i) In general.--In the case of the portion of an account
to which paragraph (3) applies and which consists of employer
securities acquired in a plan year beginning before January
1, 2007, paragraph (3) shall only apply to the applicable
percentage of such securities. This subparagraph shall be
applied separately with respect to each class of securities.
``(ii) Exception for certain participants aged 55 or
over.--Clause (i) shall not apply to an applicable individual
who is a participant who has attained age 55 and completed at
least 3 years of service before the first plan year beginning
after December 31, 2005.
``(B) Applicable percentage.--For purposes of subparagraph
(A), the applicable percentage shall be determined as
follows:
``Plan year to which The applicable
paragraph (3) applies: percentage is:
1st...............................................................33
2d................................................................66
3d............................................................100.''.
(2) Conforming amendment.--Section 407(b)(3) of such Act
(29 U.S.C. 1107(b)(3)) is amended by adding at the end the
following:
``(D) For diversification requirements for qualifying
employer securities held in certain individual account plans,
see section 204(j).''.
(c) Effective Dates.--
(1) In general.--Except as provided in paragraphs (2) and
(3), the amendments made by this section shall apply to plan
years beginning after December 31, 2006.
(2) Special rule for collectively bargained agreements.--In
the case of a plan maintained pursuant to 1 or more
collective bargaining agreements between employee
representatives and 1 or more employers ratified on or before
the date of the enactment of this Act, paragraph (1) shall be
applied to benefits pursuant to, and individuals covered by,
any such agreement by substituting for ``December 31, 2006''
the earlier of--
(A) the later of--
(i) December 31, 2007, or
(ii) the date on which the last of such collective
bargaining agreements terminates (determined without regard
to any extension thereof after such date of enactment), or
(B) December 31, 2008.
(3) Special rule for certain employer securities held in an
esop.--
(A) In general.--In the case of employer securities to
which this paragraph applies, the amendments made by this
section shall apply to plan years beginning after the earlier
of--
(i) December 31, 2007, or
(ii) the first date on which the fair market value of such
securities exceeds the guaranteed minimum value described in
subparagraph (B)(ii).
(B) Applicable securities.--This paragraph shall apply to
employer securities which are attributable to employer
contributions other than elective deferrals, and which, on
September 17, 2003--
(i) consist of preferred stock, and
(ii) are within an employee stock ownership plan (as
defined in section 4975(e)(7) of the Internal Revenue Code of
1986), the terms of which provide that the value of the
securities cannot be less than the guaranteed minimum value
specified by the plan on such date.
(C) Coordination with transition rule.--In applying section
401(a)(35)(H) of the Internal Revenue Code of 1986 and
section 204(j)(7) of the Employee Retirement Income Security
Act of 1974 (as added by this section) to employer securities
to which this paragraph applies, the applicable percentage
shall be determined without regard to this paragraph.
SEC. 902. INCREASING PARTICIPATION THROUGH AUTOMATIC
CONTRIBUTION ARRANGEMENTS.
(a) In General.--Section 401(k) of the Internal Revenue
Code of 1986 (relating to cash or deferred arrangement) is
amended by adding at the end the following new paragraph:
``(13) Alternative method for automatic contribution
arrangements to meet nondiscrimination requirements.--
``(A) In general.--A qualified automatic contribution
arrangement shall be treated as meeting the requirements of
paragraph (3)(A)(ii).
``(B) Qualified automatic contribution arrangement.--For
purposes of this paragraph, the term `qualified automatic
contribution arrangement' means any cash or deferred
arrangement which meets the requirements of subparagraphs (C)
through (E).
``(C) Automatic deferral.--
``(i) In general.--The requirements of this subparagraph
are met if, under the arrangement, each employee eligible to
participate in the arrangement is treated as having elected
to have the employer make elective contributions in an amount
equal to a qualified percentage of compensation.
``(ii) Election out.--The election treated as having been
made under clause (i) shall cease to apply with respect to
any employee if such employee makes an affirmative election--
``(I) to not have such contributions made, or
``(II) to make elective contributions at a level specified
in such affirmative election.
``(iii) Qualified percentage.--For purposes of this
subparagraph, the term `qualified percentage' means, with
respect to any employee, any percentage determined under the
arrangement if such percentage is applied uniformly, does not
exceed 10 percent, and is at least--
``(I) 3 percent during the period ending on the last day of
the first plan year which begins after the date on which the
first elective contribution described in clause (i) is made
with respect to such employee,
``(II) 4 percent during the first plan year following the
plan year described in subclause (I),
``(III) 5 percent during the second plan year following the
plan year described in subclause (I), and
``(IV) 6 percent during any subsequent plan year.
``(iv) Automatic deferral for current employees not
required.--Clause (i) may be applied without taking into
account any employee who--
``(I) was eligible to participate in the arrangement (or a
predecessor arrangement) immediately before the date on which
such arrangement becomes a qualified automatic contribution
arrangement (determined after application of this clause),
and
``(II) had an election in effect on such date either to
participate in the arrangement or to not participate in the
arrangement.
``(D) Matching or nonelective contributions.--
``(i) In general.--The requirements of this subparagraph
are met if, under the arrangement, the employer--
``(I) makes matching contributions on behalf of each
employee who is not a highly compensated employee in an
amount equal to the sum of 100 percent of the elective
contributions of the employee to the extent that such
contributions do not exceed 1 percent of compensation plus 50
percent of so much of such compensation as exceeds 1 percent
but does not exceed 6 percent of compensation, or
``(II) is required, without regard to whether the employee
makes an elective contribution or employee contribution, to
make a contribution to a defined contribution plan on behalf
of each employee who is not a highly compensated employee and
who is eligible to participate in the arrangement in an
amount equal to at least 3 percent of the employee's
compensation.
``(ii) Application of rules for matching contributions.--
The rules of clauses (ii) and (iii) of paragraph (12)(B)
shall apply for purposes of clause (i)(I).
``(iii) Withdrawal and vesting restrictions.--An
arrangement shall not be treated as meeting the requirements
of clause (i) unless, with respect to employer contributions
(including matching contributions) taken into account in
determining whether the requirements of clause (i) are met--
``(I) any employee who has completed at least 2 years of
service (within the meaning of section 411(a)) has a
nonforfeitable right to 100 percent of the employee's accrued
benefit derived from such employer contributions, and
``(II) the requirements of subparagraph (B) of paragraph
(2) are met with respect to all such employer contributions.
``(iv) Application of certain other rules.--The rules of
subparagraphs (E)(ii) and (F) of paragraph (12) shall apply
for purposes of subclauses (I) and (II) of clause (i).
``(E) Notice requirements.--
``(i) In general.--The requirements of this subparagraph
are met if, within a reasonable period before each plan year,
each employee eligible to participate in the arrangement for
such year receives written notice of the employee's rights
and obligations under the arrangement which--
``(I) is sufficiently accurate and comprehensive to apprise
the employee of such rights and obligations, and
``(II) is written in a manner calculated to be understood
by the average employee to whom the arrangement applies.
``(ii) Timing and content requirements.--A notice shall not
be treated as meeting the requirements of clause (i) with
respect to an employee unless--
``(I) the notice explains the employee's right under the
arrangement to elect not to have elective contributions made
on the employee's behalf (or to elect to have such
contributions made at a different percentage),
``(II) in the case of an arrangement under which the
employee may elect among 2 or more investment options, the
notice explains how contributions made under the arrangement
will be invested in the absence of any investment election by
the employee, and
``(III) the employee has a reasonable period of time after
receipt of the notice described in subclauses (I) and (II)
and before the first elective contribution is made to make
either such election.''.
(b) Matching Contributions.--Section 401(m) of such Code
(relating to nondiscrimination test for matching
contributions and employee contributions) is amended by
redesignating paragraph (12) as paragraph (13) and by
inserting after paragraph (11) the following new paragraph:
``(12) Alternative method for automatic contribution
arrangements.--A defined contribution plan shall be treated
as meeting the requirements of paragraph (2) with respect to
matching contributions if the plan--
``(A) is a qualified automatic contribution arrangement (as
defined in subsection (k)(13)), and
``(B) meets the requirements of paragraph (11)(B).''
(c) Exclusion From Definition of Top-Heavy Plans.--
(1) Elective contribution rule.--Clause (i) of section
416(g)(4)(H) of such Code is
[[Page H6109]]
amended by inserting ``or 401(k)(13)'' after ``section
401(k)(12)''.
(2) Matching contribution rule.--Clause (ii) of section
416(g)(4)(H) of such Code is amended by inserting ``or
401(m)(12)'' after ``section 401(m)(11)''.
(d) Treatment of Withdrawals of Contributions During First
90 Days.--
(1) In general.--Section 414 of the Internal Revenue Code
of 1986 is amended by adding at the end the following new
subsection:
``(w) Special Rules for Certain Withdrawals From Eligible
Automatic Contribution Arrangements.--
``(1) In general.--If an eligible automatic contribution
arrangement allows an employee to elect to make permissible
withdrawals--
``(A) the amount of any such withdrawal shall be includible
in the gross income of the employee for the taxable year of
the employee in which the distribution is made,
``(B) no tax shall be imposed under section 72(t) with
respect to the distribution, and
``(C) the arrangement shall not be treated as violating any
restriction on distributions under this title solely by
reason of allowing the withdrawal.
In the case of any distribution to an employee by reason of
an election under this paragraph, employer matching
contributions shall be forfeited or subject to such other
treatment as the Secretary may prescribe.
``(2) Permissible withdrawal.--For purposes of this
subsection--
``(A) In general.--The term `permissible withdrawal' means
any withdrawal from an eligible automatic contribution
arrangement meeting the requirements of this paragraph
which--
``(i) is made pursuant to an election by an employee, and
``(ii) consists of elective contributions described in
paragraph (3)(B) (and earnings attributable thereto).
``(B) Time for making election.--Subparagraph (A) shall not
apply to an election by an employee unless the election is
made no later than the date which is 90 days after the date
of the first elective contribution with respect to the
employee under the arrangement.
``(C) Amount of distribution.--Subparagraph (A) shall not
apply to any election by an employee unless the amount of any
distribution by reason of the election is equal to the amount
of elective contributions made with respect to the first
payroll period to which the eligible automatic contribution
arrangement applies to the employee and any succeeding
payroll period beginning before the effective date of the
election (and earnings attributable thereto).
``(3) Eligible automatic contribution arrangement.--For
purposes of this subsection, the term `eligible automatic
contribution arrangement' means an arrangement under an
applicable employer plan--
``(A) under which a participant may elect to have the
employer make payments as contributions under the plan on
behalf of the participant, or to the participant directly in
cash,
``(B) under which the participant is treated as having
elected to have the employer make such contributions in an
amount equal to a uniform percentage of compensation provided
under the plan until the participant specifically elects not
to have such contributions made (or specifically elects to
have such contributions made at a different percentage),
``(C) under which, in the absence of an investment election
by the participant, contributions described in subparagraph
(B) are invested in accordance with regulations prescribed by
the Secretary of Labor under section 404(c)(5) of the
Employee Retirement Income Security Act of 1974, and
``(D) which meets the requirements of paragraph (4).
``(4) Notice requirements.--
``(A) In general.--The administrator of a plan containing
an arrangement described in paragraph (3) shall, within a
reasonable period before each plan year, give to each
employee to whom an arrangement described in paragraph (3)
applies for such plan year notice of the employee's rights
and obligations under the arrangement which--
``(i) is sufficiently accurate and comprehensive to apprise
the employee of such rights and obligations, and
``(ii) is written in a manner calculated to be understood
by the average employee to whom the arrangement applies.
``(B) Time and form of notice.--A notice shall not be
treated as meeting the requirements of subparagraph (A) with
respect to an employee unless--
``(i) the notice includes an explanation of the employee's
right under the arrangement to elect not to have elective
contributions made on the employee's behalf (or to elect to
have such contributions made at a different percentage),
``(ii) the employee has a reasonable period of time after
receipt of the notice described in clause (i) and before the
first elective contribution is made to make such election,
and
``(iii) the notice explains how contributions made under
the arrangement will be invested in the absence of any
investment election by the employee.
``(5) Applicable employer plan.--For purposes of this
subsection, the term `applicable employer plan' means--
``(A) an employees' trust described in section 401(a) which
is exempt from tax under section 501(a),
``(B) a plan under which amounts are contributed by an
individual's employer for an annuity contract described in
section 403(b), and
``(C) an eligible deferred compensation plan described in
section 457(b) which is maintained by an eligible employer
described in section 457(e)(1)(A).
``(6) Special rule.--A withdrawal described in paragraph
(1) (subject to the limitation of paragraph (2)(C)) shall not
be taken into account for purposes of section 401(k)(3).''.
(2) Vesting conforming amendments.--
(A) Section 411(a)(3)(G) of such Code is amended by
inserting ``an erroneous automatic contribution under section
414(w),'' after ``402(g)(2)(A),''.
(B) The heading of section 411(a)(3)(G) of such Code is
amended by inserting ``OR ERRONEOUS AUTOMATIC CONTRIBUTION''
before the period.
(C) Section 401(k)(8)(E) of such Code is amended by
inserting ``an erroneous automatic contribution under section
414(w),'' after ``402(g)(2)(A),''.
(D) The heading of section 401(k)(8)(E) of such Code is
amended by inserting ``OR ERRONEOUS AUTOMATIC CONTRIBUTION''
before the period.
(E) Section 203(a)(3)(F) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1053(a)(3)(F)) is amended by
inserting ``an erroneous automatic contribution under section
414(w) of such Code,'' after ``402(g)(2)(A) of such Code,''.
(e) Excess Contributions.--
(1) Expansion of corrective distribution period for
automatic contribution arrangements.--Subsection (f) of
section 4979 of the Internal Revenue Code of 1986 is
amended--
(A) by inserting ``(6 months in the case of an excess
contribution or excess aggregate contribution to an eligible
automatic contribution arrangement (as defined in section
414(w)(3)))'' after ``2\1/2\ months'' in paragraph (1), and
(B) by striking ``2\1/2\ Months of'' in the heading and
inserting ``Specified Period After''.
(2) Year of inclusion.--Paragraph (2) of section 4979(f) of
such Code is amended to read as follows:
``(2) Year of inclusion.--Any amount distributed as
provided in paragraph (1) shall be treated as earned and
received by the recipient in the recipient's taxable year in
which such distributions were made.''.
(3) Simplification of allocable earnings.--
(A) Section 4979.--Paragraph (1) of section 4979(f) of such
Code is amended by adding ``through the end of the plan year
for which the contribution was made'' after ``thereto''.
(B) Section 401(k) and 401(m).--
(i) Clause (i) of section 401(k)(8)(A) of such Code is
amended by adding ``through the end of such year'' after
``such contributions''.
(ii) Subparagraph (A) of section 401(m)(6) of such Code is
amended by adding ``through the end of such year'' after ``to
such contributions''.
(f) Preemption of Conflicting State Regulation.--
(1) In general.--Section 514 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1144) is amended by
adding at the end the following new subsection:
``(e)(1) Notwithstanding any other provision of this
section, this title shall supersede any law of a State which
would directly or indirectly prohibit or restrict the
inclusion in any plan of an automatic contribution
arrangement. The Secretary may prescribe regulations which
would establish minimum standards that such an arrangement
would be required to satisfy in order for this subsection to
apply in the case of such arrangement.
``(2) For purposes of this subsection, the term `automatic
contribution arrangement' means an arrangement----
``(A) under which a participant may elect to have the plan
sponsor make payments as contributions under the plan on
behalf of the participant, or to the participant directly in
cash,
``(B) under which a participant is treated as having
elected to have the plan sponsor make such contributions in
an amount equal to a uniform percentage of compensation
provided under the plan until the participant specifically
elects not to have such contributions made (or specifically
elects to have such contributions made at a different
percentage), and
``(C) under which such contributions are invested in
accordance with regulations prescribed by the Secretary under
section 404(c)(5).
``(3)(A) The plan administrator of an automatic
contribution arrangement shall, within a reasonable period
before such plan year, provide to each participant to whom
the arrangement applies for such plan year notice of the
participant's rights and obligations under the arrangement
which--
``(i) is sufficiently accurate and comprehensive to apprise
the participant of such rights and obligations, and
``(ii) is written in a manner calculated to be understood
by the average participant to whom the arrangement applies.
``(B) A notice shall not be treated as meeting the
requirements of subparagraph (A) with respect to a
participant unless--
``(i) the notice includes an explanation of the
participant's right under the arrangement not to have
elective contributions made on the participant's behalf (or
to elect to have such contributions made at a different
percentage),
[[Page H6110]]
``(ii) the participant has a reasonable period of time,
after receipt of the notice described in clause (i) and
before the first elective contribution is made, to make such
election, and
``(iii) the notice explains how contributions made under
the arrangement will be invested in the absence of any
investment election by the participant.''.
(2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C.
1132(c)(4)) is amended by striking ``or section
302(b)(7)(F)(vi)'' inserting ``, section 302(b)(7)(F)(vi), or
section 514(e)(3)''.
(g) Effective Date.--The amendments made by this section
shall apply to plan years beginning after December 31, 2007,
except that the amendments made by subsection (f) shall take
effect on the date of the enactment of this Act.
SEC. 903. TREATMENT OF ELIGIBLE COMBINED DEFINED BENEFIT
PLANS AND QUALIFIED CASH OR DEFERRED
ARRANGEMENTS.
(a) Amendments of Internal Revenue Code.--Section 414 of
the Internal Revenue Code of 1986, as amended by this Act, is
amended by adding at the end the following new subsection:
``(x) Special Rules for Eligible Combined Defined Benefit
Plans and Qualified Cash or Deferred Arrangements.--
``(1) General rule.--Except as provided in this subsection,
the requirements of this title shall be applied to any
defined benefit plan or applicable defined contribution plan
which are part of an eligible combined plan in the same
manner as if each such plan were not a part of the eligible
combined plan.
``(2) Eligible combined plan.--For purposes of this
subsection--
``(A) In general.--The term `eligible combined plan' means
a plan--
``(i) which is maintained by an employer which, at the time
the plan is established, is a small employer,
``(ii) which consists of a defined benefit plan and an
applicable defined contribution plan,
``(iii) the assets of which are held in a single trust
forming part of the plan and are clearly identified and
allocated to the defined benefit plan and the applicable
defined contribution plan to the extent necessary for the
separate application of this title under paragraph (1), and
``(iv) with respect to which the benefit, contribution,
vesting, and nondiscrimination requirements of subparagraphs
(B), (C), (D), (E), and (F) are met.
For purposes of this subparagraph, the term `small employer'
has the meaning given such term by section 4980D(d)(2),
except that such section shall be applied by substituting
`500' for `50' each place it appears.
``(B) Benefit requirements.--
``(i) In general.--The benefit requirements of this
subparagraph are met with respect to the defined benefit plan
forming part of the eligible combined plan if the accrued
benefit of each participant derived from employer
contributions, when expressed as an annual retirement
benefit, is not less than the applicable percentage of the
participant's final average pay. For purposes of this clause,
final average pay shall be determined using the period of
consecutive years (not exceeding 5) during which the
participant had the greatest aggregate compensation from the
employer.
``(ii) Applicable percentage.--For purposes of clause (i),
the applicable percentage is the lesser of--
``(I) 1 percent multiplied by the number of years of
service with the employer, or
``(II) 20 percent.
``(iii) Special rule for applicable defined benefit
plans.--If the defined benefit plan under clause (i) is an
applicable defined benefit plan as defined in section
411(a)(13)(B) which meets the interest credit requirements of
section 411(b)(5)(B)(i), the plan shall be treated as meeting
the requirements of clause (i) with respect to any plan year
if each participant receives a pay credit for the year which
is not less than the percentage of compensation determined in
accordance with the following table:
``If the participant's age as of the beginning of thThe percentage is--
30 or less.........................................................2
Over 30 but less than 40...........................................4
40 or over but less than 50........................................6
50 or over.........................................................8.
``(iv) Years of service.--For purposes of this
subparagraph, years of service shall be determined under the
rules of paragraphs (4), (5), and (6) of section 411(a),
except that the plan may not disregard any year of service
because of a participant making, or failing to make, any
elective deferral with respect to the qualified cash or
deferred arrangement to which subparagraph (C) applies.
``(C) Contribution requirements.--
``(i) In general.--The contribution requirements of this
subparagraph with respect to any applicable defined
contribution plan forming part of an eligible combined plan
are met if--
``(I) the qualified cash or deferred arrangement included
in such plan constitutes an automatic contribution
arrangement, and
``(II) the employer is required to make matching
contributions on behalf of each employee eligible to
participate in the arrangement in an amount equal to 50
percent of the elective contributions of the employee to the
extent such elective contributions do not exceed 4 percent of
compensation.
Rules similar to the rules of clauses (ii) and (iii) of
section 401(k)(12)(B) shall apply for purposes of this
clause.
``(ii) Nonelective contributions.--An applicable defined
contribution plan shall not be treated as failing to meet the
requirements of clause (i) because the employer makes
nonelective contributions under the plan but such
contributions shall not be taken into account in determining
whether the requirements of clause (i)(II) are met.
``(D) Vesting requirements.--The vesting requirements of
this subparagraph are met if--
``(i) in the case of a defined benefit plan forming part of
an eligible combined plan an employee who has completed at
least 3 years of service has a nonforfeitable right to 100
percent of the employee's accrued benefit under the plan
derived from employer contributions, and
``(ii) in the case of an applicable defined contribution
plan forming part of eligible combined plan--
``(I) an employee has a nonforfeitable right to any
matching contribution made under the qualified cash or
deferred arrangement included in such plan by an employer
with respect to any elective contribution, including matching
contributions in excess of the contributions required under
subparagraph (C)(i)(II), and
``(II) an employee who has completed at least 3 years of
service has a nonforfeitable right to 100 percent of the
employee's accrued benefit derived under the arrangement from
nonelective contributions of the employer.
For purposes of this subparagraph, the rules of section 411
shall apply to the extent not inconsistent with this
subparagraph.
``(E) Uniform provision of contributions and benefits.--In
the case of a defined benefit plan or applicable defined
contribution plan forming part of an eligible combined plan,
the requirements of this subparagraph are met if all
contributions and benefits under each such plan, and all
rights and features under each such plan, must be provided
uniformly to all participants.
``(F) Requirements must be met without taking into account
social security and similar contributions and benefits or
other plans.--
``(i) In general.--The requirements of this subparagraph
are met if the requirements of clauses (ii) and (iii) are
met.
``(ii) Social security and similar contributions.--The
requirements of this clause are met if--
``(I) the requirements of subparagraphs (B) and (C) are met
without regard to section 401(l), and
``(II) the requirements of sections 401(a)(4) and 410(b)
are met with respect to both the applicable defined
contribution plan and defined benefit plan forming part of an
eligible combined plan without regard to section 401(l).
``(iii) Other plans and arrangements.--The requirements of
this clause are met if the applicable defined contribution
plan and defined benefit plan forming part of an eligible
combined plan meet the requirements of sections 401(a)(4) and
410(b) without being combined with any other plan.
``(3) Nondiscrimination requirements for qualified cash or
deferred arrangement.--
``(A) In general.--A qualified cash or deferred arrangement
which is included in an applicable defined contribution plan
forming part of an eligible combined plan shall be treated as
meeting the requirements of section 401(k)(3)(A)(ii) if the
requirements of paragraph (2)(C) are met with respect to such
arrangement.
``(B) Matching contributions.--In applying section
401(m)(11) to any matching contribution with respect to a
contribution to which paragraph (2)(C) applies, the
contribution requirement of paragraph (2)(C) and the notice
requirements of paragraph (5)(B) shall be substituted for the
requirements otherwise applicable under clauses (i) and (ii)
of section 401(m)(11)(A).
``(4) Satisfaction of top-heavy rules.--A defined benefit
plan and applicable defined contribution plan forming part of
an eligible combined plan for any plan year shall be treated
as meeting the requirements of section 416 for the plan year.
``(5) Automatic contribution arrangement.--For purposes of
this subsection--
``(A) In general.--A qualified cash or deferred arrangement
shall be treated as an automatic contribution arrangement if
the arrangement--
``(i) provides that each employee eligible to participate
in the arrangement is treated as having elected to have the
employer make elective contributions in an amount equal to 4
percent of the employee's compensation unless the employee
specifically elects not to have such contributions made or to
have such contributions made at a different rate, and
``(ii) meets the notice requirements under subparagraph
(B).
``(B) Notice requirements.--
``(i) In general.--The requirements of this subparagraph
are met if the requirements of clauses (ii) and (iii) are
met.
``(ii) Reasonable period to make election.--The
requirements of this clause are met if each employee to whom
subparagraph (A)(i) applies--
``(I) receives a notice explaining the employee's right
under the arrangement to elect not to have elective
contributions made on the employee's behalf or to have the
contributions made at a different rate, and
``(II) has a reasonable period of time after receipt of
such notice and before the first
[[Page H6111]]
elective contribution is made to make such election.
``(iii) Annual notice of rights and obligations.--The
requirements of this clause are met if each employee eligible
to participate in the arrangement is, within a reasonable
period before any year, given notice of the employee's rights
and obligations under the arrangement.
The requirements of clauses (i) and (ii) of section
401(k)(12)(D) shall be met with respect to the notices
described in clauses (ii) and (iii) of this subparagraph.
``(6) Coordination with other requirements.--
``(A) Treatment of separate plans.--Section 414(k) shall
not apply to an eligible combined plan.
``(B) Reporting.--An eligible combined plan shall be
treated as a single plan for purposes of sections 6058 and
6059.
``(7) Applicable defined contribution plan.--For purposes
of this subsection--
``(A) In general.--The term `applicable defined
contribution plan' means a defined contribution plan which
includes a qualified cash or deferred arrangement.
``(B) Qualified cash or deferred arrangement.--The term
`qualified cash or deferred arrangement' has the meaning
given such term by section 401(k)(2).''.
(b) Amendments to the Employee Retirement Income Security
Act of 1974.--
(1) In general.--Section 210 of the Employee Retirement
Income Security Act of 1974 is amended by adding at the end
the following new subsection:
``(e) Special Rules for Eligible Combined Defined Benefit
Plans and Qualified Cash or Deferred Arrangements.--
``(1) General rule.--Except as provided in this subsection,
this Act shall be applied to any defined benefit plan or
applicable individual account plan which are part of an
eligible combined plan in the same manner as if each such
plan were not a part of the eligible combined plan.
``(2) Eligible combined plan.--For purposes of this
subsection--
``(A) In general.--The term `eligible combined plan' means
a plan--
``(i) which is maintained by an employer which, at the time
the plan is established, is a small employer,
``(ii) which consists of a defined benefit plan and an
applicable individual account plan each of which qualifies
under section 401(a) of the Internal Revenue Code of 1986,
``(iii) the assets of which are held in a single trust
forming part of the plan and are clearly identified and
allocated to the defined benefit plan and the applicable
individual account plan to the extent necessary for the
separate application of this Act under paragraph (1), and
``(iv) with respect to which the benefit, contribution,
vesting, and nondiscrimination requirements of subparagraphs
(B), (C), (D), (E), and (F) are met.
For purposes of this subparagraph, the term `small employer'
has the meaning given such term by section 4980D(d)(2) of the
Internal Revenue Code of 1986, except that such section shall
be applied by substituting `500' for `50' each place it
appears.
``(B) Benefit requirements.--
``(i) In general.--The benefit requirements of this
subparagraph are met with respect to the defined benefit plan
forming part of the eligible combined plan if the accrued
benefit of each participant derived from employer
contributions, when expressed as an annual retirement
benefit, is not less than the applicable percentage of the
participant's final average pay. For purposes of this clause,
final average pay shall be determined using the period of
consecutive years (not exceeding 5) during which the
participant had the greatest aggregate compensation from the
employer.
``(ii) Applicable percentage.--For purposes of clause (i),
the applicable percentage is the lesser of--
``(I) 1 percent multiplied by the number of years of
service with the employer, or
``(II) 20 percent.
``(iii) Special rule for applicable defined benefit
plans.--If the defined benefit plan under clause (i) is an
applicable defined benefit plan as defined in section
203(f)(3)(B) which meets the interest credit requirements of
section 204(b)(5)(B)(i), the plan shall be treated as meeting
the requirements of clause (i) with respect to any plan year
if each participant receives pay credit for the year which is
not less than the percentage of compensation determined in
accordance with the following table:
``If the participant's age as of the beginning of thThe percentage is--
30 or less.........................................................2
Over 30 but less than 40...........................................4
40 or over but less than 50........................................6
50 or over.........................................................8.
``(iv) Years of service.--For purposes of this
subparagraph, years of service shall be determined under the
rules of paragraphs (1), (2), and (3) of section 203(b),
except that the plan may not disregard any year of service
because of a participant making, or failing to make, any
elective deferral with respect to the qualified cash or
deferred arrangement to which subparagraph (C) applies.
``(C) Contribution requirements.--
``(i) In general.--The contribution requirements of this
subparagraph with respect to any applicable individual
account plan forming part of an eligible combined plan are
met if--
``(I) the qualified cash or deferred arrangement included
in such plan constitutes an automatic contribution
arrangement, and
``(II) the employer is required to make matching
contributions on behalf of each employee eligible to
participate in the arrangement in an amount equal to 50
percent of the elective contributions of the employee to the
extent such elective contributions do not exceed 4 percent of
compensation.
Rules similar to the rules of clauses (ii) and (iii) of
section 401(k)(12)(B) of the Internal Revenue Code of 1986
shall apply for purposes of this clause.
``(ii) Nonelective contributions.--An applicable individual
account plan shall not be treated as failing to meet the
requirements of clause (i) because the employer makes
nonelective contributions under the plan but such
contributions shall not be taken into account in determining
whether the requirements of clause (i)(II) are met.
``(D) Vesting requirements.--The vesting requirements of
this subparagraph are met if--
``(i) in the case of a defined benefit plan forming part of
an eligible combined plan an employee who has completed at
least 3 years of service has a nonforfeitable right to 100
percent of the employee's accrued benefit under the plan
derived from employer contributions, and
``(ii) in the case of an applicable individual account plan
forming part of eligible combined plan--
``(I) an employee has a nonforfeitable right to any
matching contribution made under the qualified cash or
deferred arrangement included in such plan by an employer
with respect to any elective contribution, including matching
contributions in excess of the contributions required under
subparagraph (C)(i)(II), and
``(II) an employee who has completed at least 3 years of
service has a nonforfeitable right to 100 percent of the
employee's accrued benefit derived under the arrangement from
nonelective contributions of the employer.
For purposes of this subparagraph, the rules of section 203
shall apply to the extent not inconsistent with this
subparagraph.
``(E) Uniform provision of contributions and benefits.--In
the case of a defined benefit plan or applicable individual
account plan forming part of an eligible combined plan, the
requirements of this subparagraph are met if all
contributions and benefits under each such plan, and all
rights and features under each such plan, must be provided
uniformly to all participants.
``(F) Requirements must be met without taking into account
social security and similar contributions and benefits or
other plans.--
``(i) In general.--The requirements of this subparagraph
are met if the requirements of clauses (ii) and (iii) are
met.
``(ii) Social security and similar contributions.--The
requirements of this clause are met if--
``(I) the requirements of subparagraphs (B) and (C) are met
without regard to section 401(l) of the Internal Revenue Code
of 1986, and
``(II) the requirements of sections 401(a)(4) and 410(b) of
the Internal Revenue Code of 1986 are met with respect to
both the applicable defined contribution plan and defined
benefit plan forming part of an eligible combined plan
without regard to section 401(l) of the Internal Revenue Code
of 1986.
``(iii) Other plans and arrangements.--The requirements of
this clause are met if the applicable defined contribution
plan and defined benefit plan forming part of an eligible
combined plan meet the requirements of sections 401(a)(4) and
410(b) of the Internal Revenue Code of 1986 without being
combined with any other plan.
``(3) Nondiscrimination requirements for qualified cash or
deferred arrangement.--
``(A) In general.--A qualified cash or deferred arrangement
which is included in an applicable individual account plan
forming part of an eligible combined plan shall be treated as
meeting the requirements of section 401(k)(3)(A)(ii) of the
Internal Revenue Code of 1986 if the requirements of
paragraph (2) are met with respect to such arrangement.
``(B) Matching contributions.--In applying section
401(m)(11) of such Code to any matching contribution with
respect to a contribution to which paragraph (2)(C) applies,
the contribution requirement of paragraph (2)(C) and the
notice requirements of paragraph (5)(B) shall be substituted
for the requirements otherwise applicable under clauses (i)
and (ii) of section 401(m)(11)(A) of such Code.
``(4) Automatic contribution arrangement.--For purposes of
this subsection--
``(A) In general.--A qualified cash or deferred arrangement
shall be treated as an automatic contribution arrangement if
the arrangement--
``(i) provides that each employee eligible to participate
in the arrangement is treated as having elected to have the
employer make elective contributions in an amount equal to 4
percent of the employee's compensation unless the employee
specifically elects not to have such contributions made or to
have such contributions made at a different rate, and
``(ii) meets the notice requirements under subparagraph
(B).
``(B) Notice requirements.--
``(i) In general.--The requirements of this subparagraph
are met if the requirements of clauses (ii) and (iii) are
met.
[[Page H6112]]
``(ii) Reasonable period to make election.--The
requirements of this clause are met if each employee to whom
subparagraph (A)(i) applies--
``(I) receives a notice explaining the employee's right
under the arrangement to elect not to have elective
contributions made on the employee's behalf or to have the
contributions made at a different rate, and
``(II) has a reasonable period of time after receipt of
such notice and before the first elective contribution is
made to make such election.
``(iii) Annual notice of rights and obligations.--The
requirements of this clause are met if each employee eligible
to participate in the arrangement is, within a reasonable
period before any year, given notice of the employee's rights
and obligations under the arrangement.
The requirements of this subparagraph shall not be treated as
met unless the requirements of clauses (i) and (ii) of
section 401(k)(12)(D) of the Internal Revenue Code of 1986
are met with respect to the notices described in clauses (ii)
and (iii) of this subparagraph.
``(5) Coordination with other requirements.--
``(A) Treatment of separate plans.--The except clause in
section 3(35) shall not apply to an eligible combined plan.
``(B) Reporting.--An eligible combined plan shall be
treated as a single plan for purposes of section 103.
``(6) Applicable individual account plan.--For purposes of
this subsection--
``(A) In general.--The term `applicable individual account
plan' means an individual account plan which includes a
qualified cash or deferred arrangement.
``(B) Qualified cash or deferred arrangement.--The term
`qualified cash or deferred arrangement' has the meaning
given such term by section 401(k)(2) of the Internal Revenue
Code of 1986.''.
(2) Conforming changes.--
(A) The heading for section 210 of such Act is amended to
read as follows:
``SEC. 210. MULTIPLE EMPLOYER PLANS AND OTHER SPECIAL
RULES.''.
(B) The table of contents in section 1 of such Act is
amended by striking the item relating to section 210 and
inserting the following new item:
``Sec. 210. Multiple employer plans and other special rules.''.
(c) Effective Date.--The amendments made by this section
shall apply to plan years beginning after December 31, 2009.
SEC. 904. FASTER VESTING OF EMPLOYER NONELECTIVE
CONTRIBUTIONS.
(a) Amendments to the Internal Revenue Code of 1986.--
(1) In general.--Paragraph (2) of section 411(a) of the
Internal Revenue Code of 1986 (relating to employer
contributions) is amended to read as follows:
``(2) Employer contributions.--
``(A) Defined benefit plans.--
``(i) In general.--In the case of a defined benefit plan, a
plan satisfies the requirements of this paragraph if it
satisfies the requirements of clause (ii) or (iii).
``(ii) 5-year vesting.--A plan satisfies the requirements
of this clause if an employee who has completed at least 5
years of service has a nonforfeitable right to 100 percent of
the employee's accrued benefit derived from employer
contributions.
``(iii) 3 to 7 year vesting.--A plan satisfies the
requirements of this clause if an employee has a
nonforfeitable right to a percentage of the employee's
accrued benefit derived from employer contributions
determined under the following table:
`` Years of service: The nonforfeitable percentage is:
3.................................................................20
4.................................................................40
5.................................................................60
6.................................................................80
7 or more........................................................100.
``(B) Defined contribution plans.--
``(i) In general.--In the case of a defined contribution
plan, a plan satisfies the requirements of this paragraph if
it satisfies the requirements of clause (ii) or (iii).
``(ii) 3-year vesting.--A plan satisfies the requirements
of this clause if an employee who has completed at least 3
years of service has a nonforfeitable right to 100 percent of
the employee's accrued benefit derived from employer
contributions.
``(iii) 2 to 6 year vesting.--A plan satisfies the
requirements of this clause if an employee has a
nonforfeitable right to a percentage of the employee's
accrued benefit derived from employer contributions
determined under the following table:
``Years of service: The nonforfeitable percentage is:
2.................................................................20
3.................................................................40
4.................................................................60
5.................................................................80
6 or more.....................................................100.''.
(2) Conforming amendment.--Section 411(a) of such Code
(relating to general rule for minimum vesting standards) is
amended by striking paragraph (12).
(b) Amendments to the Employee Retirement Income Security
Act of 1974.--
(1) In general.--Paragraph (2) of section 203(a) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1053(a)(2)) is amended to read as follows:
``(2)(A)(i) In the case of a defined benefit plan, a plan
satisfies the requirements of this paragraph if it satisfies
the requirements of clause (ii) or (iii).
``(ii) A plan satisfies the requirements of this clause if
an employee who has completed at least 5 years of service has
a nonforfeitable right to 100 percent of the employee's
accrued benefit derived from employer contributions.
``(iii) A plan satisfies the requirements of this clause if
an employee has a nonforfeitable right to a percentage of the
employee's accrued benefit derived from employer
contributions determined under the following table:
`` Years of service: The nonforfeitable percentage is:
3.................................................................20
4.................................................................40
5.................................................................60
6.................................................................80
7 or more........................................................100.
``(B)(i) In the case of an individual account plan, a plan
satisfies the requirements of this paragraph if it satisfies
the requirements of clause (ii) or (iii).
``(ii) A plan satisfies the requirements of this clause if
an employee who has completed at least 3 years of service has
a nonforfeitable right to 100 percent of the employee's
accrued benefit derived from employer contributions.
``(iii) A plan satisfies the requirements of this clause if
an employee has a nonforfeitable right to a percentage of the
employee's accrued benefit derived from employer
contributions determined under the following table:
``Years of service: The nonforfeitable percentage is:
2.................................................................20
3.................................................................40
4.................................................................60
5.................................................................80
6 or more.....................................................100.''.
(2) Conforming amendment.--Section 203(a) of such Act is
amended by striking paragraph (4).
(c) Effective Dates.--
(1) In general.--Except as provided in paragraphs (2) and
(4), the amendments made by this section shall apply to
contributions for plan years beginning after December 31,
2006.
(2) Collective bargaining agreements.--In the case of a
plan maintained pursuant to one or more collective bargaining
agreements between employee representatives and one or more
employers ratified before the date of the enactment of this
Act, the amendments made by this section shall not apply to
contributions on behalf of employees covered by any such
agreement for plan years beginning before the earlier of--
(A) the later of--
(i) the date on which the last of such collective
bargaining agreements terminates (determined without regard
to any extension thereof on or after such date of the
enactment); or
(ii) January 1, 2007; or
(B) January 1, 2009.
(3) Service required.--With respect to any plan, the
amendments made by this section shall not apply to any
employee before the date that such employee has 1 hour of
service under such plan in any plan year to which the
amendments made by this section apply.
(4) Special rule for stock ownership plans.--
Notwithstanding paragraph (1) or (2), in the case of an
employee stock ownership plan (as defined in section
4975(e)(7) of the Internal Revenue Code of 1986) which had
outstanding on September 26, 2005, a loan incurred for the
purpose of acquiring qualifying employer securities (as
defined in section 4975(e)(8) of such Code), the amendments
made by this section shall not apply to any plan year
beginning before the earlier of--
(A) the date on which the loan is fully repaid, or
(B) the date on which the loan was, as of September 26,
2005, scheduled to be fully repaid.
SEC. 905. DISTRIBUTIONS DURING WORKING RETIREMENT.
(a) Amendment to the Employee Retirement Income Security
Act of 1974.--Subparagraph (A) of section 3(2) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1002(2)) is amended by adding at the end the following new
sentence: ``A distribution from a plan, fund, or program
shall not be treated as made in a form other than retirement
income or as a distribution prior to termination of covered
employment solely because such distribution is made to an
employee who has attained age 62 and who is not separated
from employment at the time of such distribution.''.
(b) Amendment to the Internal Revenue Code of 1986.--
Subsection (a) of section 401 of the Internal Revenue Code of
1986 (as amended by this Act) is amended by inserting after
paragraph (35) the following new paragraph:
``(36) Distributions during working retirement.--A trust
forming part of a pension plan shall not be treated as
failing to constitute a qualified trust under this section
solely because the plan provides that a distribution may be
made from such trust to an employee who has attained age 62
and who is not separated from employment at the time of such
distribution.''.
(c) Effective Date.--The amendments made by this section
shall apply to distributions in plan years beginning after
December 31, 2006.
[[Page H6113]]
SEC. 906. TREATMENT OF CERTAIN PENSION PLANS OF INDIAN TRIBAL
GOVERNMENTS.
(a) Definition of Government Plan to Include Certain
Pension Plans of Indian Tribal Governments.--
(1) Amendment to internal revenue code of 1986.--Section
414(d) of the Internal Revenue Code of 1986 (defining
governmental plan) is amended by adding at the end the
following: ``The term `governmental plan' includes a plan
which is established and maintained by an Indian tribal
government (as defined in section 7701(a)(40)), a subdivision
of an Indian tribal government (determined in accordance with
section 7871(d)), or an agency or instrumentality of either,
and all of the participants of which are employees of such
entity substantially all of whose services as such an
employee are in the performance of essential governmental
functions but not in the performance of commercial activities
(whether or not an essential government function).''.
(2) Amendment to employee retirement income security act of
1974.--
(A) Section 3(32) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1002(32)) is amended by
adding at the end the following: ``The term `governmental
plan' includes a plan which is established and maintained by
an Indian tribal government (as defined in section
7701(a)(40) of the Internal Revenue Code of 1986), a
subdivision of an Indian tribal government (determined in
accordance with section 7871(d) of such Code), or an agency
or instrumentality of either, and all of the participants of
which are employees of such entity substantially all of whose
services as such an employee are in the performance of
essential governmental functions but not in the performance
of commercial activities (whether or not an essential
government function)''.
(B) Section 4021(b)(2) of such Act is amended by adding at
the end the following: ``or which is described in the last
sentence of section 3(32)''.
(b) Clarification That Tribal Governments Are Subject to
the Same Pension Plan Rules and Regulations Applied to State
and Other Local Governments and Their Police and
Firefighters.--
(1) Amendments to internal revenue code of 1986.--
(A) Police and firefighters.--Subparagraph (H) section
415(b)(2) of the Internal Revenue Code of 1986 (defining
participant) is amended--
(i) in clause (i), by striking ``State or political
subdivision'' and inserting ``State, Indian tribal government
(as defined in section 7701(a)(40)), or any political
subdivision''; and
(ii) in clause (ii)(I), by striking ``State or political
subdivision'' each place it appears and inserting ``State,
Indian tribal government (as so defined), or any political
subdivision''.
(B) State and local government plans.--
(i) In general.--Subparagraph (A) of section 415(b)(10) of
such Code (relating to limitation to equal accrued benefit)
is amended by inserting ``or a governmental plan described in
the last sentence of section 414(d) (relating to plans of
Indian tribal governments),'' after ``foregoing,''.
(ii) Conforming amendment.--The heading of paragraph (1) of
section 415(b) of such Code is amended by striking ``Special
rule for state and'' and inserting ``Special rule for state,
indian tribal, and''.
(C) Government pick up contributions.--Paragraph (2) of
section 414(h) of such Code (relating to designation by units
of government) is amended by inserting ``or a governmental
plan described in the last sentence of section 414(d)
(relating to plans of Indian tribal governments),'' after
``foregoing,''.
(2) Amendments to employee retirement income security act
of 1974.--Section 4021(b) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1321(b)) is amended--
(A) in paragraph (12), by striking ``or'' at the end;
(B) in paragraph (13), by striking ``plan.'' and inserting
``plan; or''; and
(C) by adding at the end the following:
``(14) established and maintained by an Indian tribal
government (as defined in section 7701(a)(40) of the Internal
Revenue Code of 1986), a subdivision of an Indian tribal
government (determined in accordance with section 7871(d) of
such Code), or an agency or instrumentality of either, and
all of the participants of which are employees of such entity
substantially all of whose services as such an employee are
in the performance of essential governmental functions but
not in the performance of commercial activities (whether or
not an essential government function).''.
(c) Effective Date.--The amendments made by this section
shall apply to any year beginning on or after the date of the
enactment of this Act.
TITLE X--PROVISIONS RELATING TO SPOUSAL PENSION PROTECTION
SEC. 1001. REGULATIONS ON TIME AND ORDER OF ISSUANCE OF
DOMESTIC RELATIONS ORDERS.
Not later than 1 year after the date of the enactment of
this Act, the Secretary of Labor shall issue regulations
under section 206(d)(3) of the Employee Retirement Security
Act of 1974 and section 414(p) of the Internal Revenue Code
of 1986 which clarify that--
(1) a domestic relations order otherwise meeting the
requirements to be a qualified domestic relations order,
including the requirements of section 206(d)(3)(D) of such
Act and section 414(p)(3) of such Code, shall not fail to be
treated as a qualified domestic relations order solely
because--
(A) the order is issued after, or revises, another domestic
relations order or qualified domestic relations order; or
(B) of the time at which it is issued; and
(2) any order described in paragraph (1) shall be subject
to the same requirements and protections which apply to
qualified domestic relations orders, including the provisions
of section 206(d)(3)(H) of such Act and section 414(p)(7) of
such Code.
SEC. 1002. ENTITLEMENT OF DIVORCED SPOUSES TO RAILROAD
RETIREMENT ANNUITIES INDEPENDENT OF ACTUAL
ENTITLEMENT OF EMPLOYEE.
(a) In General.--Section 2 of the Railroad Retirement Act
of 1974 (45 U.S.C. 231a) is amended--
(1) in subsection (c)(4)(i), by striking ``(A) is entitled
to an annuity under subsection (a)(1) and (B)''; and
(2) in subsection (e)(5), by striking ``or divorced wife''
the second place it appears.
(b) Effective Date.--The amendments made by this section
shall take effect 1 year after the date of the enactment of
this Act.
SEC. 1003. EXTENSION OF TIER II RAILROAD RETIREMENT BENEFITS
TO SURVIVING FORMER SPOUSES PURSUANT TO DIVORCE
AGREEMENTS.
(a) In General.--Section 5 of the Railroad Retirement Act
of 1974 (45 U.S.C. 231d) is amended by adding at the end the
following:
``(d) Notwithstanding any other provision of law, the
payment of any portion of an annuity computed under section
3(b) to a surviving former spouse in accordance with a court
decree of divorce, annulment, or legal separation or the
terms of any court-approved property settlement incident to
any such court decree shall not be terminated upon the death
of the individual who performed the service with respect to
which such annuity is so computed unless such termination is
otherwise required by the terms of such court decree.''
(b) Effective Date.--The amendment made by this section
shall take effect 1 year after the date of the enactment of
this Act.
SEC. 1004. REQUIREMENT FOR ADDITIONAL SURVIVOR ANNUITY
OPTION.
(a) Amendments to Internal Revenue Code.--
(1) Election of survivor annuity.--Section 417(a)(1)(A) of
the Internal Revenue Code of 1986 is amended--
(A) in clause (i), by striking ``, and'' and inserting a
comma;
(B) by redesignating clause (ii) as clause (iii); and
(C) by inserting after clause (i) the following:
``(ii) if the participant elects a waiver under clause (i),
may elect the qualified optional survivor annuity at any time
during the applicable election period, and''.
(2) Definition.--Section 417 of such Code is amended by
adding at the end the following:
``(g) Definition of Qualified Optional Survivor Annuity.--
``(1) In general.--For purposes of this section, the term
`qualified optional survivor annuity' means an annuity--
``(A) for the life of the participant with a survivor
annuity for the life of the spouse which is equal to the
applicable percentage of the amount of the annuity which is
payable during the joint lives of the participant and the
spouse, and
``(B) which is the actuarial equivalent of a single annuity
for the life of the participant.
Such term also includes any annuity in a form having the
effect of an annuity described in the preceding sentence.
``(2) Applicable percentage.--
``(A) In general.--For purposes of paragraph (1), if the
survivor annuity percentage--
``(i) is less than 75 percent, the applicable percentage is
75 percent, and
``(ii) is greater than or equal to 75 percent, the
applicable percentage is 50 percent.
``(B) Survivor annuity percentage.--For purposes of
subparagraph (A), the term `survivor annuity percentage'
means the percentage which the survivor annuity under the
plan's qualified joint and survivor annuity bears to the
annuity payable during the joint lives of the participant and
the spouse.''.
(3) Notice.--Section 417(a)(3)(A)(i) of such Code is
amended by inserting ``and of the qualified optional survivor
annuity'' after ``annuity''.
(b) Amendments to ERISA.--
(1) Election of survivor annuity.--Section 205(c)(1)(A) of
the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1055(c)(1)(A)) is amended--
(A) in clause (i), by striking ``, and'' and inserting a
comma;
(B) by redesignating clause (ii) as clause (iii); and
(C) by inserting after clause (i) the following:
``(ii) if the participant elects a waiver under clause (i),
may elect the qualified optional survivor annuity at any time
during the applicable election period, and''.
(2) Definition.--Section 205(d) of such Act (29 U.S.C.
1055(d)) is amended--
(A) by inserting ``(1)'' after ``(d)'';
(B) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B), respectively; and
(C) by adding at the end the following:
``(2)(A) For purposes of this section, the term `qualified
optional survivor annuity' means an annuity--
[[Page H6114]]
``(i) for the life of the participant with a survivor
annuity for the life of the spouse which is equal to the
applicable percentage of the amount of the annuity which is
payable during the joint lives of the participant and the
spouse, and
``(ii) which is the actuarial equivalent of a single
annuity for the life of the participant.
Such term also includes any annuity in a form having the
effect of an annuity described in the preceding sentence.
``(B)(i) For purposes of subparagraph (A), if the survivor
annuity percentage--
``(I) is less than 75 percent, the applicable percentage is
75 percent, and
``(II) is greater than or equal to 75 percent, the
applicable percentage is 50 percent.
``(ii) For purposes of clause (i), the term `survivor
annuity percentage' means the percentage which the survivor
annuity under the plan's qualified joint and survivor annuity
bears to the annuity payable during the joint lives of the
participant and the spouse.''.
(3) Notice.--Section 205(c)(3)(A)(i) of such Act (29 U.S.C.
1055(c)(3)(A)(i)) is amended by inserting ``and of the
qualified optional survivor annuity'' after ``annuity''.
(c) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply to plan years beginning after December 31, 2007.
(2) Special rule for collectively bargained plans.--In the
case of a plan maintained pursuant to 1 or more collective
bargaining agreements between employee representatives and 1
or more employers ratified on or before the date of the
enactment of this Act, the amendments made by this section
shall not apply to plan years beginning before the earlier
of--
(A) the later of--
(i) January 1, 2008, or
(ii) the date on which the last collective bargaining
agreement related to the plan terminates (determined without
regard to any extension thereof after the date of enactment
of this Act), or
(B) January 1, 2009.
TITLE XI--ADMINISTRATIVE PROVISIONS
SEC. 1101. EMPLOYEE PLANS COMPLIANCE RESOLUTION SYSTEM.
(a) In General.--The Secretary of the Treasury shall have
full authority to establish and implement the Employee Plans
Compliance Resolution System (or any successor program) and
any other employee plans correction policies, including the
authority to waive income, excise, or other taxes to ensure
that any tax, penalty, or sanction is not excessive and bears
a reasonable relationship to the nature, extent, and severity
of the failure.
(b) Improvements.--The Secretary of the Treasury shall
continue to update and improve the Employee Plans Compliance
Resolution System (or any successor program), giving special
attention to--
(1) increasing the awareness and knowledge of small
employers concerning the availability and use of the program;
(2) taking into account special concerns and circumstances
that small employers face with respect to compliance and
correction of compliance failures;
(3) extending the duration of the self-correction period
under the Self-Correction Program for significant compliance
failures;
(4) expanding the availability to correct insignificant
compliance failures under the Self-Correction Program during
audit; and
(5) assuring that any tax, penalty, or sanction that is
imposed by reason of a compliance failure is not excessive
and bears a reasonable relationship to the nature, extent,
and severity of the failure.
SEC. 1102. NOTICE AND CONSENT PERIOD REGARDING DISTRIBUTIONS.
(a) Expansion of Period.--
(1) Amendment of internal revenue code.--
(A) In general.--Section 417(a)(6)(A) of the Internal
Revenue Code of 1986 is amended by striking ``90-day'' and
inserting ``180-day''.
(B) Modification of regulations.--The Secretary of the
Treasury shall modify the regulations under sections 402(f),
411(a)(11), and 417 of the Internal Revenue Code of 1986 by
substituting ``180 days'' for ``90 days'' each place it
appears in Treasury Regulations sections 1.402(f)-1,
1.411(a)-11(c), and 1.417(e)-1(b).
(2) Amendment of erisa.--
(A) In general.--Section 205(c)(7)(A) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1055(c)(7)(A)) is amended by striking ``90-day'' and
inserting ``180-day''.
(B) Modification of regulations.--The Secretary of the
Treasury shall modify the regulations under part 2 of
subtitle B of title I of the Employee Retirement Income
Security Act of 1974 relating to sections 203(e) and 205 of
such Act by substituting ``180 days'' for ``90 days'' each
place it appears.
(3) Effective date.--The amendments and modifications made
or required by this subsection shall apply to years beginning
after December 31, 2006.
(b) Notification of Right To Defer.--
(1) In general.--The Secretary of the Treasury shall modify
the regulations under section 411(a)(11) of the Internal
Revenue Code of 1986 and under section 205 of the Employee
Retirement Income Security Act of 1974 to provide that the
description of a participant's right, if any, to defer
receipt of a distribution shall also describe the
consequences of failing to defer such receipt.
(2) Effective date.--
(A) In general.--The modifications required by paragraph
(1) shall apply to years beginning after December 31, 2006.
(B) Reasonable notice.--A plan shall not be treated as
failing to meet the requirements of section 411(a)(11) of
such Code or section 205 of such Act with respect to any
description of consequences described in paragraph (1) made
within 90 days after the Secretary of the Treasury issues the
modifications required by paragraph (1) if the plan
administrator makes a reasonable attempt to comply with such
requirements.
SEC. 1103. REPORTING SIMPLIFICATION.
(a) Simplified Annual Filing Requirement for Owners and
Their Spouses.--
(1) In general.--The Secretary of the Treasury shall modify
the requirements for filing annual returns with respect to
one-participant retirement plans to ensure that such plans
with assets of $250,000 or less as of the close of the plan
year need not file a return for that year.
(2) One-participant retirement plan defined.--For purposes
of this subsection, the term ``one-participant retirement
plan'' means a retirement plan with respect to which the
following requirements are met:
(A) on the first day of the plan year--
(i) the plan covered only one individual (or the individual
and the individual's spouse) and the individual owned 100
percent of the plan sponsor (whether or not incorporated), or
(ii) the plan covered only one or more partners (or
partners and their spouses) in the plan sponsor;
(B) the plan meets the minimum coverage requirements of
section 410(b) of the Internal Revenue Code of 1986 without
being combined with any other plan of the business that
covers the employees of the business;
(C) the plan does not provide benefits to anyone except the
individual (and the individual's spouse) or the partners (and
their spouses);
(D) the plan does not cover a business that is a member of
an affiliated service group, a controlled group of
corporations, or a group of businesses under common control;
and
(E) the plan does not cover a business that uses the
services of leased employees (within the meaning of section
414(n) of such Code).
For purposes of this paragraph, the term ``partner'' includes
a 2-percent shareholder (as defined in section 1372(b) of
such Code) of an S corporation.
(3) Other definitions.--Terms used in paragraph (2) which
are also used in section 414 of the Internal Revenue Code of
1986 shall have the respective meanings given such terms by
such section.
(4) Effective date.--The provisions of this subsection
shall apply to plan years beginning on or after January 1,
2007.
(b) Simplified Annual Filing Requirement for Plans With
Fewer Than 25 Participants.--In the case of plan years
beginning after December 31, 2006, the Secretary of the
Treasury and the Secretary of Labor shall provide for the
filing of a simplified annual return for any retirement plan
which covers less than 25 participants on the first day of a
plan year and which meets the requirements described in
subparagraphs (B), (D), and (E) of subsection (a)(2).
SEC. 1104. VOLUNTARY EARLY RETIREMENT INCENTIVE AND
EMPLOYMENT RETENTION PLANS MAINTAINED BY LOCAL
EDUCATIONAL AGENCIES AND OTHER ENTITIES.
(a) Voluntary Early Retirement Incentive Plans.--
(1) Treatment as plan providing severance pay.--Section
457(e)(11) of the Internal Revenue Code of 1986 (relating to
certain plans excluded) is amended by adding at the end the
following new subparagraph:
``(D) Certain voluntary early retirement incentive plans.--
``(i) In general.--If an applicable voluntary early
retirement incentive plan--
``(I) makes payments or supplements as an early retirement
benefit, a retirement-type subsidy, or a benefit described in
the last sentence of section 411(a)(9), and
``(II) such payments or supplements are made in
coordination with a defined benefit plan which is described
in section 401(a) and includes a trust exempt from tax under
section 501(a) and which is maintained by an eligible
employer described in paragraph (1)(A) or by an education
association described in clause (ii)(II),
such applicable plan shall be treated for purposes of
subparagraph (A)(i) as a bona fide severance pay plan with
respect to such payments or supplements to the extent such
payments or supplements could otherwise have been provided
under such defined benefit plan (determined as if section 411
applied to such defined benefit plan).
``(ii) Applicable voluntary early retirement incentive
plan.--For purposes of this subparagraph, the term
`applicable voluntary early retirement incentive plan' means
a voluntary early retirement incentive plan maintained by--
``(I) a local educational agency (as defined in section
9101 of the Elementary and Secondary Education Act of 1965
(20 U.S.C. 7801)), or
``(II) an education association which principally
represents employees of 1 or more agencies described in
subclause (I) and which is described in section 501(c) (5) or
(6) and exempt from tax under section 501(a).''
(2) Age discrimination in employment act.--Section 4(l)(1)
of the Age Discrimination in Employment Act of 1967 (29
U.S.C. 623(l)(1)) is amended--
[[Page H6115]]
(A) by inserting ``(A)'' after ``(1)'',
(B) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii), respectively,
(C) by redesignating clauses (i) and (ii) of subparagraph
(B) (as in effect before the amendments made by subparagraph
(B)) as subclauses (I) and (II), respectively, and
(D) by adding at the end the following:
``(B) A voluntary early retirement incentive plan that--
``(i) is maintained by--
``(I) a local educational agency (as defined in section
9101 of the Elementary and Secondary Education Act of 1965
(20 U.S.C. 7801), or
``(II) an education association which principally
represents employees of 1 or more agencies described in
subclause (I) and which is described in section 501(c) (5) or
(6) of the Internal Revenue Code of 1986 and exempt from
taxation under section 501(a) of such Code, and
``(ii) makes payments or supplements described in
subclauses (I) and (II) of subparagraph (A)(ii) in
coordination with a defined benefit plan (as so defined)
maintained by an eligible employer described in section
457(e)(1)(A) of such Code or by an education association
described in clause (i)(II),
shall be treated solely for purposes of subparagraph (A)(ii)
as if it were a part of the defined benefit plan with respect
to such payments or supplements. Payments or supplements
under such a voluntary early retirement incentive plan shall
not constitute severance pay for purposes of paragraph
(2).''.
(b) Employment Retention Plans.--
(1) In general.--Section 457(f)(2) of the Internal Revenue
Code of 1986 (relating to exceptions) is amended by striking
``and'' at the end of subparagraph (D), by striking the
period at the end of subparagraph (E) and inserting ``,
and'', and by adding at the end the following:
``(F) that portion of any applicable employment retention
plan described in paragraph (4) with respect to any
participant.''
(2) Definitions and rules relating to employment retention
plans.--Section 457(f) of such Code is amended by adding at
the end the following new paragraph:
``(4) Employment retention plans.--For purposes of
paragraph (2)(F)--
``(A) In general.--The portion of an applicable employment
retention plan described in this paragraph with respect to
any participant is that portion of the plan which provides
benefits payable to the participant not in excess of twice
the applicable dollar limit determined under subsection
(e)(15).
``(B) Other rules.--
``(i) Limitation.--Paragraph (2)(F) shall only apply to the
portion of the plan described in subparagraph (A) for years
preceding the year in which such portion is paid or otherwise
made available to the participant.
``(ii) Treatment.--A plan shall not be treated for purposes
of this title as providing for the deferral of compensation
for any year with respect to the portion of the plan
described in subparagraph (A).
``(C) Applicable employment retention plan.--The term
`applicable employment retention plan' means an employment
retention plan maintained by--
``(i) a local educational agency (as defined in section
9101 of the Elementary and Secondary Education Act of 1965
(20 U.S.C. 7801), or
``(ii) an education association which principally
represents employees of 1 or more agencies described in
clause (i) and which is described in section 501(c) (5) or
(6) and exempt from taxation under section 501(a).
``(D) Employment retention plan.--The term `employment
retention plan' means a plan to pay, upon termination of
employment, compensation to an employee of a local
educational agency or education association described in
subparagraph (C) for purposes of--
``(i) retaining the services of the employee, or
``(ii) rewarding such employee for the employee's service
with 1 or more such agencies or associations.''.
(c) Coordination With ERISA.--Section 3(2)(B) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1002(2)(B)) is amended by adding at the end the following:
``An applicable voluntary early retirement incentive plan (as
defined in section 457(e)(11)(D)(ii) of the Internal Revenue
Code of 1986) making payments or supplements described in
section 457(e)(11)(D)(i) of such Code, and an applicable
employment retention plan (as defined in section 457(f)(4)(C)
of such Code) making payments of benefits described in
section 457(f)(4)(A) of such Code, shall, for purposes of
this title, be treated as a welfare plan (and not a pension
plan) with respect to such payments and supplements.''
(d) Effective Dates.--
(1) In general.--The amendments made by this Act shall take
effect on the date of the enactment of this Act.
(2) Tax amendments.--The amendments made by subsections
(a)(1) and (b) shall apply to taxable years ending after the
date of the enactment of this Act.
(3) ERISA amendments.--The amendment made by subsection (c)
shall apply to plan years ending after the date of the
enactment of this Act.
(4) Construction.--Nothing in the amendments made by this
section shall alter or affect the construction of the
Internal Revenue Code of 1986, the Employee Retirement Income
Security Act of 1974, or the Age Discrimination in Employment
Act of 1967 as applied to any plan, arrangement, or conduct
to which such amendments do not apply.
SEC. 1105. NO REDUCTION IN UNEMPLOYMENT COMPENSATION AS A
RESULT OF PENSION ROLLOVERS.
(a) In General.--Section 3304(a) of the Internal Revenue
Code of 1986 (relating to requirements for State unemployment
laws) is amended by adding at the end the following new flush
sentence:
``Compensation shall not be reduced under paragraph (15) for
any pension, retirement or retired pay, annuity, or similar
payment which is not includible in gross income of the
individual for the taxable year in which paid because it was
part of a rollover distribution.''.
(b) Effective Date.--The amendment made by this section
shall apply to weeks beginning on or after the date of the
enactment of this Act.
SEC. 1106. REVOCATION OF ELECTION RELATING TO TREATMENT AS
MULTIEMPLOYER PLAN.
(a) Amendment to ERISA.--Section 3(37) of the Employee
Retirement Income Security Act of 1974 is amended by adding
at the end the following new subparagraph (G):
``(G)(i) Within 1 year after the enactment of the Pension
Protection Act of 2006--
``(I) an election under subparagraph (E) may be revoked,
pursuant to procedures prescribed by the Pension Benefit
Guaranty Corporation, if, for each of the 3 plan years prior
to the date of the enactment of that Act, the plan would have
been a multiemployer plan but for the election under
subparagraph (E), and
``(II) a plan that meets the criteria in clauses (i) and
(ii) of subparagraph (A) of this paragraph or that is
described in clause (vi) may, pursuant to procedures
prescribed by the Pension Benefit Guaranty Corporation, elect
to be a multiemployer plan, if--
``(aa) for each of the 3 plan years immediately before the
date of the enactment of the Pension Protection Act of 2006,
the plan has met those criteria or is so described,
``(bb) substantially all of the plan's employer
contributions for each of those plan years were made or
required to be made by organizations that were exempt from
tax under section 501 of the Internal Revenue Code of 1986,
and
``(cc) the plan was established prior to September 2, 1974.
``(ii) An election under this paragraph shall be effective
for all purposes under this Act and under the Internal
Revenue Code of 1986, starting with the first plan year
ending after the date of the enactment of the Pension
Protection Act of 2006.
``(iii) Once made, an election under this paragraph shall
be irrevocable, except that a plan described in subclause
(i)(II) shall cease to be a multiemployer plan as of the plan
year beginning immediately after the first plan year for
which the majority of its employer contributions were made or
required to be made by organizations that were not exempt
from tax under section 501 of the Internal Revenue Code of
1986.
``(iv) The fact that a plan makes an election under clause
(i)(II) does not imply that the plan was not a multiemployer
plan prior to the date of the election or would not be a
multiemployer plan without regard to the election.
``(v)(I) No later than 30 days before an election is made
under this paragraph, the plan administrator shall provide
notice of the pending election to each plan participant and
beneficiary, each labor organization representing such
participants or beneficiaries, and each employer that has an
obligation to contribute to the plan, describing the
principal differences between the guarantee programs under
title IV and the benefit restrictions under this title for
single employer and multiemployer plans, along with such
other information as the plan administrator chooses to
include.
``(II) Within 180 days after the date of enactment of the
Pension Protection Act of 2006, the Secretary shall prescribe
a model notice under this subparagraph.
``(III) A plan administrator's failure to provide the
notice required under this subparagraph shall be treated for
purposes of section 502(c)(2) as a failure or refusal by the
plan administrator to file the annual report required to be
filed with the Secretary under section 101(b)(4).
``(vi) A plan is described in this clause if it is a plan--
``(I) that was established in Chicago, Illinois, on August
12, 1881; and
``(II) sponsored by an organization described in section
501(c)(5) of the Internal Revenue Code of 1986 and exempt
from tax under section 501(a) of such Code.''.
(b) Amendment to Internal Revenue Code.--Subsection (f) of
section 414 of the Internal Revenue Code of 1986 is amended
by adding at the end the following new paragraph (6):
``(6) Election with regard to multiemployer status.--
``(A) Within 1 year after the enactment of the Pension
Protection Act of 2006--
``(i) An election under paragraph (5) may be revoked,
pursuant to procedures prescribed by the Pension Benefit
Guaranty Corporation, if, for each of the 3 plan years prior
to the date of the enactment of that Act, the plan would have
been a multiemployer plan but for the election under
paragraph (5), and
``(ii) a plan that meets the criteria in subparagraph (A)
and (B) of paragraph (1) of this
[[Page H6116]]
subsection or that is described in subparagraph (E) may,
pursuant to procedures prescribed by the Pension Benefit
Guaranty Corporation, elect to be a multiemployer plan, if--
``(I) for each of the 3 plan years immediately before the
date of enactment of the Pension Protection Act of 2006, the
plan has met those criteria or is so described,
``(II) substantially all of the plan's employer
contributions for each of those plan years were made or
required to be made by organizations that were exempt from
tax under section 501, and
``(III) the plan was established prior to September 2,
1974.
``(B) An election under this paragraph shall be effective
for all purposes under this Act and under the Employee
Retirement Income Security Act of 1974, starting with the
first plan year ending after the date of the enactment of the
Pension Protection Act of 2006.
``(C) Once made, an election under this paragraph shall be
irrevocable, except that a plan described in subparagraph
(A)(ii) shall cease to be a multiemployer plan as of the plan
year beginning immediately after the first plan year for
which the majority of its employer contributions were made or
required to be made by organizations that were not exempt
from tax under section 501.
``(D) The fact that a plan makes an election under
subparagraph (A)(ii) does not imply that the plan was not a
multiemployer plan prior to the date of the election or would
not be a multiemployer plan without regard to the election.
``(E) A plan is described in this subparagraph if it is a
plan--
``(i) that was established in Chicago, Illinois, on August
12, 1881; and
``(ii) sponsored by an organization described in section
501(c)(5) and exempt from tax under section 501(a).''.
SEC. 1107. PROVISIONS RELATING TO PLAN AMENDMENTS.
(a) In General.--If this section applies to any pension
plan or contract amendment--
(1) such pension plan or contract shall be treated as being
operated in accordance with the terms of the plan during the
period described in subsection (b)(2)(A), and
(2) except as provided by the Secretary of the Treasury,
such pension plan shall not fail to meet the requirements of
section 411(d)(6) of the Internal Revenue Code of 1986 and
section 204(g) of the Employee Retirement Income Security Act
of 1974 by reason of such amendment.
(b) Amendments to Which Section Applies.--
(1) In general.--This section shall apply to any amendment
to any pension plan or annuity contract which is made--
(A) pursuant to any amendment made by this Act or pursuant
to any regulation issued by the Secretary of the Treasury or
the Secretary of Labor under this Act, and
(B) on or before the last day of the first plan year
beginning on or after January 1, 2009.
In the case of a governmental plan (as defined in section
414(d) of the Internal Revenue Code of 1986), this paragraph
shall be applied by substituting ``2011'' for ``2009''.
(2) Conditions.--This section shall not apply to any
amendment unless--
(A) during the period--
(i) beginning on the date the legislative or regulatory
amendment described in paragraph (1)(A) takes effect (or in
the case of a plan or contract amendment not required by such
legislative or regulatory amendment, the effective date
specified by the plan), and
(ii) ending on the date described in paragraph (1)(B) (or,
if earlier, the date the plan or contract amendment is
adopted), the plan or contract is operated as if such plan or
contract amendment were in effect; and
(B) such plan or contract amendment applies retroactively
for such period.
TITLE XII--PROVISIONS RELATING TO EXEMPT ORGANIZATIONS
Subtitle A--Charitable Giving Incentives
SEC. 1201. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT
PLANS FOR CHARITABLE PURPOSES.
(a) In General.--Subsection (d) of section 408 (relating to
individual retirement accounts) is amended by adding at the
end the following new paragraph:
``(8) Distributions for charitable purposes.--
``(A) In general.--So much of the aggregate amount of
qualified charitable distributions with respect to a taxpayer
made during any taxable year which does not exceed $100,000
shall not be includible in gross income of such taxpayer for
such taxable year.
``(B) Qualified charitable distribution.--For purposes of
this paragraph, the term `qualified charitable distribution'
means any distribution from an individual retirement plan
(other than a plan described in subsection (k) or (p))--
``(i) which is made directly by the trustee to an
organization described in section 170(b)(1)(A) (other than
any organization described in section 509(a)(3) or any fund
or account described in section 4966(d)(2)), and
``(ii) which is made on or after the date that the
individual for whose benefit the plan is maintained has
attained age 70\1/2\.
A distribution shall be treated as a qualified charitable
distribution only to the extent that the distribution would
be includible in gross income without regard to subparagraph
(A).
``(C) Contributions must be otherwise deductible.--For
purposes of this paragraph, a distribution to an organization
described in subparagraph (B)(i) shall be treated as a
qualified charitable distribution only if a deduction for the
entire distribution would be allowable under section 170
(determined without regard to subsection (b) thereof and this
paragraph).
``(D) Application of section 72.--Notwithstanding section
72, in determining the extent to which a distribution is a
qualified charitable distribution, the entire amount of the
distribution shall be treated as includible in gross income
without regard to subparagraph (A) to the extent that such
amount does not exceed the aggregate amount which would have
been so includible if all amounts distributed from all
individual retirement plans were treated as 1 contract under
paragraph (2)(A) for purposes of determining the inclusion of
such distribution under section 72. Proper adjustments shall
be made in applying section 72 to other distributions in such
taxable year and subsequent taxable years.
``(E) Denial of deduction.--Qualified charitable
distributions which are not includible in gross income
pursuant to subparagraph (A) shall not be taken into account
in determining the deduction under section 170.
``(F) Termination.--This paragraph shall not apply to
distributions made in taxable years beginning after December
31, 2007.''.
(b) Modifications Relating to Information Returns by
Certain Trusts.--
(1) Returns.--Section 6034 (relating to returns by trusts
described in section 4947(a)(2) or claiming charitable
deductions under section 642(c)) is amended to read as
follows:
``SEC. 6034. RETURNS BY CERTAIN TRUSTS.
``(a) Split-Interest Trusts.--Every trust described in
section 4947(a)(2) shall furnish such information with
respect to the taxable year as the Secretary may by forms or
regulations require.
``(b) Trusts Claiming Certain Charitable Deductions.--
``(1) In general.--Every trust not required to file a
return under subsection (a) but claiming a deduction under
section 642(c) for the taxable year shall furnish such
information with respect to such taxable year as the
Secretary may by forms or regulations prescribe, including--
``(A) the amount of the deduction taken under section
642(c) within such year,
``(B) the amount paid out within such year which represents
amounts for which deductions under section 642(c) have been
taken in prior years,
``(C) the amount for which such deductions have been taken
in prior years but which has not been paid out at the
beginning of such year,
``(D) the amount paid out of principal in the current and
prior years for the purposes described in section 642(c),
``(E) the total income of the trust within such year and
the expenses attributable thereto, and
``(F) a balance sheet showing the assets, liabilities, and
net worth of the trust as of the beginning of such year.
``(2) Exceptions.--Paragraph (1) shall not apply to a trust
for any taxable year if--
``(A) all the net income for such year, determined under
the applicable principles of the law of trusts, is required
to be distributed currently to the beneficiaries, or
``(B) the trust is described in section 4947(a)(1).''.
(2) Increase in penalty relating to filing of information
return by split-interest trusts.--Paragraph (2) of section
6652(c) (relating to returns by exempt organizations and by
certain trusts) is amended by adding at the end the following
new subparagraph:
``(C) Split-interest trusts.--In the case of a trust which
is required to file a return under section 6034(a),
subparagraphs (A) and (B) of this paragraph shall not apply
and paragraph (1) shall apply in the same manner as if such
return were required under section 6033, except that--
``(i) the 5 percent limitation in the second sentence of
paragraph (1)(A) shall not apply,
``(ii) in the case of any trust with gross income in excess
of $250,000, the first sentence of paragraph (1)(A) shall be
applied by substituting `$100' for `$20', and the second
sentence thereof shall be applied by substituting `$50,000'
for `$10,000', and
``(iii) the third sentence of paragraph (1)(A) shall be
disregarded.
In addition to any penalty imposed on the trust pursuant to
this subparagraph, if the person required to file such return
knowingly fails to file the return, such penalty shall also
be imposed on such person who shall be personally liable for
such penalty.''.
(3) Confidentiality of noncharitable beneficiaries.--
Subsection (b) of section 6104 (relating to inspection of
annual information returns) is amended by adding at the end
the following new sentence: ``In the case of a trust which is
required to file a return under section 6034(a), this
subsection shall not apply to information regarding
beneficiaries which are not organizations described in
section 170(c).''.
(4) Clerical amendment.--The item in the table of sections
for subpart A of part III of subchapter A of chapter 61
relating to section 6034 is amended to read as follows:
``Sec. 6034. Returns by certain trusts.''.
(c) Effective Dates.--
(1) Subsection (a).--The amendment made by subsection (a)
shall apply to distributions made in taxable years beginning
after December 31, 2005.
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to returns for
[[Page H6117]]
taxable years beginning after December 31, 2006.
SEC. 1202. EXTENSION OF MODIFICATION OF CHARITABLE DEDUCTION
FOR CONTRIBUTIONS OF FOOD INVENTORY.
(a) In General.--Section 170(e)(3)(C)(iv) (relating to
termination) is amended by striking ``2005'' and inserting
``2007''.
(b) Effective Date.--The amendment made by this section
shall apply to contributions made after December 31, 2005.
SEC. 1203. BASIS ADJUSTMENT TO STOCK OF S CORPORATION
CONTRIBUTING PROPERTY.
(a) In General.--Paragraph (2) of section 1367(a) (relating
to adjustments to basis of stock of shareholders, etc.) is
amended by adding at the end the following new flush
sentence:
``The decrease under subparagraph (B) by reason of a
charitable contribution (as defined in section 170(c)) of
property shall be the amount equal to the shareholder's pro
rata share of the adjusted basis of such property. The
preceding sentence shall not apply to contributions made in
taxable years beginning after December 31, 2007.''.
(b) Effective Date.--The amendment made by this section
shall apply to contributions made in taxable years beginning
after December 31, 2005.
SEC. 1204. EXTENSION OF MODIFICATION OF CHARITABLE DEDUCTION
FOR CONTRIBUTIONS OF BOOK INVENTORY.
(a) In General.--Section 170(e)(3)(D)(iv) (relating to
termination) is amended by striking ``2005'' and inserting
``2007''.
(b) Effective Date.--The amendment made by this section
shall apply to contributions made after December 31, 2005.
SEC. 1205. MODIFICATION OF TAX TREATMENT OF CERTAIN PAYMENTS
TO CONTROLLING EXEMPT ORGANIZATIONS.
(a) In General.--Paragraph (13) of section 512(b) (relating
to special rules for certain amounts received from controlled
entities) is amended by redesignating subparagraph (E) as
subparagraph (F) and by inserting after subparagraph (D) the
following new subparagraph:
``(E) Paragraph to apply only to certain excess payments.--
``(i) In general.--Subparagraph (A) shall apply only to the
portion of a qualifying specified payment received or accrued
by the controlling organization that exceeds the amount which
would have been paid or accrued if such payment met the
requirements prescribed under section 482.
``(ii) Addition to tax for valuation misstatements.--The
tax imposed by this chapter on the controlling organization
shall be increased by an amount equal to 20 percent of the
larger of--
``(I) such excess determined without regard to any
amendment or supplement to a return of tax, or
``(II) such excess determined with regard to all such
amendments and supplements.
``(iii) Qualifying specified payment.--The term `qualifying
specified payment' means a specified payment which is made
pursuant to--
``(I) a binding written contract in effect on the date of
the enactment of this subparagraph, or
``(II) a contract which is a renewal, under substantially
similar terms, of a contract described in subclause (I).
``(iv) Termination.--This subparagraph shall not apply to
payments received or accrued after December 31, 2007.''.
(b) Reporting.--
(1) In general.--Section 6033 (relating to returns by
exempt organizations) is amended by redesignating subsection
(h) as subsection (i) and by inserting after subsection (g)
the following new subsection:
``(h) Controlling Organizations.--Each controlling
organization (within the meaning of section 512(b)(13)) which
is subject to the requirements of subsection (a) shall
include on the return required under subsection (a)--
``(1) any interest, annuities, royalties, or rents received
from each controlled entity (within the meaning of section
512(b)(13)),
``(2) any loans made to each such controlled entity, and
``(3) any transfers of funds between such controlling
organization and each such controlled entity.''.
(2) Report to congress.--Not later than January 1, 2009,
the Secretary of the Treasury shall submit to the Committee
on Finance of the Senate and the Committee on Ways and Means
of the House of Representatives a report on the effectiveness
of the Internal Revenue Service in administering the
amendments made by subsection (a) and on the extent to which
payments by controlled entities (within the meaning of
section 512(b)(13) of the Internal Revenue Code of 1986) to
controlling organizations (within the meaning of section
512(b)(13) of such Code) meet the requirements under section
482 of such Code. Such report shall include the results of
any audit of any controlling organization or controlled
entity and recommendations relating to the tax treatment of
payments from controlled entities to controlling
organizations.
(c) Effective Date.--
(1) Subsection (a).--The amendments made by subsection (a)
shall apply to payments received or accrued after December
31, 2005.
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to returns the due date (determined without
regard to extensions) of which is after the date of the
enactment of this Act.
SEC. 1206. ENCOURAGEMENT OF CONTRIBUTIONS OF CAPITAL GAIN
REAL PROPERTY MADE FOR CONSERVATION PURPOSES.
(a) In General.--
(1) Individuals.--Paragraph (1) of section 170(b) (relating
to percentage limitations) is amended by redesignating
subparagraphs (E) and (F) as subparagraphs (F) and (G),
respectively, and by inserting after subparagraph (D) the
following new subparagraph:
``(E) Contributions of qualified conservation
contributions.--
``(i) In general.--Any qualified conservation contribution
(as defined in subsection (h)(1)) shall be allowed to the
extent the aggregate of such contributions does not exceed
the excess of 50 percent of the taxpayer's contribution base
over the amount of all other charitable contributions
allowable under this paragraph.
``(ii) Carryover.--If the aggregate amount of contributions
described in clause (i) exceeds the limitation of clause (i),
such excess shall be treated (in a manner consistent with the
rules of subsection (d)(1)) as a charitable contribution to
which clause (i) applies in each of the 15 succeeding years
in order of time.
``(iii) Coordination with other subparagraphs.--For
purposes of applying this subsection and subsection (d)(1),
contributions described in clause (i) shall not be treated as
described in subparagraph (A), (B), (C), or (D) and such
subparagraphs shall apply without regard to such
contributions.
``(iv) Special rule for contribution of property used in
agriculture or livestock production.--
``(I) In general.--If the individual is a qualified farmer
or rancher for the taxable year for which the contribution is
made, clause (i) shall be applied by substituting `100
percent' for `50 percent'.
``(II) Exception.--Subclause (I) shall not apply to any
contribution of property made after the date of the enactment
of this subparagraph which is used in agriculture or
livestock production (or available for such production)
unless such contribution is subject to a restriction that
such property remain available for such production. This
subparagraph shall be applied separately with respect to
property to which subclause (I) does not apply by reason of
the preceding sentence prior to its application to property
to which subclause (I) does apply.
``(v) Definition.--For purposes of clause (iv), the term
`qualified farmer or rancher' means a taxpayer whose gross
income from the trade or business of farming (within the
meaning of section 2032A(e)(5)) is greater than 50 percent of
the taxpayer's gross income for the taxable year.
``(vi) Termination.--This subparagraph shall not apply to
any contribution made in taxable years beginning after
December 31, 2007.''.
(2) Corporations.--Paragraph (2) of section 170(b) is
amended to read as follows:
``(2) Corporations.--In the case of a corporation--
``(A) In general.--The total deductions under subsection
(a) for any taxable year (other than for contributions to
which subparagraph (B) applies) shall not exceed 10 percent
of the taxpayer's taxable income.
``(B) Qualified conservation contributions by certain
corporate farmers and ranchers.--
``(i) In general.--Any qualified conservation contribution
(as defined in subsection (h)(1))--
``(I) which is made by a corporation which, for the taxable
year during which the contribution is made, is a qualified
farmer or rancher (as defined in paragraph (1)(E)(v)) and the
stock of which is not readily tradable on an established
securities market at any time during such year, and
``(II) which, in the case of contributions made after the
date of the enactment of this subparagraph, is a contribution
of property which is used in agriculture or livestock
production (or available for such production) and which is
subject to a restriction that such property remain available
for such production,
shall be allowed to the extent the aggregate of such
contributions does not exceed the excess of the taxpayer's
taxable income over the amount of charitable contributions
allowable under subparagraph (A).
``(ii) Carryover.--If the aggregate amount of contributions
described in clause (i) exceeds the limitation of clause (i),
such excess shall be treated (in a manner consistent with the
rules of subsection (d)(2)) as a charitable contribution to
which clause (i) applies in each of the 15 succeeding years
in order of time.
``(iii) Termination.--This subparagraph shall not apply to
any contribution made in taxable years beginning after
December 31, 2007.
``(C) Taxable income.--For purposes of this paragraph,
taxable income shall be computed without regard to--
``(i) this section,
``(ii) part VIII (except section 248),
``(iii) any net operating loss carryback to the taxable
year under section 172,
``(iv) section 199, and
``(v) any capital loss carryback to the taxable year under
section 1212(a)(1).''.
(b) Conforming Amendments.--
(1) Paragraph (2) of section 170(d) is amended by striking
``subsection (b)(2)'' each place it appears and inserting
``subsection (b)(2)(A)''.
(2) Section 545(b)(2) is amended by striking ``and (D)''
and inserting ``(D), and (E)''.
[[Page H6118]]
(c) Effective Date.--The amendments made by this section
shall apply to contributions made in taxable years beginning
after December 31, 2005.
SEC. 1207. EXCISE TAXES EXEMPTION FOR BLOOD COLLECTOR
ORGANIZATIONS.
(a) Exemption From Imposition of Special Fuels Tax.--
Section 4041(g) (relating to other exemptions) is amended by
striking ``and'' at the end of paragraph (3), by striking the
period in paragraph (4) and inserting ``; and'', and by
inserting after paragraph (4) the following new paragraph:
``(5) with respect to the sale of any liquid to a qualified
blood collector organization (as defined in section
7701(a)(49)) for such organization's exclusive use in the
collection, storage, or transportation of blood.''.
(b) Exemption From Manufacturers Excise Tax.--
(1) In general.--Section 4221(a) (relating to certain tax-
free sales) is amended by striking ``or'' at the end of
paragraph (4), by adding ``or'' at the end of paragraph (5),
and by inserting after paragraph (5) the following new
paragraph:
``(6) to a qualified blood collector organization (as
defined in section 7701(a)(49)) for such organization's
exclusive use in the collection, storage, or transportation
of blood,''.
(2) No exemption with respect to vaccines and recreational
equipment.--Section 4221(a) is amended by adding at the end
the following new sentence: ``In the case of taxes imposed by
subchapter C or D, paragraph (6) shall not apply.''.
(3) Conforming amendments.--
(A) The second sentence of section 4221(a) is amended by
striking ``Paragraphs (4) and (5)'' and inserting
``Paragraphs (4), (5), and (6)''.
(B) Section 6421(c) is amended by striking ``or (5)'' and
inserting ``(5), or (6)''.
(c) Exemption From Communication Excise Tax.--
(1) In general.--Section 4253 (relating to exemptions) is
amended by redesignating subsection (k) as subsection (l) and
inserting after subsection (j) the following new subsection:
``(k) Exemption for Qualified Blood Collector
Organizations.--Under regulations provided by the Secretary,
no tax shall be imposed under section 4251 on any amount paid
by a qualified blood collector organization (as defined in
section 7701(a)(49)) for services or facilities furnished to
such organization.''.
(2) Conforming amendment.--Section 4253(l), as redesignated
by paragraph (1), is amended by striking ``or (j)'' and
inserting ``(j), or (k)''.
(d) Exemption From Tax on Heavy Vehicles.--Section 4483 is
amended by redesignating subsection (h) as subsection (i) and
by inserting after subsection (g) the following new
subsection:
``(h) Exemption for Vehicles Used in Blood Collection.--
``(1) In general.--No tax shall be imposed by section 4481
on the use of any qualified blood collector vehicle by a
qualified blood collector organization.
``(2) Qualified blood collector vehicle.--For purposes of
this subsection, the term `qualified blood collector vehicle'
means a vehicle at least 80 percent of the use of which
during the prior taxable period was by a qualified blood
collector organization in the collection, storage, or
transportation of blood.
``(3) Special rule for vehicles first placed in service in
a taxable period.--In the case of a vehicle first placed in
service in a taxable period, a vehicle shall be treated as a
qualified blood collector vehicle for such taxable period if
such qualified blood collector organization certifies to the
Secretary that the organization reasonably expects at least
80 percent of the use of such vehicle by the organization
during such taxable period will be in the collection,
storage, or transportation of blood.
``(4) Qualified blood collector organization.--The term
`qualified blood collector organization' has the meaning
given such term by section 7701(a)(49).''.
(e) Credit or Refund for Certain Taxes on Sales and
Services.--
(1) Deemed overpayment.--
(A) In general.--Section 6416(b)(2) is amended by
redesignating subparagraphs (E) and (F) as subparagraphs (F)
and (G), respectively, and by inserting after subparagraph
(D) the following new subparagraph:
``(E) sold to a qualified blood collector organization (as
defined in section 7701(a)(49)) for such organization's
exclusive use in the collection, storage, or transportation
of blood;''.
(B) No credit or refund for vaccines or recreational
equipment.--Section 6416(b)(2) is amended by adding at the
end the following new sentence: ``In the case of taxes
imposed by subchapter C or D of chapter 32, subparagraph (E)
shall not apply.''.
(C) Conforming amendments.--Section 6416(b)(2) is amended--
(i) by striking ``Subparagraphs (C) and (D)'' in the second
sentence and inserting ``Subparagraphs (C), (D), and (E)''.
(ii) by striking ``(B), (C), and (D)'' and inserting ``(B),
(C), (D), and (E)''.
(2) Sales of tires.--Section 6416(b)(4)(B) is amended by
striking ``or'' at the end of clause (i), by striking the
period at the end of clause (ii) and inserting ``, or'', and
by adding after clause (ii) the following:
``(iii) sold to a qualified blood collector organization
for its exclusive use in connection with a vehicle the
organization certifies will be primarily used in the
collection, storage, or transportation of blood.''.
(f) Definition of Qualified Blood Collector Organization.--
Section 7701(a) is amended by inserting at the end the
following new paragraph:
``(49) Qualified blood collector organization.--The term
`qualified blood collector organization' means an
organization which is--
``(A) described in section 501(c)(3) and exempt from tax
under section 501(a),
``(B) primarily engaged in the activity of the collection
of human blood,
``(C) registered with the Secretary for purposes of excise
tax exemptions, and
``(D) registered by the Food and Drug Administration to
collect blood.''.
(g) Effective Date.--
(1) In general.--The amendments made by this section shall
take effect on January 1, 2007.
(2) Subsection (d).--The amendment made by subsection (d)
shall apply to taxable periods beginning on or after July 1,
2007.
Subtitle B--Reforming Exempt Organizations
PART 1--GENERAL REFORMS
SEC. 1211. REPORTING ON CERTAIN ACQUISITIONS OF INTERESTS IN
INSURANCE CONTRACTS IN WHICH CERTAIN EXEMPT
ORGANIZATIONS HOLD AN INTEREST.
(a) Reporting Requirements.--
(1) In general.--Subpart B of part III of subchapter A of
chapter 61 (relating to information concerning transactions
with other persons), as amended by this Act, is amended by
adding at the end the following new section:
``SEC. 6050V. RETURNS RELATING TO APPLICABLE INSURANCE
CONTRACTS IN WHICH CERTAIN EXEMPT ORGANIZATIONS
HOLD INTERESTS.
``(a) In General.--Each applicable exempt organization
which makes a reportable acquisition shall make the return
described in subsection (c).
``(b) Time for Making Return.--Any applicable exempt
organization required to make a return under subsection (a)
shall file such return at such time as may be established by
the Secretary.
``(c) Form and Manner of Returns.--A return is described in
this subsection if such return--
``(1) is in such form as the Secretary prescribes,
``(2) contains the name, address, and taxpayer
identification number of the applicable exempt organization
and the issuer of the applicable insurance contract, and
``(3) contains such other information as the Secretary may
prescribe.
``(d) Definitions.--For purposes of this section--
``(1) Reportable acquisition.--The term `reportable
acquisition' means the acquisition by an applicable exempt
organization of a direct or indirect interest in any
applicable insurance contract in any case in which such
acquisition is a part of a structured transaction involving a
pool of such contracts.
``(2) Applicable insurance contract.--
``(A) In general.--The term `applicable insurance contract'
means any life insurance, annuity, or endowment contract with
respect to which both an applicable exempt organization and a
person other than an applicable exempt organization have
directly or indirectly held an interest in the contract
(whether or not at the same time).
``(B) Exceptions.--Such term shall not include a life
insurance, annuity, or endowment contract if--
``(i) all persons directly or indirectly holding any
interest in the contract (other than applicable exempt
organizations) have an insurable interest in the insured
under the contract independent of any interest of an
applicable exempt organization in the contract,
``(ii) the sole interest in the contract of an applicable
exempt organization or each person other than an applicable
exempt organization is as a named beneficiary, or
``(iii) the sole interest in the contract of each person
other than an applicable exempt organization is--
``(I) as a beneficiary of a trust holding an interest in
the contract, but only if the person's designation as such
beneficiary was made without consideration and solely on a
purely gratuitous basis, or
``(II) as a trustee who holds an interest in the contract
in a fiduciary capacity solely for the benefit of applicable
exempt organizations or persons otherwise described in
subclause (I) or clause (i) or (ii).
``(3) Applicable exempt organization.--The term `applicable
exempt organization' means--
``(A) an organization described in section 170(c),
``(B) an organization described in section
168(h)(2)(A)(iv), or
``(C) an organization not described in paragraph (1) or (2)
which is described in section 2055(a) or section 2522(a).
``(e) Termination.--This section shall not apply to
reportable acquisitions occurring after the date which is 2
years after the date of the enactment of this section.''.
(2) Conforming amendment.--The table of sections for
subpart B of part III of subchapter A of chapter 61 is
amended by adding at the end the following new item:
[[Page H6119]]
``Sec. 6050V. Returns relating to applicable insurance contracts in
which certain exempt organizations hold interests.''.
(b) Penalties.--
(1) In general.--Subparagraph (B) of section 6724(d)(1), as
amended by this Act, is amended by redesignating clauses
(xiv) through (xix) as clauses (xv) through (xx) and by
inserting after clause (xiii) the following new clause:
``(xiv) section 6050V (relating to returns relating to
applicable insurance contracts in which certain exempt
organizations hold interests),''.
(2) Intentional disregard.--Section 6721(e)(2) is amended
by striking ``or'' at the end of subparagraph (B), by
striking ``and'' at the end of subparagraph (C) and inserting
``or'', and by adding at the end the following new
subparagraph:
``(D) in the case of a return required to be filed under
section 6050V, 10 percent of the value of the benefit of any
contract with respect to which information is required to be
included on the return, and''.
(c) Study.--
(1) In general.--The Secretary of the Treasury shall
undertake a study on--
(A) the use by tax exempt organizations of applicable
insurance contracts (as defined under section 6050V(d)(2) of
the Internal Revenue Code of 1986, as added by subsection
(a)) for the purpose of sharing the benefits of the
organization's insurable interest in individuals insured
under such contracts with investors, and
(B) whether such activities are consistent with the tax
exempt status of such organizations.
(2) Report.--Not later than 30 months after the date of the
enactment of this Act, the Secretary of the Treasury shall
report on the study conducted under paragraph (1) to the
Committee on Finance of the Senate and the Committee on Ways
and Means of the House of Representatives.
(d) Effective Date.--The amendments made by this section
shall apply to acquisitions of contracts after the date of
enactment of this Act.
SEC. 1212. INCREASE IN PENALTY EXCISE TAXES RELATING TO
PUBLIC CHARITIES, SOCIAL WELFARE ORGANIZATIONS,
AND PRIVATE FOUNDATIONS.
(a) Taxes on Self-Dealing and Excess Benefit
Transactions.--
(1) In general.--Section 4941(a) (relating to initial
taxes) is amended--
(A) in paragraph (1), by striking ``5 percent'' and
inserting ``10 percent'', and
(B) in paragraph (2), by striking ``2\1/2\ percent'' and
inserting ``5 percent''.
(2) Increased limitation for managers on self-dealing.--
Section 4941(c)(2) is amended by striking ``$10,000'' each
place it appears in the text and heading thereof and
inserting ``$20,000''.
(3) Increased limitation for managers on excess benefit
transactions.--Section 4958(d)(2) is amended by striking
``$10,000'' and inserting ``$20,000''.
(b) Taxes on Failure to Distribute Income.--Section 4942(a)
(relating to initial tax) is amended by striking ``15
percent'' and inserting ``30 percent''.
(c) Taxes on Excess Business Holdings.--Section 4943(a)(1)
(relating to imposition) is amended by striking ``5 percent''
and inserting ``10 percent''.
(d) Taxes on Investments Which Jeopardize Charitable
Purpose.--
(1) In general.--Section 4944(a) (relating to initial
taxes) is amended by striking ``5 percent'' both places it
appears and inserting ``10 percent''.
(2) Increased limitation for managers.--Section 4944(d)(2)
is amended--
(A) by striking ``$5,000,'' and inserting ``$10,000,'', and
(B) by striking ``$10,000.'' and inserting ``$20,000.''.
(e) Taxes on Taxable Expenditures.--
(1) In general.--Section 4945(a) (relating to initial
taxes) is amended--
(A) in paragraph (1), by striking ``10 percent'' and
inserting ``20 percent'', and
(B) in paragraph (2), by striking ``2\1/2\ percent'' and
inserting ``5 percent''.
(2) Increased limitation for managers.--Section 4945(c)(2)
is amended--
(A) by striking ``$5,000,'' and inserting ``$10,000,'', and
(B) by striking ``$10,000.'' and inserting ``$20,000.''.
(f) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
SEC. 1213. REFORM OF CHARITABLE CONTRIBUTIONS OF CERTAIN
EASEMENTS IN REGISTERED HISTORIC DISTRICTS AND
REDUCED DEDUCTION FOR PORTION OF QUALIFIED
CONSERVATION CONTRIBUTION ATTRIBUTABLE TO
REHABILITATION CREDIT.
(a) Special Rules With Respect to Buildings in Registered
Historic Districts.--
(1) In general.--Paragraph (4) of section 170(h) (relating
to definition of conservation purpose) is amended by
redesignating subparagraph (B) as subparagraph (C) and by
inserting after subparagraph (A) the following new
subparagraph:
``(B) Special rules with respect to buildings in registered
historic districts.--In the case of any contribution of a
qualified real property interest which is a restriction with
respect to the exterior of a building described in
subparagraph (C)(ii), such contribution shall not be
considered to be exclusively for conservation purposes
unless--
``(i) such interest--
``(I) includes a restriction which preserves the entire
exterior of the building (including the front, sides, rear,
and height of the building), and
``(II) prohibits any change in the exterior of the building
which is inconsistent with the historical character of such
exterior,
``(ii) the donor and donee enter into a written agreement
certifying, under penalty of perjury, that the donee--
``(I) is a qualified organization (as defined in paragraph
(3)) with a purpose of environmental protection, land
conservation, open space preservation, or historic
preservation, and
``(II) has the resources to manage and enforce the
restriction and a commitment to do so, and
``(iii) in the case of any contribution made in a taxable
year beginning after the date of the enactment of this
subparagraph, the taxpayer includes with the taxpayer's
return for the taxable year of the contribution--
``(I) a qualified appraisal (within the meaning of
subsection (f)(11)(E)) of the qualified property interest,
``(II) photographs of the entire exterior of the building,
and
``(III) a description of all restrictions on the
development of the building.''.
(b) Disallowance of Deduction for Structures and Land in
Registered Historic Districts.--Subparagraph (C) of section
170(h)(4), as redesignated by subsection (a), is amended--
(1) by striking ``any building, structure, or land area
which'',
(2) by inserting ``any building, structure, or land area
which'' before ``is listed'' in clause (i), and
(3) by inserting ``any building which'' before ``is
located'' in clause (ii).
(c) Filing Fee for Certain Contributions.--Subsection (f)
of section 170 (relating to disallowance of deduction in
certain cases and special rules) is amended by adding at the
end the following new paragraph:
``(13) Contributions of certain interests in buildings
located in registered historic districts.--
``(A) In general.--No deduction shall be allowed with
respect to any contribution described in subparagraph (B)
unless the taxpayer includes with the return for the taxable
year of the contribution a $500 filing fee.
``(B) Contribution described.--A contribution is described
in this subparagraph if such contribution is a qualified
conservation contribution (as defined in subsection (h))
which is a restriction with respect to the exterior of a
building described in subsection (h)(4)(C)(ii) and for which
a deduction is claimed in excess of $10,000.
``(C) Dedication of fee.--Any fee collected under this
paragraph shall be used for the enforcement of the provisions
of subsection (h).''.
(d) Reduced Deduction for Portion of Qualified Conservation
Contribution Attributable to the Rehabilitation Credit.--
Subsection (f) of section 170, as amended by subsection (c),
is amended by adding at the end the following new paragraph:
``(14) Reduction for amounts attributable to rehabilitation
credit.--In the case of any qualified conservation
contribution (as defined in subsection (h)), the amount of
the deduction allowed under this section shall be reduced by
an amount which bears the same ratio to the fair market value
of the contribution as--
``(A) the sum of the credits allowed to the taxpayer under
section 47 for the 5 preceding taxable years with respect to
any building which is a part of such contribution, bears to
``(B) the fair market value of the building on the date of
the contribution.''.
(e) Effective Dates.--
(1) Special rules for buildings in registered historic
districts.--The amendments made by subsection (a) shall apply
to contributions made after July 25, 2006.
(2) Disallowance of deduction for structures and land;
reduction for rehabilitation credit.--The amendments made by
subsections (b) and (d) shall apply to contributions made
after the date of the enactment of this Act.
(3) Filing fee.--The amendment made by subsection (c) shall
apply to contributions made 180 days after the date of the
enactment of this Act.
SEC. 1214. CHARITABLE CONTRIBUTIONS OF TAXIDERMY PROPERTY.
(a) Denial of Long-Term Capital Gain.--Subparagraph (B) of
section 170(e)(1) is amended by striking ``or'' at the end of
clause (ii), by inserting ``or'' at the end of clause (iii),
and by inserting after clause (iii) the following new clause:
``(iv) of any taxidermy property which is contributed by
the person who prepared, stuffed, or mounted the property or
by any person who paid or incurred the cost of such
preparation, stuffing, or mounting,''.
(b) Treatment of Basis.--Subsection (f) of section 170, as
amended by this Act, is amended by adding at the end the
following new paragraph:
``(15) Special rule for taxidermy property.--
``(A) Basis.--For purposes of this section and
notwithstanding section 1012, in the case of a charitable
contribution of taxidermy property which is made by the
person who prepared, stuffed, or mounted the property or by
any person who paid or incurred the cost of such preparation,
stuffing, or mounting, only the cost of the preparing,
stuffing,
[[Page H6120]]
or mounting shall be included in the basis of such property.
``(B) Taxidermy property.--For purposes of this section,
the term `taxidermy property' means any work of art which--
``(i) is the reproduction or preservation of an animal, in
whole or in part,
``(ii) is prepared, stuffed, or mounted for purposes of
recreating one or more characteristics of such animal, and
``(iii) contains a part of the body of the dead animal.''.
(c) Effective Date.--The amendment made by this section
shall apply to contributions made after July 25, 2006.
SEC. 1215. RECAPTURE OF TAX BENEFIT FOR CHARITABLE
CONTRIBUTIONS OF EXEMPT USE PROPERTY NOT USED
FOR AN EXEMPT USE.
(a) Recapture of Deduction on Certain Sales of Exempt Use
Property.--
(1) In general.--Clause (i) of section 170(e)(1)(B)
(related to certain contributions of ordinary income and
capital gain property) is amended to read as follows:
``(i) of tangible personal property--
``(I) if the use by the donee is unrelated to the purpose
or function constituting the basis for its exemption under
section 501 (or, in the case of a governmental unit, to any
purpose or function described in subsection (c)), or
``(II) which is applicable property (as defined in
paragraph (7)(C)) which is sold, exchanged, or otherwise
disposed of by the donee before the last day of the taxable
year in which the contribution was made and with respect to
which the donee has not made a certification in accordance
with paragraph (7)(D),''.
(2) Dispositions after close of taxable year.--Section
170(e) is amended by adding at the end the following new
paragraph:
``(7) Recapture of deduction on certain dispositions of
exempt use property.--
``(A) In general.--In the case of an applicable disposition
of applicable property, there shall be included in the income
of the donor of such property for the taxable year of such
donor in which the applicable disposition occurs an amount
equal to the excess (if any) of--
``(i) the amount of the deduction allowed to the donor
under this section with respect to such property, over
``(ii) the donor's basis in such property at the time such
property was contributed.
``(B) Applicable disposition.--For purposes of this
paragraph, the term `applicable disposition' means any sale,
exchange, or other disposition by the donee of applicable
property--
``(i) after the last day of the taxable year of the donor
in which such property was contributed, and
``(ii) before the last day of the 3-year period beginning
on the date of the contribution of such property,
unless the donee makes a certification in accordance with
subparagraph (D).
``(C) Applicable property.--For purposes of this paragraph,
the term `applicable property' means charitable deduction
property (as defined in section 6050L(a)(2)(A))--
``(i) which is tangible personal property the use of which
is identified by the donee as related to the purpose or
function constituting the basis of the donee's exemption
under section 501, and
``(ii) for which a deduction in excess of the donor's basis
is allowed.
``(D) Certification.--A certification meets the
requirements of this subparagraph if it is a written
statement which is signed under penalty of perjury by an
officer of the donee organization and--
``(i) which--
``(I) certifies that the use of the property by the donee
was related to the purpose or function constituting the basis
for the donee's exemption under section 501, and
``(II) describes how the property was used and how such use
furthered such purpose or function, or
``(ii) which--
``(I) states the intended use of the property by the donee
at the time of the contribution, and
``(II) certifies that such intended use has become
impossible or infeasible to implement.''.
(b) Reporting Requirements.--Paragraph (1) of section
6050L(a) (relating to returns relating to certain
dispositions of donated property) is amended--
(1) by striking ``2 years'' and inserting ``3 years'', and
(2) by striking ``and'' at the end of subparagraph (D), by
striking the period at the end of subparagraph (E) and
inserting a comma, and by inserting at the end the following:
``(F) a description of the donee's use of the property, and
``(G) a statement indicating whether the use of the
property was related to the purpose or function constituting
the basis for the donee's exemption under section 501.
In any case in which the donee indicates that the use of
applicable property (as defined in section 170(e)(7)(C)) was
related to the purpose or function constituting the basis for
the exemption of the donee under section 501 under
subparagraph (G), the donee shall include with the return the
certification described in section 170(e)(7)(D) if such
certification is made under section 170(e)(7).''.
(c) Penalty.--
(1) In general.--Part I of subchapter B of chapter 68
(relating to assessable penalties) is amended by inserting
after section 6720A the following new section:
``SEC. 6720B. FRAUDULENT IDENTIFICATION OF EXEMPT USE
PROPERTY.
``In addition to any criminal penalty provided by law, any
person who identifies applicable property (as defined in
section 170(e)(7)(C)) as having a use which is related to a
purpose or function constituting the basis for the donee's
exemption under section 501 and who knows that such property
is not intended for such a use shall pay a penalty of
$10,000.''.
(2) Clerical amendment.--The table of sections for part I
of subchapter B of chapter 68 is amended by adding after the
item relating to section 6720A the following new item:
``Sec. 6720B. Fraudulent identification of exempt use property.''.
(d) Effective Date.--
(1) Recapture.--The amendments made by subsection (a) shall
apply to contributions after September 1, 2006.
(2) Reporting.--The amendments made by subsection (b) shall
apply to returns filed after September 1, 2006.
(3) Penalty.--The amendments made by subsection (c) shall
apply to identifications made after the date of the enactment
of this Act.
SEC. 1216. LIMITATION OF DEDUCTION FOR CHARITABLE
CONTRIBUTIONS OF CLOTHING AND HOUSEHOLD ITEMS.
(a) In General.--Subsection (f) of section 170, as amended
by this Act, is amended by adding at the end the following
new paragraph:
``(16) Contributions of clothing and household items.--
``(A) In general.--In the case of an individual,
partnership, or corporation, no deduction shall be allowed
under subsection (a) for any contribution of clothing or a
household item unless such clothing or household item is in
good used condition or better.
``(B) Items of minimal value.--Notwithstanding subparagraph
(A), the Secretary may by regulation deny a deduction under
subsection (a) for any contribution of clothing or a
household item which has minimal monetary value.
``(C) Exception for certain property.--Subparagraphs (A)
and (B) shall not apply to any contribution of a single item
of clothing or a household item for which a deduction of more
than $500 is claimed if the taxpayer includes with the
taxpayer's return a qualified appraisal with respect to the
property.
``(D) Household items.--For purposes of this paragraph--
``(i) In general.--The term `household items' includes
furniture, furnishings, electronics, appliances, linens, and
other similar items.
``(ii) Excluded items.--Such term does not include--
``(I) food,
``(II) paintings, antiques, and other objects of art,
``(III) jewelry and gems, and
``(IV) collections.
``(E) Special rule for pass-thru entities.--In the case of
a partnership or S corporation, this paragraph shall be
applied at the entity level, except that the deduction shall
be denied at the partner or shareholder level.''.
(b) Effective Date.--The amendment made by this section
shall apply to contributions made after the date of enactment
of this Act.
SEC. 1217. MODIFICATION OF RECORDKEEPING REQUIREMENTS FOR
CERTAIN CHARITABLE CONTRIBUTIONS.
(a) Recordkeeping Requirement.--Subsection (f) of section
170, as amended by this Act, is amended by adding at the end
the following new paragraph:
``(17) Recordkeeping.--No deduction shall be allowed under
subsection (a) for any contribution of a cash, check, or
other monetary gift unless the donor maintains as a record of
such contribution a bank record or a written communication
from the donee showing the name of the donee organization,
the date of the contribution, and the amount of the
contribution.''.
(b) Effective Date.--The amendment made by this section
shall apply to contributions made in taxable years beginning
after the date of the enactment of this Act.
SEC. 1218. CONTRIBUTIONS OF FRACTIONAL INTERESTS IN TANGIBLE
PERSONAL PROPERTY.
(a) Income Tax.--Section 170 (relating to charitable, etc.,
contributions and gifts) is amended by redesignating
subsection (o) as subsection (p) and by inserting after
subsection (n) the following new subsection:
``(o) Special Rules for Fractional Gifts.--
``(1) Denial of deduction in certain cases.--
``(A) In general.--No deduction shall be allowed for a
contribution of an undivided portion of a taxpayer's entire
interest in tangible personal property unless all interest in
the property is held immediately before such contribution
by--
``(i) the taxpayer, or
``(ii) the taxpayer and the donee.
``(B) Exceptions.--The Secretary may, by regulation,
provide for exceptions to subparagraph (A) in cases where all
persons who hold an interest in the property make
proportional contributions of an undivided portion of the
entire interest held by such persons.
``(2) Valuation of subsequent gifts.--In the case of any
additional contribution, the fair market value of such
contribution shall be determined by using the lesser of--
[[Page H6121]]
``(A) the fair market value of the property at the time of
the initial fractional contribution, or
``(B) the fair market value of the property at the time of
the additional contribution.
``(3) Recapture of deduction in certain cases; addition to
tax.--
``(A) Recapture.--The Secretary shall provide for the
recapture of the amount of any deduction allowed under this
section (plus interest) with respect to any contribution of
an undivided portion of a taxpayer's entire interest in
tangible personal property--
``(i) in any case in which the donor does not contribute
all of the remaining interest in such property to the donee
(or, if such donee is no longer in existence, to any person
described in section 170(c)) before the earlier of--
``(I) the date that is 10 years after the date of the
initial fractional contribution, or
``(II) the date of the death of the donor, and
``(ii) in any case in which the donee has not, during the
period beginning on the date of the initial fractional
contribution and ending on the date described in clause (i)--
``(I) had substantial physical possession of the property,
and
``(II) used the property in a use which is related to a
purpose or function constituting the basis for the
organizations' exemption under section 501.
``(B) Addition to tax.--The tax imposed under this chapter
for any taxable year for which there is a recapture under
subparagraph (A) shall be increased by 10 percent of the
amount so recaptured.
``(4) Definitions.--For purposes of this subsection--
``(A) Additional contribution.--The term `additional
contribution' means any charitable contribution by the
taxpayer of any interest in property with respect to which
the taxpayer has previously made an initial fractional
contribution.
``(B) Initial fractional contribution.--The term `initial
fractional contribution' means, with respect to any taxpayer,
the first charitable contribution of an undivided portion of
the taxpayer's entire interest in any tangible personal
property.''.
(b) Estate Tax.--Section 2055 (relating to transfers for
public, charitable, and religious uses) is amended by
redesignating subsection (g) as subsection (h) and by
inserting after subsection (f) the following new subsection:
``(g) Valuation of Subsequent Gifts.--
``(1) In general.--In the case of any additional
contribution, the fair market value of such contribution
shall be determined by using the lesser of--
``(A) the fair market value of the property at the time of
the initial fractional contribution, or
``(B) the fair market value of the property at the time of
the additional contribution.
``(2) Definitions.--For purposes of this paragraph--
``(A) Additional contribution.--The term `additional
contribution' means a bequest, legacy, devise, or transfer
described in subsection (a) of any interest in a property
with respect to which the decedent had previously made an
initial fractional contribution.
``(B) Initial fractional contribution.--The term `initial
fractional contribution' means, with respect to any decedent,
any charitable contribution of an undivided portion of the
decedent's entire interest in any tangible personal property
for which a deduction was allowed under section 170.''.
(c) Gift Tax.--Section 2522 (relating to charitable and
similar gifts) is amended by redesignating subsection (e) as
subsection (f) and by inserting after subsection (d) the
following new subsection:
``(e) Special Rules for Fractional Gifts.--
``(1) Denial of deduction in certain cases.--
``(A) In general.--No deduction shall be allowed for a
contribution of an undivided portion of a taxpayer's entire
interest in tangible personal property unless all interest in
the property is held immediately before such contribution
by--
``(i) the taxpayer, or
``(ii) the taxpayer and the donee.
``(B) Exceptions.--The Secretary may, by regulation,
provide for exceptions to subparagraph (A) in cases where all
persons who hold an interest in the property make
proportional contributions of an undivided portion of the
entire interest held by such persons.
``(2) Valuation of subsequent gifts.--In the case of any
additional contribution, the fair market value of such
contribution shall be determined by using the lesser of--
``(A) the fair market value of the property at the time of
the initial fractional contribution, or
``(B) the fair market value of the property at the time of
the additional contribution.
``(3) Recapture of deduction in certain cases; addition to
tax.--
``(A) In general.--The Secretary shall provide for the
recapture of an amount equal to any deduction allowed under
this section (plus interest) with respect to any contribution
of an undivided portion of a taxpayer's entire interest in
tangible personal property--
``(i) in any case in which the donor does not contribute
all of the remaining interest in such property to the donee
(or, if such donee is no longer in existence, to any person
described in section 170(c)) before the earlier of--
``(I) the date that is 10 years after the date of the
initial fractional contribution, or
``(II) the date of the death of the donor, and
``(ii) in any case in which the donee has not, during the
period beginning on the date of the initial fractional
contribution and ending on the date described in clause (i)--
``(I) had substantial physical possession of the property,
and
``(II) used the property in a use which is related to a
purpose or function constituting the basis for the
organizations' exemption under section 501.
``(B) Addition to tax.--The tax imposed under this chapter
for any taxable year for which there is a recapture under
subparagraph (A) shall be increased by 10 percent of the
amount so recaptured.
``(4) Definitions.--For purposes of this subsection--
``(A) Additional contribution.--The term `additional
contribution' means any gift for which a deduction is allowed
under subsection (a) or (b) of any interest in a property
with respect to which the donor has previously made an
initial fractional contribution.
``(B) Initial fractional contribution.--The term `initial
fractional contribution' means, with respect to any donor,
the first gift of an undivided portion of the donor's entire
interest in any tangible personal property for which a
deduction is allowed under subsection (a) or (b).''.
(d) Effective Date.--The amendments made by this section
shall apply to contributions, bequests, and gifts made after
the date of the enactment of this Act.
SEC. 1219. PROVISIONS RELATING TO SUBSTANTIAL AND GROSS
OVERSTATEMENTS OF VALUATIONS.
(a) Modification of Thresholds for Substantial and Gross
Valuation Misstatements.--
(1) Substantial valuation misstatement.--
(A) Income taxes.--Subparagraph (A) of section 6662(e)(1)
(relating to substantial valuation misstatement under chapter
1) is amended by striking ``200 percent'' and inserting ``150
percent''.
(B) Estate and gift taxes.--Paragraph (1) of section
6662(g) is amended by striking ``50 percent'' and inserting
``65 percent''.
(2) Gross valuation misstatement.--
(A) Income taxes.--Clauses (i) and (ii) of section
6662(h)(2)(A) (relating to increase in penalty in case of
gross valuation misstatements) are amended to read as
follows:
``(i) in paragraph (1)(A), `200 percent' for `150 percent',
``(ii) in paragraph (1)(B)(i)--
``(I) `400 percent' for `200 percent', and
``(II) `25 percent' for `50 percent', and''.
(B) Estate and gift taxes.--Subparagraph (C) of section
6662(h)(2) is amended by striking ``1A`25 percent'
for `50 percent'1A'' and inserting ``1A`40
percent' for `65 percent'1A''.
(3) Elimination of reasonable cause exception for gross
misstatements.--Section 6664(c)(2) (relating to reasonable
cause exception for underpayments) is amended by striking
``paragraph (1) shall not apply unless'' and inserting
``paragraph (1) shall not apply. The preceding sentence shall
not apply to a substantial valuation overstatement under
chapter 1 if''.
(b) Penalty on Appraisers Whose Appraisals Result in
Substantial or Gross Valuation Misstatements.--
(1) In general.--Part I of subchapter B of chapter 68
(relating to assessable penalties) is amended by inserting
after section 6695 the following new section:
``SEC. 6695A. SUBSTANTIAL AND GROSS VALUATION MISSTATEMENTS
ATTRIBUTABLE TO INCORRECT APPRAISALS.
``(a) Imposition of Penalty.--If--
``(1) a person prepares an appraisal of the value of
property and such person knows, or reasonably should have
known, that the appraisal would be used in connection with a
return or a claim for refund, and
``(2) the claimed value of the property on a return or
claim for refund which is based on such appraisal results in
a substantial valuation misstatement under chapter 1 (within
the meaning of section 6662(e)), or a gross valuation
misstatement (within the meaning of section 6662(h)), with
respect to such property, then such person shall pay a
penalty in the amount determined under subsection (b).
``(b) Amount of Penalty.--The amount of the penalty imposed
under subsection (a) on any person with respect to an
appraisal shall be equal to the lesser of--
``(1) the greater of--
``(A) 10 percent of the amount of the underpayment (as
defined in section 6664(a)) attributable to the misstatement
described in subsection (a)(2), or
``(B) $1,000, or
``(2) 125 percent of the gross income received by the
person described in subsection (a)(1) from the preparation of
the appraisal.
``(c) Exception.--No penalty shall be imposed under
subsection (a) if the person establishes to the satisfaction
of the Secretary that the value established in the appraisal
was more likely than not the proper value.''.
(2) Rules applicable to penalty.--Section 6696 (relating to
rules applicable with respect to sections 6694 and 6695) is
amended--
(A) by striking ``6694 and 6695'' each place it appears in
the text and heading thereof and inserting ``6694, 6695, and
6695A'', and
(B) by striking ``6694 or 6695'' each place it appears in
the text and inserting ``6694, 6695, or 6695A''.
(3) Conforming amendment.--The table of sections for part I
of subchapter B of chapter
[[Page H6122]]
68 is amended by striking the item relating to section 6696
and inserting the following new items:
``Sec. 6695A. Substantial and gross valuation misstatements
attributable to incorrect appraisals.
``Sec. 6696. Rules applicable with respect to sections 6694, 6695, and
6695A.''.
(c) Qualified Appraisers and Appraisals.--
(1) In general.--Subparagraph (E) of section 170(f)(11) is
amended to read as follows:
``(E) Qualified appraisal and appraiser.--For purposes of
this paragraph--
``(i) Qualified appraisal.--The term `qualified appraisal'
means, with respect to any property, an appraisal of such
property which--
``(I) is treated for purposes of this paragraph as a
qualified appraisal under regulations or other guidance
prescribed by the Secretary, and
``(II) is conducted by a qualified appraiser in accordance
with generally accepted appraisal standards and any
regulations or other guidance prescribed under subclause (I).
``(ii) Qualified appraiser.--Except as provided in clause
(iii), the term `qualified appraiser' means an individual
who--
``(I) has earned an appraisal designation from a recognized
professional appraiser organization or has otherwise met
minimum education and experience requirements set forth in
regulations prescribed by the Secretary,
``(II) regularly performs appraisals for which the
individual receives compensation, and
``(III) meets such other requirements as may be prescribed
by the Secretary in regulations or other guidance.
``(iii) Specific appraisals.--An individual shall not be
treated as a qualified appraiser with respect to any specific
appraisal unless--
``(I) the individual demonstrates verifiable education and
experience in valuing the type of property subject to the
appraisal, and
``(II) the individual has not been prohibited from
practicing before the Internal Revenue Service by the
Secretary under section 330(c) of title 31, United States
Code, at any time during the 3-year period ending on the date
of the appraisal.''.
(2) Reasonable cause exception.--Subparagraphs (B) and (C)
of section 6664(c)(3) are amended to read as follows:
``(B) Qualified appraisal.--The term `qualified appraisal'
has the meaning given such term by section 170(f)(11)(E)(i).
``(C) Qualified appraiser.--The term `qualified appraiser'
has the meaning given such term by section
170(f)(11)(E)(ii).''.
(d) Disciplinary Actions Against Appraisers.--Section
330(c) of title 31, United States Code, is amended by
striking ``with respect to whom a penalty has been assessed
under section 6701(a) of the Internal Revenue Code of 1986''.
(e) Effective Dates.--
(1) Misstatement penalties.--Except as provided in
paragraph (3), the amendments made by subsection (a) shall
apply to returns filed after the date of the enactment of
this Act.
(2) Appraiser provisions.--Except as provided in paragraph
(3), the amendments made by subsections (b), (c), and (d)
shall apply to appraisals prepared with respect to returns or
submissions filed after the date of the enactment of this
Act.
(3) Special rule for certain easements.--In the case of a
contribution of a qualified real property interest which is a
restriction with respect to the exterior of a building
described in section 170(h)(4)(C)(ii) of the Internal Revenue
Code of 1986, and an appraisal with respect to the
contribution, the amendments made by subsections (a) and (b)
shall apply to returns filed after July 25, 2006.
SEC. 1220. ADDITIONAL STANDARDS FOR CREDIT COUNSELING
ORGANIZATIONS.
(a) In General.--Section 501 (relating to exemption from
tax on corporations, certain trusts, etc.) is amended by
redesignating subsection (q) as subsection (r) and by
inserting after subsection (p) the following new subsection:
``(q) Special Rules for Credit Counseling Organizations.--
``(1) In general.--An organization with respect to which
the provision of credit counseling services is a substantial
purpose shall not be exempt from tax under subsection (a)
unless such organization is described in paragraph (3) or (4)
of subsection (c) and such organization is organized and
operated in accordance with the following requirements:
``(A) The organization--
``(i) provides credit counseling services tailored to the
specific needs and circumstances of consumers,
``(ii) makes no loans to debtors (other than loans with no
fees or interest) and does not negotiate the making of loans
on behalf of debtors,
``(iii) provides services for the purpose of improving a
consumer's credit record, credit history, or credit rating
only to the extent that such services are incidental to
providing credit counseling services, and
``(iv) does not charge any separately stated fee for
services for the purpose of improving any consumer's credit
record, credit history, or credit rating.
``(B) The organization does not refuse to provide credit
counseling services to a consumer due to the inability of the
consumer to pay, the ineligibility of the consumer for debt
management plan enrollment, or the unwillingness of the
consumer to enroll in a debt management plan.
``(C) The organization establishes and implements a fee
policy which--
``(i) requires that any fees charged to a consumer for
services are reasonable,
``(ii) allows for the waiver of fees if the consumer is
unable to pay, and
``(iii) except to the extent allowed by State law,
prohibits charging any fee based in whole or in part on a
percentage of the consumer's debt, the consumer's payments to
be made pursuant to a debt management plan, or the projected
or actual savings to the consumer resulting from enrolling in
a debt management plan.
``(D) At all times the organization has a board of
directors or other governing body--
``(i) which is controlled by persons who represent the
broad interests of the public, such as public officials
acting in their capacities as such, persons having special
knowledge or expertise in credit or financial education, and
community leaders,
``(ii) not more than 20 percent of the voting power of
which is vested in persons who are employed by the
organization or who will benefit financially, directly or
indirectly, from the organization's activities (other than
through the receipt of reasonable directors' fees or the
repayment of consumer debt to creditors other than the credit
counseling organization or its affiliates), and
``(iii) not more than 49 percent of the voting power of
which is vested in persons who are employed by the
organization or who will benefit financially, directly or
indirectly, from the organization's activities (other than
through the receipt of reasonable directors' fees).
``(E) The organization does not own more than 35 percent
of--
``(i) the total combined voting power of any corporation
(other than a corporation which is an organization described
in subsection (c)(3) and exempt from tax under subsection
(a)) which is in the trade or business of lending money,
repairing credit, or providing debt management plan services,
payment processing, or similar services,
``(ii) the profits interest of any partnership (other than
a partnership which is an organization described in
subsection (c)(3) and exempt from tax under subsection (a))
which is in the trade or business of lending money, repairing
credit, or providing debt management plan services, payment
processing, or similar services, and
``(iii) the beneficial interest of any trust or estate
(other than a trust which is an organization described in
subsection (c)(3) and exempt from tax under subsection (a))
which is in the trade or business of lending money, repairing
credit, or providing debt management plan services, payment
processing, or similar services.
``(F) The organization receives no amount for providing
referrals to others for debt management plan services, and
pays no amount to others for obtaining referrals of
consumers.
``(2) Additional requirements for organizations described
in subsection (c)(3).--
``(A) In general.--In addition to the requirements under
paragraph (1), an organization with respect to which the
provision of credit counseling services is a substantial
purpose and which is described in paragraph (3) of subsection
(c) shall not be exempt from tax under subsection (a) unless
such organization is organized and operated in accordance
with the following requirements:
``(i) The organization does not solicit contributions from
consumers during the initial counseling process or while the
consumer is receiving services from the organization.
``(ii) The aggregate revenues of the organization which are
from payments of creditors of consumers of the organization
and which are attributable to debt management plan services
do not exceed the applicable percentage of the total revenues
of the organization.
``(B) Applicable percentage.--
``(i) In general.--For purposes of subparagraph (A)(ii),
the applicable percentage is 50 percent.
``(ii) Transition rule.--Notwithstanding clause (i), in the
case of an organization with respect to which the provision
of credit counseling services is a substantial purpose and
which is described in paragraph (3) of subsection (c) and
exempt from tax under subsection (a) on the date of the
enactment of this subsection, the applicable percentage is--
``(I) 80 percent for the first taxable year of such
organization beginning after the date which is 1 year after
the date of the enactment of this subsection, and
``(II) 70 percent for the second such taxable year
beginning after such date, and
``(III) 60 percent for the third such taxable year
beginning after such date.
``(3) Additional requirement for organizations described in
subsection (c)(4).--In addition to the requirements under
paragraph (1), an organization with respect to which the
provision of credit counseling services is a substantial
purpose and which is described in paragraph (4) of subsection
(c) shall not be exempt from tax under subsection (a) unless
such organization notifies the Secretary, in such manner as
the Secretary may by regulations prescribe, that it is
applying for recognition as a credit counseling organization.
``(4) Credit counseling services; debt management plan
services.--For purposes of this subsection--
``(A) Credit counseling services.--The term `credit
counseling services' means--
[[Page H6123]]
``(i) the providing of educational information to the
general public on budgeting, personal finance, financial
literacy, saving and spending practices, and the sound use of
consumer credit,
``(ii) the assisting of individuals and families with
financial problems by providing them with counseling, or
``(iii) a combination of the activities described in
clauses (i) and (ii).
``(B) Debt management plan services.--The term `debt
management plan services' means services related to the
repayment, consolidation, or restructuring of a consumer's
debt, and includes the negotiation with creditors of lower
interest rates, the waiver or reduction of fees, and the
marketing and processing of debt management plans.''.
(b) Debt Management Plan Services Treated as an Unrelated
Business.--Section 513 (relating to unrelated trade or
business) is amended by adding at the end the following:
``(j) Debt Management Plan Services.--The term `unrelated
trade or business' includes the provision of debt management
plan services (as defined in section 501(q)(4)(B)) by any
organization other than an organization which meets the
requirements of section 501(q).''.
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after the date of the enactment of this Act.
(2) Transition rule for existing organizations.--In the
case of any organization described in paragraph (3) or (4)
section 501(c) of the Internal Revenue Code of 1986 and with
respect to which the provision of credit counseling services
is a substantial purpose on the date of the enactment of this
Act, the amendments made by this section shall apply to
taxable years beginning after the date which is 1 year after
the date of the enactment of this Act.
SEC. 1221. EXPANSION OF THE BASE OF TAX ON PRIVATE FOUNDATION
NET INVESTMENT INCOME.
(a) Gross Investment Income.--
(1) In general.--Paragraph (2) of section 4940(c) (relating
to gross investment income) is amended by adding at the end
the following new sentence: ``Such term shall also include
income from sources similar to those in the preceding
sentence.''.
(2) Conforming amendment.--Subsection (e) of section 509
(relating to gross investment income) is amended by adding at
the end the following new sentence: ``Such term shall also
include income from sources similar to those in the preceding
sentence.''.
(b) Capital Gain Net Income.--Paragraph (4) of section
4940(c) (relating to capital gains and losses) is amended--
(1) in subparagraph (A), by striking ``used for the
production of interest, dividends, rents, and royalties'' and
inserting ``used for the production of gross investment
income (as defined in paragraph (2))'',
(2) in subparagraph (C), by inserting ``or carrybacks''
after ``carryovers'', and
(3) by adding at the end the following new subparagraph:
``(D) Except to the extent provided by regulation, under
rules similar to the rules of section 1031 (including the
exception under subsection (a)(2) thereof), no gain or loss
shall be taken into account with respect to any portion of
property used for a period of not less than 1 year for a
purpose or function constituting the basis of the private
foundation's exemption if the entire property is exchanged
immediately following such period solely for property of like
kind which is to be used primarily for a purpose or function
constituting the basis for such foundation's exemption.''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
SEC. 1222. DEFINITION OF CONVENTION OR ASSOCIATION OF
CHURCHES.
Section 7701 (relating to definitions) is amended by
redesignating subsection (o) as subsection (p) and by
inserting after subsection (n) the following new subsection:
``(o) Convention or Association of Churches.--For purposes
of this title, any organization which is otherwise a
convention or association of churches shall not fail to so
qualify merely because the membership of such organization
includes individuals as well as churches or because
individuals have voting rights in such organization.''.
SEC. 1223. NOTIFICATION REQUIREMENT FOR ENTITIES NOT
CURRENTLY REQUIRED TO FILE.
(a) In General.--Section 6033 (relating to returns by
exempt organizations), as amended by this Act, is amended by
redesignating subsection (i) as subsection (j) and by
inserting after subsection (h) the following new subsection:
``(i) Additional Notification Requirements.--Any
organization the gross receipts of which in any taxable year
result in such organization being referred to in subsection
(a)(3)(A)(ii) or (a)(3)(B)--
``(1) shall furnish annually, in electronic form, and at
such time and in such manner as the Secretary may by
regulations prescribe, information setting forth--
``(A) the legal name of the organization,
``(B) any name under which such organization operates or
does business,
``(C) the organization's mailing address and Internet web
site address (if any),
``(D) the organization's taxpayer identification number,
``(E) the name and address of a principal officer, and
``(F) evidence of the continuing basis for the
organization's exemption from the filing requirements under
subsection (a)(1), and
``(2) upon the termination of the existence of the
organization, shall furnish notice of such termination.''.
(b) Loss of Exempt Status for Failure to File Return or
Notice.--Section 6033 (relating to returns by exempt
organizations), as amended by subsection (a), is amended by
redesignating subsection (j) as subsection (k) and by
inserting after subsection (i) the following new subsection:
``(j) Loss of Exempt Status for Failure to File Return or
Notice.--
``(1) In general.--If an organization described in
subsection (a)(1) or (i) fails to file an annual return or
notice required under either subsection for 3 consecutive
years, such organization's status as an organization exempt
from tax under section 501(a) shall be considered revoked on
and after the date set by the Secretary for the filing of the
third annual return or notice. The Secretary shall publish
and maintain a list of any organization the status of which
is so revoked.
``(2) Application necessary for reinstatement.--Any
organization the tax-exempt status of which is revoked under
paragraph (1) must apply in order to obtain reinstatement of
such status regardless of whether such organization was
originally required to make such an application.
``(3) Retroactive reinstatement if reasonable cause shown
for failure.--If, upon application for reinstatement of
status as an organization exempt from tax under section
501(a), an organization described in paragraph (1) can show
to the satisfaction of the Secretary evidence of reasonable
cause for the failure described in such paragraph, the
organization's exempt status may, in the discretion of the
Secretary, be reinstated effective from the date of the
revocation under such paragraph.''.
(c) No Declaratory Judgment Relief.--Section 7428(b)
(relating to limitations) is amended by adding at the end the
following new paragraph:
``(4) Nonapplication for certain revocations.--No action
may be brought under this section with respect to any
revocation of status described in section 6033(j)(1).''.
(d) No Monetary Penalty for Failure to Notify.--Section
6652(c)(1) (relating to annual returns under section 6033 or
6012(a)(6)) is amended by adding at the end the following new
subparagraph:
``(E) No penalty for certain annual notices.--This
paragraph shall not apply with respect to any notice required
under section 6033(i).''.
(e) Secretarial Outreach Requirements.--
(1) Notice requirement.--The Secretary of the Treasury
shall notify in a timely manner every organization described
in section 6033(i) of the Internal Revenue Code of 1986 (as
added by this section) of the requirement under such section
6033(i) and of the penalty established under section 6033(j)
of such Code--
(A) by mail, in the case of any organization the identity
and address of which is included in the list of exempt
organizations maintained by the Secretary, and
(B) by Internet or other means of outreach, in the case of
any other organization.
(2) Loss of status penalty for failure to file return.--The
Secretary of the Treasury shall publicize, in a timely manner
in appropriate forms and instructions and through other
appropriate means, the penalty established under section
6033(j) of such Code for the failure to file a return under
subsection (a)(1) or (i) of section 6033 of such Code.
(f) Effective Date.--The amendments made by this section
shall apply to notices and returns with respect to annual
periods beginning after 2006.
SEC. 1224. DISCLOSURE TO STATE OFFICIALS RELATING TO EXEMPT
ORGANIZATIONS.
(a) In General.--Subsection (c) of section 6104 is amended
by striking paragraph (2) and inserting the following new
paragraphs:
``(2) Disclosure of proposed actions related to charitable
organizations.--
``(A) Specific notifications.--In the case of an
organization to which paragraph (1) applies, the Secretary
may disclose to the appropriate State officer--
``(i) a notice of proposed refusal to recognize such
organization as an organization described in section
501(c)(3) or a notice of proposed revocation of such
organization's recognition as an organization exempt from
taxation,
``(ii) the issuance of a letter of proposed deficiency of
tax imposed under section 507 or chapter 41 or 42, and
``(iii) the names, addresses, and taxpayer identification
numbers of organizations which have applied for recognition
as organizations described in section 501(c)(3).
``(B) Additional disclosures.--Returns and return
information of organizations with respect to which
information is disclosed under subparagraph (A) may be made
available for inspection by or disclosed to an appropriate
State officer.
``(C) Procedures for disclosure.--Information may be
inspected or disclosed under subparagraph (A) or (B) only--
``(i) upon written request by an appropriate State officer,
and
``(ii) for the purpose of, and only to the extent necessary
in, the administration of State laws regulating such
organizations.
[[Page H6124]]
Such information may only be inspected by or disclosed to a
person other than the appropriate State officer if such
person is an officer or employee of the State and is
designated by the appropriate State officer to receive the
returns or return information under this paragraph on behalf
of the appropriate State officer.
``(D) Disclosures other than by request.--The Secretary may
make available for inspection or disclose returns and return
information of an organization to which paragraph (1) applies
to an appropriate State officer of any State if the Secretary
determines that such returns or return information may
constitute evidence of noncompliance under the laws within
the jurisdiction of the appropriate State officer.
``(3) Disclosure with respect to certain other exempt
organizations.--Upon written request by an appropriate State
officer, the Secretary may make available for inspection or
disclosure returns and return information of any organization
described in section 501(c) (other than organizations
described in paragraph (1) or (3) thereof) for the purpose
of, and only to the extent necessary in, the administration
of State laws regulating the solicitation or administration
of the charitable funds or charitable assets of such
organizations. Such information may only be inspected by or
disclosed to a person other than the appropriate State
officer if such person is an officer or employee of the State
and is designated by the appropriate State officer to receive
the returns or return information under this paragraph on
behalf of the appropriate State officer.
``(4) Use in civil judicial and administrative
proceedings.--Returns and return information disclosed
pursuant to this subsection may be disclosed in civil
administrative and civil judicial proceedings pertaining to
the enforcement of State laws regulating such organizations
in a manner prescribed by the Secretary similar to that for
tax administration proceedings under section 6103(h)(4).
``(5) No disclosure if impairment.--Returns and return
information shall not be disclosed under this subsection, or
in any proceeding described in paragraph (4), to the extent
that the Secretary determines that such disclosure would
seriously impair Federal tax administration.
``(6) Definitions.--For purposes of this subsection--
``(A) Return and return information.--The terms `return'
and `return information' have the respective meanings given
to such terms by section 6103(b).
``(B) Appropriate state officer.--The term `appropriate
State officer' means--
``(i) the State attorney general,
``(ii) the State tax officer,
``(iii) in the case of an organization to which paragraph
(1) applies, any other State official charged with overseeing
organizations of the type described in section 501(c)(3), and
``(iv) in the case of an organization to which paragraph
(3) applies, the head of an agency designated by the State
attorney general as having primary responsibility for
overseeing the solicitation of funds for charitable
purposes.''.
(b) Conforming Amendments.--
(1) Paragraph (2) of section 6103(a) is amended by
inserting ``or section 6104(c)'' after ``this section''.
(2) Subparagraph (A) of section 6103(p)(3) is amended by
inserting ``and section 6104(c)'' after ``section'' in the
first sentence.
(3) Paragraph (4) of section 6103(p) is amended--
(A) in the matter preceding subparagraph (A), by inserting
``, any appropriate State officer (as defined in section
6104(c)),'' before ``or any other person'',
(B) in subparagraph (F)(i), by inserting ``any appropriate
State officer (as defined in section 6104(c)),'' before ``or
any other person'', and
(C) in the matter following subparagraph (F), by inserting
``, an appropriate State officer (as defined in section
6104(c)),'' after ``including an agency'' each place it
appears.
(4) The heading for paragraph (1) of section 6104(c) is
amended by inserting ``for charitable organizations'' after
``rule''.
(5) Paragraph (2) of section 7213(a) is amended by
inserting ``or under section 6104(c)'' after ``6103''.
(6) Paragraph (2) of section 7213A(a) is amended by
inserting ``or under section 6104(c)'' after ``7213(a)(2)''.
(7) Paragraph (2) of section 7431(a) is amended by
inserting `` or in violation of section 6104(c)'' after
``6103''.
(c) Effective Date.--The amendments made by this section
shall take effect on the date of the enactment of this Act
but shall not apply to requests made before such date.
SEC. 1225. PUBLIC DISCLOSURE OF INFORMATION RELATING TO
UNRELATED BUSINESS INCOME TAX RETURNS.
(a) In General.--Subparagraph (A) of section 6104(d)(1) is
amended by redesignating clauses (ii) and (iii) as clauses
(iii) and (iv), respectively, and by inserting after clause
(i) the following new clause:
``(ii) any annual return filed under section 6011 which
relates to any tax imposed by section 511 (relating to
imposition of tax on unrelated business income of charitable,
etc., organizations) by such organization, but only if such
organization is described in section 501(c)(3),''.
(b) Effective Date.--The amendments made by this section
shall apply to returns filed after the date of the enactment
of this Act.
SEC. 1226. STUDY ON DONOR ADVISED FUNDS AND SUPPORTING
ORGANIZATIONS.
(a) Study.--The Secretary of the Treasury shall undertake a
study on the organization and operation of donor advised
funds (as defined in section 4966(d)(2) of the Internal
Revenue Code of 1986, as added by this Act) and of
organizations described in section 509(a)(3) of such Code.
The study shall specifically consider--
(1) whether the deductions allowed for the income, gift, or
estate taxes for charitable contributions to sponsoring
organizations (as defined in section 4966(d)(1) of such Code,
as added by this Act) of donor advised funds or to
organizations described in section 509(a)(3) of such Code are
appropriate in consideration of--
(A) the use of contributed assets (including the type,
extent, and timing of such use), or
(B) the use of the assets of such organizations for the
benefit of the person making the charitable contribution (or
a person related to such person),
(2) whether donor advised funds should be required to
distribute for charitable purposes a specified amount
(whether based on the income or assets of the fund) in order
to ensure that the sponsoring organization with respect to
such donor advised fund is operating consistent with the
purposes or functions constituting the basis for its
exemption under section 501, or its status as an organization
described in section 509(a), of such Code,
(3) whether the retention by donors to organizations
described in paragraph (1) of rights or privileges with
respect to amounts transferred to such organizations
(including advisory rights or privileges with respect to the
making of grants or the investment of assets) is consistent
with the treatment of such transfers as completed gifts that
qualify for a deduction for income, gift, or estate taxes,
and
(4) whether the issues raised by paragraphs (1), (2), and
(3) are also issues with respect to other forms of charities
or charitable donations.
(b) Report.--Not later than 1 year after the date of the
enactment of this Act, the Secretary of the Treasury shall
submit to the Committee on Finance of the Senate and the
Committee on Ways and Means of the House of Representatives a
report on the study conducted under subsection (a) and make
such recommendations as the Secretary of the Treasury
considers appropriate.
PART 2--IMPROVED ACCOUNTABILITY OF DONOR ADVISED FUNDS
SEC. 1231. EXCISE TAXES RELATING TO DONOR ADVISED FUNDS.
(a) In General.--Chapter 42 (relating to private
foundations and certain other tax-exempt organizations), as
amended by the Tax Increase Prevention and Reconciliation Act
of 2005, is amended by adding at the end the following new
subchapter:
``Subchapter G--Donor Advised Funds
``Sec. 4966. Taxes on taxable distributions.
``Sec. 4967. Taxes on prohibited benefits.
``SEC. 4966. TAXES ON TAXABLE DISTRIBUTIONS.
``(a) Imposition of Taxes.--
``(1) On the sponsoring organization.--There is hereby
imposed on each taxable distribution a tax equal to 20
percent of the amount thereof. The tax imposed by this
paragraph shall be paid by the sponsoring organization with
respect to the donor advised fund.
``(2) On the fund management.--There is hereby imposed on
the agreement of any fund manager to the making of a
distribution, knowing that it is a taxable distribution, a
tax equal to 5 percent of the amount thereof. The tax imposed
by this paragraph shall be paid by any fund manager who
agreed to the making of the distribution.
``(b) Special Rules.--For purposes of subsection (a)--
``(1) Joint and several liability.--If more than one person
is liable under subsection (a)(2) with respect to the making
of a taxable distribution, all such persons shall be jointly
and severally liable under such paragraph with respect to
such distribution.
``(2) Limit for management.--With respect to any one
taxable distribution, the maximum amount of the tax imposed
by subsection (a)(2) shall not exceed $10,000.
``(c) Taxable Distribution.--For purposes of this section--
``(1) In general.--The term `taxable distribution' means
any distribution from a donor advised fund--
``(A) to any natural person, or
``(B) to any other person if--
``(i) such distribution is for any purpose other than one
specified in section 170(c)(2)(B), or
``(ii) the sponsoring organization does not exercise
expenditure responsibility with respect to such distribution
in accordance with section 4945(h).
``(2) Exceptions.--Such term shall not include any
distribution from a donor advised fund--
``(A) to any organization described in section 170(b)(1)(A)
(other than a disqualified supporting organization),
``(B) to the sponsoring organization of such donor advised
fund, or
``(C) to any other donor advised fund.
``(d) Definitions.--For purposes of this subchapter--
``(1) Sponsoring organization.--The term `sponsoring
organization' means any organization which--
``(A) is described in section 170(c) (other than in
paragraph (1) thereof, and without regard to paragraph (2)(A)
thereof),
[[Page H6125]]
``(B) is not a private foundation (as defined in section
509(a)), and
``(C) maintains 1 or more donor advised funds.
``(2) Donor advised fund.--
``(A) In general.--Except as provided in subparagraph (B)
or (C), the term `donor advised fund' means a fund or
account--
``(i) which is separately identified by reference to
contributions of a donor or donors,
``(ii) which is owned and controlled by a sponsoring
organization, and
``(iii) with respect to which a donor (or any person
appointed or designated by such donor) has, or reasonably
expects to have, advisory privileges with respect to the
distribution or investment of amounts held in such fund or
account by reason of the donor's status as a donor.
``(B) Exceptions.--The term `donor advised fund' shall not
include any fund or account--
``(i) which makes distributions only to a single identified
organization or governmental entity, or
``(ii) with respect to which a person described in
subparagraph (A)(iii) advises as to which individuals receive
grants for travel, study, or other similar purposes, if--
``(I) such person's advisory privileges are performed
exclusively by such person in the person's capacity as a
member of a committee all of the members of which are
appointed by the sponsoring organization,
``(II) no combination of persons described in subparagraph
(A)(iii) (or persons related to such persons) control,
directly or indirectly, such committee, and
``(III) all grants from such fund or account are awarded on
an objective and nondiscriminatory basis pursuant to a
procedure approved in advance by the board of directors of
the sponsoring organization, and such procedure is designed
to ensure that all such grants meet the requirements of
paragraphs (1), (2), or (3) of section 4945(g).
``(C) Secretarial authority.--The Secretary may exempt a
fund or account not described in subparagraph (B) from
treatment as a donor advised fund--
``(i) if such fund or account is advised by a committee not
directly or indirectly controlled by the donor or any person
appointed or designated by the donor for the purpose of
advising with respect to distributions from such fund (and
any related parties), or
``(ii) if such fund benefits a single identified charitable
purpose.
``(3) Fund manager.--The term `fund manager' means, with
respect to any sponsoring organization--
``(A) an officer, director, or trustee of such sponsoring
organization (or an individual having powers or
responsibilities similar to those of officers, directors, or
trustees of the sponsoring organization), and
``(B) with respect to any act (or failure to act), the
employees of the sponsoring organization having authority or
responsibility with respect to such act (or failure to act).
``(4) Disqualified supporting organization.--
``(A) In general.--The term `disqualified supporting
organization' means, with respect to any distribution--
``(i) any type III supporting organization (as defined in
section 4943(f)(5)(A)) which is not a functionally integrated
type III supporting organization (as defined in section
4943(f)(5)(B)), and
``(ii) any organization which is described in subparagraph
(B) or (C) if--
``(I) the donor or any person designated by the donor for
the purpose of advising with respect to distributions from a
donor advised fund (and any related parties) directly or
indirectly controls a supported organization (as defined in
section 509(f)(3)) of such organization, or
``(II) the Secretary determines by regulations that a
distribution to such organization otherwise is inappropriate.
``(B) Type i and type ii supporting organizations.--An
organization is described in this subparagraph if the
organization meets the requirements of subparagraphs (A) and
(C) of section 509(a)(3) and is--
``(i) operated, supervised, or controlled by one or more
organizations described in paragraph (1) or (2) of section
509(a), or
``(ii) supervised or controlled in connection with one or
more such organizations.
``(C) Functionally integrated type iii supporting
organizations.--An organization is described in this
subparagraph if the organization is a functionally integrated
type III supporting organization (as defined under section
4943(f)(5)(B)).
``SEC. 4967. TAXES ON PROHIBITED BENEFITS.
``(a) Imposition of Taxes.--
``(1) On the donor, donor advisor, or related person.--
There is hereby imposed on the advice of any person described
in subsection (d) to have a sponsoring organization make a
distribution from a donor advised fund which results in such
person or any other person described in subsection (d)
receiving, directly or indirectly, a more than incidental
benefit as a result of such distribution, a tax equal to 125
percent of such benefit. The tax imposed by this paragraph
shall be paid by any person described in subsection (d) who
advises as to the distribution or who receives such a benefit
as a result of the distribution.
``(2) On the fund management.--There is hereby imposed on
the agreement of any fund manager to the making of a
distribution, knowing that such distribution would confer a
benefit described in paragraph (1), a tax equal to 10 percent
of the amount of such benefit. The tax imposed by this
paragraph shall be paid by any fund manager who agreed to the
making of the distribution.
``(b) Exception.--No tax shall be imposed under this
section with respect to any distribution if a tax has been
imposed with respect to such distribution under section 4958.
``(c) Special Rules.--For purposes of subsection (a)--
``(1) Joint and several liability.--If more than one person
is liable under paragraph (1) or (2) of subsection (a) with
respect to a distribution described in subsection (a), all
such persons shall be jointly and severally liable under such
paragraph with respect to such distribution.
``(2) Limit for management.--With respect to any one
distribution described in subsection (a), the maximum amount
of the tax imposed by subsection (a)(2) shall not exceed
$10,000.
``(d) Person Described.--A person is described in this
subsection if such person is described in section 4958(f)(7)
with respect to a donor advised fund.''.
(b) Conforming Amendments.--
(1) Section 4963 is amended by inserting ``4966, 4967,''
after ``4958,'' each place it appears in subsections (a) and
(c).
(2) The table of subchapters for chapter 42 is amended by
adding at the end the following new item:
``Subchapter G. Donor Advised Funds''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
SEC. 1232. EXCESS BENEFIT TRANSACTIONS INVOLVING DONOR
ADVISED FUNDS AND SPONSORING ORGANIZATIONS.
(a) Disqualified Persons.--
(1) In general.--Paragraph (1) of section 4958(f) is
amended by striking ``and'' at the end of subparagraph (B),
by striking the period at the end of subparagraph (C) and
inserting a comma, and by adding after subparagraph (C) the
following new subparagraphs:
``(D) which involves a donor advised fund (as defined in
section 4966(d)(2)), any person who is described in paragraph
(7) with respect to such donor advised fund (as so defined),
and
``(E) which involves a sponsoring organization (as defined
in section 4966(d)(1)), any person who is described in
paragraph (8) with respect to such sponsoring organization
(as so defined).''.
(2) Donors, donor advisors, and investment advisors treated
as disqualified persons.--Section 4958(f) is amended by
adding at the end the following new paragraphs:
``(7) Donors and donor advisors.--For purposes of paragraph
(1)(E), a person is described in this paragraph if such
person--
``(A) is described in section 4966(d)(2)(A)(iii),
``(B) is a member of the family of an individual described
in subparagraph (A), or
``(C) is a 35-percent controlled entity (as defined in
paragraph (3) by substituting `persons described in
subparagraph (A) or (B) of paragraph (7)' for `persons
described in subparagraph (A) or (B) of paragraph (1)' in
subparagraph (A)(i) thereof).
``(8) Investment advisors.--For purposes of paragraph
(1)(F)--
``(A) In general.--A person is described in this paragraph
if such person--
``(i) is an investment advisor,
``(ii) is a member of the family of an individual described
in clause (i), or
``(iii) is a 35-percent controlled entity (as defined in
paragraph (3) by substituting `persons described in clause
(i) or (ii) of paragraph (8)(A)' for `persons described in
subparagraph (A) or (B) of paragraph (1)' in subparagraph
(A)(i) thereof).
``(B) Investment advisor defined.--For purposes of
subparagraph (A), the term `investment advisor' means, with
respect to any sponsoring organization (as defined in section
4966(d)(1)), any person (other than an employee of such
organization) compensated by such organization for managing
the investment of, or providing investment advice with
respect to, assets maintained in donor advised funds (as
defined in section 4966(d)(2)) owned by such organization.''.
(b) Certain Transactions Treated as Excess Benefit
Transactions.--
(1) In general.--Section 4958(c) is amended by
redesignating paragraph (2) as paragraph (3) and by inserting
after paragraph (1) the following new paragraph:
``(2) Special rules for donor advised funds.--In the case
of any donor advised fund (as defined in section
4966(d)(2))--
``(A) the term `excess benefit transaction' includes any
grant, loan, compensation, or other similar payment from such
fund to a person described in subsection (f)(7) with respect
to such fund, and
``(B) the term `excess benefit' includes, with respect to
any transaction described in subparagraph (A), the amount of
any such grant, loan, compensation, or other similar
payment.''.
(2) Special rule for correction of transaction.--Section
4958(f)(6) is amended by inserting ``, except that in the
case of any correction of an excess benefit transaction
described in subsection (c)(2), no amount repaid in a manner
prescribed by the Secretary may be held in any donor advised
fund'' after ``standards''.
(c) Effective Date.--The amendments made by this section
shall apply to transactions occurring after the date of the
enactment of this Act.
[[Page H6126]]
SEC. 1233. EXCESS BUSINESS HOLDINGS OF DONOR ADVISED FUNDS.
(a) In General.--Section 4943 is amended by adding at the
end the following new subsection:
``(e) Application of Tax to Donor Advised Funds.--
``(1) In general.--For purposes of this section, a donor
advised fund (as defined in section 4966(d)(2)) shall be
treated as a private foundation.
``(2) Disqualified person.--In applying this section to any
donor advised fund (as so defined), the term `disqualified
person' means, with respect to the donor advised fund, any
person who is--
``(A) described in section 4966(d)(2)(A)(iii),
``(B) a member of the family of an individual described in
subparagraph (A), or
``(C) a 35-percent controlled entity (as defined in section
4958(f)(3) by substituting `persons described in subparagraph
(A) or (B) of section 4943(e)(2)' for `persons described in
subparagraph (A) or (B) of paragraph (1)' in subparagraph
(A)(i) thereof).
``(3) Present holdings.--For purposes of this subsection,
rules similar to the rules of paragraphs (4), (5), and (6) of
subsection (c) shall apply to donor advised funds (as so
defined), except that--
``(A) `the date of the enactment of this subsection' shall
be substituted for `May 26, 1969' each place it appears in
paragraphs (4), (5), and (6), and
``(B) `January 1, 2007' shall be substituted for `January
1, 1970' in paragraph (4)(E).''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
SEC. 1234. TREATMENT OF CHARITABLE CONTRIBUTION DEDUCTIONS TO
DONOR ADVISED FUNDS.
(a) Income.--Section 170(f) (relating to disallowance of
deduction in certain cases and special rules), as amended by
this Act, is amended by adding at the end the following new
paragraph:
``(18) Contributions to donor advised funds.--A deduction
otherwise allowed under subsection (a) for any contribution
to a donor advised fund (as defined in section 4966(d)(2))
shall only be allowed if--
``(A) the sponsoring organization (as defined in section
4966(d)(1)) with respect to such donor advised fund is not--
``(i) described in paragraph (3), (4), or (5) of subsection
(c), or
``(ii) a type III supporting organization (as defined in
section 4943(f)(5)(A)) which is not a functionally integrated
type III supporting organization (as defined in section
4943(f)(5)(B)), and
``(B) the taxpayer obtains a contemporaneous written
acknowledgment (determined under rules similar to the rules
of paragraph (8)(C)) from the sponsoring organization (as so
defined) of such donor advised fund that such organization
has exclusive legal control over the assets contributed.''.
(b) Estate.--Section 2055(e) is amended by adding at the
end the following new paragraph:
``(5) Contributions to donor advised funds.--A deduction
otherwise allowed under subsection (a) for any contribution
to a donor advised fund (as defined in section 4966(d)(2))
shall only be allowed if--
``(A) the sponsoring organization (as defined in section
4966(d)(1)) with respect to such donor advised fund is not--
``(i) described in paragraph (3) or (4) of subsection (a),
or
``(ii) a type III supporting organization (as defined in
section 4943(f)(5)(A)) which is not a functionally integrated
type III supporting organization (as defined in section
4943(f)(5)(B)), and
``(B) the taxpayer obtains a contemporaneous written
acknowledgment (determined under rules similar to the rules
of section 170(f)(8)(C)) from the sponsoring organization (as
so defined) of such donor advised fund that such organization
has exclusive legal control over the assets contributed.''.
(c) Gift.--Section 2522(c) is amended by adding at the end
the following new paragraph:
``(5) Contributions to donor advised funds.--A deduction
otherwise allowed under subsection (a) for any contribution
to a donor advised fund (as defined in section 4966(d)(2))
shall only be allowed if--
``(A) the sponsoring organization (as defined in section
4966(d)(1)) with respect to such donor advised fund is not--
``(i) described in paragraph (3) or (4) of subsection (a),
or
``(ii) a type III supporting organization (as defined in
section 4943(f)(5)(A)) which is not a functionally integrated
type III supporting organization (as defined in section
4943(f)(5)(B)), and
``(B) the taxpayer obtains a contemporaneous written
acknowledgment (determined under rules similar to the rules
of section 170(f)(8)(C)) from the sponsoring organization (as
so defined) of such donor advised fund that such organization
has exclusive legal control over the assets contributed.''.
(d) Effective Date.--The amendments made by this section
shall apply to contributions made after the date which is 180
days after the date of the enactment of this Act.
SEC. 1235. RETURNS OF, AND APPLICATIONS FOR RECOGNITION BY,
SPONSORING ORGANIZATIONS.
(a) Matters Included on Returns.--
(1) In general.--Section 6033, as amended by this Act, is
amended by redesignating subsection (k) as subsection (l) and
by inserting after subsection (j) the following new
subsection:
``(k) Additional Provisions Relating to Sponsoring
Organizations.--Every organization described in section
4966(d)(1) shall, on the return required under subsection (a)
for the taxable year--
``(1) list the total number of donor advised funds (as
defined in section 4966(d)(2)) it owns at the end of such
taxable year,
``(2) indicate the aggregate value of assets held in such
funds at the end of such taxable year, and
``(3) indicate the aggregate contributions to and grants
made from such funds during such taxable year.''.
(2) Effective date.--The amendments made by this subsection
shall apply to returns filed for taxable years ending after
the date of the enactment of this Act.
(b) Matters Included on Exempt Status Application.--
(1) In general.--Section 508 is amended by adding at the
end the following new subsection:
``(f) Additional Provisions Relating to Sponsoring
Organizations.--A sponsoring organization (as defined in
section 4966(d)(1)) shall give notice to the Secretary (in
such manner as the Secretary may provide) whether such
organization maintains or intends to maintain donor advised
funds (as defined in section 4966(d)(2)) and the manner in
which such organization plans to operate such funds.''.
(2) Effective date.--The amendment made by this subsection
shall apply to organizations applying for tax-exempt status
after the date of the enactment of this Act.
PART 3--IMPROVED ACCOUNTABILITY OF SUPPORTING ORGANIZATIONS
SEC. 1241. REQUIREMENTS FOR SUPPORTING ORGANIZATIONS.
(a) Types of Supporting Organizations.--Subparagraph (B) of
section 509(a)(3) is amended to read as follows:
``(B) is--
``(i) operated, supervised, or controlled by one or more
organizations described in paragraph (1) or (2),
``(ii) supervised or controlled in connection with one or
more such organizations, or
``(iii) operated in connection with one or more such
organizations, and''.
(b) Requirements for Supporting Organizations.--Section 509
(relating to private foundation defined) is amended by adding
at the end the following new subsection:
``(f) Requirements for Supporting Organizations.--
``(1) Type iii supporting organizations.--For purposes of
subsection (a)(3)(B)(iii), an organization shall not be
considered to be operated in connection with any organization
described in paragraph (1) or (2) of subsection (a) unless
such organization meets the following requirements:
``(A) Responsiveness.--For each taxable year beginning
after the date of the enactment of this subsection, the
organization provides to each supported organization such
information as the Secretary may require to ensure that such
organization is responsive to the needs or demands of the
supported organization.
``(B) Foreign supported organizations.--
``(i) In general.--The organization is not operated in
connection with any supported organization that is not
organized in the United States.
``(ii) Transition rule for existing organizations.--If the
organization is operated in connection with an organization
that is not organized in the United States on the date of the
enactment of this subsection, clause (i) shall not apply
until the first day of the third taxable year of the
organization beginning after the date of the enactment of
this subsection.
``(2) Organizations controlled by donors.--
``(A) In general.--For purposes of subsection (a)(3)(B), an
organization shall not be considered to be--
``(i) operated, supervised, or controlled by any
organization described in paragraph (1) or (2) of subsection
(a), or
``(ii) operated in connection with any organization
described in paragraph (1) or (2) of subsection (a),
if such organization accepts any gift or contribution from
any person described in subparagraph (B).
``(B) Person described.--A person is described in this
subparagraph if, with respect to a supported organization of
an organization described in subparagraph (A), such person
is--
``(i) a person (other than an organization described in
paragraph (1), (2), or (4) of section 509(a)) who directly or
indirectly controls, either alone or together with persons
described in clauses (ii) and (iii), the governing body of
such supported organization,
``(ii) a member of the family (determined under section
4958(f)(4)) of an individual described in clause (i), or
``(iii) a 35-percent controlled entity (as defined in
section 4958(f)(3) by substituting `persons described in
clause (i) or (ii) of section 509(f)(2)(B)' for `persons
described in subparagraph (A) or (B) of paragraph (1)' in
subparagraph (A)(i) thereof).
``(3) Supported organization.--For purposes of this
subsection, the term `supported organization' means, with
respect to an organization described in subsection (a)(3), an
[[Page H6127]]
organization described in paragraph (1) or (2) of subsection
(a)--
``(A) for whose benefit the organization described in
subsection (a)(3) is organized and operated, or
``(B) with respect to which the organization performs the
functions of, or carries out the purposes of.''.
(c) Charitable Trusts Which Are Type III Supporting
Organizations.--For purposes of section 509(a)(3)(B)(iii) of
the Internal Revenue Code of 1986, an organization which is a
trust shall not be considered to be operated in connection
with any organization described in paragraph (1) or (2) of
section 509(a) of such Code solely because--
(1) it is a charitable trust under State law,
(2) the supported organization (as defined in section
509(f)(3) of such Code) is a beneficiary of such trust, and
(3) the supported organization (as so defined) has the
power to enforce the trust and compel an accounting.
(d) Payout Requirements for Type III Supporting
Organizations.--
(1) In general.--The Secretary of the Treasury shall
promulgate new regulations under section 509 of the Internal
Revenue Code of 1986 on payments required by type III
supporting organizations which are not functionally
integrated type III supporting organizations. Such
regulations shall require such organizations to make
distributions of a percentage of either income or assets to
supported organizations (as defined in section 509(f)(3) of
such Code) in order to ensure that a significant amount is
paid to such organizations.
(2) Type iii supporting organization; functionally
integrated type iii supporting organization.--For purposes of
paragraph (1), the terms ``type III supporting organization''
and ``functionally integrated type III supporting
organization'' have the meanings given such terms under
subparagraphs (A) and (B) section 4943(f)(5) of the Internal
Revenue Code of 1986 (as added by this Act), respectively.
(e) Effective Dates.--
(1) In general.--The amendments made by subsections (a) and
(b) shall take effect on the date of the enactment of this
Act.
(2) Charitable trusts which are type iii supporting
organizations.--Subsection (c) shall take effect--
(A) in the case of trusts operated in connection with an
organization described in paragraph (1) or (2) of section
509(a) of the Internal Revenue Code of 1986 on the date of
the enactment of this Act, on the date that is one year after
the date of the enactment of this Act, and
(B) in the case of any other trust, on the date of the
enactment of this Act.
SEC. 1242. EXCESS BENEFIT TRANSACTIONS INVOLVING SUPPORTING
ORGANIZATIONS.
(a) Disqualified Persons.--Paragraph (1) of section
4958(f), as amended by this Act, is amended by redesignating
subparagraphs (D) and (E) as subparagraphs (E) and (F),
respectively, and by adding after subparagraph (C) the
following new subparagraph:
``(D) any person who is described in subparagraph (A), (B),
or (C) with respect to an organization described in section
509(a)(3) and organized and operated exclusively for the
benefit of, to perform the functions of, or to carry out the
purposes of the applicable tax-exempt organization.''.
(b) Certain Transactions Treated as Excess Benefit
Transactions.--Section 4958(c), as amended by this Act, is
amended by redesignating paragraph (3) as paragraph (4) and
by inserting after paragraph (2) the following new paragraph:
``(3) Special rules for supporting organizations.--
``(A) In general.--In the case of any organization
described in section 509(a)(3)--
``(i) the term `excess benefit transaction' includes--
``(I) any grant, loan, compensation, or other similar
payment provided by such organization to a person described
in subparagraph (B), and
``(II) any loan provided by such organization to a
disqualified person (other than an organization described in
paragraph (1), (2), or (4) of section 509(a)), and
``(ii) the term `excess benefit' includes, with respect to
any transaction described in clause (i), the amount of any
such grant, loan, compensation, or other similar payment.
``(B) Person described.--A person is described in this
subparagraph if such person is--
``(i) a substantial contributor to such organization,
``(ii) a member of the family (determined under section
4958(f)(4)) of an individual described in clause (i), or
``(iii) a 35-percent controlled entity (as defined in
section 4958(f)(3) by substituting `persons described in
clause (i) or (ii) of section 4958(c)(3)(B)' for `persons
described in subparagraph (A) or (B) of paragraph (1)' in
subparagraph (A)(i) thereof).
``(C) Substantial contributor.--For purposes of this
paragraph--
``(i) In general.--The term `substantial contributor' means
any person who contributed or bequeathed an aggregate amount
of more than $5,000 to the organization, if such amount is
more than 2 percent of the total contributions and bequests
received by the organization before the close of the taxable
year of the organization in which the contribution or bequest
is received by the organization from such person. In the case
of a trust, such term also means the creator of the trust.
Rules similar to the rules of subparagraphs (B) and (C) of
section 507(d)(2) shall apply for purposes of this
subparagraph.
``(ii) Exception.--Such term shall not include any
organization described in paragraph (1), (2), or (4) of
section 509(a).''.
(c) Effective Dates.--
(1) Subsection (a).--The amendments made by subsection (a)
shall apply to transactions occurring after the date of the
enactment of this Act.
(2) Subsection (b).--The amendments made by subsection (a)
shall apply to transactions occurring after July 25, 2006.
SEC. 1243. EXCESS BUSINESS HOLDINGS OF SUPPORTING
ORGANIZATIONS.
(a) In General.--Section 4943, as amended by this Act, is
amended by adding at the end the following new subsection:
``(f) Application of Tax to Supporting Organizations.--
``(1) In general.--For purposes of this section, an
organization which is described in paragraph (3) shall be
treated as a private foundation.
``(2) Exception.--The Secretary may exempt the excess
business holdings of any organization from the application of
this subsection if the Secretary determines that such
holdings are consistent with the purpose or function
constituting the basis for its exemption under section 501.
``(3) Organizations described.--An organization is
described in this paragraph if such organization is--
``(A) a type III supporting organization (other than a
functionally integrated type III supporting organization), or
``(B) an organization which meets the requirements of
subparagraphs (A) and (C) of section 509(a)(3) and which is
supervised or controlled in connection with or one or more
organizations described in paragraph (1) or (2) of section
509(a), but only if such organization accepts any gift or
contribution from any person described in section
509(f)(2)(B).
``(4) Disqualified person.--
``(A) In general.--In applying this section to any
organization described in paragraph (3), the term
`disqualified person' means, with respect to the
organization--
``(i) any person who was, at any time during the 5-year
period ending on the date described in subsection (a)(2)(A),
in a position to exercise substantial influence over the
affairs of the organization,
``(ii) any member of the family (determined under section
4958(f)(4)) of an individual described in clause (i),
``(iii) any 35-percent controlled entity (as defined in
section 4958(f)(3) by substituting `persons described in
clause (i) or (ii) of section 4943(f)(4)(A)' for `persons
described in subparagraph (A) or (B) of paragraph (1)' in
subparagraph (A)(i) thereof),
``(iv) any person described in section 4958(c)(3)(B), and
``(v) any organization--
``(I) which is effectively controlled (directly or
indirectly) by the same person or persons who control the
organization in question, or
``(II) substantially all of the contributions to which were
made (directly or indirectly) by the same person or persons
described in subparagraph (B) or a member of the family
(within the meaning of section 4946(d)) of such a person.
``(B) Persons described.--A person is described in this
subparagraph if such person is--
``(i) a substantial contributor to the organization (as
defined in section 4958(c)(3)(C)),
``(ii) an officer, director, or trustee of the organization
(or an individual having powers or responsibilities similar
to those of the officers, directors, or trustees of the
organization), or
``(iii) an owner of more than 20 percent of--
``(I) the total combined voting power of a corporation,
``(II) the profits interest of a partnership, or
``(III) the beneficial interest of a trust or
unincorporated enterprise,
which is a substantial contributor (as so defined) to the
organization.
``(5) Type iii supporting organization; functionally
integrated type iii supporting organization.--For purposes of
this subsection--
``(A) Type iii supporting organization.--The term `type III
supporting organization' means an organization which meets
the requirements of subparagraphs (A) and (C) of section
509(a)(3) and which is operated in connection with one or
more organizations described in paragraph (1) or (2) of
section 509(a).
``(B) Functionally integrated type iii supporting
organization.--The term `functionally integrated type III
supporting organization' means a type III supporting
organization which is not required under regulations
established by the Secretary to make payments to supported
organizations (as defined under section 509(f)(3)) due to the
activities of the organization related to performing the
functions of, or carrying out the purposes of, such supported
organizations.
``(6) Special rule for certain holdings of type iii
supporting organizations.--For purposes of this subsection,
the term `excess business holdings' shall not include any
holdings of a type III supporting organization in any
business enterprise if, as of November 18, 2005, the holdings
were held (and at all times thereafter, are held) for the
benefit of the community pursuant to the direction of a State
attorney general or a State
[[Page H6128]]
official with jurisdiction over such organization.
``(7) Present holdings.--For purposes of this subsection,
rules similar to the rules of paragraphs (4), (5), and (6) of
subsection (c) shall apply to organizations described in
section 509(a)(3), except that--
``(A) `the date of the enactment of this subsection' shall
be substituted for `May 26, 1969' each place it appears in
paragraphs (4), (5), and (6), and
``(B) `January 1, 2007' shall be substituted for `January
1, 1970' in paragraph (4)(E).''.
(b) Effective Date.--The amendment made by this section
shall apply to taxable years beginning after the date of the
enactment of this Act.
SEC. 1244. TREATMENT OF AMOUNTS PAID TO SUPPORTING
ORGANIZATIONS BY PRIVATE FOUNDATIONS.
(a) Qualifying Distributions.--Paragraph (4) of section
4942(g) is amended to read as follows:
``(4) Limitation on distributions by nonoperating private
foundations to supporting organizations.--
``(A) In general.--For purposes of this section, the term
`qualifying distribution' shall not include any amount paid
by a private foundation which is not an operating foundation
to--
``(i) any type III supporting organization (as defined in
section 4943(f)(5)(A)) which is not a functionally integrated
type III supporting organization (as defined in section
4943(f)(5)(B)), and
``(ii) any organization which is described in subparagraph
(B) or (C) if--
``(I) a disqualified person of the private foundation
directly or indirectly controls such organization or a
supported organization (as defined in section 509(f)(3)) of
such organization, or
``(II) the Secretary determines by regulations that a
distribution to such organization otherwise is inappropriate.
``(B) Type i and type ii supporting organizations.--An
organization is described in this subparagraph if the
organization meets the requirements of subparagraphs (A) and
(C) of section 509(a)(3) and is--
``(i) operated, supervised, or controlled by one or more
organizations described in paragraph (1) or (2) of section
509(a), or
``(ii) supervised or controlled in connection with one or
more such organizations.
``(C) Functionally integrated type iii supporting
organizations.--An organization is described in this
subparagraph if the organization is a functionally integrated
type III supporting organization (as defined under section
4943(f)(5)(B)).''.
(b) Taxable Expenditures.--Subparagraph (A) of section
4945(d)(4) is amended to read as follows:
``(A) such organization--
``(i) is described in paragraph (1) or (2) of section
509(a),
``(ii) is an organization described in section 509(a)(3)
(other than an organization described in clause (i) or (ii)
of section 4942(g)(4)(A)), or
``(iii) is an exempt operating foundation (as defined in
section 4940(d)(2)), or''.
(c) Effective Date.--The amendments made by this section
shall apply to distributions and expenditures after the date
of the enactment of this Act.
SEC. 1245. RETURNS OF SUPPORTING ORGANIZATIONS.
(a) Requirement to File Return.--Subparagraph (B) of
section 6033(a)(3) is amended by inserting ``(other than an
organization described in section 509(a)(3))'' after
``paragraph (1)''.
(b) Matters Included on Returns.--Section 6033, as amended
by this Act, is amended by redesignating subsection (l) as
subsection (m) and by inserting after subsection (k) the
following new subsection:
``(l) Additional Provisions Relating to Supporting
Organizations.--Every organization described in section
509(a)(3) shall, on the return required under subsection
(a)--
``(1) list the supported organizations (as defined in
section 509(f)(3)) with respect to which such organization
provides support,
``(2) indicate whether the organization meets the
requirements of clause (i), (ii), or (iii) of section
509(a)(3)(B), and
``(3) certify that the organization meets the requirements
of section 509(a)(3)(C).''.
(c) Effective Date.--The amendments made by this section
shall apply to returns filed for taxable years ending after
the date of the enactment of this Act.
TITLE XIII--OTHER PROVISIONS
SEC. 1301. TECHNICAL CORRECTIONS RELATING TO MINE SAFETY.
Section 110 of the Federal Mine Safety and Health Act of
1977 (30 U.S.C. 820), as amended by the Mine Improvement and
New Emergency Response Act of 2006 (Public Law 109-236), is
amended--
(1) by striking subsection (d); and
(2) in subsection (a)--
(A) by striking ``(1)(1) The operator'' and inserting ``(1)
The operator'';
(B) in the paragraph (2) added by section 8(a)(1)(B) of the
Mine Improvement and New Emergency Response Act of 2006
(Public Law 109-236)--
(i) by striking ``paragraph (1)'' and inserting
``subsection (a)(1)''; and
(ii) by redesignating such paragraph as subsection (d) and
transferring such subsection so as to appear after subsection
(c); and
(3) in subsection (b)--
(A) by striking ``Any operator'' and inserting ``(1) Any
operator''; and
(B) in the second sentence, as added by section 8(a)(2) of
the Mine Improvement and New Emergency Response Act of 2006
(Public Law 109-236), by striking ``Violations'' and
inserting the following:
``(2) Violations''.
SEC. 1302. GOING-TO-THE-SUN ROAD.
(a) In General.--Section 1940 of the Safe, Accountable,
Flexible, Efficient Transportation Equity Act: A Legacy for
Users (119 Stat. 1511) is amended--
(1) in subsection (a)--
(A) by striking paragraphs (1) and (2);
(B) by redesignating paragraphs (3) through (5) as
paragraphs (1) through (3), respectively; and
(C) by striking ``$10,000,000'' each place that it appears
and inserting ``$16,666,666''; and
(2) by adding at the end the following:
``(c) Contract Authority.--Except as otherwise provided in
this section, funds authorized to be appropriated under this
section shall be available for obligation in the same manner
as if the funds were apportioned under chapter 1 of title 23,
United States Code.''.
(b) Rescission.--Section 10212 of the Safe, Accountable,
Flexible, Efficient Transportation Equity Act: A Legacy for
Users (119 Stat. 1937) is amended by striking
``$8,543,000,000'' each place it appears and inserting
``$8,593,000,000''.
SEC. 1303. EXCEPTION TO THE LOCAL FURNISHING REQUIREMENT OF
THE TAX-EXEMPT BOND RULES.
(a) Snettisham Hydroelectric Facility.--For purposes of
determining whether any private activity bond issued before
May 31, 2006, and used to finance the acquisition of the
Snettisham hydroelectric facility is a qualified bond for
purposes of section 142(a)(8) of the Internal Revenue Code of
1986, the electricity furnished by such facility to the City
of Hoonah, Alaska, shall not be taken into account for
purposes of section 142(f)(1) of such Code.
(b) Lake Dorothy Hydroelectric Facility.--For purposes of
determining whether any private activity bond issued before
May 31, 2006, and used to finance the Lake Dorothy
hydroelectric facility is a qualified bond for purposes of
section 142(a)(8) of the Internal Revenue Code of 1986, the
electricity furnished by such facility to the City of Hoonah,
Alaska, shall not be taken into account for purposes of
paragraphs (1) and (3) of section 142(f) of such Code.
(c) Definitions.--For purposes of this section--
(1) Lake dorothy hydroelectric facility.--The term ``Lake
Dorothy hydroelectric facility'' means the hydroelectric
facility located approximately 10 miles south of Juneau,
Alaska, and commonly referred to as the ``Lake Dorothy
project''.
(2) Snettisham hydroelectric facility.--The term
``Snettisham hydroelectric facility'' means the hydroelectric
project described in section 1804 of the Small Business Job
Protection Act of 1996.
SEC. 1304. QUALIFIED TUITION PROGRAMS.
(a) Permanent Extension of Modifications.--Section 901 of
the Economic Growth and Tax Relief Reconciliation Act of 2001
(relating to sunset provisions) shall not apply to section
402 of such Act (relating to modifications to qualified
tuition programs).
(b) Regulatory Authority to Prevent Abuse.--Section 529
(relating to qualified tuition programs) is amended by adding
at the end the following new subsection:
``(f) Regulations.--Notwithstanding any other provision of
this section, the Secretary shall prescribe such regulations
as may be necessary or appropriate to carry out the purposes
of this section and to prevent abuse of such purposes,
including regulations under chapters 11, 12, and 13 of this
title.''.
TITLE XIV--TARIFF PROVISIONS
SEC. 1401. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This title may be cited as the
``Miscellaneous Trade and Technical Corrections Act of
2006''.
(b) Table of Contents.--The table of contents of this title
is as follows:
TITLE XIV--TARIFF PROVISIONS
Sec. 1401. Short title; table of contents.
Sec. 1402. Reference.
Subtitle A--Temporary Duty Suspensions and Reductions
Chapter 1--New Duty Suspensions and Reductions
Sec. 1411. Certain non-knit gloves designed for use by auto mechanics.
Sec. 1412. Certain microphones for use in automotive interiors.
Sec. 1413. Acrylic or modacrylic synthetic filament tow.
Sec. 1414. Acrylic or modacrylic synthetic staple fibers, carded,
combed, or otherwise processed for spinning.
Sec. 1415. Nitrocellulose.
Sec. 1416. Potassium sorbate.
Sec. 1417. Sorbic acid.
Sec. 1418. Certain capers.
Sec. 1419. Certain pepperoncini prepared or preserved otherwise than by
vinegar or acetic acid.
Sec. 1420. Certain capers.
Sec. 1421. Certain pepperoncini prepared or preserved by vinegar or
acetic acid in concentrations at 0.5 percent or greater.
Sec. 1422. Certain pepperoncini prepared or preserved otherwise than by
vinegar or acetic acid in concentrations less than 0.5
percent.
[[Page H6129]]
Sec. 1423. Chloral.
Sec. 1424. Imidacloprid technical (imidacloprid).
Sec. 1425. Triadimefon.
Sec. 1426. Polyethylene HE1878.
Sec. 1427. Thiacloprid.
Sec. 1428. Pyrimethanil.
Sec. 1429. Foramsulfuron.
Sec. 1430. Fenamidone.
Sec. 1431. Cyclanilide technical.
Sec. 1432. Para-benzoquinone.
Sec. 1433. O-Anisidine.
Sec. 1434. 2,4-Xylidine.
Sec. 1435. Crotonaldehyde.
Sec. 1436. Butanedioic acid, dimethyl ester, polymer with 4-hydroxy-
2,2,6,6,-tetramethyl-1-piperidineethanol.
Sec. 1437. Mixtures of CAS Nos. 106990-43-6 and 65447-77-0.
Sec. 1438. MCPA.
Sec. 1439. Bronate advanced.
Sec. 1440. Bromoxynil octanoate tech.
Sec. 1441. Bromoxynil meo.
Sec. 1442. Hydraulic control units.
Sec. 1443. Shield asy-steering gear.
Sec. 1444. 2,4-Dichloroaniline.
Sec. 1445. 2-Acetylbutyrolactone.
Sec. 1446. Alkylketone.
Sec. 1447. Cyfluthrin (baythroid).
Sec. 1448. Beta-cyfluthrin.
Sec. 1449. Cyclopropane-1,1-dicarboxylic acid, dimethyl ester.
Sec. 1450. Spiroxamine.
Sec. 1451. Spiromesifen.
Sec. 1452. 4-Chlorobenzaldehyde.
Sec. 1453. Oxadiazon.
Sec. 1454. NAHP.
Sec. 1455. Phosphorus thiochloride.
Sec. 1456. Trifloxystrobin.
Sec. 1457. Phosphoric acid, lanthanum salt, cerium terbium-doped.
Sec. 1458. Lutetium oxide.
Sec. 1459. ACM.
Sec. 1460. Permethrin.
Sec. 1461. Thidiazuron.
Sec. 1462. Flutolanil.
Sec. 1463. Resmethrin.
Sec. 1464. Clothianidin.
Sec. 1465. Certain master cylinder assembles.
Sec. 1466. Certain transaxles.
Sec. 1467. Converter asy.
Sec. 1468. Module and bracket asy-power steering.
Sec. 1469. Unit asy-battery hi volt.
Sec. 1470. Certain articles of natural cork.
Sec. 1471. Glyoxylic acid.
Sec. 1472. Cyclopentanone.
Sec. 1473. Mesotrione technical.
Sec. 1474. Malonic acid-dinitrile 50% NMP.
Sec. 1475. Formulations of NOA 446510.
Sec. 1476. DEMBB distilled-ISO tank.
Sec. 1477. Methylionone.
Sec. 1478. Certain acrylic fiber tow.
Sec. 1479. Certain acrylic fiber tow.
Sec. 1480. MKH 6561 isocyanate.
Sec. 1481. Endosulfan.
Sec. 1482. Tetraconazole.
Sec. 1483. M-alcohol.
Sec. 1484. Certain machines for use in the assembly of motorcycle
wheels.
Sec. 1485. Deltamethrin.
Sec. 1486. Palm fatty acid distillate.
Sec. 1487. 4-Methoxy-2-methyldiphenylamine.
Sec. 1488. 2-Methylhydroquinone.
Sec. 1489. 1-Fluoro-2-nitrobenzene.
Sec. 1490. Cosmetic bags with a flexible outer surface of reinforced or
laminated polyvinyl chloride (PVC).
Sec. 1491. Mixtures of methyl 4-iodo-2-[3-(4-methoxy-6-methyl-1,3,5-
triazin-2-yl)ureidosulfonyl]benzoate, sodium salt
(iodosulfuron methyl, sodium salt).
Sec. 1492. Ethyl 4,5-dihydro-5,5-diphenyl-1,2-oxazole-3-carboxylate
(isoxadifen-ethyl).
Sec. 1493. (5-cyclopropyl-4-isoxazolyl)[2-(methylsulfonyl)-4-
(trifluoromethyl)phenyl]methanone (isoxaflutole).
Sec. 1494. Methyl 2-[(4,6-dimethoxypyrimidin-2-ylcarbamoyl)sulfamoyl]-
a-(methanesulfonamido)-p-toluate (mesosulfuron-methyl)
whether or not mixed with application adjuvants.
Sec. 1495. Mixtures of foramsulfuron and iodosulfuron-methyl-sodium.
Sec. 1496. Vulcuren UPKA 1988.
Sec. 1497. Vullcanox 41010 NA/LG.
Sec. 1498. Vulkazon AFS/LG.
Sec. 1499. P-Anisaldehyde.
Sec. 1500. 1,2-Pentanediol.
Sec. 1501. Agrumex.
Sec. 1502. Cohedur RL.
Sec. 1503. Formulations of prosulfuron.
Sec. 1504. Lewatit.
Sec. 1505. Para-Chlorophenol.
Sec. 1506. Cypermethrin.
Sec. 1507. Ion-exchange resin powder.
Sec. 1508. Ion-exchange resin powder.
Sec. 1509. Desmodur E 14.
Sec. 1510. Desmodur VP LS 2253.
Sec. 1511. Desmodur R-E.
Sec. 1512. Walocel MW 3000 PFV.
Sec. 1513. TSME.
Sec. 1514. Walocel VP-M 20660.
Sec. 1515. Xama 2.
Sec. 1516. Xama 7.
Sec. 1517. Certain cases for toys.
Sec. 1518. Certain cases for toys.
Sec. 1519. Aniline 2.5-disulfonic acid.
Sec. 1520. 1,4-benzenedicarboxylic acid, polymer with n,n'-bis(2-
aminoethyl)-1,2-ethanediamine, cyclized, methosulfate.
Sec. 1521. Sulfur blue 7.
Sec. 1522. Formaldehyde, reaction products with 1,4-benzenediol and m-
phenylenediamine, sulfurized.
Sec. 1523. Isocyanatosulfonyl.
Sec. 1524. Isocyanatosulfonyl.
Sec. 1525. Gemifloxacin, gemifloxacin mesylate, and gemifloxacin
mesylate sesquihydrate.
Sec. 1526. Butralin.
Sec. 1527. Spirodiclofen.
Sec. 1528. Propamocarb HCL (PREVICUR).
Sec. 1529. Desmodur IL.
Sec. 1530. Chloroacetone.
Sec. 1531. IPN (isophthalonitrile).
Sec. 1532. NOA 446510 technical.
Sec. 1533. Hexythiazox technical.
Sec. 1534. Crelan (self-blocked cycloaliphatic polyuretdione).
Sec. 1535. Aspirin.
Sec. 1536. Desmodur BL XP 2468.
Sec. 1537. Desmodur RF-E.
Sec. 1538. Desmodur HL.
Sec. 1539. D-Mannose.
Sec. 1540. Certain camel hair.
Sec. 1541. Waste of camel hair.
Sec. 1542. Certain camel hair.
Sec. 1543. Woven fabric of vicuna hair.
Sec. 1544. Certain camel hair.
Sec. 1545. Noils of camel hair.
Sec. 1546. Chloroacetic acid, ethyl ester.
Sec. 1547. Chloroacetic acid, sodium salt.
Sec. 1548. Low expansion laboratory glass.
Sec. 1549. Stoppers, lids, and other closures.
Sec. 1550. Pigment yellow 213.
Sec. 1551. Indoxacarb.
Sec. 1552. Dimethyl carbonate.
Sec. 1553. 5-Chloro-1-indanone (EK179).
Sec. 1554. Mixtures of famoxadone and cymoxanil.
Sec. 1555. Decanedioic acid, bis(2,2,6,6-tetramethyl-4-piperidinyl)
ester.
Sec. 1556. Acid blue 80.
Sec. 1557. Pigment brown 25.
Sec. 1558. Formulations of azoxystrobin.
Sec. 1559. Formulations of pinoxaden/cloquintocet.
Sec. 1560. Mixtures of difenoconazole/mefenoxam.
Sec. 1561. Fludioxinil technical.
Sec. 1562. Mixtures of clodinafop-propargyl.
Sec. 1563. Avermectin b, 1,4"-deoxy-4"-methylamino-, (4"r)-, benzoate.
Sec. 1564. Cloquintocet-mexyl.
Sec. 1565. Metalaxyl-M technical.
Sec. 1566. Cyproconazole technical.
Sec. 1567. Pinoxaden technical.
Sec. 1568. Mixtures of tralkoxydim.
Sec. 1569. Certain chemicals.
Sec. 1570. Mixtures of ( )-(cis and trans)-1-[[2-(2,4-
dichlorophenyl)-4-propyl-1,3-dioxolan-2-yl]-methyl]-1h-
1,2,4-triazole.
Sec. 1571. Paraquat dichloride.
Sec. 1572. Certain basketballs.
Sec. 1573. Certain leather basketballs.
Sec. 1574. Certain rubber basketballs.
Sec. 1575. Certain volleyballs.
Sec. 1576. 4-Chloro-3-[[3-(4-methoxyphenyl)-1,3-dioxopropyl]-amino]-
dodecyl ester.
Sec. 1577. Linuron.
Sec. 1578. N,N-Dimethylpiperidinium chloride (mepiquat chloride).
Sec. 1579. Diuron.
Sec. 1580. Formulated product Krovar I DF.
Sec. 1581. Triasulfuron technical.
Sec. 1582. Brodifacoum technical.
Sec. 1583. Pymetrozine technical.
Sec. 1584. Formulations of thiamethoxam, difenoconazole, fludioxinil,
and mefenoxam.
Sec. 1585. Trifloxysulfuron-sodium technical.
Sec. 1586. 2 Benzylthio-3-ethyl sulfonyl pyridine.
Sec. 1587. 2-Amino-4-methoxy-6-methyl-1,3,5-triazine.
Sec. 1588. Formulated products containing mixtures of the active
ingredient 2-chloro-n-[[(4-methoxy-6-methyl-1,3,5-
triazin-2yl) amino]carbonyl] benzenesulfonamide and
application adjuvants.
Sec. 1589. 2-methyl-4-methoxy-6-methylamino-1,3,5-triazine.
Sec. 1590. Mixtures of sodium-2-chloro-6-[(4,6 dimethoxypyrimidin-2-
yl)thio]benzoate and application adjuvants (pyrithiobac-
sodium).
Sec. 1591. Certain decorative plates, decorative sculptures, decorative
plaques, and architectural miniatures.
Sec. 1592. Certain music boxes.
Sec. 1593. 2-Methyl-4-chlorophenoxyacetic acid.
Sec. 1594. Phenmedipham.
Sec. 1595. Desmedipham.
Sec. 1596. Certain footwear with open toes or heels.
Sec. 1597. Certain work footwear.
Sec. 1598. Certain refracting and reflecting telescopes.
Sec. 1600. Certain work footwear.
Sec. 1601. Certain footwear for men.
Sec. 1602. Certain rubber or plastic footwear.
Sec. 1604. Zinc dimethyldithiocarbamate.
Sec. 1605. Certain liquid crystal device (LCD) panel assemblies.
Sec. 1606. Certain watertube boilers and reactor vessel heads.
Chapter 2--Existing Duty Suspensions and Reductions
Sec. 1611. Extension of certain existing duty suspensions and
reductions.
Subtitle B--Other Tariff Provisions
Chapter 1--Liquidation Or Reliquidation of Certain Entries
Sec. 1621. Certain tramway cars and associated spare parts.
[[Page H6130]]
Sec. 1622. Reliquidation of certain entries of candles.
Sec. 1623. Certain entries of roller chain.
Sec. 1624. Certain entries of soundspa clock radios.
Chapter 2--Miscellaneous Provisions
Sec. 1631. Vessel repair duties.
Sec. 1632. Suspension of new shipper review provision.
Sec. 1633. Extension and modification of duty suspension on wool
products; wool research fund; wool duty refunds.
Sec. 1634. Authorities relating to DR-CAFTA Agreement.
Sec. 1635. Technical amendments to Customs modernization.
Subtitle C--Effective Date
Sec. 1641. Effective date.
SEC. 1402. REFERENCE.
Except as otherwise expressly provided, whenever in this
title an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a chapter, subchapter, note,
additional U.S. note, heading, subheading, or other
provision, the reference shall be considered to be made to a
chapter, subchapter, note, additional U.S. note, heading,
subheading, or other provision of the Harmonized Tariff
Schedule of the United States (19 U.S.C. 3007).
Subtitle A--Temporary Duty Suspensions and Reductions
CHAPTER 1--NEW DUTY SUSPENSIONS AND REDUCTIONS
SEC. 1411. CERTAIN NON-KNIT GLOVES DESIGNED FOR USE BY AUTO
MECHANICS.
(a) In General.--Subchapter II of chapter 99 is amended by
inserting in numerical sequence the following new headings:
`` 9902.14.01 Mechanics' work 2.8% No change No change On or before 12/
gloves, valued 31/2009
not over $3.50
per pair
(provided for in
subheading
6216.00.58)......
9902.14.02 Mechanics' work 2.8% No change No change On or before 12/ ''.
gloves, valued 31/2009
over $3.50 but
not over $3.70
per pair
(provided for in
subheading
6216.00.58)......
9902.14.03 Mechanics' work 2.8% No change No change On or before 12/ ''.
gloves, valued 31/2009
over $3.70 but
not over $4.99
per pair
(provided for in
subheading
6216.00.58)......
9902.14.04 Mechanics' work 2.8% No change No change On or before 12/ ''.
gloves, valued 31/2009
over $4.99 but
not over $7.72
per pair
(provided for in
subheading
6216.00.58)......
9902.14.05 Mechanics' work 2.8% No change No change On or before 12/ ''.
gloves, valued 31/2009
over $7.72 per
pair (provided
for in subheading
6216.00.58)......
(b) Amendment to U.S. Notes.--Subchapter II of chapter 99
is amended by adding at the end of the U.S. Notes to such
subchapter the following new U.S. Note:
``18. For purposes of headings 9902.14.01, 9902.14.02,
9902.14.03, 9902.14.04, and 9902.14.05, the term `mechanics'
work gloves' means gloves, of man-made fibers, having
synthetic leather palms and fingers; fourchettes of synthetic
leather or of fabric of nylon or elastomeric yarn; backs
comprising either one layer of knitted fabric of elastomeric
yarn or three layers, with the outer layer of knitted fabric
of elastomeric yarn, the center layer of foam and the inner
layer of tricot fabric; the foregoing, whether or not
including an thermoplastic rubber logo or pad on the back;
and elastic wrist straps with molded thermoplastic rubber
hook-and-loop enclosures.''.
SEC. 1412. CERTAIN MICROPHONES FOR USE IN AUTOMOTIVE
INTERIORS.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.17 Unidirectional Free No change No change On or before 12/ ''.
(cardioid) 31/2009
electret
condenser
microphone
modules for use
in motor vehicles
provided for in
headings 8701
through 8705
(other than such
modules designed
for handheld,
microphone stand,
or lapel use),
the foregoing
each including
wire leads for
external
connection,
whether or not
including a multi-
pin board level
type connector
but not including
a battery
compartment;
having a typical
frequency
response of 250
Hertz through
7,000 Hertz with
no more than a 20
decibel deviation
in that frequency
range and an
electrostatic
discharge
immunity of 4,000
V (contact) and
8,000 V (air);
and capable of
operation and
storage in the
temperature range
of -40C through
85C and a
humidity of not
over 95 percent
(provided for in
subheading
8518.10.80)......
SEC. 1413. ACRYLIC OR MODACRYLIC SYNTHETIC FILAMENT TOW.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.21 Synthetic 6.8% No change No change On or before 12/ ''.
filament tow: 31/2009
acrylic or
modacrylic
(provided for in
subheading
5501.30.00)......
SEC. 1414. ACRYLIC OR MODACRYLIC SYNTHETIC STAPLE FIBERS,
CARDED, COMBED, OR OTHERWISE PROCESSED FOR
SPINNING.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.22 Synthetic staple Free No change No change On or before 12/ ''.
fibers, carded, 31/2009
combed, or
otherwise
processed for
spinning: acrylic
or modacrylic
(provided for in
subheading
5506.30.00)......
SEC. 1415. NITROCELLULOSE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
[[Page H6131]]
`` 9902.10.23 Cellulose nitrates 4.4% No change No change On or before 12/ ''.
(nitrocellulose, 31/2009
including
collodions) (CAS
9004-70-0)
(provided for in
subheading
3912.20.00)......
SEC. 1416. POTASSIUM SORBATE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.24 Potassium sorbate 1.4% No change No change On or before 12/ ''.
(CAS No. 24634-61- 31/2009
5) (provided for
in subheading
2916.19.10)......
SEC. 1417. SORBIC ACID.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.25 Sorbic acid (CAS 1.9% No change No change On or before 12/ ''.
No. 110-44-1) 31/2009
(provided for in
subheading
2916.19.20)......
SEC. 1418. CERTAIN CAPERS.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.26 Capers, prepared Free No change No change On or before 12/ ''.
or preserved by 31/2009
vinegar other
than such goods
in immediate
containers each
holding 3.4 kg or
less (provided
for in subheading
2001.90.20)......
SEC. 1419. CERTAIN PEPPERONCINI PREPARED OR PRESERVED
OTHERWISE THAN BY VINEGAR OR ACETIC ACID.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.27 Pepperoncini, Free No change No change On or before 12/ ''.
prepared or 31/2009
preserved
otherwise than by
vinegar, not
frozen (provided
for in subheading
2005.90.55)......
SEC. 1420. CERTAIN CAPERS.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.28 Capers, prepared Free No change No change On or before 12/ ''.
or preserved by 31/2009
vinegar in
immediate
containers each
holding more than
3.4 kg (provided
for in subheading
2001.90.10)......
SEC. 1421. CERTAIN PEPPERONCINI PREPARED OR PRESERVED BY
VINEGAR OR ACETIC ACID IN CONCENTRATIONS AT 0.5
PERCENT OR GREATER.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.29 Pepperoncini, 2.2% No change No change On or before 12/ ''.
prepared or 31/2009
preserved by
vinegar (provided
for in subheading
2001.90.38)......
SEC. 1422. CERTAIN PEPPERONCINI PREPARED OR PRESERVED
OTHERWISE THAN BY VINEGAR OR ACETIC ACID IN
CONCENTRATIONS LESS THAN 0.5 PERCENT.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.30 Giardiniera, Free No change No change On or before 12/ ''.
prepared or 31/2009
preserved
otherwise than by
vinegar, not
frozen (provided
for in subheading
2005.90.55)......
SEC. 1423. CHLORAL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.31 Trichloroacetaldeh Free No change No change On or before 12/ ''.
yde (CAS No. 75- 31/2009
87-6) (provided
for in subheading
2913.00.50)......
SEC. 1424. IMIDACLOPRID TECHNICAL (IMIDACLOPRID).
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.32 1-[(6-Chloro-3- Free No change No change On or before 12/ ''.
pyrdinyl)methyl]- 31/2009
N-nitro-2-
imidazolidinimine
(Imidacloprid)
(CAS No. 138261-
41-3) (provided
for in subheading
2933.39.27)......
SEC. 1425. TRIADIMEFON.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.33 1-(4- Free No change No change On or before 12/ ''.
Chlorophenoxy)-3, 31/2009
3-dimethyl-1-(1H-
1,2,4-triazol-1-
y1)-2-butanone
(CAS No. 43121-43-
3) (Triadimefon)
(provided for in
subheading
2933.99.22)......
[[Page H6132]]
SEC. 1426. POLYETHYLENE HE1878.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.34 Polyethylene 3.6% No change No change On or before 12/ ''.
HE1878 (CAS No. 31/2009
25087-34-7), with
l-butene as
comonomer
(provided for in
subheading
3901.20.50)......
SEC. 1427. THIACLOPRID.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.35 (Z)-[3- [(6-chloro- Free No change No change On or before 12/ ''.
3- pyridinyl) 31/2009
methyl]-2-
thiazolidinyliden
e] cyanamide
(thiacloprid)
(CAS No. 111988-
49-9) (provided
for in subheading
2934.10.10)......
SEC. 1428. PYRIMETHANIL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.36 4,6-Dimethyl-N- Free No change No change On or before 12/ ''.
phenyl-2- 31/2009
pyrimidinamine
(pyrimethanil)
(CAS No. 53112-28-
0) (provided for
in subheading
2933.59.15)......
SEC. 1429. FORAMSULFURON.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.37 Foramsulfuron 2.6% No change No change On or before 12/ ''.
(Benzamide, 2- 31/2009
(((((4,6-
dimethoxy-2-
pyrimidinyl)amino
)
carbonyl)amino)su
lfonyl)-4-
(formylamino)-
N,N-dimethyl-,)
(CAS No. 173159-
57-4), in bulk or
put up in forms
or packaging for
retail sale
(provided for in
subheading
2935.00.75 or
3808.30.15)......
SEC. 1430. FENAMIDONE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.38 (5S)-3,5-Dihydro-5- Free No change No change On or before 12/ ''.
methyl-2- 31/2009
(methylthio)- 5-
phenyl-3-
(phenylamino)- 4H-
imidazol-4-one
(Fenamidone) (CAS
No. 161326-34-7)
(provided for in
subheading
2933.29.35)......
SEC. 1431. CYCLANILIDE TECHNICAL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.39 1-(2,4-Dichloro- Free No change No change On or before 12/ ''.
phenylaminocarbon 31/2009
yl)-
cyclopropanecarbo
xylic acid
(Cyclanilide)
(CAS No. 113136-
77-9) (provided
for in subheading
2924.29.47)......
SEC. 1432. PARA-BENZOQUINONE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.40 1,4-Benzoquinone Free No change No change On or before 12/ ''.
(CAS No. 106-51- 31/2009
4) (provided for
in subheading
2914.69.90)......
SEC. 1433. O-ANISIDINE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.41 o-Anisidine (CAS Free No change No change On or before 12/ ''.
No. 90-04-4) 31/2009
(provided for in
subheading
2922.22.10)......
SEC. 1434. 2,4-XYLIDINE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.43 2,4-Xylidine (CAS Free No change No change On or before 12/ ''.
No. 95-68-1) 31/2009
(provided for in
subheading
2921.49.10)......
SEC. 1435. CROTONALDEHYDE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.44 Crotonaldehyde (2- Free No change No change On or before 12/ ''.
butenaldehyde) 31/2009
(CAS No. 4170-30-
3) (provided for
in subheading
2912.19.50)......
SEC. 1436. BUTANEDIOIC ACID, DIMETHYL ESTER, POLYMER WITH 4-
HYDROXY-2,2,6,6,-TETRAMETHYL-1-
PIPERIDINEETHANOL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
[[Page H6133]]
`` 9902.10.47 Butanedioic acid, Free No change No change On or before 12/ ''.
dimethyl ester, 31/2009
polymer with 4-
hydroxy-2,2,6,6,-
tetramethyl-1-
piperidineethanol
(CAS No. 65447-77-
0) (provided for
in subheading
3907.99.00)......
SEC. 1437. MIXTURES OF CAS NOS. 106990-43-6 AND 65447-77-0.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.48 1,3,5-Triazine- Free No change No change On or before 12/ ''.
2,4,6-triamine, 31/2009
N,N-[1,2-
ethanediylbis[[[4
,6-bis[butyl
(1,2,2,6,6-
pentamethyl-4-
piperidinyl)amino
]-1,3,5-triazine-
2-yl]imino]-3,1-
propanediyl]]bis[
N,N-dibutyl-N,N-
bis(1,2,2,6,6-
pentamethyl-4-
piperidinyl)-
(CAS No. 106990-
43-6) and
Butanedioic acid,
dimethylester
polymer with 4-
hyroxy-2,2,6,6-
tetramethyl-1-
piperdine ethanol
(CAS No. 65447-77-
0) (Provided for
in subheading
3812.30.90)......
SEC. 1438. MCPA.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.54 2-Ethylhexyl (4- Free No change No change On or before 12/ ''.
chloro-2- 31/2009
methylphenoxy)ace
tate (CAS No.
29450-45-1)
(provided for in
subheading
2918.90.20)......
SEC. 1439. BRONATE ADVANCED.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.55 Formulations of 2.8% No change No change On or before 12/ ''.
2,6-dibromo-4- 31/2009
cyanophenyl
octanoate (CAS
No. 1689-99-2),
2, 6-dibromo-4-
cyanophenyl
heptanoate (CAS
No. 56634-95-8),
and 2-ethylhexyl
(4-chloro-2-
methylphenoxy)ace
tate (CAS No.
29450-45-1)
(provided for in
subheading
3808.30.15)......
SEC. 1440. BROMOXYNIL OCTANOATE TECH.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.56 2,6-dibromo-4- Free No change No change On or before 12/ ''.
cyanophenyl 31/2009
octanoate (CAS
No. 1689-99-2)
(provided for in
subheading
2926.90.25)......
SEC. 1441. BROMOXYNIL MEO.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.57 2,6-Dibromo-4- Free No change No change On or before 12/ ''.
cyanophenyl 31/2009
octanoate/
heptanoate (CAS
Nos.1689-99-2 and
56634-95-8)
(provided for in
subheading
3808.30.15)......
SEC. 1442. HYDRAULIC CONTROL UNITS.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.62 Hydraulic control Free No change No change On or before 12/ ''.
units designed 31/2009
for use in
braking systems
of hybrid motor
vehicles of
heading 8703
(provided for in
subheading
9032.89.60)......
SEC. 1443. SHIELD ASY-STEERING GEAR.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.63 Steering gear Free No change No change On or before 12/ ''.
assemblies for 31/2009
single-pinion
constant-ratio
electronic power
assisted steering
systems rated at
80 amperes at
12V, the
foregoing
designed for use
in hybrid motor
vehicles of
heading 8703
(provided for in
subheading
8708.99.73)......
SEC. 1444. 2,4-DICHLOROANILINE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.64 2,4- Free No change No change On or before 12/ ''.
Dichloroaniline 31/2009
(CAS No. 554-00-
7) (provided for
in subheading
2921.42.18)......
SEC. 1445. 2-ACETYLBUTYROLACTONE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.65 2- Free No change No change On or before 12/ ''.
Acetylbutyrolacto 31/2009
ne (CAS No. 517-
23-7) (provided
for in subheading
2932.29.50)......
[[Page H6134]]
SEC. 1446. ALKYLKETONE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.66 1-(4-Chlorophenyl)- Free No change No change On or before 12/ ''.
4, 4-dimethyl-3- 31/2009
pentanone (CAS
No. 66346-01-8)
(provided for in
subheading
2914.70.40)......
SEC. 1447. CYFLUTHRIN (BAYTHROID).
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.67 Cyano(4-fluoro-3- 3.5% No change No change On or before 12/ ''.
phenoxyphenyl)met 31/2009
hyl 3-(2,2-
dichloroethenyl)-
2,2-
dimethylcycloprop
anecarboxylate
(Cyfluthrin,
excluding b-
Cyfluthrin) (CAS
No. 68359-37-5)
(provided for in
subheading
2926.90.30)......
SEC. 1448. BETA-CYFLUTHRIN.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.68 Reaction mixture Free No change No change On or before 12/ ''.
comprising the 31/2009
enantiomeric pair
(R)-a-cyano-4-
fluoro-3-
phenoxybenzyl
(1S,3S)-3-(2,2-
dichlorovinyl)-2,
2-
dimethylcycloprop
anecarboxylate
and (S)-a-cyano-4-
fluoro-3-
phenoxybenzyl
(1R,3R)-3-(2,2-
dichlorovinyl)-2,
2-
dimethylcycloprop
anecarboxylate in
ratio 1:2 with
the enantiomeric
pair (R)-a-cyano-
4-fluoro-3-
phenoxybenzyl
(1S,3R)-3-(2,2-
dichlorovinyl)-2,
2-
dimethylcycloprop
anecarboxylate
and (S)-a-cyano-4-
fluoro-3-
phenoxybenzyl
(1R,3S)-3-(2,2-
dichlorovinyl)-2,
2-
dimethylcycloprop
anecarboxylate (b-
Cyfluthrin) (CAS
No. 68359-37-5)
(provided for in
subheading
2926.90.30)......
SEC. 1449. CYCLOPROPANE-1,1-DICARBOXYLIC ACID, DIMETHYL
ESTER.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.69 Cyclopropane-1,1- 1.8% No change No change On or before 12/ ''.
dicarboxylic 31/2009
acid, dimethyl
ester (CAS No.
6914-71-2)
(provided for in
subheading
2917.20.00)......
SEC. 1450. SPIROXAMINE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.70 8-(1,1- Free No change No change On or before 12/ ''.
Dimethylethyl)-N- 31/2009
ethyl-N-propyl-
1,4-
dioxaspiro[4,5]de
cane-2-
methanamine (CAS
118134-30-8)
(provided for in
subheading
2932.99.90)......
SEC. 1451. SPIROMESIFEN.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.71 3,3- Free No change No change On or before 12/ ''.
Dimethylbutanoic 31/2009
acid, 2-oxo-3-
(2,4,6-
trimethylphenyl)-
1-
oxaspiro[4.4]non-
3-en-yl ester
(CAS 283594-90-1)
(provided for in
subheading
2932.29.10)......
SEC. 1452. 4-CHLOROBENZALDEHYDE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.72 4- Free No change No change On or before 12/ ''.
Chlorobenzaldehyd 31/2009
e (CAS No. 104-88-
1) (provided for
in subheading
2913.00.40)......
SEC. 1453. OXADIAZON.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.73 5-tert-butyl-3- Free No change No change On or before 12/ ''.
(2,4-dichloro-5- 31/2009
isopropoxyphenyl)
-1,3,4-oxadiazol-
2(3H)-one
(Oxadiazon) (CAS
No. 19666-30-9)
(provided for in
subheading
2934.99.11)......
SEC. 1454. NAHP.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.74 2-(1,1- Free No change No change On or before 12/ ''.
Dimethylethyl)-5- 31/2009
hydroxypyrimidine
, sodium salt
(CAS No. 146237-
62-9) (provided
for in subheading
2933.59.70)......
SEC. 1455. PHOSPHORUS THIOCHLORIDE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
[[Page H6135]]
`` 9902.10.75 Phosphorus Free No change No change On or before 12/ ''.
Thiochloride (CAS 31/2009
No. 3982-91-0)
(provided for in
subheading
2851.00.00)......
SEC. 1456. TRIFLOXYSTROBIN.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.76. Methyl (E)- 2.4% No change No change On or before 12/ ''.
methoxyimino-{(E) 31/2009
-a-[1-(a,a,a-
trifluoro-m-
tolyl)
ethylideneaminoox
y] -o-
tolyl}acetate
(Trifloxystrobin)
(CAS No. 141517-
21-7) (provided
for in subheading
2929.90.20)......
SEC. 1457. PHOSPHORIC ACID, LANTHANUM SALT, CERIUM TERBIUM-
DOPED.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.77 Phosphoric acid, Free No change No change On or before 12/ ''.
lanthanum salt, 31/2009
cerium terbium-
doped (CAS No.
95823-34-0)
(provided for in
subheading
2846.90.80)......
SEC. 1458. LUTETIUM OXIDE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.78 Lutetium oxide Free No change No change On or before 12/ ''.
(CAS No. 12032-20- 31/2009
1) (provided for
in subheading
2846.90.80)......
SEC. 1459. ACM.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.79 (3-Acetoxy-3- 0.7% No change No change On or before 12/ ''.
cyanopropyl) 31/2009
methylphosphinic
acid, butyl ester
(CAS No. 167004-
78-6) (provided
for in subheading
2931.00.90)......
SEC. 1460. PERMETHRIN.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.80 (3- Free No change No change On or before 12/ ''.
Phenoxyphenyl)met 31/2009
hyl 3-(2,2-
dichloroethenyl)-
2,2-
dimethylcycloprop
anecarboxylate
(Permethrin) (CAS
No. 52645-53-1)
(provided for in
subheading
2916.20.50)......
SEC. 1461. THIDIAZURON.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.81 N-Phenyl-N - Free No change No change On or before 12/ ''.
(1,2,3-thiadiazol- 31/2009
5-yl)urea
(Thidiazuron) CAS
No. 51707-55-2),
whether or not
mixed with
application
adjuvants
(provided for in
subheading
2934.99.15 or
3808.30.15)......
SEC. 1462. FLUTOLANIL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.82 N-[3-(1- Free No change No change On or before 12/ ''.
Methylethoxy)phen 31/2009
yl]-2-
(trifluoromethyl)
benzamide
(Flutolanil) (CAS
No. 66332-96-5)
(provided for in
subheading
2924.29.47)......
SEC. 1463. RESMETHRIN.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.83 [5-(Phenylmethyl)- Free No change No change On or before 12/ ''.
3-furanyl]methyl 31/2009
2,2-dimethyl-3-(2-
methyl-1-
propenyl)
cyclopropanecarbo
xylate
(Resmethrin) (CAS
No. 10453-86-8)
(provided for in
subheading
2932.19.10)......
SEC. 1464. CLOTHIANIDIN.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.84 (E)-1-(2-Chloro- 5.4% No change No change On or before 12/ ''.
1,3-thiazol-5- 31/2009
ylmethyl)-3-
methyl-2-
nitroguanidine
(Clothianidin)
(CAS No. 210880-
92-5) (provided
for in subheading
2934.10.90)......
SEC. 1465. CERTAIN MASTER CYLINDER ASSEMBLES.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
[[Page H6136]]
`` 9902.10.92 Master cylinder Free No change No change On or before 12/ ''.
assemblies for 31/2009
braking systems,
not incorporating
a vacuum booster,
the foregoing
designed for use
in hybrid motor
vehicles of
heading 8703
(provided for in
subheading
8708.39.50)......
SEC. 1466. CERTAIN TRANSAXLES.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.93 Transaxles, each 1.5% No change No change On or before 12/ ''.
incorporating an 31/2009
integral
electronic
controller, the
foregoing
designed for use
in hybrid motor
vehicles of
heading 8703
(provided for in
subheading
8708.40.20)......
SEC. 1467. CONVERTER ASY.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.94 Static converters Free No change No change On or before 12/ ''.
capable of 31/2009
converting 300 V
direct current to
12 V direct
current, designed
for use in hybrid
motor vehicles of
heading 8703
(provided for in
subheading
8504.40.95)......
SEC. 1468. MODULE AND BRACKET ASY-POWER STEERING.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.95 Controllers for Free No change No change On or before 12/ ''.
electronic power 31/2009
assisted steering
systems, rated at
80 amperes at 12
V, designed for
use in hybrid
motor vehicles of
heading 8703
(provided for in
subheading
8537.10.90)......
SEC. 1469. UNIT ASY-BATTERY HI VOLT.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.96 Nickel metal- 2.8% No change No change On or before 12/ ''.
hydride storage 31/2009
batteries,
exceeding 300 V,
the foregoing
designed for use
in hybrid motor
vehicles of
heading 8703
(provided for in
subheading
8507.80.80)......
SEC. 1470. CERTAIN ARTICLES OF NATURAL CORK.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.10.99 Articles of 6% No change No change On or before 12/ ''.
natural cork, not 31/2009
elsewhere
specified or
included
(provided for in
subheading
4503.90.60)......
SEC. 1471. GLYOXYLIC ACID.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.01 Glyoxylic acid 1.6% No change No change On or before 12/ ''.
(CAS No. 298-12- 31/2009
4) (provided for
in subheading
2918.30.90)......
SEC. 1472. CYCLOPENTANONE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.02 Cyclopentanone Free No change No change On or before 12/ ''.
(CAS No. 120-92- 31/2009
3) (provided for
in subheading
2914.29.50)......
SEC. 1473. MESOTRIONE TECHNICAL.
(a) Calendar Year 2006.--Subchapter II of chapter 99 is
amended by inserting in numerical sequence the following new
heading:
`` 9902.11.03 2-[4- 6.04% No change No change On or before 12/ ''.
(Methylsulfonyl)- 31/2006
2-nitrobenzoyl]-
1,3-
cyclohexanedione
(Mesotrione) (CAS
No. 104206-82-8)
(provided for in
subheading
2930.90.10)......
(b) Calendar Year 2007.--
(1) In general.--Heading 9902.11.03, as added by subsection
(a), is amended--
(A) by striking ``6.04%'' and inserting ``6.08%''; and
(B) by striking ``12/31/2006'' and inserting ``12/31/
2007''.
(2) Effective date.--The amendments made by paragraph (1)
shall take effect on January 1, 2007.
(c) Calendar Years 2008 and 2009.--
(1) In general.--Heading 9902.11.03, as added by subsection
(a) and amended by subsection (b), is further amended--
(A) by striking ``6.08%'' and inserting ``6.11%''; and
(B) by striking ``12/31/2007'' and inserting ``12/31/
2009''.
(2) Effective date.--The amendments made by paragraph (1)
shall take effect on January 1, 2008.
SEC. 1474. MALONIC ACID-DINITRILE 50% NMP.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
[[Page H6137]]
`` 9902.11.04 50% solution of Free No change No change On or before 12/ ''.
malononitrile in 31/2009
methyl-2-
pyrrolidone
solvent (CAS Nos.
109-77-3 and 872-
50-4) (provided
for in subheading
3824.90.9190)....
SEC. 1475. FORMULATIONS OF NOA 446510.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.05 Formulations of Free No change No change On or before 12/ ''.
NOA 446510 which 31/2009
include NOA
446510 Technical,
2-(4-chloro-
phenyl) -N-[2-(3-
methoxy-4-prop-2-
ynyloxy-phenyl)
ethyl]-2-prop-2-
ynyloxyacetamide
(CAS No. 374726-
62-2) (provided
for in subheading
3808.20.15)......
SEC. 1476. DEMBB DISTILLED-ISO TANK.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.06 2-Bromo-1,3- Free No change No change On or before 12/ ''.
diethyl-5- 31/2009
methylbenzene
(CAS No. 314084-
61-2) (DEMBB)
(provided for in
subheading
2903.69.80)......
SEC. 1477. METHYLIONONE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.10 3-Methyl-4-(2,6,6- Free No change No change On or before 12/ ''.
trimethylcyclohex- 31/2009
2-enyl)but-3-en-2-
one
(Methylionone)
(CAS No. 1335-46-
2) (provided for
in subheading
2914.23.00.......
SEC. 1478. CERTAIN ACRYLIC FIBER TOW.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.11 Acrylic fiber tow Free No change No change On or before 12/ ''.
(polyacrylonitril 31/2009
e tow) containing
by weight a
minimum of 92
percent
acrylonitrile,
not more than 0.1
percent zinc and
from 4 to 8
percent water,
imported in the
form of from 1 to
12 sub-bundles
crimped together,
each containing
24,000 filaments
(plus or minus
0.06 percent) and
with average
filament denier
of 1.5 decitex
(plus or minus
0.08 percent)
(provided for in
subheading
5501.30.00)......
SEC. 1479. CERTAIN ACRYLIC FIBER TOW.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.12 Acrylic fiber tow Free No change No change On or before 12/ ''.
(polyacrylonitril 31/2009
e tow) containing
by weight a
minimum of 92
percent
acrylonitrile,
not more than 0.1
percent zinc and
from 2 to 8
percent water,
imported in the
form of 6 sub-
bundles crimped
together, each
containing 45,000
filaments (plus
or minus 0.06
percent) and with
average filament
denier of either
1.48 decitex
(plus or minus
0.08 percent) or
1.32 decitex
(plus or minus
0.09 percent)
(provided for in
subheading
5501.30.00)......
SEC. 1480. MKH 6561 ISOCYANATE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.13 2-(Carbomethoxy) Free No change No change On or before 12/ ''.
benzenesulfonyl 31/2009
isocyanate (CAS
No. 74222-95-0)
(provided for in
subheading
2930.90.29)......
SEC. 1481. ENDOSULFAN.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.14 6,7,8,9,10,10- Free No change No change On or before 12/ ''.
Hexachlorohexahyd 31/2009
romethano-2,4,3-
benzodioxathiepin-
3-oxide
(Endosulfan) (CAS
No. 115-29-7)
(provided for in
subheading
2920.90.50 or
3808.10.50)......
SEC. 1482. TETRACONAZOLE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.15 1-[2-(2,4- Free No change No change On or before 12/ ''.
dichlorophenyl)-3- 31/2009
(1,1,2,2-
tetrafluoroethoxy
)propyl]-1H-1,2,4-
triazole
(Tetraconazole)
(CAS No. 112281-
77-3) (provided
for in subheading
2933.99.22)......
SEC. 1483. M-ALCOHOL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
[[Page H6138]]
`` 9902.11.16 2-(2,4- 1% No change No change On or before 12/ ''.
Dichlorophenyl)-3- 31/2009
(1H-1,2,4-triazol-
1-yl)propanol
(CAS No. 112281-
82-0) (provided
for in subheading
2933.99.82)......
SEC. 1484. CERTAIN MACHINES FOR USE IN THE ASSEMBLY OF
MOTORCYCLE WHEELS.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.17 Wheel spoke Free No change No change On or before 12/ ''.
tightening 31/2009
machines
(provided for in
subheading
8479.89.98), for
use with wheels
of vehicles of
heading 8711.....
SEC. 1485. DELTAMETHRIN.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.26 (S)-a-Cyano-3- Free No change No change On or before 12/ ''.
phenoxybenzyl 31/2009
(1R,3R)-3-(2,2-
dibromovinyl)-2,2-
dimethylcycloprop
anecarboxylate
(Deltamethrin)
(CAS No. 52918-63-
5) (provided for
in subheading
2926.90.30)......
SEC. 1486. PALM FATTY ACID DISTILLATE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.32 Monocarboxylic 1% No change No change On or before 12/ ''.
fatty acids 31/2009
derived from palm
oil (provided for
in subheading
3823.19.20)......
SEC. 1487. 4-METHOXY-2-METHYLDIPHENYLAMINE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.35 4-Methoxy-2- 1.1% No change No change On or before 12/ ''.
methyldiphenylami 31/2009
ne (CAS No. 41317-
15-1) (provided
for in subheading
2922.29.60)......
SEC. 1488. 2-METHYLHYDROQUINONE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.36 2- Free No change No change On or before 12/ ''.
Methylhydroquinon 31/2009
e (CAS No. 95-71-
6) (provided for
in subheading
2907.29.90)......
SEC. 1489. 1-FLUORO-2-NITROBENZENE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.37 1-Fluoro-2- Free No change No change On or before 12/ ''.
nitrobenzene (CAS 31/2009
No. 1493-27-2)
(provided for in
subheading
2904.90.30)......
SEC. 1490. COSMETIC BAGS WITH A FLEXIBLE OUTER SURFACE OF
REINFORCED OR LAMINATED POLYVINYL CHLORIDE
(PVC).
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.43 Vanity cases that 13.3% No change No change On or before 12/ ''.
are of a soft 31/2009
sided
construction, of
reinforced or
laminated
polyvinyl
chloride
plastics, and are
of a kind
normally carried
in the pocket or
in the handbag
and used to
contain and apply
cosmetic
preparations
(provided for in
subheading
4202.12.20)......
SEC. 1491. MIXTURES OF METHYL 4-IODO-2-[3-(4-METHOXY-6-
METHYL-1,3,5-TRIAZIN-2-
YL)UREIDOSULFONYL]BENZOATE, SODIUM SALT
(IODOSULFURON METHYL, SODIUM SALT).
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.44 Mixtures of Free No change No change On or before 12/ ''.
methyl 4-iodo-2- 31/2009
[3-(4-methoxy-6-
methyl-1,3,5-
triazin-2-yl)
ureidosulfonyl]be
nzoate, sodium
salt
(Iodosulfuron
methyl, sodium
salt) (CAS No.
144550-36-7) and
application
adjuvants
(provided for in
subheading
3808.30.15)......
SEC. 1492. ETHYL 4,5-DIHYDRO-5,5-DIPHENYL-1,2-OXAZOLE-3-
CARBOXYLATE (ISOXADIFEN-ETHYL).
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.45 Ethyl 4,5-dihydro- Free No change No change On or before 12/ ''.
5,5-diphenyl-1,2- 31/2009
oxazole-3-
carboxylate
(Isoxadifen-
ethyl) (CAS No.
163520-33-0)
(provided for in
subheading
2934.99.39)......
SEC. 1493. (5-CYCLOPROPYL-4-ISOXAZOLYL) [2-(METHYLSULFONYL) -
4-(TRIFLUOROMETHYL) PHENYL] METHANONE
(ISOXAFLUTOLE).
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
[[Page H6139]]
`` 9902.11.46 (5-cyclopropyl-4- 4.8% No change No change On or before 12/ ''.
isoxazolyl) [2- 31/2009
(methylsulfonyl)-
4-
(trifluoromethyl)
phenyl]methanone
(Isoxaflutole)
(CAS No. 141112-
29-0) (provided
for in subheading
2934.99.15)......
SEC. 1494. METHYL 2-[(4,6- DIMETHOXYPYRIMIDIN-2-YLCARBAMOYL)
SULFAMOYL]-A-(METHANESULFONAMIDO) -P-TOLUATE
(MESOSULFURON-METHYL) WHETHER OR NOT MIXED WITH
APPLICATION ADJUVANTS.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.48 Methyl 2-[(4,6- Free No change No change On or before 12/ ''.
dimethoxypyrimidi 31/2009
n-2-ylcarbamoyl)
sulfamoyl] -a-
(methanesulfonami
do) -p-toluate
(Mesosulfuron-
methyl) (CAS No.
208465-21-8)
whether or not
mixed with
application
adjuvants
(provided for in
subheading
2935.00.75 or
3808.30.15)......
SEC. 1495. MIXTURES OF FORAMSULFURON AND IODOSULFURON-METHYL-
SODIUM.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.49 Mixtures of N,N- Free No change No change On or before 12/ ''.
dimethyl-2[3-(4,6- 31/2009
dimethoxypyrimidi
n-2-yl)
ureidosulfonyl] -
4-
formylaminobenzam
ide
(Foramsulfuron)
(CAS No. 173159-
57-4), methyl 4-
iodo-2-[3-(4-
methoxy-6- methyl-
1,3,5-triazin-2-
yl)
ureidosulfonyl]be
nzoate, sodium
salt
(Iodosulfuron-
methyl-sodium)
(CAS No. 144550-
36-7) and
application
adjuvants
(provided for in
subheading
3808.30.15)......
SEC. 1496. VULCUREN UPKA 1988.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.54 1,6-Bis(N,N'- Free No change No change On or before 12/ ''.
dibenzylthiocarba 31/2009
moyldithio)hexane
(CAS No. 151900-
44-6) (provided
for in subheading
2930.20.20)......
SEC. 1497. VULLCANOX 41010 NA/LG.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.55 N-Isopropyl-N'- Free No change No change On or before 12/ ''.
phenyl-p- 31/2009
phenylenediamine
(CAS No. 101-72-
4) (provided for
in subheading
2921.51.50)......
SEC. 1498. VULKAZON AFS/LG.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.56 Pentaerythritolbi Free No change No change On or before 12/ ''.
s(tetrahydrobenza 31/2009
ldehyde acetal)
(CAS No. 6600-31-
3) (provided for
in subheading
2932.99.90)......
SEC. 1499. P-ANISALDEHYDE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.57 P-Anisaldehyde Free No change No change On or before 12/ ''.
(CAS No. 123-11- 31/2009
5) (Benzoldehyde,
4-methoxy-)
(provided for in
subheading
2912.49.10)......
SEC. 1500. 1,2-PENTANEDIOL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.60 1,2-Pentanediol Free No change No change On or before 12/ ''.
(CAS No. 5343-92- 31/2009
0) (provided for
in subheading
2905.39.90)......
SEC. 1501. AGRUMEX.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following:
`` 9902.11.62 o-tert- Free No change No change On or before 12/ ''.
Butylcyclohexyl 31/2009
acetate, cis form
(CAS No. 20298-69-
9) (Agrumex)
(Cyclohexanol, 2-
(1,1-dimethyl-)
(provided for in
subheading
2915.39.45)......
SEC. 1502. COHEDUR RL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.63 Mixtures of Free No change No change On or before 12/ ''.
resorcinol (CAS 31/2009
No. 108-46-3),
hexamethylolmelam
ine ether (CAS
No. 3089-11-0)
and dibutyl
phthalate (CAS
No. 84-74-2)
(provided for in
subheading
3824.90.28)......
[[Page H6140]]
SEC. 1503. FORMULATIONS OF PROSULFURON.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.64 Mixtures of Free No change No change On or before 12/ ''.
Prosulfuron (1-(4- 31/2009
methoxy-6-methyl-
1,3,5-triazin-2-
yl)-3-[2-(3,3,3-
trifluoropropyl)-
phenylsulfonyl]ur
ea ) (CAS No.
94125-34-5) and
application
adjuvants
(provided for in
subheading
3808.30.15)......
SEC. 1504. LEWATIT.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.71 Ion-exchange Free No change No change On or before 12/ ''.
resins (cationic 31/2009
H form),
consisting of
copolymers of
acrylic acid and
diethylene glycol
divinyl ether
(CAS No. 359785-
58-3) (provided
for in subheading
3914.00.60)......
SEC. 1505. PARA-CHLOROPHENOL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.72 para-Chlorophenol Free No change No change On or before 12/ ''.
(CAS No. 106-48- 31/2009
9) (provided for
in subheading
2908.10.60)......
SEC. 1506. CYPERMETHRIN.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.74 Cyano(3- Free No change No change On or before 12/ ''.
phenoxyphenyl)met 31/2009
hyl 3-(2,2-
dichloroethenyl)-
2,2-
dimethylcycloprop
anecarboxylate
(Cypermethrin)
(CAS No. 52315-07-
8) (provided for
in subheading
2926.90.30)......
SEC. 1507. ION-EXCHANGE RESIN POWDER.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.78 Ion-exchange Free No change No change On or before 12/ ''.
resin powder 31/2009
comprised of a
copolymer of
methacrylic acid
cross-linked with
divinylbenzene,
in the hydrogen
ionic form, of a
nominal partical
size between
0.025mm and 0.150
mm, dried to less
than 5% moisture
(CAS No. 50602-21-
6)(provided for
in subheading
3914.00.60)......
SEC. 1508. ION-EXCHANGE RESIN POWDER.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.79 Ion-exchange Free No change No change On or before 12/ ''.
resin powder 31/2009
comprised of a
copolymer of
methacrylic acid
cross-linked with
divinylbenzene,
in the potassium
ionic form, of a
nominal particle
size between
0.025mm and 0.150
mm, dried to less
than 10% moisture
(CAS No. 65405-55-
2) (provided for
in subheading
3914.00.60)......
SEC. 1509. DESMODUR E 14.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.80 1,2,3- Free No change No change On or before 12/ ''.
Propanetriol, 31/2009
polymer with 2,4-
diisocyanato-1-
methylbenzene, 2-
ethyl-2-
(hydroxymethyl)-1
,3-propanediol,
methyloxirane and
oxirane (CAS No.
127821-00-5)
(provided for in
subheading
3909.50.50)......
SEC. 1510. DESMODUR VP LS 2253.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.82 Hexane, 1,6- Free No change No change On or before 12/ ''.
diisocyanato-, 31/2009
homopolymer, 3,5-
dimethyl-1H-
pyrazole-blocked
(CAS No. 163206-
31-3) (provided
for in subheading
3911.90.90)......
SEC. 1511. DESMODUR R-E.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.83 4,4, 4-TT Desmodur Free No change No change On or before 12/ ''.
R-E in solvent 31/2009
(CAS No. 2422-91-
5) in solvent
(provided for in
subheading
3824.90.28)......
SEC. 1512. WALOCEL MW 3000 PFV.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
[[Page H6141]]
`` 9902.11.84 Methyl Free No change No change On or before 12/ ''.
hydroxyethyl 31/2009
cellulose
products
containing 30% or
greater content
of 2-hydroxyethyl
methyl ether
cellulose
(``MHEC'' )
reaction products
with glyoxal (CAS
No. 68441-63-4)
(provided for in
subheading
3912.39.00)......
SEC. 1513. TSME.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.85 ortho/para- Free No change No change On or before 12/ ''.
Toluenesulfonic 31/2009
acid, methyl
ester (TSME) (CAS
Nos. 23373-38-8
and 80-48-8)
(provided for in
subheading
2904.10.32)......
SEC. 1514. WALOCEL VP-M 20660.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.86 Methyl Free No change No change On or before 12/ ''.
Hydroxyethyl 31/2009
Cellulose with a
77% or greater
content of 2-
hydroxyethyl
methyl ether
cellulose (CAS
No. 9032-42-2)
(provided for in
subheading
3912.39.00)......
SEC. 1515. XAMA 2.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.87 Trimethylopropane Free No change No change On or before 12/ ''.
tris(3- 31/2009
aziridinylpropano
ate) (CAS No.
52234-82-9)
(provided for in
subheading
2933.99.97)......
SEC. 1516. XAMA 7.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.88 Polyfunctional Free No change No change On or before 12/ ''.
aziridine (CAS 31/2009
No. 57116-45-7)
(provided for in
subheading
2933.99.97)......
SEC. 1517. CERTAIN CASES FOR TOYS.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.90 Cases or Free No change No change On or before 12/ ''.
containers 31/2009
(provided for in
subheading
4202.92.90 and
not including
goods described
in heading
9902.01.81),
specially shaped
or fitted for,
and with
labeling, logo or
other descriptive
information on
the exterior of
the case or
container
indicating its
intention to be
used for,
electronic
drawing toys or
electronic games
of heading 9503
or 9504..........
SEC. 1518. CERTAIN CASES FOR TOYS.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.91 Cases or Free No change No change On or before 12/ ''.
containers 31/2009
(provided for in
subheadings
4402.12.80 or
4202.92.90),
having one or
more molded
plastic holders,
clips or
fasteners, for
holding a doll or
dolls, whether or
not the case or
container is also
capable of
holding other
goods............
SEC. 1519. ANILINE 2.5-DISULFONIC ACID.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.92 Aniline 2,5- Free No change No change On or before 12/ ''.
disulfonic acid 31/2009
(CAS No. 98-44-2)
(1,4-
Benzenedisnlfonic
acid, 2-amino-)
(provided for in
subheading
2921.42.90)......
SEC. 1520. 1,4-BENZENEDICARBOXYLIC ACID, POLYMER WITH N,N'-
BIS(2-AMINOETHYL)-1,2-ETHANEDIAMINE, CYCLIZED,
METHOSULFATE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.93 1,4- Free No change No change On or before 12/ ''.
Benzenedicarboxyl 31/2009
ic acid, polymer
With N,N-Bis(2-
aminoethyl)-1,2-
ethanediamine,
cyclized,
methosulfate (CAS
No. 68187-22-4)
(provided for in
subheading
3908.90.70)......
SEC. 1521. SULFUR BLUE 7.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
[[Page H6142]]
`` 9902.11.94 4-[(4-Amino- 3- Free No change No change On or before 12/ ''.
methylphenyl) 31/2009
amino]phenol,
reaction products
with sodium
sulfide (Sulfur
Blue 7) (CAS No.
1327-57-7)
(provided for in
subheading
3204.19.50)......
SEC. 1522. FORMALDEHYDE, REACTION PRODUCTS WITH 1,4-
BENZENEDIOL AND M-PHENYLENEDIAMINE, SULFURIZED.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.95 Formaldehyde, Free No change No change On or before 12/ ''.
reaction products 31/2009
with 1,4-
benzenediol and m-
phenylenediamine,
sulfurized (CAS
No. 110392-46-6)
(provided for in
subheading
3204.19.50)......
SEC. 1523. ISOCYANATOSULFONYL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.96 2- Free No change No change On or before 12/ ''.
(Isocyanatosulfon 31/2009
yl)benzoic acid,
ethyl ester (CAS
No. 77375-79-2)
(provided for in
subheading
2930.90.29)......
SEC. 1524. ISOCYANATOSULFONYL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.97 2- Free No change No change On or before 12/ ''.
(Isocyanatosulfon 31/2009
yl)benzoic acid,
methyl ester (CAS
No. 74222-95-0)
(provided for in
subheading
2930.90.29)......
SEC. 1525. GEMIFLOXACIN, GEMIFLOXACIN MESYLATE, AND
GEMIFLOXACIN MESYLATE SESQUIHYDRATE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.11.99 Gemifloxacin (CAS Free No change No change On or before 12/ ''.
No. 175463-14-6); 31/2009
gemifloxacin
mesylate (CAS No.
210353-53-0 or
204519-65-3); and
gemifloxacin
mesylate
sesquihydrate
(CAS No. 210353-
56-3 ) (the
foregoing
provided for in
subheading
2933.99.46)......
SEC. 1526. BUTRALIN.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.01 Butralin (CAS No. Free No change No change On or before 12/ ''.
33629-47-9) 31/2009
(Benzenamine, 4-
(1,1-
dimethylethyl)-N-
(1-methylpropyl)-
2,6-dintro-)
(provided for in
subheading
2921.43.90)......
SEC. 1527. SPIRODICLOFEN.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.02 2,2- Free No change No change On or before 12/ ''.
Dimethylbutanoic 31/2009
acid, 3-(2,4-
dichlorophenyl)-2-
oxo-1-
oxaspiro(4.5)dec-
3-en-4-yl ester
(Spirodiclofen)
(CAS No. 148477-
71-8) (provided
for in subheading
2932.29.10)......
SEC. 1528. PROPAMOCARB HCL (PREVICUR).
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.03 Mixtures of propyl Free No change No change On or before 12/ ''.
3-(dimethylamino) 31/2009
propylcarbamate
monohydrochloride
(Propamocarb
hydrochloride)
(CAS No. 25606-41-
1) and
application
adjuvants
(provided for in
subheading
3808.20.50)......
SEC. 1529. DESMODUR IL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.04 Poly(toluene Free No change No change On or before 12/ ''.
diisocyanate) 31/2009
(CAS No. 26006-20-
2) dissolved in
organic solvents
(provided for in
subheading
3911.90.45)......
SEC. 1530. CHLOROACETONE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.05 1-Chloro-2- Free No change No change On or before 12/ ''.
propanone (CAS 31/2009
No. 78-95-5)
(provided for in
subheading
2914.70.90)......
SEC. 1531. IPN (ISOPHTHALONITRILE).
(a) Calendar Year 2006.--Subchapter II of chapter 99 is
amended by inserting in numerical sequence the following new
heading:
[[Page H6143]]
`` 9902.12.06 1,3- 3.04% No change No change On or before 12/ ''.
Benzenedicarbonit 31/2006
rile (CAS No. 626-
17-5) (provided
for in subheading
2926.90.48)......
(b) Calendar Year 2007.--
(1) In general.--Heading 9902.12.06, as added by subsection
(a), is amended--
(A) by striking ``3.04%'' and inserting ``3.23%''; and
(B) by striking ``On or before 12/31/2006'' and inserting
``On or before 12/31/2007''.
(2) Effective date.--The amendments made by paragraph (1)
shall take effect on January 1, 2007.
(c) Calendar Years 2008 and 2009.--
(1) In general.--Heading 9902.12.06, as added by subsection
(a) and amended by subsection (b), is further amended--
(A) by striking ``3.23%'' and inserting ``3.4%''; and
(B) by striking ``On or before 12/31/2007'' and inserting
``On or before 12/31/2009''.
(2) Effective date.--The amendments made by paragraph (1)
shall take effect on January 1, 2008.
SEC. 1532. NOA 446510 TECHNICAL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.07 4-Chloro-N- [2-[3- 1.2% No change No change On or before 12/ ''.
methoxy-4-(2- 31/2009
propynyloxy)
phenyl]ethyl]-a-
(2-
propynyloxy)benze
neacetamide
(Mandipropamid)
(CAS No. 374726-
62-2) (provided
for in subheading
2924.29.47)......
SEC. 1533. HEXYTHIAZOX TECHNICAL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.08 trans-5-(4- Free No change No change On or before 12/ ''.
Chlorophenyl)-N- 31/2009
cyclohexyl-4-
methyl-2-
oxothiazolidine-3-
carboxamide
(Hexythiazox
Technical) (CAS
No. 78587-05-0)
(provided for in
subheading
2934.10.10)......
SEC. 1534. CRELAN (SELF-BLOCKED CYCLOALIPHATIC
POLYURETDIONE).
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.10 2-Oxepanone Free No change No change On or before 12/ ''.
polymer with 1,4- 31/2009
butanediol and 5-
isocyanato-1-
(isocyanatomethyl
)-1,3,3-
trimethylcyclohex
ane, 2-ethyl-1-
hexanol-blocked
(CAS No. 189020-
69-7) (provided
for in subheading
3909.50.50)......
SEC. 1535. ASPIRIN.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.11 o-Acetylsalicylic 3.0% No change No change On or before 12/ ''.
acid (aspirin) 31/2009
(CAS No. 50-78-2)
(provided for in
subheading
2918.22.10)......
SEC. 1536. DESMODUR BL XP 2468.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.12 Copolymer of Free No change No change On or before 12/ ''.
methyl ethyl 31/2009
ketoxime and
toluenediisocyana
te (CAS No.
352462-03-4)
(provided for in
subheading
3911.90.45)......
SEC. 1537. DESMODUR RF-E.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.17 Mixtures of tris(4- Free No change No change On or before 12/ ''.
isocyanatophenyl) 31/2009
thiophosphate
(CAS No. 4151-51-
3) and ethyl
acetate and
monochlorobenzene
as solvents
(provided for in
subheading
3824.90.28)......
SEC. 1538. DESMODUR HL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.18 Benzene, 1,3- Free No change No change On or before 12/ ''.
diisocyanatomethy 31/2009
l-, polymer with
1,6-
diisocyanatohexan
e (CAS No. 63368-
95-6) dissolved
in n-butyl
acetate (provided
for in subheading
3911.90.45)......
SEC. 1539. D-MANNOSE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.19 D-Mannose (CAS No. Free No change No change On or before 12/ ''.
3458-28-4) 31/2009
(provided for in
subheading
2940.00.60)......
SEC. 1540. CERTAIN CAMEL HAIR.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
[[Page H6144]]
`` 9902.12.20 Camel hair, Free No change No change On or before 12/ ''.
processed beyond 31/2009
the degreased or
carbonized
condition
(provided for in
subheading
5102.19.90)......
SEC. 1541. WASTE OF CAMEL HAIR.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.21 Waste of camel Free No change No change On or before 12/ ''.
hair (provided 31/2009
for in subheading
5103.20.00)......
SEC. 1542. CERTAIN CAMEL HAIR.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.22 Camel hair carded Free No change No change On or before 12/ ''.
or combed 31/2009
(provided for in
subheading
5105.39.00)......
SEC. 1543. WOVEN FABRIC OF VICUNA HAIR.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.23 Woven fabrics Free No change No change On or before 12/31/2009 ''
containing 85 .
percent or more
by weight of
vicuna hair
(provided for
in subheadings
5111.11.70,
5111.19.60,
5112.11.60, or
5112.19.95)....
----------------------------------------------------------------------------------------------------------------
SEC. 1544. CERTAIN CAMEL HAIR.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.24 Camel hair, not Free No change No change On or before 12/31/2009 ''
processed in .
any manner
beyond the
degreased or
carbonized
condition
(provided for
in subheading
5102.19.20)....
----------------------------------------------------------------------------------------------------------------
SEC. 1545. NOILS OF CAMEL HAIR.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.25 Noils of camel Free No change No change On or before 12/31/2009 ''
hair (provided .
for in
subheading
5103.10.00)....
----------------------------------------------------------------------------------------------------------------
SEC. 1546. CHLOROACETIC ACID, ETHYL ESTER.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.33 Chloroacetic Free No change No change On or before 12/31/2009 ''
acid, ethyl .
ester (CAS No.
105-39-5)
(provided for
in subheading
2915.40.50)....
----------------------------------------------------------------------------------------------------------------
SEC. 1547. CHLOROACETIC ACID, SODIUM SALT.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.34 Chloroacetic Free No change No change On or before 12/31/2009 ''
acid, sodium .
salt (CAS No.
3926-62-3)
(provided for
in subheading
2915.40.50)....
----------------------------------------------------------------------------------------------------------------
SEC. 1548. LOW EXPANSION LABORATORY GLASS.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.39 Laboratory, 3.6% No change No change On or before 12/31/2009 ''
hygienic, or .
pharmaceutical
glassware,
whether or not
graduated or
calibrated, of
low expansion
borosilicate
glass or
alumino-
borosilicate
glass, having a
linear
coefficient of
expansion not
exceeding 3.3 x
10\7\ per
Kelvin within a
temperature
range of 0 to
300 C (provided
for in
subheading
7017.20.00)....
----------------------------------------------------------------------------------------------------------------
SEC. 1549. STOPPERS, LIDS, AND OTHER CLOSURES.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.40 Stoppers, lids, Free No change No change On or before 12/31/2009 ''
and other .
closures of low
expansion
borosilicate
glass or
alumino-
borosilicate
glass, having a
linear
coefficient of
expansion not
exceeding 3.3 x
10\7\ per
Kelvin within a
temperature
range of 0 to
300 C, produced
by automatic
machine
(provided for
in subheading
7010.20.20) or
produced by
hand (provided
for in
subheading
7010.20.30)....
----------------------------------------------------------------------------------------------------------------
SEC. 1550. PIGMENT YELLOW 213.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.41 1,4- Free No change No change On or before 12/31/2009 ''
Benzenedicarbox .
ylic acid, 2-
[[2-oxo-1-
[[1,2,3,4-
tetrahydro-7-
methoxy-2,3-
dioxo-6-
quinoxalinyl)
amino]carbonyl]
propyl]azo]-,
dimethyl ester
(Pigment Yellow
213) (CAS No.
220198-21-0)
(provided for
in subheading
3204.17.60)....
----------------------------------------------------------------------------------------------------------------
SEC. 1551. INDOXACARB.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.42 (4aS) -7-Chloro- Free No change No change On or before 12/31/2009 ''
2, 5-dihydro-2- .
[[(methoxycarbo
nyl)[4-
(trifluorometho
xy) phenyl]
amino]
carbonyl]-
indeno [1,2-
e][1,3,4]
oxadiazine-4a
(3H)-carboxylic
acid methyl
ester (CAS No.
173584-44-6)
(provided for
in subheading
2934.99.16)....
----------------------------------------------------------------------------------------------------------------
SEC. 1552. DIMETHYL CARBONATE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.43 Dimethyl Free No change No change On or before 12/31/2009 ''
carbonate (CAS .
No. 616-38-6)
(provided for
in subheading
2920.90.50)....
----------------------------------------------------------------------------------------------------------------
SEC. 1553. 5-CHLORO-1-INDANONE (EK179).
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
[[Page H6145]]
`` 9902.12.44 5-Chloro-1- Free No change No change On or before 12/31/2009 ''
indanone (CAS .
No. 42348-86-7)
(provided for
in subheading
2914.39.90)....
----------------------------------------------------------------------------------------------------------------
SEC. 1554. MIXTURES OF FAMOXADONE AND CYMOXANIL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.45 Mixtures of 5- Free No change No change On or before 12/31/2009 ''
methyl-5-(4- .
phenoxyphenyl)-
3-(phenylamino)-
2,4-
oxazolidinedion
e] (famoxadone)
(CAS No. 131807-
57-3), 2-cyano-
N-
[(ethylamino)ca
rbonyl]-2-
(methoxyimino)a
cetamide
(Cymoxanil)
(CAS No. 57966-
95-7) and
application
adjuvants
(provided for
in subheading
3808.20.15)....
----------------------------------------------------------------------------------------------------------------
SEC. 1555. DECANEDIOIC ACID, BIS(2,2,6,6-TETRAMETHYL-4-
PIPERIDINYL) ESTER.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.47 Decanedioic Free No change No change On or Before 12/31/2009 ''
acid, .
bis(2,2,6,6-
tetramethyl-4-
piperidinyl)
ester (CAS No.
52829-07-9)
(provided for
in subheading
2933.39.91)....
----------------------------------------------------------------------------------------------------------------
SEC. 1556. ACID BLUE 80.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.49 Acid Blue 80 Free No change No change On or before 12/31/2009 ''
(CAS No. 4474- .
24-2) (provided
for in
subheading
3204.12.50)....
----------------------------------------------------------------------------------------------------------------
SEC. 1557. PIGMENT BROWN 25.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.50 Pigment Brown 25 Free No change No change On or before 12/31/2009 ''
(CAS No. 6992- .
11-6) (provided
for in
subheading
3204.17.04)....
----------------------------------------------------------------------------------------------------------------
SEC. 1558. FORMULATIONS OF AZOXYSTROBIN.
(a) Calendar Year 2006.--Subchapter II of chapter 99 is
amended by inserting in numerical sequence the following new
heading:
`` 9902.12.51 Mixtures of 6.14% No change No change On or before 12/31/2006 ''
benzeneacetic .
acid, (a E)- 2-
[[6-(2-
cyanophenoxy) -
4-pyrimidinyl]
oxy]-a-
(methoxymethyle
ne)-, methyl
ester
(Azoxystrobin)
(CAS No. 131860-
33-8) and
application
adjuvants
(provided for
in subheading
3808.20.15)....
----------------------------------------------------------------------------------------------------------------
(b) Calendar Year 2007.--
(1) In general.--Heading 9902.12.51, as added by subsection
(a), is amended--
(A) by striking ``6.14%'' and inserting ``6.15%''; and
(B) by striking ``On or before 12/31/2006'' and inserting
``On or before 12/31/2007''.
(2) Effective date.--The amendments made by paragraph (1)
shall take effect on January 1, 2007.
(c) Calendar Years 2008 and 2009.--
(1) In general.--Heading 9902.12.51, as added by subsection
(a) and amended by subsection (b), is further amended--
(A) by striking ``6.15%'' and inserting ``6.17%''; and
(B) by striking ``On or before 12/31/2007'' and inserting
``On or before 12/31/2009''.
(2) Effective date.--The amendments made by paragraph (1)
shall take effect on January 1, 2008.
SEC. 1559. FORMULATIONS OF PINOXADEN/CLOQUINTOCET.
(a) Calendar Years 2006 and 2007.--Subchapter II of chapter
99 is amended by inserting in numerical sequence the
following new heading:
`` 9902.12.52 Mixtures of Free No change No change On or before 12/31/2007 ''
8(2,6-diethyl-p- .
tolyl)-1,2,4,5-
tetrahydro-7-
oxo-7H-
pyrazolo[[1,2-
d][1,4,5]
oxadiazepin-9-
yl 2,2-
dimethylpropion
ate (Pinoxaden)
(CAS No. 243973-
20-8), acetic
acid, [5-chloro-
8-
quinolinyl]oxy]-
, 1-methylhexyl
ester
(Cloquintocet)
(CAS No. 99607-
70-2) and
application
adjuvants
(provided for
in subheading
3808.30.15)....
----------------------------------------------------------------------------------------------------------------
(b) Calendar Years 2008 and 2009.--
(1) In general.--Heading 9902.12.52, as added by subsection
(a), is further amended--
(A) by striking ``Free'' and inserting ``1.74%''; and
(B) by striking ``On or before 12/31/2007'' and inserting
``On or before 12/31/2009''.
(2) Effective date.--The amendments made by paragraph (1)
shall take effect on January 1, 2008.
SEC. 1560. MIXTURES OF DIFENOCONAZOLE/MEFENOXAM.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.53 Mixtures of 1H- Free No change No change On or before 12/31/2009 ''
1,2,4-triazole, .
1-((2-
chlorophenoxy)p
henyl)-4-methyl-
1,3-dioxolan-2-
yl)methyl)-
(Difenoconazole
) (CAS No.
119446-68-3),
(R,S)-2-((2,6-
dimethylphenyl)
methoxyacetylam
ino) propionic
acid, methyl
ester
(Mefenoxam)
(CAS Nos. 70630-
17-0, and 69516-
34-3) and
application
adjuvants
(provided for
in subheading
3808.20.15)....
----------------------------------------------------------------------------------------------------------------
SEC. 1561. FLUDIOXINIL TECHNICAL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.54 1H-Pyrrole-3- 1.6% No change No change On or before 12/31/2009 ''
carbonitrile, 4- .
(2,2-difluoro-
1,3-benzodioxol-
4-yl)-
(fludioxinil)
(CAS No. 131341-
86-1) (provided
for in
subheading
2934.99.12)....
----------------------------------------------------------------------------------------------------------------
SEC. 1562. MIXTURES OF CLODINAFOP-PROPARGYL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.55 Mixtures of 1.7% No change No change On or before 12/31/2009 ''
propionic acid, .
2-(4-((5-chloro-
3-fluoro-2-
pyridynyl)oxy)p
henoxy-2-
propynyl ester,
(clodinafop-
propargyl) (CAS
No. 105512-06-
9) (provided
for in
subheading
3808.30.15)....
----------------------------------------------------------------------------------------------------------------
SEC. 1563. AVERMECTIN B, 1,4"-DEOXY-4"-METHYLAMINO-, (4"R)-,
BENZOATE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.56 Avermectin B, Free No change No change On or before 12/31/2009 ''
1,4"-deoxy-4"- .
methylamino-,
(4"R)-,
benzoate (CAS
No. 155569-91-
8) (provided
for in
subheading
3824.90.91 or
2932.29.50)....
----------------------------------------------------------------------------------------------------------------
SEC. 1564. CLOQUINTOCET-MEXYL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.57 Acetic acid, 5- Free No change No change On or before 12/31/2009 ''
chloro-8- .
quinolinoxy-, 1-
methylhexyl
ester
(Cloquintocet-
mexyl) (CAS No.
99607-70-2)
(provided for
in subheading
2933.49.30)....
----------------------------------------------------------------------------------------------------------------
[[Page H6146]]
SEC. 1565. METALAXYL-M TECHNICAL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.58 (R,S)-2-((2,6- Free No change No change On or before 12/31/2009 ''
Dimethylphenyl) .
methoxyacetylam
ino) propionic
acid, methyl
ester
(Metalaxyl-M
and L-
Metalaxylfenoxa
m) (CAS Nos.
70630-17-0 and
69516-34-3)
(provided for
in subheading
2924.29.47)....
----------------------------------------------------------------------------------------------------------------
SEC. 1566. CYPROCONAZOLE TECHNICAL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.59 [a-(4- Free No change No change On or before 12/31/2009 ''
Chlorophenyl)-a- .
(1-
cyclopropylethy
l)-1H-1-1,2,4-
triazole-1-
ethanol
(Cyproconazole)
(CAS No. 94361-
06-5) (provided
for in
subheading
2934.99.12)....
----------------------------------------------------------------------------------------------------------------
SEC. 1567. PINOXADEN TECHNICAL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.60 8-(2,6-Diethyl-4- 1.8% No change No change On or before 12/31/2009 ''
methylphenyl)-1 .
,2,4,5-
tetrahydro-7-
oxo-7H-
pyrazolo[1,2-
d][1,4,5]oxadia
zepin-9-yl 2,2-
dimethylpropano
ate (Pinoxaden)
(CAS No. 243973-
20-8) (provided
for in
subheading
2934.99.15)....
----------------------------------------------------------------------------------------------------------------
SEC. 1568. MIXTURES OF TRALKOXYDIM.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.12.61 Mixtures of 2-[1- Free No change No change On or before 12/31/2009 ''
(ethoxyimino)pr .
opyl]-3-hydroxy-
5-(2,4,6-
trimethylphenyl
)-2-cyclohexen-
1-one
(Tralkoxydim)
(CAS No. 87820-
88-0) as the
active
ingredient and
application
adjuvants
(provided for
in subheading
3808.30.15)....
----------------------------------------------------------------------------------------------------------------
SEC. 1569. CERTAIN CHEMICALS.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new headings:
`` 9902.12.72 Mixtures of zinc Free No change No change On or before 12/31/2009
dialkyldithioph
osphate (CAS
No. 6990-43-8)
with an
elastomer
binder of
ethylene-
propylene-diene
monomer and
ethyl vinyl
acetate,
dispersing
agents and
silica
(provided for
in subheading
3812.10.50)....
9902.12.73 Mixtures of Free No change No change On or before 12/31/2009 ..
dithiocarbamate
, thiazole,
thiuram and
thiourea with
an elastomer
binder of
ethylene-
propylene-diene
monomer and
ethyl vinyl
acetate, and
dispersing
agents
(provided for
in subheading
3812.10.50)....
9902.12.74 Mixtures of Free No change No change On or before 12/31/2009
caprolactam
disulfide (CAS
No. 23847-08-7)
with an
elastomer
binder of
ethylene-
propylene-diene
monomer and
ethyl vinyl
acetate, and
dispersing
agents
(provided for
in subheading
3812.10.50)....
9902.12.75 Mixtures of N- Free No change No change On or before 12/31/2009
(3,4-dichloro-
phenyl)-N,N-
dimethylurea
(CAS No. 330-54-
1) with
acrylate rubber
(provided for
in subheading
3812.10.50)....
9902.12.76 Mixtures of zinc Free No change No change On or before 12/31/2009
dicyanato
diamine (CAS
No. 122012-52-
6) with an
elastomer
binder of
ethylene-
propylene-diene
monomer and
ethyl vinyl
acetate, and
dispersing
agents
(provided for
in subheading
3812.10.50)....
9902.12.77 4,8-Dicyclohexyl Free No change No change On or before 12/31/2009
-6-2,10-
dimethyl -12H-
dibenzo
[d,g][1,3,2]
dioxaphosphocin
(CAS No. 73912-
21-7) (provided
for in
subheading
2920.90.50)....
9902.12.78 Mixtures of Free No change No change On or before 12/31/2009
benzenesulfonic
acid, dodecyl-,
with 2-
aminoethanol
(CAS No. 26836-
07-7) and Poly
(oxy-1,2-
ethanediyl), a-
[1-oxo-9-
octadecenyl]-w-
hydroxy-, (9Z)
(CAS No. 9004-
96-0) (provided
for in
subheading
3402.90.50)....
9902.12.79 1,3-Dihydro-3,3- Free No change No change On or before 12/31/2009 ''
bis (4-hydroxy- .
m-tolyl)-2H-
indol-2-one
(CAS No. 47465-
97-4) (provided
for in
subheading
2933.79.08)....
----------------------------------------------------------------------------------------------------------------
SEC. 1570. MIXTURES OF ( )-(CIS AND TRANS)-1-
[[2-(2,4-DICHLOROPHENYL)-4-PROPYL-1,3-DIOXOLAN-
2-YL]-METHYL]-1H-1,2,4-TRIAZOLE.
(a) In General.--Subchapter II of chapter 99 is amended by
inserting in numerical sequence the following new heading:
`` 9902.12.80 Mixtures of ( 1.1% No change No change On or before 12/31/2009 ''
)- .
(cis and trans)-
1-[[2-(2,4-
Dichlorophenyl)
-4-propyl-1,3-
dioxolan-2-yl]-
methyl]-1H-
1,2,4-triazole
(CAS No. 60207-
90-1) and
application
adjuvants
(provided for
in subheading
3808.20.15)....
----------------------------------------------------------------------------------------------------------------
(b) Conforming amendment.--Subchapter II of chapter 99 is
amended by striking heading 9902.32.04.
SEC. 1571. PARAQUAT DICHLORIDE.
(a) In General.--Subchapter II of chapter 99 is amended by
inserting in numerical sequence the following new heading:
`` 9902.13.06 Paraquat 3.59% No change No change On or before 12/31/2006 ''
dichloride .
(1,1'dimethyl-
4,4'-
bipyridinium
dichloride)
(CAS No. 1910-
42-5) (provided
for in
subheading
2933.39.23)....
----------------------------------------------------------------------------------------------------------------
(b) Calendar Year 2007.--
(1) In general.--Heading 9902.13.06, as added by subsection
(a), is amended--
(A) by striking ``3.59%'' and inserting ``4.02%''; and
(B) by striking ``On or before 12/31/2006'' and inserting
``On or before 12/31/2007''.
(2) Effective date.--The amendments made by paragraph (1)
shall take effect on January 1, 2007.
(c) Calendar Years 2008 and 2009.--
(1) In general.--Heading 9902.13.06, as added by subsection
(a) and amended by subsection (b), is further amended--
(A) by striking ``4.02%'' and inserting ``4.41%''; and
(B) by striking ``On or before 12/31/2007'' and inserting
``On or before 12/31/2009''.
(2) Effective date.--The amendments made by paragraph (1)
shall take effect on January 1, 2008.
SEC. 1572. CERTAIN BASKETBALLS.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.07 Basketballs, 0.9% No change No change On or before 12/31/2009 ''
having an .
external
surface other
than leather,
rubber, or
synthetic
(provided for
in subheading
9506.62.80)....
----------------------------------------------------------------------------------------------------------------
SEC. 1573. CERTAIN LEATHER BASKETBALLS.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.08 Leather Free No change No change On or before 12/31/2009 ''
basketballs .
(provided for
in subheading
9506.62.80)....
----------------------------------------------------------------------------------------------------------------
SEC. 1574. CERTAIN RUBBER BASKETBALLS.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
[[Page H6147]]
`` 9902.13.09 Rubber 1.5% No change No change On or before 12/31/2009 ''
basketballs .
(provided for
in subheading
9506.62.80)....
----------------------------------------------------------------------------------------------------------------
SEC. 1575. CERTAIN VOLLEYBALLS.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.10 Volleyballs Free No change No change On or before 12/31/2009 ''
(provided for .
in subheading
9506.62.80)....
----------------------------------------------------------------------------------------------------------------
SEC. 1576. 4-CHLORO-3-[[3-(4-METHOXYPHENYL)-1,3-DIOXOPROPYL]-
AMINO]-DODECYL ESTER.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.11 4-Chloro-3-[[3- Free No change No change On or before 12/31/2009 ''
(4- .
methoxyphenyl)-
1,3-
dioxopropyl]-
amino]-dodecyl
ester (CAS No.
33942-96-0)
(provided for
in subheading
2924.29.71)....
----------------------------------------------------------------------------------------------------------------
SEC. 1577. LINURON.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.24 3-(3,4- Free No change No change On or before 12/31/2009 ''
Dichlorophenyl) .
-1-methoxy-1-
methylurea (CAS
No. 330-55-2)
(Linuron)
(provided for
in subheading
2924.21.16)....
----------------------------------------------------------------------------------------------------------------
SEC. 1578. N,N-DIMETHYLPIPERIDINIUM CHLORIDE (MEPIQUAT
CHLORIDE).
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.25 N,N- Free No change No change On or before 12/31/2009 ''
Dimethylpiperid .
inium chloride
(Mepiquat
chloride) (CAS
No. 24307-26-4)
(provided for
in subheading
2933.39.25)....
----------------------------------------------------------------------------------------------------------------
SEC. 1579. DIURON.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.26 Formulations of Free No change No change On or before 12/31/2009 ''
3-(3,4- .
dichlorophenyl)
-1,1-
dimethylurea
(CAS No. 330-54-
1) (Diuron) and
application
adjuvants
(provided for
in subheading
3808.30.15)....
----------------------------------------------------------------------------------------------------------------
SEC. 1580. FORMULATED PRODUCT KROVAR I DF.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.27 Formulations 2.5% No change No change On or before 12/31/2009 ''
containing 5- .
bromo-3-sec-
butyl-6-
methyluracil
(Bromacil) (CAS
No. 314-40-9),
3-(3,4-
Dichlorophenyl)
-1,1-
dimethylurea
(Diuron) (CAS
No. 330-54-1),
and application
adjuvants
(provided for
in subheading
3808.30.15)....
----------------------------------------------------------------------------------------------------------------
SEC. 1581. TRIASULFURON TECHNICAL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.28 3-(6-Methoxy-4- Free No change No change On or before 12/31/2009 ''
methyl-1,3,5- .
triazin-2-yl)-1-
[2-(2-
chloroethoxy)
phenylsulfonyl]
urea
(Triasulfuron)
(CAS No. 82097-
50-5) (provided
for in
subheading
2935.00.75)....
----------------------------------------------------------------------------------------------------------------
SEC. 1582. BRODIFACOUM TECHNICAL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.29 3-[3-(4'- Free No change No change On or before 12/31/2009 ''
Bromo[1,1'- .
biphenyl]-4-yl)-
1,2,3,4-
tetrahydro-1-
naphthalenyl]-4-
hydroxy-2H-1-
benzopyran- 2-
one
(Brodifacoum)
(CAS No. 56073-
10-0) (provided
for in
subheading
2932.29.10)....
----------------------------------------------------------------------------------------------------------------
SEC. 1583. PYMETROZINE TECHNICAL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.30 1,2,4-Triazin- Free No change No change On or before 12/31/2009 ''
3(2H)-one, 4,5- .
dihydro-6-
methyl-4-[(3-
pyridinylmethyl
ene)amino]-
(Pymetrozine)
(CAS No. 123312-
89-0) (provided
for in
subheading
2933.69.60)....
----------------------------------------------------------------------------------------------------------------
SEC. 1584. FORMULATIONS OF THIAMETHOXAM, DIFENOCONAZOLE,
FLUDIOXINIL, AND MEFENOXAM.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.31 Formulations of Free No change No change On or before 12/31/2009 ''
3-[(2-chloro-5- .
thiazolyl)methy
l]tetrahydro-5-
methyl-N-nitro-
1,3,5-oxadiazin-
4-imine)
(Thiamethoxam)
(CAS No. 153719-
23-4 ); 1H-
1,2,4-triazole,
1-[[2-[2-chloro-
4-(4-
chlorophenoxy)p
henyl]-4-methyl-
1,3-dioxolan-2-
yl]methyl]-
(Difenoconazole
) (CAS No.
119446-68-3);
1H-Pyrrole-3-
carbonitrile, 4-
(2,2-difluoro-
1,3-benzodioxol-
4-yl)-
(Fludioxinil)
(CAS No. 131341-
86-1); and
(R,S)-2-[(2,6-
dimethylphenylm
ethoxy)acetylam
ino]-propionic
acid methyl
ester
(Mefenoxam)
(CAS Nos. 70630-
17-0 and 69516-
34-3) (provided
for in
subheading
3808.20.15)....
----------------------------------------------------------------------------------------------------------------
SEC. 1585. TRIFLOXYSULFURON-SODIUM TECHNICAL.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.32 N-[[(4,6- Free No change No change On or before 12/31/2009 ''
Dimethoxy-2- .
pyrimidinyl)ami
no]carbonyl]-3-
(2,2,2-
trifluoroethoxy
)-2-
pyridinesulfona
mide monosodium
salt (CAS No.
199119-58-9)
(trifloxysulfur
on-sodium)
(provided for
in subheading
2935.00.75)....
----------------------------------------------------------------------------------------------------------------
SEC. 1586. 2 BENZYLTHIO-3-ETHYL SULFONYL PYRIDINE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.41 2-Benzylthio-3- Free No change No change On or before 12/31/2009 ''
ethyl sulfonyl .
pyridine (CAS
No. 175729-82-
5) (provided
for in
subheading
2933.39.61)....
----------------------------------------------------------------------------------------------------------------
SEC. 1587. 2-AMINO-4-METHOXY-6-METHYL-1,3,5-TRIAZINE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.42 2-Amino-4- Free No change No change On or before 12/31/2009 ''
methoxy-6- .
methyl-1,3,5-
triazine (CAS
No. 1668-54-8)
(provided for
in subheading
2933.69.60)....
----------------------------------------------------------------------------------------------------------------
[[Page H6148]]
SEC. 1588. FORMULATED PRODUCTS CONTAINING MIXTURES OF THE
ACTIVE INGREDIENT 2-CHLORO-N-[[(4-METHOXY-6-
METHYL-1,3,5-TRIAZIN-2YL) AMINO]CARBONYL]
BENZENESULFONAMIDE AND APPLICATION ADJUVANTS.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.43 Formulated Free No change No change On or before 12/31/2009 ''
products .
containing
mixtures of the
active
ingredient 2-
chloro-N-[[(4-
methoxy-6-
methyl-1,3,5-
triazin-2yl)
amino]carbonyl]
benzenesulfonam
ide and
application
adjuvants
(Chlorosulfuon)
(CAS No. 64902-
72-3) (provided
for in
subheading
3808.30.15)....
----------------------------------------------------------------------------------------------------------------
SEC. 1589. 2-METHYL-4-METHOXY-6-METHYLAMINO-1,3,5-TRIAZINE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.44 2-Methyl-4- Free No change No change On or before 12/31/2009 ''
methoxy-6- .
methylamino-
1,3,5-triazine
(CAS No. 5248-
39-5) (provided
for in
subheading
2933.69.60)....
----------------------------------------------------------------------------------------------------------------
SEC. 1590. MIXTURES OF SODIUM-2-CHLORO-6-[(4,6
DIMETHOXYPYRIMIDIN-2-YL)THIO]BENZOATE AND
APPLICATION ADJUVANTS (PYRITHIOBAC-SODIUM).
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.45 Mixtures of 3.5% No change No change On or before 12/31/2009 ''
sodium-2-chloro- .
6-[(4,6
dimethoxypyrimi
din-2-
yl)thio]benzoat
e (CAS No.
123343-16-8)
and application
adjuvants
(Pyrithiobac-
sodium)
(provided for
in subheading
3808.30.15)....
----------------------------------------------------------------------------------------------------------------
SEC. 1591. CERTAIN DECORATIVE PLATES, DECORATIVE SCULPTURES,
DECORATIVE PLAQUES, AND ARCHITECTURAL
MINIATURES.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.46 Decorative Free No change No change 12/31/2009 ''
plates, whether .
or not with
decorative rim
or attached
sculpture;
decorative
sculptures,
each with plate
or plaque
attached, and
decorative
plaques each
not over 7.65
cm in
thickness;
architectural
miniatures,
whether or not
put up in sets;
all the
foregoing of
resin materials
and containing
agglomerated
stone, put up
for mail order
retail sale,
whether for
wall or
tabletop
display and
each weighing
not over 1.36
kg together
with their
retail
packaging
(provided for
in subheading
3926.40.00)....
----------------------------------------------------------------------------------------------------------------
SEC. 1592. CERTAIN MUSIC BOXES.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.47 Music boxes with Free No change No change On or before 12/31/2009 ''
mechanical .
musical
movements,
presented in
the immediate
packaging for
shipment to the
ultimate
purchaser, and
each weighing
not over 6 kg
together with
retail
packaging
(provided for
in subheading
9208.10.00)....
----------------------------------------------------------------------------------------------------------------
SEC. 1593. 2-METHYL-4-CHLOROPHENOXYACETIC ACID.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.60 2-Methyl-4- Free No change No change On or before 12/31/2009 ''
chlorophenoxyac .
etic acid (CAS
No. 94-74-6)
(provided for
in subheading
2918.90.20)....
----------------------------------------------------------------------------------------------------------------
SEC. 1594. PHENMEDIPHAM.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.76 3- Free No change No change On or before 12/31/2009 ''
Methylcarbonyla .
minophenyl-3-
methyl-
carbanilate
(Phenmedipham)
(CAS No. 13684-
63-4) in bulk
or mixed with
application
adjuvants
(provided for
in subheadings
2924.29.47 and
3808.30.15)....
----------------------------------------------------------------------------------------------------------------
SEC. 1595. DESMEDIPHAM.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.77 3- Free No change No change On or before 12/31/2009 ''
Ethoxycarbonyla .
minophenyl-N-
phenylcarbamate
(Desmedipham)
(CAS No. 13684-
56-5) in bulk
or mixed with
application
adjuvants
(provided for
in subheadings
2924.29.43 and
3808.30.15)....
----------------------------------------------------------------------------------------------------------------
SEC. 1596. CERTAIN FOOTWEAR WITH OPEN TOES OR HEELS.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.78 Footwear with Free No change No change On or before 12/31/2009 ''
outer soles of .
rubber or
plastics and
uppers of
vegetable
fibers, with
open toes or
open heels,
other than
house slippers
(provided for
in subheading
6404.19.25)....
----------------------------------------------------------------------------------------------------------------
SEC. 1597. CERTAIN WORK FOOTWEAR.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.85 House slippers Free No change No change On or before 12/31/2009 ''
with outer .
soles of
rubber,
plastics,
leather or
composition
leather and
uppers of
leather, valued
not over $2.50/
pair (provided
for in
subheading
6403.99.75);
Sports
footwear;
tennis shoes,
basketball
shoes, gym
shoes, training
shoes and the
like, all the
foregoing with
outer soles of
rubber or
plastics and
uppers of
textile
materials for
women (provided
for in
subheading
6404.11.20)....
----------------------------------------------------------------------------------------------------------------
SEC. 1598. CERTAIN REFRACTING AND REFLECTING TELESCOPES.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.86 Refracting Free No change No change On or before 12/31/2009 ''
telescopes with .
50 mm or
smaller
objective
lenses and
reflecting
telescopes with
76 mm or
smaller
mirrors, and
parts and
accessories
thereof
(provided for
in subheading
9005.80.40 or
9005.90.80)....
----------------------------------------------------------------------------------------------------------------
SEC. 1600. CERTAIN WORK FOOTWEAR.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.90 Welt footwear Free No change No change On or before 12/31/2009 ''
with outer .
soles of
rubber,
plastics,
leather or
composition
leather and
uppers of
pigskin,
incorporating a
protective
metal toe-cap
(provided for
in subheading
6403.40.30)....
----------------------------------------------------------------------------------------------------------------
[[Page H6149]]
SEC. 1601. CERTAIN FOOTWEAR FOR MEN.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.91 Other footwear 4.5% No change No change On or before 12/31/2009 ''
with uppers of .
vegetable
fibers, for men
(provided for
in subheading
6405.20.30)....
----------------------------------------------------------------------------------------------------------------
SEC. 1602. CERTAIN RUBBER OR PLASTIC FOOTWEAR.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.92 Other footwear 6.5% No change No change On or before 12/31/2009 ''
with uppers of .
vegetable
fibers, other
than such
footwear for
men or women
(provided for
in subheading
6405.20.30)....
----------------------------------------------------------------------------------------------------------------
SEC. 1604. ZINC DIMETHYLDITHIOCARBAMATE.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.13.97 Zinc Free No change No change On or before 12/31/2009 ''
dimethyldithioc .
arbamate
(Ziram) (CAS
No. 137-30-4)
(provided for
in subheading
3808.20.28)....
----------------------------------------------------------------------------------------------------------------
SEC. 1605. CERTAIN LIQUID CRYSTAL DEVICE (LCD) PANEL
ASSEMBLIES.
Subchapter II of chapter 99 is amended by inserting in
numerical sequence the following new heading:
`` 9902.85.21 Liquid Crystal Free No change No change On or before 12/31/2009 ''
Device (LCD) .
panel
assemblies for
use in LCD
direct view
televisions
(provided for
in subheading
9013.80.90)....
----------------------------------------------------------------------------------------------------------------
SEC. 1606. CERTAIN WATERTUBE BOILERS AND REACTOR VESSEL
HEADS.
(a) Watertube Boilers.--Subchapter II of chapter 99 is
amended by inserting in numerical sequence the following new
heading:
`` 9902.84.01 Watertube Free No change No change On or before 12/31/2010 ''
boilers with a .
steam
production
exceeding 45 t
per hour, for
use in nuclear
facilities
entered after
12/31/2008 and
on or before 12/
31/2010 if the
contract for
the purchase of
such watertube
boilers was
entered into on
or before 7/31/
2006 (provided
for in
subheading
8402.11.00)....
----------------------------------------------------------------------------------------------------------------
(b) Reactor Vessel Heads.--Subchapter II of chapter 99 is
amended by inserting in numerical sequence the following new
heading:
`` 9902.84.04 Reactor vessel Free No change No change On or before 12/31/2010 ''
heads and .
pressurizers
for nuclear
reactors
entered after
12/31/2008 and
on or before 12/
31/2010 if the
contract for
the purchase of
such heads and
pressurizers
was entered
into on or
before 7/31/
2006 (provided
for in
subheading
8401.40.00)....
----------------------------------------------------------------------------------------------------------------
CHAPTER 2--EXISTING DUTY SUSPENSIONS AND REDUCTIONS
SEC. 1611. EXTENSION OF CERTAIN EXISTING DUTY SUSPENSIONS AND
REDUCTIONS.
(a) Existing Duty Suspensions and Reduction.--Each of the
following headings is amended by striking the date in the
effective period column and inserting ``12/31/2009'':
(1) Heading 9902.39.08 (relating to ORGASOL polyamide
powders).
(2) Heading 9902.30.90 (relating to 3-amino-2'-(sulfato-
ethyl sulfonyl) ethyl benzamide).
(3) Heading 9902.32.91 (relating to MUB 738 INT).
(4) Heading 9902.30.31 (relating to 5-amino-N-(2-
hydroxyethyl)-2,3-xylenesulfonamide).
(5) Heading 9902.01.83 (relating to Ethoprop).
(6) Heading 9902.01.73 (relating to Fosetyl-Al).
(7) Heading 9902.03.38 (relating to Flufenacet (FOE
hydroxy)).
(8) Heading 9902.02.02 (relating to Methidathion
Technical).
(9) Heading 9902.02.12 (relating to difenoconazole).
(10) Heading 9902.02.09 (relating to Lambda-Cyhalothrin).
(11) Heading 9902.02.08 (relating to cyprodinil).
(12) Heading 9902.02.04 (relating to Wakil XL).
(13) Heading 9902.02.06 (relating to Azoxystrobin
Technical).
(14) Heading 9902.02.05 (relating to mucochloric acid).
(15) Heading 9902.03.06 (relating to high tenacity multiple
(folded) or cabled yarn of viscose rayon).
(16) Heading 9902.05.07 (relating to high tenacity single
yarn of viscose rayon with a decitex equal to or greater than
1,000).
(17) Heading 9902.38.31 (relating to Vulkalent E/C).
(18) Heading 9902.01.71 (relating to hexanedioic acid,
polymer with 1,3-benzenedimethanamine).
(19) Heading 9902.29.93 (relating to Trinexapac-ethyl).
(20) Heading 9902.38.52 (relating to formulations of
triasulfuron).
(21) Heading 9902.39.30 (relating to certain ion-exchange
resins).
(22) Heading 9902.32.82 (relating to 2,6 Dichlorotoluene).
(23) Heading 9902.02.33 (relating to Ion exchange resin
comprising a compolymer of styrene crosslinked with
ethenylbenzene, aminophosphonic acid sodium form).
(24) Heading 9902.02.32 (relating toIon exchange resin
comprising a copolymer of styrene crosslinked with
divinylbenzene, iminodiacetic acid, sodium form)).
(25) Heading 9902.01.78 (relating to certain bags for
toys).
(26) Heading 9902.01.81 (relating to cases for certain
children's products).
(27) Heading 9902.01.80 (relating to certain children's
products).
(28) Heading 9902.29.34 (relating to certain light
absorbing photo dyes).
(29) Heading 9902.85.04 (relating to certain R-core
transformers).
(30) Heading 9902.03.04 (relating to reduced vat blue 43).
(31) Heading 9902.03.03 (relating to sulfur black 1).
(32) Heading 9902.01.22 (relating to DMSIP).
(33) Heading 9902.29.35 (relating to 2-
(Methoxycarbonyl)benzylsulfonamide).
(34) Heading 9902.02.52 (relating to Imidacloprid
pesticides).
(35) Heading 9902.38.15 (relating to Baytron C-R).
(36) Heading 9902.29.87 (relating to 3,4-
Ethylenedioxythiophene).
(37) Heading 9902.01.90 (relating to certain filament
yarns).
(38) Heading 9902.01.91 (relating to certain filament
yarns).
(39) Heading 9902.71.08 (relating to certain semi-
manufactured forms of gold).
(40) Heading 9902.04.10 (relating to Crotonic Acid).
(41) Heading 9902.04.09 (relating to 3,6,9-
Trioxaundecanedioic acid).
(42) Heading 9902.02.51 (relating to benzoic acid, 2-amino-
4-[[(2,5-dichlorophenyl)amino]carbonyl]-, methyl ester).
(43) Heading 9902.32.73 (relating to Solvent blue 124).
(44) Heading 9902.32.55 (relating to Methyl thioglycolate
(MTG)).
(45) Heading 9902.01.48 (relating to Ethyl pyruvate).
(46) Heading 9902.04.11 (relating to 1,3-
Benzenedicarboxamide, N, N'-Bis (2,2,6,6-tetramethyl-4-
piperidinyl)-).
(47) Heading 9902.04.07 (relating to reaction products of
phosphorus trichloride with 1,1'-biphenyl and 2,4-bis(1,1-
dimethylethyl)phenol).
(48) Heading 9902.04.05 (relating to preparations based on
ethanediamide, N-(2-ethoxyphenyl)-N'-(4-isodecylphenyl)-).
(49) Heading 9902.04.06 (relating to 1-Acetyl-4-(3-dodecyl-
2,5-dioxo-1-pyrrolidinyl)-2,2,6,6-tetramethylpiperidine).
(50) Heading 9902.04.12 (relating to 3-Dodecyl-1-(2,2,6,6-
tetramethyl-4-piperidinyl)-2,5-pyrrolidinedione).
(51) Heading 9902.29.70 (relating to
Tetraacetylethylenediamine).
(52) Heading 9902.34.01 (relating to sodium petroleum
sulfonate).
(53) Heading 9902.02.75 (relating to esters and sodium
esters of parahydroxybenzoic acid).
(54) Heading 9902.30.16 (relating to Diclofop methyl).
(55) Heading 9902.33.61 (relating to ((3-
((Dimethylamino)carbonyl)-2-pyridinyl)sulfonyl) carbamic
acid, phenyl ester).
(56) Heading 9902.01.45 (relating to Esfenvalerate).
(57) Heading 9902.05.01 (relating to Methyl 2-[[[[[4-
(dimethylamino)-6- (2,2,2-trifluoroethoxy)-1,3,5-triazin-2-
yl]-amino]carbonyl]amino]sulfonyl]-3-methylbenzoate and
application adjuvants).
(58) Heading 9902.01.44 (relating to Benzyl carbazate).
[[Page H6150]]
(59) Heading 9902.05.14 (relating to Pyromellitic
Dianhydride).
(60) Heading 9902.05.13 (relating to 4,4'-Oxydiphthalic
Anhydride).
(61) Heading 9902.05.12 (relating to 4,4'-Oxydianiline).
(62) Heading 9902.05.11 (relating to 3,3',4,4'-
Biphenyltetracarboxylic Dianhydride).
(63) Heading 9902.29.80 (relating to 1-[[2-(2,4-
dichlorophenyl)-4-propyl-1,3-dioxolan-2-yl]-methyl]-1H-1,2,4-
triazole).
(64) Heading 9902.05.19 (relating to ethofumesate).
(65) Heading 9902.02.60 (relating to Nemacur VL).
(66) Heading 9902.03.77 (relating to thiophanate methyl).
(67) Heading 9902.84.14 (relating to ceiling fans).
(b) Other Modifications.--
(1) 2-Chlorobenzyl chloride.--Heading 9902.01.56 is
amended--
(A) by striking ``2903.69.70'' and inserting
``2903.69.80''; and
(B) by striking ``12/31/2006'' and inserting ``12/31/
2009''.
(2) Triethylene glycol bis[3-(3-tert-butyl-4-hydroxy-5-
methylphenyl)propionate] .--Heading 9902.01.88 is amended--
(A) by striking ``Free'' and inserting ``4.1%''; and
(B) by striking ``12/31/2006'' and inserting ``12/31/
2009''.
(3) Formulations of triasulfuron and dicamba.--Heading
9902.38.21 is amended--
(A) in the article description column--
(i) by inserting ``(Triasulfuron)'' before ``(CAS No.
82097-50-5)''; and
(ii) by inserting ``(Dicamba)'' before ``(CAS No. 1918-00-
9)''; and
(B) by striking ``12/31/2003'' and inserting ``12/31/
2009''.
(4) 11-Aminoundecanoic acid.--Heading 9902.32.49 is
amended--
(A) by striking ``Free'' and inserting ``2.3%''; and
(B) by striking ``12/31/2006'' and inserting ``12/31/
2009''.
(5) PHBA.--Heading 9902.29.03 is amended--
(A) by striking ``Free'' and inserting ``3.1%''; and
(B) by striking ``12/31/2006'' and inserting ``12/31/
2009''.
(6) Acetamiprid Technical.--Heading 9902.03.92 is amended--
(A) by striking ``Free'' and inserting ``2.5%''; and
(B) by striking ``12/31/2006'' and inserting ``12/31/
2009''.
(7) Baytron and baytron p.--Heading 9902.39.15 is amended--
(A) by inserting ``, whether or not containing binder resin
and organic solvent'' before ``(CAS No.''; and
(B) by striking ``12/31/2006'' and inserting ``12/31/
2009''.
(8) Iprodione.--Heading 9902.01.51 is amended--
(A) by striking ``4.1%'' and inserting ``2.0%''; and
(B) by striking ``12/31/2006'' and inserting ``12/31/
2009''.
(9) Ethanediamide, N-(2-ethoxyphenyl)-N'-(2-ethylphenyl)-
).--Heading 9902.04.13 is amended--
(A) by striking ``2924.29.76'' and inserting
``2924.29.71''; and
(B) by striking ``12/31/2006'' and inserting ``12/31/
2009''.
(10) Thiamethoxam technical.--Heading 9902.03.11 is
amended--
(A) by striking ``3.2%'' and inserting ``3.0%''; and
(B) by striking ``12/31/2006'' and inserting ``12/31/
2009''.
(11) 1,3-Bis(4-aminophenoxy)benzene (RODA).--Heading
9902.05.15 is amended--
(A) by inserting ``(RODA)'' after ``benzene''; and
(B) by striking ``12/31/2006'' and inserting ``12/31/
2009''.
(12) Mixtures of n-[[(4,6-dimethoxypyrimidin-2-
yl)amino]carbonyl]-3-(ethylsulfonyl)-2-pyridinesulfonamide
and application adjuvants.--Heading 9902.33.60 is amended--
(A) by striking the article description and inserting the
following: ``Mixtures of N-[[(4,6-dimethoxypyrimidin-2-
yl)amino]carbonyl]-3-(ethylsulfonyl)-2-pyridinesulfonamide
and application adjuvants (CAS No. 122931-48-0) (provided for
in subheading 3808.30.15)''; and
(B) by striking ``12/31/2003'' and inserting ``12/31/
2009''.
Subtitle B--Other Tariff Provisions
CHAPTER 1--LIQUIDATION OR RELIQUIDATION OF CERTAIN ENTRIES
SEC. 1621. CERTAIN TRAMWAY CARS AND ASSOCIATED SPARE PARTS.
(a) In General.--The Commissioner of the Bureau of Customs
and Border Protection of the Department of Homeland Security
shall admit free of duty 3 tramway cars (provided for in
subheading 8603.10.00 of the Harmonized Tariff Schedule of
the United States) manufactured in Ostrava, Czech Republic,
for the use by the city of Portland, Oregon, and imported
pursuant to a contract with the city of Portland, Oregon, and
associated spare parts for such tramway cars (provided for in
applicable subheadings of heading 8607 or other headings of
the Harmonized Tariff Schedule of the United States) imported
pursuant to such contract, the foregoing to be entered into
the customs territory of the United States by not later than
December 31, 2006.
(b) Reliquidation; Refund of Amounts Owed.-- If the
liquidation of the entry of any of the tramway cars or
associated spare parts described in subsection (a) becomes
final before the date of the enactment of this Act, the
Commissioner of the Bureau of Customs and Border Protection,
notwithstanding any other provision of law, shall--
(1) within 15 days after such date, reliquidate the entry
in accordance with the provisions of this section; and
(2) at the time of such reliquidation, make the appropriate
refund of any duty paid with respect to the entry.
SEC. 1622. RELIQUIDATION OF CERTAIN ENTRIES OF CANDLES.
(a) Reliquidation of Entries.--Notwithstanding sections 514
and 520 of the Tariff Act of 1930 (19 U.S.C. 1514 and 1520)
or any other provision of law, the Bureau of Customs and
Border Protection shall, not later than 90 days after the
date of the enactment of this Act--
(1) reliquidate the entries listed in subsection (b)
without assessment of antidumping duties or interest; and
(2) refund any antidumping duties and interest which were
previously paid on such entries.
(b) Affected Entries.--The entries referred to in
subsection (a) are the following:
Entry number Date of entry Port
110-3447557-3 03/18/00.......... Los Angeles
110-3447591-2 03/19/00.......... Los Angeles
110-3447595-3 03/19/00.......... Los Angeles
110-1201638-1 03/21/00.......... Detroit
110-1201639-9 03/21/00.......... Detroit
110-1201640-7 03/21/00.......... Detroit
110-3447613-4 03/21/00.......... Los Angeles
110-1201697-7 03/23/00.......... Detroit
110-1201695-1 03/23/00.......... Detroit
110-1201696-9 03/23/00.......... Detroit
110-1201756-1 03/27/00.......... Detroit
110-1201757-9 03/27/00.......... Detroit
110-1201758-7 03/27/00.......... Detroit
110-1740905-2 03/30/00.......... Los Angeles
110-1740943-3 03/30/00.......... Los Angeles
110-1201845-2 03/31/00.......... Detroit
110-1201813-0 04/03/00.......... Detroit
110-1201814-8 04/03/00.......... Detroit
110-1201815-5 04/03/00.......... Detroit
110-1201875-9 04/04/00.......... Detroit
110-1201868-4 04/04/00.......... Detroit
110-1201858-5 04/04/00.......... Detroit
110-3447959-1 04/11/00.......... Los Angeles
110-3447958-3 04/11/00.......... Los Angeles
110-3759536-9 04/12/00.......... Detroit
110-3759561-7 04/12/00.......... Detroit
110-3759542-7 04/12/00.......... Detroit
110-3759540-1 04/12/00.......... Detroit
110-3447977-3 04/12/00.......... Los Angeles
110-3759539-3 04/12/00.......... Detroit
110-3448045-8 04/14/00.......... Los Angeles
110-3448046-6 04/14/00.......... Los Angeles
110-3448110-0 04/20/00.......... Los Angeles
110-3759670-6 04/25/00.......... Detroit
110-3759673-0 04/25/00.......... Detroit
110-3759669-8 04/25/00.......... Detroit
110-3759667-2 04/25/00.......... Detroit
110-3759671-4 04/25/00.......... Detroit
110-3759668-0 04/25/00.......... Detroit
110-3448241-3 04/27/00.......... Los Angeles
110-3448247-0 04/27/00.......... Los Angeles
110-3448276-9 04/28/00.......... Memphis
110-3448274-4 04/28/00.......... Memphis
110-3448282-7 05/04/00.......... Memphis
101-4081779-1 05/07/00.......... Memphis
101-4088945-1 05/23/00.......... Memphis
101-4089954-3 05/23/00.......... Memphis
101-4088960-0 05/23/00.......... Memphis
101-4092192-4 05/25/00.......... Memphis
101-4089312-3 05/26/00.......... Detroit
101-4089942-7 05/26/00.......... Detroit
101-4089893-2 05/26/00.......... Detroit
101-4092221-1 05/26/00.......... Memphis
101-4089697-7 05/26/00.......... Los Angeles
101-4092215-3 05/26/00.......... Memphis
101-4086053-6 05/26/00.......... Los Angeles
101-4122700-8 07/27/00.......... Los Angeles
101-4122707-3 07/27/00.......... Los Angeles
101-4122712-3 07/27/00.......... Los Angeles
101-4127147-7 08/03/00.......... Los Angeles
101-4132485-4 08/09/00.......... Norfolk
101-4129989-0 08/11/00.......... Detroit
101-4130345-2 08/17/00.......... Detroit
101-4129976-7 08/23/00.......... Detroit
101-4149476-4 09/06/00.......... Los Angeles
101-4149483-0 09/06/00.......... Los Angeles
101-4149493-9 09/06/00.......... Los Angeles
101-4148595-2 09/08/00.......... Detroit
101-4153301-7 09/18/00.......... Detroit
101-4154523-5 09/14/00.......... Los Angeles
101-4153389-2 09/18/00.......... Detroit
101-4157161-1 09/20/00.......... Norfolk
101-4153333-0 09/21/00.......... Detroit
101-4155542-4 09/26/00.......... Detroit
101-4166291-5 10/07/00.......... Los Angeles
101-4167325-0 10/09/00.......... Detroit
101-4167363-1 10/12/00.......... Detroit
101-4164567-0 10/13/00.......... Norfolk
101-4168049-5 10/14/00.......... Los Angeles
101-4172904-5 10/21/00.......... Los Angeles
101-4175579-2 10/30/00.......... Los Angeles
101-4183996-8 11/07/00.......... Detroit
101-4183234-4 11/09/00.......... Detroit
101-4183251-8 11/09/00.......... Detroit
101-4183253-4 11/09/00.......... Detroit
101-4183257-5 11/09/00.......... Detroit
101-4183264-1 11/09/00.......... Detroit
101-4183264-1 11/09/00.......... Detroit
101-4184811-8 11/13/00.......... Los Angeles
101-4184819-1 11/13/00.......... Los Angeles
101-4189001-1 11/14/00.......... Tampa
101-4185526-1 11/16/00.......... Detroit
101-4185535-2 11/16/00.......... Detroit
101-4186580-7 11/20/00.......... Detroit
101-4189830-3 11/20/00.......... Detroit
101-4189774-3 11/21/00.......... Detroit
101-4191183-3 11/24/00.......... Los Angeles
101-4191188-2 11/24/00.......... Los Angeles
101-4191193-2 11/24/00.......... Los Angeles
101-4194796-9 11/29/00.......... Detroit
101-4194801-7 11/29/00.......... Detroit
101-4196383-4 12/01/00.......... Los Angeles
101-4196389-1 12/01/00.......... Los Angeles
101-4199308-8 12/13/00.......... Detroit
SEC. 1623. CERTAIN ENTRIES OF ROLLER CHAIN.
(a) Liquidation or Reliquidation of Entries.--
Notwithstanding sections 514 and 520 of the Tariff Act of
1930 (19 U.S.C. 1514 and 1520) or any other provision of law,
the Bureau of Customs and Border Protection shall, not later
than 90 days after the date of enactment of this Act,
liquidate or reliquidate
[[Page H6151]]
the entries listed in subsection (b) without assessment of
interest and shall refund any interest which was previously
paid.
(b) Affected Entries.--The entries referred to in
subsections (a) and (b) are the following:
Entry number Date of entry Port
858442975 08/21/85.......... Chicago
868558147 01/28/86.......... Chicago
868565499 03/14/86.......... Chicago
858440922 07/31/85.......... Chicago
868565499 03/14/86.......... Chicago
868558147 01/28/86.......... Chicago
858442975 08/21/85.......... Chicago
858440922 07/31/85.......... Chicago
847648353 06/18/84.......... Chicago
858268324 01/04/85.......... Chicago
858264302 11/08/84.......... Chicago
858265107 11/19/84.......... Chicago
847650150 07/18/84.......... Chicago
847412877 05/09/84.......... Chicago
837078386 03/21/83.......... Chicago
837077691 02/07/83.......... Chicago
837077701 02/07/83.......... Chicago
826735834 01/13/82.......... Chicago
826736309 01/18/82.......... Chicago
821020081 02/12/82.......... Chicago
821020052 02/17/82.......... Chicago
821026768 04/13/82.......... Chicago
827119569 06/18/82.......... Chicago
837075114 10/06/82.......... Chicago
826727088 10/14/81.......... Chicago
837124777 05/19/83.......... Chicago
847405240 11/28/83.......... Chicago
837127606 08/18/83.......... Chicago
837125132 06/08/83.......... Chicago
847406100 12/22/83.......... Chicago
847404034 11/02/83.......... Chicago
837128090 09/07/83.......... Chicago
837126762 08/05/83.......... Chicago
837125569 06/22/83.......... Chicago
837078991 04/12/83.......... Chicago
837129222 10/03/83.......... Chicago
847406414 12/29/83.......... Chicago
847408014 01/31/84.......... Chicago
868569204 07/03/86.......... Chicago
868730813 08/14/86.......... Chicago
SEC. 1624. CERTAIN ENTRIES OF SOUNDSPA CLOCK RADIOS.
(a) In General.--Notwithstanding section 514 of the Tariff
Act of 1930 (19 U.S.C. 1514) or any other provision of law,
the Bureau of Customs and Border Protection shall, not later
than 90 days after the date of the enactment of this Act--
(1) reliquidate each entry described in subsection (c)
containing any merchandise which, on the date of original
liquidation, was classified under subheading 8527.19.50 of
the Harmonized Tariff Schedule of the United States; and
(2) make such reliquidation at the rate of duty that would
have been applicable to such merchandise if the merchandise
had been liquidated under subheading 8527.19.10 of such
Schedule on the date of entry of the merchandise.
(b) Refund of Amounts Owed.--Any amounts owed by the United
States under subsection (a) shall be refunded with interest.
(c) Affected Entries.--The entries referred to in
subsection (a) are as follows:
Entry number
110-1199345-7
110-1199542-9
110-1199558-5
110-1201694-4
110-3759754-8
110-3759785-2
101-4082299-9
101-4088073-2
101-4089053-3
101-4120875-0
101-4133671-8
101-4138302-5
101-4145092-3
101-4148477-3
101-4153108-6
101-4159322-7
101-4158601-5
101-4163243-9
101-4164448-3
101-4168318-4
101-4172197-6
101-4172489-7
101-4193123-7
101-4264820-2
101-4271724-7
101-4277850-4
101-4287672-0
101-4301588-0
101-4306238-7
101-4306235-3
101-6011727-0
101-6012796-4
101-6015492-7
101-6021099-2
101-6026903-0
101-6024120-3
101-6028079-7
101-6027052-5
101-6036728-9
101-6048069-4
101-6079830-1
101-6082949-4
101-6115954-5
101-6119379-1
101-6127048-2
101-6150035-9
101-6148556-9
101-6172630-1
101-6172406-6
101-6186497-9
101-4208407-7
101-6035939-3
CHAPTER 2--MISCELLANEOUS PROVISIONS
SEC. 1631. VESSEL REPAIR DUTIES.
(a) Exemption.--Section 466(h) of the Tariff Act of 1930
(19 U.S.C. 1466(h)) is amended by striking paragraph (4) and
inserting the following:
``(4) the cost of equipment, repair parts, and materials
that are installed on a vessel documented under the laws of
the United States and engaged in the foreign or coasting
trade, if the installation is done by members of the regular
crew of such vessel while the vessel is on the high seas, in
foreign waters, or in a foreign port, and does not involve
foreign shipyard repairs by foreign labor.''.
(b) Amendment to HTS.--The U.S. Notes to subchapter XVIII
of chapter 98 of the Harmonized Tariff Schedule of the United
States are amended by amending U.S. Note 2 to read as
follows:
``2. Notwithstanding the provisions of subheadings
9818.00.03 through 9818.00.07, no duty shall apply to the
cost of equipment, repair parts, and materials that are
installed in a vessel documented under the laws of the United
States and engaged in the foreign or coasting trade, if the
installation is done by members of the regular crew of such
vessel while the vessel is on the high seas, in foreign
waters, or in a foreign port and does not involve foreign
shipyard repairs by foreign labor. Declaration and entry
shall not be required with respect to such installation,
equipment, parts, and materials.''.
(c) Effective Date.--The amendments made by this section
apply to vessel equipment, repair parts, and materials
installed on or after April 25, 2001.
SEC. 1632. SUSPENSION OF NEW SHIPPER REVIEW PROVISION.
(a) Suspension of the Availability of Bonds to New
Shippers.--Clause (iii) of section 751(a)(2)(B) of the Tariff
Act of 1930 (19 U.S.C. 1675(a)(2)(B)(iii)) shall not be
effective during the period beginning on April 1, 2006, and
ending on June 30, 2009.
(b) Report on the Impact of the Suspension.--Not later than
December 31, 2008, the Secretary of the Treasury, in
consultation with the Secretary of Commerce, the United
States Trade Representative, and the Secretary of Homeland
Security, shall submit to the Committee on Ways and Means of
the House of Representatives and the Committee on Finance of
the Senate a report containing--
(1) recommendations on whether the suspension of section
751(a)(2)(B)(iii) of the Tariff Act of 1930 should be
extended beyond the date provided in subsection (a); and
(2) an assessment of the effectiveness of any
administrative measure that was implemented to address the
difficulties that necessitated the suspension under
subsection (a), including--
(A) any problem in the collection of antidumping duties on
imports from new shippers; and
(B) any burden imposed on legitimate trade and commerce by
the suspension of bonds to new shippers.
(c) Report on Collection Problems and Analysis of Proposed
Solutions.--
(1) Report.--Not later than 180 days after the date of the
enactment of this Act, the Secretary of the Treasury, in
consultation with the Secretary of Homeland Security and the
Secretary of Commerce, shall submit to the Committee on Ways
and Means of the House of Representatives and the Committee
on Finance of the Senate a report describing--
(A) any major problem experienced in the collection of
duties during the 4 most recent fiscal years for which data
are available, including any fraudulent activity intended to
avoid payment of duties; and
(B) an estimate of the total amount of duties that were
uncollected during the most recent fiscal year for which data
are available, including, with respect to each product, a
description of why the duties were uncollected.
(2) Recommendations.--The report shall include--
(A) recommendations on any additional action needed to
address problems related to the collection of duties; and
(B) for each recommendation--
(i) an analysis of how the recommendation would address the
specific problem; and
(ii) an assessment of the impact that implementing the
recommendation would have on international trade and commerce
(including any additional costs imposed on United States
businesses).
SEC. 1633. EXTENSION AND MODIFICATION OF DUTY SUSPENSION ON
WOOL PRODUCTS; WOOL RESEARCH FUND; WOOL DUTY
REFUNDS.
(a) Extension of Temporary Duty Reductions.--Each of the
following headings of the Harmonized Tariff Schedule of the
United States is amended by striking the date in the
effective period column and inserting ``12/31/2009'':
(1) Heading 9902.51.11 (relating to fabrics of worsted
wool).
(2) Heading 9902.51.13 (relating to yarn of combed wool).
(3) Heading 9902.51.14 (relating to wool fiber, waste,
garnetted stock, combed wool, or wool top).
(4) Heading 9902.51.15 (relating to fabrics of combed
wool).
(5) Heading 9902.51.16 (relating to fabrics of combed
wool).
(b) Extension of Duty Refunds and Wool Research Trust
Fund.--
(1) In general.--Section 4002(c) of the Wool Suit and
Textile Trade Extension Act of 2004 (Public Law 108-429; 118
Stat. 2603 (7 U.S.C. 7101 note)) is amended--
(A) in paragraph (3)--
(i) by striking ``2 additional payments'' and inserting
``annual additional payments''; and
(ii) by adding at the end the following:
[[Page H6152]]
``(C) Each subsequent annual payment to be made after
January 1 of each subsequent year, but on or before April 15
of such year through calendar year 2010.''; and
(B) in paragraph (6)--
(i) in subparagraph (A), by striking ``through 2007'' and
inserting ``through 2009''; and
(ii) by adding at the end the following:
``(C) Eligible manufacturers.--Only manufacturers who weave
worsted wool fabric in the United States shall be eligible
for a grant under this paragraph.''.
(2) Sunset.--Section 506(f) of the Trade and Development
Act of 2000 (Public 106-200; 114 Stat. 303), as amended by
section 4002(c)(5) of the Wool Suit and Textile Trade
Extension Act of 2004 (Public 108-429; 118 Stat. 2603), is
amended by striking ``2008'' and inserting ``2010''.
SEC. 1634. AUTHORITIES RELATING TO DR-CAFTA AGREEMENT.
(a) Authority to Implement Certain Amendments to DR-CAFTA
Agreement With Nicaragua, El Salvador, Honduras, and
Guatemala.--
(1) Proclamation authority.--The President is authorized to
proclaim modifications to the Harmonized Tariff Schedule of
the United States as necessary to carry out amendments
proposed by the United States and the CAFTA-DR countries to
the Agreement, the terms of which are contained in the
letters of understanding described in paragraph (2).
(2) Letters of understanding.--The letters of understanding
referred to in paragraph (1) are the following:
(A) The letter of March 24, 2006, from Nicaraguan Vice
Minister of Trade Julio Teran to United States Special
Textile Negotiator Scott Quesenberry.
(B) The letter of March 27, 2006, from United States
Special Textile Negotiator Scott Quesenberry to Nicaraguan
Vice Minister of Trade Julio Teran.
(C) The letter of January 27, 2006, from El Salvadoran Vice
Minister of Economy Eduardo Ayala to United States Special
Textile Negotiator Scott Quesenberry.
(D) The letter of January 27, 2006, from United States
Special Textile Negotiator Scott Quesenberry to El Salvadoran
Vice Minister of Economy Eduardo Ayala.
(E) The letter of March 7, 2006, from Honduran Vice
Minister of Foreign Trade Jorge Rosa to United States Special
Textile Negotiator Scott Quesenberry.
(F) The letter of March 7, 2006, from United States Special
Textile Negotiator Scott Quesenberry to Honduran Vice
Minister of Foreign Trade Jorge Rosa.
(G) The letter of June 23, 2006, from Guatemalan Minister
of Economy Marcio Cuevas Quezada to United States Special
Textile Negotiator Scott Quesenberry.
(H) The letter of June 23, 2006, from United States Special
Textile Negotiator Scott Quesenberry to Guatemalan Minister
of Economy Marcio Cuevas Quezada.
(3) Sunset.--The authority of the President to proclaim
modifications pursuant to paragraph (1) expires on December
31, 2007.
(b) Authority to Implement Certain Amendments to DR-CAFTA
Agreement With Costa Rica and the Dominican Republic.--
(1) Proclamation authority.--The President is authorized to
proclaim modifications to the Harmonized Tariff Schedule of
the United States as necessary to carry out amendments
proposed by the United States, Costa Rica, and the Dominican
Republic to the Agreement, the terms of which are contained
in the letters of understanding described in paragraph (2).
(2) Letters of understanding.--
(A) In general.--The letters of understanding referred to
in paragraph (1) are letters of understanding exchanged
between the countries described in paragraph (1) relating to
the rules of origin for articles containing pocket bag fabric
described in subparagraph (B).
(B) Pocket bag fabric described.--For purposes of
subparagraph (A), the term ``pocket bag fabric'' means pocket
bag fabric used in an apparel article classifiable under
chapter 61 or 62 of the Harmonized Tariff Schedule of the
United States that contains a pocket or pockets.
(3) Consultation and layover requirements.--Any
modification proclaimed by the President pursuant to
paragraph (1) shall be subject to the consultation and
layover provisions of section 104 of the Dominican Republic-
Central America-United States Free Trade Agreement
Implementation Act (Public Law 109-53; 19 U.S.C. 4014).
(4) Congressional disapproval.--
(A) In general.--Any modification proclaimed by the
President pursuant to paragraph (1) shall not be effective if
a joint resolution described in subparagraph (B) is enacted
into law.
(B) Joint resolution described.--For purposes of
subparagraph (A), the term ``joint resolution'' means a joint
resolution of Congress, the sole matter after the resolving
clause of which is as follows: ``That the Congress
disapproves the modification proclaimed by the President
contained in the report submitted to the Committee on Finance
of the Senate and the Committee on Ways and Means of the
House of Representatives pursuant to section 104(2) of the
Dominican Republic-Central America-United States Free Trade
Agreement Implementation Act (Public Law 109-53; 19 U.S.C.
4014(2)) on __________.'', with the blank space being filled
with the appropriate date.
(5) Sunset.--The authority of the President to proclaim
modifications pursuant to paragraph (1) expires on December
31, 2007.
(c) Authority Relating to Nicaraguan Tariff Preference
Level Under DR-CAFTA Agreement.--
(1) Certificate of eligibility.--The Commissioner of
Customs may require an importer to submit at the time the
importer files a claim for preferential tariff treatment
under Annex 3.28 of the Agreement a certificate of
eligibility, properly completed and signed, or transmitted
pursuant to an authorized electronic data interchange system,
by an authorized official of the Government of Nicaragua for
purposes of implementing the tariff preference level for
Nicaragua provided in Annex 3.28 of the Agreement.
(2) Enforcement of commitments.--The President is
authorized to proclaim a reduction in the overall limit in
the tariff preference level for Nicaragua provided in Annex
3.28 of the Agreement if the President determines that
Nicaragua has failed to comply with a commitment under an
agreement between the United States and Nicaragua with regard
to the administration of such tariff preference level.
(3) Effective date.--Paragraph (1) applies with respect to
entries made on or after April 1, 2006.
(d) Technical Correction Relating to Co-Production of
Certain Textile and Apparel Goods.--Section 205(a)(2) of the
Dominican Republic-Central America-United States Free Trade
Agreement Implementation Act (19 U.S.C. 4034(a)(2)) is
amended by inserting after ``with respect to that country''
the following: ``or any other CAFTA-DR country''.
(e) Reporting Requirements on Certain Negotiations and
Amendments to DR-CAFTA Agreement.--
(1) In general.--Not later than 30 days after the date of
the enactment of this Act, and at least quarterly thereafter,
the United States Trade Representative shall submit to the
appropriate congressional committees a report on the status
of negotiations and amendments proposed by the United States,
Nicaragua, El Salvador, Honduras, Guatemala, Costa Rica, and
the Dominican Republic to the Agreement regarding any change
to the rule of origin or alteration of the tariff treatment
of socks described in paragraph (2) or any technical
correction described in paragraph (3). In addition, the
United States Trade Representative shall provide to the
appropriate congressional committees copies of any amendments
to be proposed by the United States before the amendments are
offered and copies of any amendments received by the United
States relating to such negotiations.
(2) Socks described.--For purposes of paragraph (1), the
term ``socks'' means articles classifiable under subheading
6111.20.6050, 6111.30.5050, 6111.90.5050, 6115.91.00,
6115.92.60, 6115.92.90, 6115.93.60, 6115.93.90, 6115.99.14,
or 6115.99.18 of the Harmonized Tariff Schedule of the United
States.
(3) Technical corrections described.--Technical corrections
referred to in paragraph (1) are the following:
(A) Clarification of references to ``elastomeric yarns''
contained in the notes, subheading notes, additional U.S.
notes, and statistical notes to chapters 50 to 63 (section
XI) of the Harmonized Tariff Schedule of the United States.
(B) Clarification of the ability to apply short supply
provisions to sewing thread, narrow elastics, and visible
linings.
(C) Treatment of women's and girls' woven sleep bottoms
under Annex 4.1 of the Agreement.
(D) Addition of a rule of origin for women's and girls'
woven sleep bottoms to reflect the rule of origin provided
for in subheading 6207.11.00 of the Harmonized Tariff
Schedule of the United States and contained in Annex 4.1 of
the Agreement.
(E) Provision of women's and girls sleep bottoms under
Annex 4.1-A of the Agreement.
(4) Definition.--In this subsection, the term ``appropriate
congressional committees'' means the Committee on Ways and
Means of the House of Representatives and the Committee on
Finance of the Senate
(5) Sunset.--The requirements of paragraph (1) expire on
the date on which any change is made to the rule of origin
pursuant to article 3.25 of the Agreement for any good
described in paragraph (2), or December 31, 2007, whichever
occurs later.
(f) Definitions.--In this section:
(1) Agreement.--The term ``Agreement'' has the meaning
given the term in section 3(1) of the Dominican Republic-
Central America-United States Free Trade Agreement
Implementation Act (Public Law 109-53; 19 U.S.C. 4002(1)).
(2) CAFTA-dr country.--The term ``CAFTA-DR country'' has
the meaning given the term in section 3(2) of the Dominican
Republic-Central America-United States Free Trade Agreement
Implementation Act (Public Law 109-53; 19 U.S.C. 4002(2)).
SEC. 1635. TECHNICAL AMENDMENTS TO CUSTOMS MODERNIZATION.
(a) Entry of Merchandise.--Section 484(a) of the Tariff Act
of 1930 (19 U.S.C. 1484(a)) is amended--
(1) in paragraph (1), by amending subparagraph (A) to read
as follows:
``(A) make entry therefor by filing with the Bureau of
Customs and Border Protection such documentation or, pursuant
to an authorized electronic data interchange system, such
information as is necessary to enable
[[Page H6153]]
the Bureau of Customs and Border Protection to determine
whether the merchandise may be released from custody of the
Bureau of Customs and Border Protection;''; and
(2) in paragraph (2)(A), in the second sentence, by
inserting after ``covering'' the following: ``merchandise
released under a special delivery permit pursuant to section
448(b) and''.
(b) Refunds and Errors.--Section 520(a) of the Tariff Act
of 1930 (19 U.S.C. 1520(a)) is amended--
(1) in paragraph (1), by striking the semicolon at the end
and inserting a period;
(2) in paragraph (2), by striking ``; and'' at the end and
inserting a period; and
(3) in paragraph (4)--
(A) by inserting ``an importer of record declares or''
before ``it is ascertained''; and
(B) by striking ``by reason of clerical error''.
(c) Entry From Warehouse.--Section 557(a) of the Tariff Act
of 1930 (19 U.S.C. 1557(a)) is amended--
(1) in paragraph (1)--
(A) in the second sentence, by inserting after ``the date
of importation'' the following: ``, or such longer period of
time as the Bureau of Customs and Border Protection may at
its discretion permit upon proper request being filed and
good cause shown''; and
(B) in subparagraph (A), by inserting after ``the date of
importation'' the following: ``or such longer period of time
as the Bureau of Customs and Border Protection may at its
discretion permit upon proper request being filed and good
cause shown''; and
(2) in paragraph (2), by inserting after ``the date of
importation'' the following: ``, or such longer period of
time as the Bureau of Customs and Border Protection may at
its discretion permit upon proper request being filed and
good cause shown,''.
(d) Abandoned Goods.--Section 559 of the Tariff Act of 1930
(19 U.S.C. 1559) is amended by inserting after ``the date of
importation'' each place it appears the following: ``, or
such longer period of time as the Bureau of Customs and
Border Protection may at its discretion permit upon proper
request being filed and good cause shown''.
(e) Manipulation in Warehouse.--Section 562 of the Tariff
Act of 1930 (19 U.S.C. 1562) is amended--
(1) by amending the first sentence to read as follows:
``Merchandise shall only be withdrawn from a bonded warehouse
in such quantity and in such condition as the Secretary of
the Treasury shall by regulation prescribe.''; and
(2) in the second sentence, by striking ``All merchandise
so withdrawn'' and all that follows through ``except that
upon permission therefor'' and inserting ``Upon permission''.
(f) Other Technical Amendments.--(1) Section 629(e) of the
Tariff Act of 1930 (19 U.S.C. 1629(e)) is amended by striking
``insuring'' and inserting ``ensuring''.
(2) Section 135(f)(2)(B) of the Trade Act of 1974, as
amended by section 2004(i)(1) of the Miscellaneous Trade and
Technical Corrections Act of 2004, is amended by striking
``their establishment'' and insert ``its establishment''.
(3) Section 245(a) of the Trade Act of 1974 (19 U.S.C.
2317(a)) is amended by striking ``, other than subchapter
D''.
(4) Section 291(2) of the Trade Act of 1974 (19 U.S.C.
2401(2)) is amended--
(A) by striking ``1001(5)'' and inserting ``1001(e)''; and
(B) by striking ``1308(5)'' and inserting ``1308(e)''.
(5) Section 13031(e)(6)(C)(i) of the Consolidated Omnibus
Budget Reconciliation Act of 1985 (19 U.S.C. 58c(e)(6)(C)(i))
is amended by striking ``commonly know'' and inserting
``commonly known''.
(6) Section 2107(a)(4) of the Bipartisan Trade Promotion
Authority Act of 2002 (19 U.S.C. 3807(a)(4)) is amended--
(A) by striking ``paragraph (2)(A)'' and inserting
``paragraphs (2)(A)''; and
(B) by striking ``paragraph (2)(B)'' and inserting
``paragraphs (2)(B)''.
(7) Section 514(c)(3) of the Tariff Act of 1930 (19 U.S.C.
1514(c)(3)) is amended by moving the last 2 sentences 2 ems
to the left as flush left text.
Subtitle C--Effective Date
SEC. 1641. EFFECTIVE DATE.
Except as otherwise provided in this title, the amendments
made by this title shall apply with respect to goods entered,
or withdrawn from warehouse for consumption, on or after the
15th day after the date of the enactment of this Act.
The SPEAKER pro tempore (Mr. Putnam). Pursuant to House Resolution
966, general debate shall not exceed 1 hour, equally divided and
controlled by the chairman and ranking minority member of the Committee
on Ways and Means and the Committee on Education and the Workforce.
The gentleman from California (Mr. Thomas), the gentleman from New
York (Mr. Rangel), the gentleman from California (Mr. McKeon), and the
gentleman from California (Mr. George Miller) each will control 15
minutes.
{time} 2130
Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, the title of this bill, as we indicated, is the Pension
Protection Act of 2006; but it is much more than that. Within the bill
also are tax items, trade items, charitable provisions.
One of the reasons I am pleased to bring this to the floor is that it
is in essence the combination of more than 5 months of working on a
very important area of public law that affects tens of millions of
Americans. It is about the agreement workers have with their employers
as to what they are going to be able to earn, not for the time they are
working but for the time they are retired.
Our current pension system is, frankly, broken. It moved rapidly into
a known broken situation, and we have responded, not as quickly as
perhaps we would have liked, but I think we have responded in a way
that, as we discussed, this bill I think you will find there is, at
least there was on the conference committee and there should be in this
House, broad bipartisan support.
For example, on this side of the aisle, I could say I hold a letter
from the General Motors Corporation endorsing the changes we are making
in pension law. And someone would say, aha. But then I would pick up a
letter and say, I hold a letter from the United Auto Workers who are
supportive of this pension change. And I could do that for industry
after industry showing that you not only have the corporate structure
in support but you have the workers in support.
This is a bill that makes fundamental changes in transparency, in
payment arrangements, which means the promise made from employers to
employees and employees to employers has a greater chance than a long,
long time of being honored. It is important legislation. The Ways and
Means Committee will spend some time on the text, trade, and charitable
provisions, but I want to say that I am very proud of the product that
has been produced. It will move off this floor, it will move through
the Senate, and it will be signed by the President. And the time line
in doing that will save many employees from what would have been a
certain failure to have pensions if we did not act before we adjourned
for our summer district work period.
Mr. Speaker, I reserve the balance of my time.
Mr. RANGEL. Mr. Speaker, I ask unanimous consent to yield my time to
be controlled by the gentleman from California (Mr. George Miller).
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from New York?
There was no objection.
Mr. GEORGE MILLER of California. I yield 2 minutes to the gentleman
from Washington (Mr. McDermott).
(Mr. McDERMOTT of Washington asked and was given permission to revise
and extend his remarks.)
Mr. McDERMOTT. Mr. Speaker, this is one of those bills in the middle
of the night; this is a 21-page summary. There isn't anybody here,
perhaps four or five conference members may know what is in it. None of
us have seen the bill, so you have got to trust the leadership.
Now, this bill imposes new red tape and fees on employers that wish
to provide their employees with defined benefit pensions. It makes it
harder to give a defined benefit.
Those opposing this measure of course will say they believe that the
bill's new requirements will impose requirements to discourage
employers from offering a traditional pension plan. Supporters are
saying this bill will strengthen everything. But if the aim of this
bill is to strengthen pensions, why does it exempt Halliburton from the
bill's requirements?
No one could possibly have read the text of this bill. But we do have
this 21-page summary, I say, which says that the proposal delays the
effective action on funding and benefit limitation rules for defense
contractors. Those who are ripping us off in Iraq by the billions are
not being brought under this bill. This provision was not in the House
nor was it in the Senate version of the bill.
If the funding and limitation rules are so good for everyone, which
is what the majority contends, why aren't they good enough for
Halliburton? Of course, I know Halliburton is a friend of the Vice
President. Perhaps we need CSI to come in here to uncover how this bill
got put together, but we know enough to oppose the bill. This proposal
continues to promote the philosophy of conservatives, which is that
people are better off alone. You are on
[[Page H6154]]
your own, folks. We are going to give you a 401(k), and good luck, no
defined benefits anymore. This is to end pensions as we have known
them.
Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
It is times like these that you have to resist the temptation of
saying, okay, let's just go home and not pass this bill. But the
gentleman from Washington, from Seattle, perhaps wouldn't be able to
get back if he were flying Northwest Airlines, and so the fervor of his
speech not to act would in fact have to bump into reality sooner than I
think he might like.
Mr. Speaker, I would like to yield the remainder of the time to be
controlled by the gentleman of Michigan, a fellow conferee on the
pension conference (Mr. Camp).
Mr. CAMP of Michigan. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I rise in strong support of the Pension Protection Act.
By approving this bill, the House of Representatives is taking an
important step towards safeguarding employee pensions and reforming the
current system to ensure all American workers receive their full
promised retirement benefits. This bill is a significant improvement
over current law.
The bill before us today shores up the single defined benefit system
so that companies cannot escape their obligations. Instead of allowing
firms to routinely underfund their plans, H.R. 4 requires employers to
fund 100 percent of their liabilities. The bill also requires employers
to make up contributions faster than the 30 years under current law.
More importantly, the Pension Protection Act lives up to its name by
not allowing companies to make promises to their workers they cannot
hope to fulfill. If pension plans are critically underfunded,
executives will no longer be able to commit new pension benefits to
workers under the false premise that they have the money to make good
on those faulty assurances.
In Michigan, the auto industry is critical to our State's economy. I
want to thank Chairman Thomas and Mr. Leader Boehner for their
leadership, ensuring Michigan's manufacturers continue to operate
robust pension plans. I am particularly pleased H.R. 4 has the support
of United Auto Makers and the United Automobile Workers. I worked hard
to ensure the auto sector and its workers are not subject to unfair,
unrealistic rules that would unnecessarily penalize this critical
sector of the American economy.
H.R. 4 also provides relief to the struggling airline industry. The
Pension Protection Act is a huge victory to the pilots, flight
attendants, baggage handlers, and other employees in the airline
industry that have worked hard for their pensions and expect them to be
there upon retirement. This bill allows airline companies that have
frozen their plans and taken that responsible step more time to make
good on their commitments and preserve their workers' benefits.
Absent legislation, some airlines would be forced to terminate their
pension plans. If this were to happen, the PBGC would incur billions of
additional pension liability, and employees would receive a fraction of
their promised benefits. The Pension Protection Act prevents this and
enables airlines to fully meet the obligations to their workers. I urge
all of my colleagues to pass this important bill for America's workers.
Mr. Speaker, I reserve the balance of my time.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 3 minutes to
the gentleman from New Jersey (Mr. Andrews).
(Mr. ANDREWS asked and was given permission to revise and extend his
remarks.)
Mr. ANDREWS. Mr. Speaker, this bill offers much to recommend in
improving pension law. In particular, I applaud the inclusion of relief
for multi-employer plans and the clearing up of some of the
contradictions and ambiguities around hybrid defined benefit plans. But
I must rise in opposition to this bill for two reasons.
The first is that the bill makes a mistake that the majority said
from the very outset it did not want to make, which was to favor one
industry over another in affording relief for single-employer plans.
Not only does this bill afford more protection for some industries over
others, but within an industry, within the airline industry, it
exhibits I believe unwise favoritism for some airlines over others. The
majority started this process by saying it did not want to choose
winners and losers among industries. What in fact I believe it has done
is to choose winners and losers within an industry, which I think is
unwise and a bad precedent to set.
Secondly, I must rise in opposition to this bill because of its
procedural irregularity. There is a conference which was seated several
months ago that is dealing with these issues. What is before us tonight
is a brand-new bill, not a conference report. This does not recognize
months of negotiation between the two Houses and between the two
parties. It is a brand-new bill that starts without anyone I think
truly vetting or understanding.
And I must say that my Democratic colleagues who are conferees on
this bill, Mr. Miller, Mr. Rangel, Mr. Payne, among the three of them
they have 90 years of experience in this House, and they were afforded
no opportunity to attend a meeting of the conference, to ask a question
at the conference, to express their views at the conference. This is
not disrespect to them; it is disrespect to their constituents and to
the millions of people whose views are represented by Mr. Miller and
Mr. Rangel and Mr. Payne and others.
This is an awfully important area of legislation. To rush head on
with a bill that no one has read, ignoring a conference that has never
met, that ignores 90 years of experience from Members on this side I
think is a mistake. So despite the good that I know is in this bill, I
would urge a ``no'' vote.
Mr. CAMP of Michigan. Mr. Speaker, I yield 2\1/4\ minutes to the
gentlewoman from Connecticut, a distinguished member of the Ways and
Means Committee (Mrs. Johnson).
(Mrs. JOHNSON of Connecticut asked and was given permission to revise
and extend her remarks.)
Mrs. JOHNSON of Connecticut. Mr. Speaker, I rise in strong support of
this Pension Protection Act of 2006. Not only does it ensure that
employers and unions will fund their plans, but it enables individuals
to make a much greater effort toward providing for their retirement
security as well.
Nothing is more important to Americans than the gut-wrenching issue
of being secure in their old age. It is important to seniors, it is
important to their families, it is important to young people to know
that they can plan for the future. And it is a pity that only 50
percent of America's workers participate in pension plans. This bill
makes a simple change that will result in 85 to 90 percent of working
Americans who work for companies with pension plans participating in
those plans, as opposed to 50 percent. That is big. That is important.
It is a simple mechanism, but it will help many, many more young people
get into those pension plans, take advantage of employer contributions,
and prepare for their retirement.
It also does something else we don't know much about, we don't pay
attention to it, we don't think about it: it makes permanent the
saver's credit. If you don't make much money, putting money aside for
retirement is really hard. We have a little plan by which the
government gives you a dollar for every dollar you save for low- and
middle-income earners. This makes that permanent, and that will enable
us to grow that program appropriately. It also indexes it to inflation
so those people can never be robbed of the power of this help in saving
for their retirement.
{time} 2145
This is not a perfect bill, but it does some really important things
for working people and it helps us think ahead. We have a lot of people
with 401(k) plans, and at 65, they are blowing them. One of the things
this bill does is to encourage new products to plan for our future by
changing the tax treatment of 401(k) money invested in an annuity that
can provide a paycheck for life or cover long-term care if needed.
We need to be thinking anew about all the challenges of retirement,
not just the income challenge.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to
the
[[Page H6155]]
gentleman from Maryland (Mr. Cardin).
Mr. CARDIN. Mr. Speaker, I thank my friend for yielding me this time.
Mr. Speaker, I am really conflicted on this bill because there are
good provisions in it. The provisions which I had the opportunity to
work with our former colleague, Mr. Portman, provisions that would make
permanent the changes in the tax law in 2001, makes it easier for
people to save for their retirement, employers to provide pension
plans; provisions for automatic enrollment so that employees have a
better chance of having a retirement savings. The permanency and
indexing of the saver's credit, I think, is a very important provision.
The split tax refund, I can go on and on and on.
But I must tell you, I was listening to Mr. Andrews and I think that
he raises a very valid point on the process. You have to, at times,
understand that process is important so we do the right thing here.
I heard reference to approving a conference report, but this is not a
conference report. We have a letter from the Senate Members of the
conference report urging the House Members of the conference committee
to join them in a product that is different than what we have before us
today.
There are concerns in this legislation that I do not know if they
have been addressed, including the airline industry, including the way
we treat employers who have well-funded plans today as to whether they
will continue those plans.
So, Mr. Speaker, this bill is coming up with no notice, no
opportunity for us to review it, and without an opportunity for our
conferees to present their report.
So I do not know what to tell the Members to do here. I doubt if we
will have time to review all the provisions that are in this bill. I
doubt whether we will know exactly what is involved, and we do not have
the comfort of knowing that it is the product of a conference
committee. It is a new bill that is before us.
So I just urge my colleagues to be very careful in consideration of
this legislation. It is very important legislation. It does some very
good things, but I am concerned there may be some unintended
consequences.
Mr. CAMP of Michigan. Mr. Speaker, I yield 2\1/4\ minutes to the
gentleman from Arizona (Mr. Hayworth), a distinguished member of the
Ways and Means Committee.
(Mr. HAYWORTH asked and was given permission to revise and extend his
remarks.)
Mr. HAYWORTH. Mr. Speaker, I thank my colleague from Michigan for his
hard work as part of the conference, and I rise in strong support of
the Pension Protection Act.
I listened with great interest to the criticisms offered from the
other side of the aisle, especially my friends from New Jersey and
California, and indeed, it is somewhat reminiscent of the initial
evaluation by a Hollywood agent of a young actor. The shorthand note
was, ``can't sing, can't act, dances a little.'' And of course, it
turned out to be the great Fred Astaire.
Now, with all due respect to Mr. Astaire and his song and dance, the
song and dance offered by the other side, the criticisms, when you take
a look, focus on process, not policy. Indeed, my friends from New
Jersey and Maryland readily concede that there are many desirable
policies in this bill, reforming the outdated single employer defined
benefit pension plans.
We heard the chairman of the committee say not only was there a
letter from General Motors but also from the United Auto Workers, and
yet we hear the process is somehow terribly flawed and that even within
the airline industries some airlines are treated differently. Mr.
Speaker, the different airlines are reacting differently to the
concerns they face. It is not some sort of vast conspiracy with malice
aforethought to pick winners and losers. It comes from different
responses from the businesses involved.
No, a clear level look at what we are doing says that this is, in
fact, precisely the bill at this time.
As to the process, we heard mention made of the other body. We are
mindful that there are those who aspire to become part of the other
body, but Mr. Speaker, without impugning any action, although I know we
have changed the rules, the fact is a lot of folks basically want to
blow up this agreement.
We need this bill. It is a good bill. Vote for it.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 3 minutes to
the gentlewoman from California (Ms. Woolsey).
Ms. WOOLSEY. Mr. Speaker, if this bill is so great, why are
executives not being treated the same way as the rank-and-file workers?
It is hard to believe that in the face of all of the corporate scandals
that we have been experiencing over the last few years, that this
legislation still allows for executives to receive a golden parachute.
Unbelievably, executives who have run their companies into the ground
can continue to receive large lump sum payments from their underfunded
pension plans at the same time that the rank-and-file employees'
benefits have been frozen.
You heard me right. If a company's plan is underfunded by 80 percent,
rank-and-file workers cannot receive new benefits or lump sum payments.
Meanwhile, the restrictions for executives do not start until the plan
is underfunded by 60 percent. That difference adds up to billions and
billions of dollars.
Whatever happened to the captain going down with the ship? The way
this bill reads the only boat the Republican majority is familiar with
is the Titanic, because they are giving lifeboats to the first class
passengers only.
Mr. Speaker, we live in a country that values equality. Why oh why in
the world would we allow this pension bill to pass the House treating
executive pension benefits differently from their workers? What
happened to what is good for the goose is good for the gander? If
workers' pensions are underfunded, then so are executives. It is time
to end the golden parachute or, as the gander goes, the golden egg.
I urge my colleagues, vote against this conference report and support
workers benefits.
Mr. CAMP of Michigan. Mr. Speaker, I yield 2 minutes to the
gentlewoman from Pennsylvania (Ms. Hart), a distinguished member of the
Ways and Means Committee.
Ms. HART. Mr. Speaker, I thank the gentleman for yielding, and I
especially thank the chairman for answering the call of families across
the Nation to make 529 qualified tuition programs permanent.
What are those plans? For those of you who do not know, the 529
section allows for tax-free college savings. This is something that has
encouraged so many families to save for college. The figures in assets
in 529 plans have grown from $13 billion in 2001 to more than $65
billion today. This has provided for so many families to save for
education, and it is more important than ever because we know workers
with the least education have generally experienced the slowest wage
growth over the past three decades. Making this plan permanent allows
families to plan for the future and make sure that they will get that
education.
Also, the pension changes are so very important. In the communities
that I represent, we experienced terrible, really unfairness, on
pension plans when US Airways filed for bankruptcy and turned their
pension plans over to the PBGC, and unfortunately, their executives
took a golden parachute.
The gentlewoman who just spoke before me was wrong in her statement
that those executives continue to do this. The plans must be funded
before these executives could have a special set-aside pension plan for
themselves. We ended that practice of unfairness of these large company
executives stealing the money away while their rank-and-file workers
lose.
The bill encourages greater transparency for the employees to know
the health of their pension plan. These are such important changes that
anyone who does not support it is not supporting the retirement
security for the people in their district. It is so important that
people know the status of their finances as they work through their
working life so they have expectation of their pension, they have
expectation of how much income they will receive, and this bill will
help them get there.
Mr. Speaker, I encourage my colleagues to support this.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield myself 30
seconds just to correct the record.
[[Page H6156]]
The legislation does not require the funding of these plans.
Executives can continue to get benefits out of these plans if they are
only 60 percent funded. The gentlewoman from California was correct.
Workers can only get benefits if they are 80 percent funded.
So the executives can continue to draw down the assets of the
corporations, but the employees cannot.
Mr. Speaker, I yield 2 minutes to the gentleman from Massachusetts
(Mr. Neal), a member of the Ways and Means Committee.
(Mr. NEAL of Massachusetts asked and was given permission to revise
and extend his remarks.)
Mr. NEAL of Massachusetts. Mr. Speaker, I thank the gentleman.
When you hear this argument and this debate, remember, a year ago,
these are the people that were going to abandon the Social Security
system. These are the people that were going to throw the Social
Security system overboard.
I heard the gentleman from Arizona say, well, there is good things in
the legislation and there is bad things in the legislation. Does
anybody remember the S&L issue around here or did we have amnesia?
There were good things about deregulating the S&Ls, and it cost the
American taxpayer $500 billion, but a decade later.
The Wall Street Journal published a poll yesterday. I hear my
Republican friends talking about how great everything is. How good
everything is on Wall Street.
The American people are asked, in what direction is the country
headed, right or wrong? And by almost two-thirds they say the wrong
direction. They are paying $3.15 a gallon for gasoline, their health
care plan is being taken away, and their retirement plan is being
compromised, if not jeopardized. 401(k) plans are replacing the defined
benefit that we had all come to know.
That is where the anxiety is coming from. That is why the American
people think the country's headed in the wrong direction.
You are about to hasten the demise of the defined benefit plan by
embracing this legislation tonight, and I want to say something as well
to those who are witnessing the debate.
It has not been vetted through the committee system. It has not been
presented back and forth between two parties. It is being put up on a
Friday night, once again because they think you are not watching. That
is the way the Ways and Means Committee has operated during the last
few years. That is the way legislation's brought to the floor, no
opportunity for the minority to ever be heard. We simply put it in
front of this body, late at night so people cannot witness it, and then
we move on from there. Whether it is good or bad, we will not have our
fingerprints on it.
Mr. CAMP of Michigan. Mr. Speaker, what is the time remaining?
The SPEAKER pro tempore. The gentleman from Michigan (Mr. Camp) has
2\3/4\ minutes remaining, and the gentleman from California (Mr. George
Miller) has 18\1/2\ minutes remaining.
Mr. CAMP of Michigan. Mr. Speaker, I reserve the balance of my time.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 15 seconds to
the gentleman from North Carolina (Mr. Etheridge).
Mr. ETHERIDGE. Mr. Speaker, I thank the gentleman for yielding.
I served in business for 19 years and have been in public life a long
time. I have signed a lot of contracts, but never in my life have I
signed a contract that I have not read. We are asking the Members of
this body to sign a contract with the American people that we have not
read.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to
the gentleman from New York (Mr. Owens).
(Mr. OWENS asked and was given permission to revise and extend his
remarks.)
Mr. OWENS. Mr. Speaker, we have not an accidental shipwreck here. We
have a deliberate shipwreck being set up.
I am not the oldest person in this body tonight, but I have been here
a long time and seen the great swindle of the savings and loans
collapse. This is a swindle that will be even bigger.
We have the full faith and credit somewhere behind the pension
guaranty fund. It is not there, we are going to put it behind there,
and it is the American taxpayers who are going to pay when this whole
pension system collapses.
I do not know what grand formula is in motion here and who the genius
is, but the looting of America is going along very well, and this is
one more step in that direction.
It is going to be a huge, like an economic asteroid collapsing on the
economy when this pension benefit guaranty fund collapses as the
savings and loans did.
{time} 2200
We can't even get a figure as to how many billions of dollars were
lost in the savings and loans. If you go looking for it, it is
nebulous. But at least $1 trillion of taxpayer money has gone down the
drain, and is still going, partially because it was funded with 30-year
bonds.
I watched while it unfolded. And the savings and loans criminals,
really, were not punished. It was a great example of how you could
steal millions and get away with it. Silverado Bank comes to mind,
because we had relatives of the administration involved in that one,
and on and on it goes, with Members of Congress on the boards, and all
kinds of things that happened, and they got away with it.
Now we have corporate America having mismanaged these pensions all
this time, having looted them in many different ways. Enron certainly
shows us how they can do that in quite a clear fashion. But there are
many other different ways that the people in control have looted the
pension funds, destroying them, and they are going to ask the American
people to bail them out. That is what is most devastating about
tonight.
Mr. CAMP of Michigan. Mr. Speaker, I yield 1\1/2\ minutes to the
distinguished gentleman from the Ways and Means Committee, the
gentleman from Wisconsin (Mr. Ryan).
(Mr. RYAN of Wisconsin asked and was given permission to revise and
extend his remarks.)
Mr. RYAN of Wisconsin. Mr. Speaker, I am sitting here listening to
this debate and I am wondering, what bill are they talking about? Are
they talking about the bill that 70 Democrats voted for earlier in the
year that got 294 votes? Are they talking about the bill that is
endorsed by the United Auto Workers, by the building trades? Are they
talking about the bill that was negotiated between Democrats and
Republicans, between the House and the other body? Because that is the
bill we are talking about right here. This bill was written with the
input from labor, with the input from management, with the input from
employees and employers.
What is wrong? What needs to be fixed? Well, you know what needs to
be fixed? If an employer promises their employee they are going to fund
their pension, by golly, that is exactly what they should do. That is
what this bill does. It makes sure they do in fact fund that pension
100 percent.
If an employer wants to prefund their employees' pension, wants to do
good by helping them ahead of time, we want to change the rules so they
can do that. And you know what, if an employer wants to exploit
loopholes and rip off their employees, shortchange their pension, as
the current law allows employers to do, we have got to stop them from
doing that. And that is what this bill does.
That is why this bill is supported by unions, by management, by
Republicans, by Democrats, by the House and the other body. This is a
bill that is a good bill that has been negotiated for a year, and I
urge its passage.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 4 minutes to
the gentleman from North Dakota (Mr. Pomeroy).
Mr. POMEROY. I am pleased to follow the preceding speaker, who like
me is on the Ways and Means Committee. He knows darn well the Ways and
Means Committee had nothing to do with this bill. This bill has been
marked up in a nontransparent conference committee, and then last
night, on the eve of the vote, the Republicans walked and didn't vote.
It is utter nonsense the gamesmanship that has been played.
But there have been deals cut. A lot of deals have been cut. So some
unions
[[Page H6157]]
cut their deal and they are for it; some companies are for it; some
industries are for it. And I don't have any problem with any of them.
What I have a problem with, with this bill, is the great majority of
plans, covering 20 million workers in the workforce today, with pension
protection, pensions that they are counting on to pay that monthly
payment in old age.
We have seen this argument before. Remember last year, when the
President wanted to privatize Social Security? Suddenly, we heard about
how Social Security was on the rocks; we had to end Social Security as
we knew it to save it. We had to privatize it to protect it. This is
the same thing that is going on now. They are saying pensions are on
the rocks. We have to pass this bill to save pensions.
Baloney. Don't believe a word of it. Jane Bryant Quinn, noted
commentator on financial matters, writes in a recent column about the
recovering health of pension funding. ``Plans are coming back to
sounder footing, thanks to rising interest rates, massive corporate
catch-up contributions to their plans, limitations on benefits and the
recovery in the markets.''
And in addition to that, my colleagues, we passed a big premium
increase in that budget and so more money is coming in yet. But none of
that is mentioned. And so there is a lot of confusion on the floor.
Does this bill toughen that funding requirement or not? It is the
wrong question, my colleagues, and I used to be a solvency regulator as
a former insurance commissioner. The right question here is: Will this
bill continue pensions or will this bill make their freezing and
termination more likely? And on that, consider the words of David Wyss,
chief economist for Standard & Poor's. ``The more that is required of
plans, the sooner they will go extinct.'' Private pensions are going
the way of the Dodo.
Because, you see, when you make funding too onerous or too
unpredictable, you force the executives to cancel or terminate or
freeze the plan. And that is exactly what is at foot. So the enemies of
pensions can stand on the floor and say they are protecting workers by
increasing funding, but they know all along they are going to cause the
freezing of plans.
We have a trend here that is very worrisome, because my friends, this
is the mounting number of frozen pension plans. And I am telling you,
if we pass this bill, this number is going to skyrocket. Indeed, one
trade group with expertise in this area predicts 60 percent of the
plans might freeze if the bill is passed.
Let me tell you what happens when a plan freezes. It means that you
no longer get to count future years' earnings in your retirement
benefit. So baby boomers in the workforce today, following this debate,
you are going to get killed under this bill. You are not going to get
final rate of pay as considering your pension benefit. Instead, you are
going to get a reduced pension than you ever counted on, and they are
going to swap you for a 401(k).
Is that a fair trade? Well, Jane Bryant Quinn's column says that
workers in this situation may take an annual company contribution in
their 401(k) of 15 percent to be equal. Now, how many of you know of
401(k)'s where they put in 15 percent?
So what we are seeing here, directed right at the baby boom workers,
is a bill that will cause the freezing of their pension, the reduction
of their benefit, and yet the majority, in their hypocrisy, has the
nerve to suggest they are doing it to protect workers. Kill this bill.
Protect worker pensions.
Mr. CAMP of Michigan. Mr. Speaker, I yield myself the balance of my
time.
I urge Members to vote for this Pension Protection Act because this
bill reforms the current system. What we have seen through the years in
the steel industry and some of the airline industry, and the auto
industry is on the brink, we have seen plans terminated and put over on
the PBGC. Everybody loses there, certainly potentially the American
taxpayer, but more importantly, the workers in those companies end up
not receiving the benefits they remember promised.
This legislation requires plans to be fully funded. That is an
important step forward. It also ensures that the plans have a realistic
reflection of the value of their plan so that we don't have some rule
that doesn't make any sense that values a plan at an unrealistic
amount. The plans are fully funded at a mark-to-market amount that
actually reflects the value of the market.
This bill represents a compromise between the House and Senate on
multiemployer provisions, which strengthens the multiemployer plans as
well as the defined benefit plans. This legislation also would allow
shutdown benefits if plans are funded above a certain level, which are
so important as we have this changing dynamic in our economy that will
continue to protect our workers.
This legislation is better than current law, reforms current law,
strengthens our plans, and will ensure that plans are not terminated
and put on the PBGC.
Mr. Speaker, I yield back the balance of my time.
Mr. GEORGE MILLER of California. Mr. Speaker, I reserve the balance
of my time.
Mr. McKEON. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise in support of H.R. 4, the Pension Protection Act,
and I ask my colleagues to join me in doing the same. We followed a
long road to get to this point, and there have been many bumps along
the way. But when you are considering such substantial legislation,
such fundamental reforms, especially in a bill where we haven't had
reforms like this for over 20 years, that is to be expected.
At the end of the day, however, what we have brought to the floor
tonight represents the reform package agreed upon by House and Senate
pension conference principals after many, many meetings. After a long
and sometimes difficult process, this bill provides us just what we
were looking for at the outset: Reforms that significantly strengthen
outdated worker pension laws for workers, retirees, and taxpayers. And
that is a major and a long, overdue victory.
In the fall of 2004, nearly 2 years ago, the House Education
Workforce Committee, led by then-Chairman Boehner, unveiled six
principles to fix our Nation's outdated pension laws. These pillars
represented the foundation for the defined benefit pension overhaul
Congress was about to embark upon, and our committee pledged to
incorporate them into the final legislative product we would send to
President Bush. Mr. Speaker, the Pension Protection Act meets that
pledge.
We pledged to craft a bill that provides certainty by establishing a
permanent interest rate to more accurately calculate employers' pension
liabilities so they fund their pension promises. We have done just
that.
We pledged to craft a bill that relies on common sense by enabling
employers to build a cushion in their pension plans during good
economic times. And we have done just that.
We pledged to craft a bill that establishes stability by enclosing
funding loopholes and ensuring employers make adequate and consistent
cash payments to their plans. And we have done just that.
We pledged to craft a bill that promises greater transparency by
giving employees timely and straightforward information about the
health of their plans. And we have done just that.
We pledged to craft a bill that values honesty by ending the practice
of allowing employers and union leaders, when faced with a severely
underfunded pension plan, to dig their hole even deeper by promising
extra benefits to employees and retirees. And we have done just that.
And, finally, we pledged to craft a bill that enhances retirement
security portability by ensuring that hybrid plans, such as cash
balance pensions, which offer portable, more generous worker benefits,
remain a viable part of the defined benefits system. And we have done
just that.
In short, this bill will reform broken pension rules that no longer
serve the interests of workers who count on their retirement savings
being there for them when they need it. I am proud to have played a
role in crafting it, and I thank Chairman Thomas, my neighbor from
California, chairman of the Ways and Means Committee, and, in
particular, my former chairman, Leader Boehner, for leading the charge
on this important issue. Going all the way back to his days as
Employer-Employee Relations Subcommittee Chair,
[[Page H6158]]
our majority leader has been a tireless advocate for the reforms we are
considering tonight, and I thank him for his commitment.
I also want to thank my committee staff for their work on this
legislation. Ed Gilroy, Jim Paretti, Steve Perrotta, and Mr. Boehner's
pension policy adviser, Stacey Dion. They have been truly remarkable
throughout this process, putting in innumerable hours, and we literally
would not be here tonight without them.
Mr. Speaker, I urge swift passage of H.R. 4, both here in the House
this evening and in the Senate next week.
Mr. Speaker, I reserve the balance of my time.
Mr. GEORGE MILLER of California. Mr. Speaker, I continue to reserve
the balance of my time.
Mr. McKEON. Mr. Speaker, I am happy to yield 3 minutes to a member of
the committee, a member of the conference committee, and thank him for
his work on this bill, the gentleman from Minnesota (Mr. Kline).
Mr. KLINE. Mr. Speaker, I thank the gentleman, my chairman, for
yielding.
Mr. Speaker, I rise today in very strong support of H.R. 4, the
Pension Protection Act of 2006. This legislation provides security and
peace of mind for working families across our Nation. Many Americans
have worked their entire lives for their pensions, and nothing is more
important to them than making sure these obligations are met. This
legislation protects the interest of workers, retirees, and taxpayers,
and it helps employers continue to offer these benefits.
As vice chairman of the Employer-Employee Relations Subcommittee, I
have worked over the last few years with my colleagues to reform these
antiquated pension laws. This legislation reflects our negotiations
with House and Senate leaders concluded in recent days. I am proud to
have championed the inclusion of airline relief in this final package.
{time} 2215
The Pension Protection Act strikes the necessary balance between the
many diverse groups with an interest in a healthy pension system. The
passage of this bill protects the pensions of more than 9,000 Northwest
Airline pension plan participants who live in my district alone. I am
honored to represent these individuals here in Congress and to support
this much needed legislation on their behalf and on behalf of all my
constituents.
Without this legislation, Mr. Speaker, it is not a matter of if the
airline terminates its plans; it is a matter of when. This bill will
allow Northwest Airlines to emerge from bankruptcy with its pension
plans intact.
Curtis Shoemake, a 30-year Northwest Airline pilot from Minnesota,
summed up the situation when he remarked, ``It's a win-win for
everybody. It's a win because it protects our pensions. It's a win
because the PBGC is not burdened with the termination of our pension.
I'm hopeful that Congress will step up to the plate and do the right
thing.''
Tonight, Mr. Speaker, I am asking my colleagues to join me in doing
the right thing. Let's take the next step toward solving our Nation's
pension crisis. Vote for this legislation and strengthen America's
pension system for the workers of today and of tomorrow.
Mr. GEORGE MILLER of California. Mr. Speaker, I continue to reserve
the balance of my time.
Mr. McKEON. Mr. Speaker, I yield 1 minute to the chairman of the Ways
and Means Committee, Mr. Thomas.
Mr. THOMAS. I thank the gentleman very much.
Mr. Speaker, of necessity, this bill, H.R. 4, governing pension rules
is very complex. A detailed, plain-English explanation is available
from the Joint Committee on Taxation and will be a key resource in
understanding the intent underlying the bill's provisions and,
therefore, obviously of the legislative intent behind the bill.
Mr. McKEON. I am happy to yield 3 minutes to a subcommittee chairman
of the Education Committee, a member of the conference committee, a
good friend of mine from Texas, a hero of this country, Mr. Sam
Johnson.
Mr. SAM JOHNSON of Texas. Thank you, Mr. Chairman, for that time.
I normally don't do this, but I rise in opposition to this pension
bill on which I am a conferee. The original House pension bill had no
specific industry relief. In the House bill we did not pick winners and
losers.
However, the Senate bill did contain specific airline industry
relief. The four legacy carriers that maintain pension plans were all
treated the same. Within that industry, there was no picking winners
and losers. Yet this bill that we are debating chooses to favor two
bankrupt airlines, Delta and Northwest. I appreciate the comments
previous on Northwest. I think they need the help. It gives them extra
relief for having run their pension plans even into the ground.
The two airlines that are not threatening the retirement security of
their employees, American and Continental, are being punished for
having gotten wage and benefit concessions from their employees during
very hard-fought, but successful, negotiations. American Airlines has
been working closely with their pilots, flight attendants, and ground
crews to be sure that this is an airline that keeps flying and keeps
its promises to its employees.
Yet the bill debated here tonight will give Delta and Northwest a
huge competitive advantage. I will vote against this bill because all
four legacy carriers should get the same interest rate, I believe, for
unfunded promises.
The Senate bill and the draft conference report that has been
circulated by the Senate would provide for parity for all four airlines
on the interest rate. Those who support this deal say American and
Continental are being greedy. I say American and Continental need the
same interest rate as the other two or they are going to be hundreds of
millions of dollars at a disadvantage against their direct competitors.
As a matter of fact, American just reported, I think, somewhere around
$300 million profit in this year, and $600 million is what they would
be cost by this bill each year.
I am standing with the Texas delegation and airlines that keep their
word. Our Texas airlines have worked hard to keep their word with their
employees. This Congress must give equal treatment for our major
airlines.
I urge a ``no'' vote.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to
the gentleman from Massachusetts (Mr. Tierney).
Mr. TIERNEY. I thank the gentleman for yielding.
Mr. Speaker, I think that there are some provisions in this bill that
merit our hesitation before we proceed forward on it here tonight. This
will be the second bill that we have passed in this House on the same
subject, and both of them have missed opportunities.
This bill misses an opportunity to encourage companies to keep
offering traditional pensions to their employees. As my colleague Mr.
Neal from Massachusetts said earlier, it could be the demise of the
defined contribution plan, defined benefit plan for employees, a plan
that many, many people rely on and the best type of pension/retirement
plan that people could have. This in the face of a majority of this
body and a White House that are already intent on attacking and
privatizing Social Security.
This bill misses an opportunity to protect taxpayers from footing the
bill for the bailout of the Pension Benefit Guaranty Corporation. The
PBGC estimates that this bill will increase its deficit by $2 billion
over the next 10 years.
This bill misses an opportunity to prevent companies from using
bankruptcy to dump workers' pension plans, and we have seen that happen
too often in a number of instances very recently. We had every
opportunity to put provisions in this bill that would force companies
to try alternative means and other financing and ways to stop from
having to dump their plan into bankruptcy and therefore hurt their
retirees. We fail to do it in this bill.
The bill misses an opportunity to save pension benefits for older
workers by allowing conversion to cash balance plans without protecting
those that are 45 years or older, and estimates are that they stand to
lose up to half of the accumulated value in their pension plans.
And the bill misses an opportunity to stop companies from awarding
lavish retirement compensation packages to executives at the same time
they cut
[[Page H6159]]
workers' benefits. The fact of the matter is that the executives that
are responsible for driving these plans into the ground ought to have
their fate and their retirement hooked onto the fate of their employees
so that they will make sure that these plans succeed every possible
time.
And the bill misses an opportunity to protect workers' pension
assets. The investment advice exemptions in the bill don't adequately
protect against conflicted investment advice.
Mr. Speaker, they miss opportunity after opportunity. We can do
better. Let it go back to conference, let's correct it, and let's come
out with a good pension plan to protect America's workers.
Mr. McKEON. I yield to the gentleman from Georgia, a member of the
committee, for purposes of a unanimous consent request.
(Mr. PRICE of Georgia asked and was given permission to revise and
extend his remarks.)
Mr. PRICE of Georgia. Mr. Speaker, I want to commend the leader and
the chairman for their hard work on this. I rise in support of H.R. 4.
Mr. McKEON. At this time I would like to yield to my good friend from
across the aisle, the ranking member of the Transportation Committee,
Mr. Oberstar, for 2 minutes.
Mr. OBERSTAR. I thank the gentleman for yielding.
As the chairman of the Ways and Means committee said earlier, he did
say that the pension system is broken. I wouldn't say it is quite
broken, but it does have some cracks. We forget that when ERISA was
enacted in 1973, it was hailed in particular in my district by my
predecessor for whom I was administrative assistant as the great
salvation for iron ore mines that were about to go into bankruptcy and
for workers whose pension plans would have been lost without PBGC set
up under ERISA.
We find now that there are some oversights that should have been
plugged over the years and failings that should have been corrected.
But they weren't done. And now we are at a situation where there is an
opportunity to make an adjustment and that is in the airline sector.
If the steel industry had been as responsible as I submit Northwest
Airlines has been and Delta in working with their employees to protect
the pensions, freeze the pensions, require the company to pay in over a
period of time, we wouldn't have billions of dollars in unfunded
liabilities for the steel industry in the PBGC, and we would have more
steel industry still operating and more workers getting their fair
pensions.
Now, the plan that Northwest has set before its workers was
negotiated with the pilots, the flight attendants and the machinists,
and they said, We'll freeze the plan, but we'll continue to pay into it
so that you get the full amount you're entitled to and then we'll
substitute a defined contribution plan.
Now, two other carriers, American and Continental, say that is unfair
to them. But what is unfair to them would be if we do nothing tonight,
defeat this bill, and then Northwest simply turns over in the month of
August their pension plan to the PBGC and thousands of employees from
both Northwest and Delta are out of luck, they lose huge amounts of
money over the balance of their retirement years, and then American and
Continental have a real disparity in competition because those
companies don't have that burden of liability to pay.
So pass this bill and give those carriers an opportunity to do the
right thing.
Mr. McKEON. May I inquire how much time remains.
The SPEAKER pro tempore. The gentleman from California (Mr. McKeon)
has 3\1/2\ minutes remaining. The gentleman from California (Mr. George
Miller) has 10\1/4\ minutes remaining.
Mr. McKEON. Mr. Speaker, I am happy to yield at this time 2\1/2\
minutes to a member of the committee, Mr. Ehlers from Michigan.
Mr. EHLERS. This is a very complex issue, and we have worked on this
bill for a considerable amount of time in the Committee on Education
and the Workforce, of which I am a member.
I am puzzled, because there is a little confusion on the floor
tonight about the airlines issue, and I hope I can help to clarify
that. The impression that has been given, and I have heard it in other
discussions and not just in this debate, that there is one plan here
for Northwest and Delta and a different plan here for Continental and
American Airlines. That is simply not true.
There are two plans, but it does not specify which airlines. Any of
the airlines can pick one of the two plans. It is an open choice. One
plan is for an airline which chooses to freeze their pensions. In that
case, they will pay what they owe to the PBGC at a certain rate of
interest over a certain period of time. In the other plan, airlines do
not have to freeze their pensions and they pay their obligation to the
PBGC at a certain rate over a certain amount of time.
Now, those rates and times are different because the two plans are
different. The liabilities of the airlines are different. But
Continental or American Airlines can choose to use the frozen plan with
no problem whatsoever. If they think Northwest and Delta are getting a
better deal, they can join them. They can freeze their plans and get
the same repayment rate, same interest rate, same time to repay as
Northwest and Delta. It is very simple. Two plans, but no airline is
tied to a particular plan. They can make the choice they wish. In fact,
Continental is using both plans.
And so the argument that we are being unfair and are picking winners
and losers among the airlines simply does not apply in this case. As
Mr. Oberstar said, this is a fair arrangement which will preserve the
pension funds for the employees of the airlines and will prevent a
further load from being assigned to the PBGC, the Pension Benefit
Guaranty Corporation, which would lose a lot of government money and
which we may have to bail out if we do not adopt this plan.
I urge an ``aye'' vote.
Mr. GEORGE MILLER of California. Mr. Speaker, I yield myself such
time as I may consume.
Mr. Speaker and Members of the House, this is a complicated piece of
legislation and Members of the House and Members of the Senate have
struggled with it for some period of time. That struggle really hasn't
been completed yet because this legislation was taken from the
conference committee and it is here tonight to be passed unilaterally
within the House and be presented to the Senate in the future.
It is difficult to understand all of the things that have been done
in this legislation, certainly for the Democratic Members of the House
since we were not included in this conference committee. We were not
invited into any of the sessions, nor was the information shared with
us as it was developed during the conference committee because they
chose to run it simply on a partisan basis among the House conferees.
{time} 2230
But I think it is clear to understand also that this legislation
does, in fact, as my colleague from Massachusetts said, miss a number
of opportunities. And that is why we are concerned with it tonight.
We understand the changes that have been made that allow companies to
continue to underfund those pension plans and then increase the
contributions that those plans will have to make in later years, and it
is pretty clear that as businesses sit down and make the decisions
about the allocation of resources and they look at those increased
contributions, the burden will really push them in the direction of
freezing or terminating their plans. That is why we see the quote that
was given this last day or so, ``We will see an unprecedented number of
companies freezing their plans in 2007 because they will recognize the
difficulties of the new pension regime.'' That comes from the American
Benefits Council, which deals with so many of these plans, because this
tilts the table toward the decisions by companies to terminate or to
freeze those plans.
And if that happens, of course, we have been warned now, under this
legislation by the Pension Benefit Guaranty Corporation that as they
contribute less to those plans and then make that decision, it also
heightens the likelihood that these underfunding problems will become
worse, according to this legislation as represented to us by the
Pension Benefit Guaranty Corporation. And they also make it clear
[[Page H6160]]
the Pension Benefit Guaranty Corporation that absorbs these plans on
behalf of a safety net paid for by other plans that as they suffer from
a huge deficit, a $23 billion deficit, they expect that this
legislation that is before us tonight will add some $2 billion to that
deficit over the next 10 years.
But there are other decisions that the conferees could have made or
that you could have made in drafting this bill as you brought it to the
floor. You could have erred on the side of working people. You could
have made a decision that in these plans that are distressed and
underfunded that we would, in fact, treat the employees and the
executives alike. But we set two different standards. We said that if
your plan is not 80 percent funded, then the employees can get no
additional benefits in terms of their retirement out of that plan. But
if a plan is only 60 percent funded, executives can continue to draw
and add on and accrue pension benefits. So we have set two different
standards here. Both people, I assume, are working very hard for the
success of that corporation. One is just going to get treated entirely
differently than the other. It is a matter of simple fairness. A matter
of simple equity. But when we see the greatest disparities in the
history of this country for a long time now, when we see these
disparities, this bill increases those disparities between the
executives and the employees.
You could have made a decision not to harm the pilots that were
harmed after 9/11 because they were forced to retire early. Federal law
made them retire at 60. Then 9/11 and the high fuel costs come along,
and that drives United Airlines into bankruptcy, a bankruptcy I didn't
agree with, but they went into bankruptcy; so you lost 40 percent of
your pension. PBGC took over their plan, but you lost an additional
amount because you retired at 60. Those pilots had no chance. We could
have taken care of them in this bill. One would have thought that that
was somewhat of a humane thing to do, a compassionate thing to do. They
were victims of 9/11. They were victims of the downturn in the travel
economy after 9/11. They were victims of high fuel costs. They did not
do anything wrong, and Federal law forced them to retire. But we just
blew off their cause in this legislation.
The issue of older workers, a missed opportunity there, to make sure,
as we transition from defined benefits plans to cash balance plans,
that we would protect the oldest of those workers, the closest to
retirement, that we would make sure that they would be taken care of
because, as we know, people who are 55, 60 years old, 5 years from
retirement, have very little opportunity to accumulate the kind of
economic resources that are necessary to match the retirement that they
were expecting. You didn't have to do it. It was recommended by the
administration.
The Secretary of Treasury, former Secretary Mr. Snow, said it should
be done. He said he did it in his corporation at CSX. He voted to do it
as a member of the board of Verizon. It was done by Honeywell. It was
done by Wells Fargo Bank. It was a compassionate thing to do. They
still realized the savings that they wanted by changing their pension
plans, and I do not object to their doing that. I just thought that we
could make an effort to try to protect those people who the GAO tells
us would lose almost half of their benefits with those kinds of
conversions. But that was not done in this legislation.
So I really think that we ought to understand that those kinds of
decisions really do harm a number of people that could have been helped
in this legislation, a significant number of people that could have
been helped in this legislation. And we could have done some more to
try to help keep these plans out of the PBGC.
We could have also made sure that before people went to bankruptcy in
the manner in which United did, that they would have made the last
ditch effort, the kind of effort that we just talked about earlier,
where airlines made these kinds of efforts to freeze their plans, but
they did not. But I think before we rush to bankruptcy and then we turn
these plans over to the PBGC and maybe ultimately to the taxpayer that
there ought to be a burden, there ought to be a showing, there ought to
be evidence that, in fact, you made every effort. I am not asking you
to destroy the company. I am asking you to make the kind of effort that
we saw others make but they chose not to make it at United, and as a
result of that, those machinists, those flight attendants, the pilots,
the ramp workers, and so many others have taken such a serious hit on
their pension benefits with no ability to recover. So those are my
objections to this legislation.
We started this session with an unprecedented attack on Social
Security. And as people started to look at that attack, and they saw
the Federal privatization of Social Security, they started to look at
their own pension plans, and they realized, as what we are doing with
here today, that their own pension plans are very insecure. There is
probably no employer in this country that can tell you that that
pension plan will be there for their employees 75 years from now, 65
years from now, and be paying out 80 percent of the benefits. So people
have come to realize that they need retirement security. And I do not
believe that this legislation provides that kind of security that
individuals need.
I recognize the transitions in pension plans. I recognize the changes
in pension plans. But I really think that this legislation, in many
ways, was drafted looking in the rear-view mirror as opposed to the
future of these plans and how we encourage savings and how we encourage
participation.
There is no question this legislation deals with some of those
issues, but I do not believe that we did the kind of job that will
serve us well in the future.
And I would encourage Members to oppose this legislation. We will
have a motion to recommit, a motion that will protect those older
workers, a motion that will treat those airlines the same. If they all
freeze their plans, they should get the same number of years to do
that, and we think it will provide them a greater margin of safety if
they do that, and provide for that kind of transition and the
protection of those pension plans as they originally requested, as the
Senate originally voted to do. But the conferees didn't go there, and
certainly this legislation being offered in the House tonight didn't go
there. But that will be offered in a few minutes.
I urge opposition to this legislation.
Mr. Speaker, I yield back the balance of my time.
Mr. McKEON. Mr. Speaker, it gives me great pleasure to yield the
balance of my time to our majority leader, who started this project as
a subcommittee chairman and then full committee chairman of the
Education Committee, Mr. Boehner from Ohio.
Mr. BOEHNER. Mr. Speaker, let me thank my colleague for yielding.
And, Mr. Miller, let me say hello to you and thank you for your loyal
opposition. Even though over the last 7 years that we have worked on
this project together, much of what is in here you should be very proud
of because you and Mr. Andrews, Mr. Thomas, Mr. McKeon, Mr. Johnson,
and others, all of us, over the last 6 or 7 years, have spent a lot of
time bringing this bill together.
And I am pleased that this bill is on the floor tonight. It could be
here in a different form. It could be here in a different way. But the
fact is that we have worked together in a bipartisan way to craft a
very good bill to protect American workers' pensions.
Simply put, I think these reforms that we have put in place tonight
represent the most sweeping changes to America's pension system in 30
years. And they will ensure that workers and retirees can continue to
count on their hard-earned retirement benefits. And these reforms, I
think, deserve the support of every Member in this House.
Over the past few years, we have seen more and more companies get out
of their pension system, freeze their pension plan, go bankrupt, turn
it over to the Pension Benefit Guaranty Corporation, and put the
pension benefits for American workers in jeopardy. And what we are
attempting to do tonight, in a bipartisan way, is to protect the
American workers and the benefits that they have earned and try to make
sure that the commitments that companies make to their workers are
kept. And the way to do that is to make sure that we put more money
into these pension funds.
[[Page H6161]]
Now, my friend from California, who was down here arguing against
this bill, had a two-sided argument. One, the bill is too strong. We
are going to require companies to put more money into their pension
plans, and as a result, they are going to freeze their plans. Yet on
the other hand, he is complaining that we are not protecting the
interests of the American worker. Now, we spent years on this, both of
us together, and we know the only way you get there is to walk a very
fine line, to make sure that promises made to American workers are
kept, that plans are better funded, and that we try to prevent a
taxpayer bailout of the Pension Benefit Guaranty Corporation.
As my colleague from California said, 7 years ago, when I was bounced
out of the Republican leadership after the 1998 election, I became
chairman of the Employer-Employee Relations Subcommittee of the
Education and the Workforce Committee, a subcommittee most of you have
never heard of. And my ranking member was my good friend from New
Jersey, Mr. Andrews, and we began a series of hearings in 1999 to
uncover what was happening in the pension system in America today. And
we had dozens of hearings and worked hard. And some of the things that
we learned, I think we have dealt with very comprehensively in this
bill.
The bill ensures that employers better fund their pension plans. It
closes loopholes that allow underfunded plans to skip their pension
payments. It prohibits employers and union leaders from digging the
hole even deeper by promising extra benefits when their plans are
severely underfunded. The bill enhances disclosure to give workers and
retirees more information about the condition of their own pension fund
that they are a member of. It protects taxpayers from a multi-billion
dollar bailout of the Pension Benefit Guaranty Corporation. It better
protects multi-employer pension plans for both workers and the
employers who fund them. And it gives access to critical investment
advice for those who have 401(K) plans and IRAs.
I want to also mention the last issue, the fact that one of the
issues I have worked on for these 7 years and never given up on is
trying to get critical investment advice into those who have self-
directed plans. My colleague from Massachusetts sits over there with a
smile on his face because we worked on this together, although he
disagrees with me. He is still my friend. But helping those who have to
make decisions in their 401(k) plan or their IRA is critically
important if we want to help them get the type of retirement security
that they want for themselves. We all know that many of these plans are
underfunded.
There is not enough diversification in their portfolios, and if we
don't get real investment advice and personalized investment advice
into their hands, we know they are not going to have the type of
retirement that they are expecting. Thankfully, those provisions are
included in this bill to help make sure that investment advice gets
there.
Another big issue is bringing legal certainty to those cash balance
plans, these hybrid plans. It is not a defined benefit plan; it is not
a 401(K). And over 2,000 companies in America today have these hybrid
pension plans, and they are in some legal jeopardy. And I think we have
struck the right balance in this legislation to protect the interest of
older workers that are in defined benefit plans as these conversions
take place.
Now, not every Member favors every provision of this bill, as my
friend from California pointed out. And if I had to write this bill
myself, it would be different than what we see today. The fact is that
I think we have made good on our promise to help American workers keep
their retirement benefits they have earned, to make sure that those
commitments are kept.
I want to thank my friend from California, Chairman Bill Thomas, whom
I have worked on this proposal with for the last 5 years. We all know
Bill is a sweet, lovable human being. This is his last year as chairman
of the Ways and Means Committee. And I have got to tell you that all of
us in the House, whether we agree with Bill or disagree with Bill every
day, Bill is someone who works hard, puts his mind to it, and no one
has worked harder in bringing this bill to the floor tonight than my
colleague and friend from California, Mr. Thomas.
{time} 2245
Also I want to thank Chairman McKeon, the man who took my place as
Chairman of the Education and Workforce Committee some 6 months ago,
for his hard work.
I want to thank my staff. Stacey Dion, Stacey, everybody that has
worked on this knows Stacey. She has been one of the principal authors
of this. I want to thank Paula Nowakowski, Jo-Marie St. Martin, Kevin
Smith, Mike Sommers, Greg Maurer, Dave Schnittger and George Canty on
my staff for all of their work on this bill now and in the past.
I also have to thank some of my former staff on the Education and the
Workforce Committee, Ed Gilroy, Steve Forde, Jim Paretti and Steve
Perrotta, for all of the work they have done continuing to assist not
only me when I was chairman, but Mr. McKeon as well.
Let me also thank the staff from the Ways and Means Committee and our
Democrat staff who have worked hard over many years to get us to this
point.
This is a very important bill. I think all of my colleagues on both
sides of the aisle know it is a very important bill.
When we started this process, Mr. Andrews and I in 1999, it wasn't
many months into this when we asked ourselves, why haven't these laws
been cleaned up and straightened out? Well, Mr. Andrews, I can tell
you, I found out why, because it is hard work and there are a lot of
people who have a lot of different interests.
But at the end of the day, the work that we started I think is going
to pay dividends tonight, because what we have here is a process and a
product that has been developed together that will in fact meet the
goals that we set out to do. And it wouldn't have happened without the
work of a lot of Members on both sides of the aisle.
With that, Mr. Speaker, I ask my colleagues to support this bill, to
defeat the motion to recommit, and move this bill to the Senate and on
to the President's desk.
Mr. BLUMENAUER. Mr. Speaker, there is probably no issue of more
critical interest to the majority of the people that I represent than
retirement security. We are facing a growing crisis in this country
because of the way pension plans have been mismanaged and the stresses
that are coming from demographic changes, in particular the pending
retirement of the baby-boomers. We've already seen many of these
programs disrupted to the serious disadvantage of hardworking men and
women who through no fault of their own are facing a much more
difficult time in retirement.
I am sad in this instance that this bill does not make the simple
adjustment that all employees' pensions are treated the same whether
they are an executive or metalworker or longshoreman. That would have
been a simple reform providing equity and would have forced more
attention and energy on the part of top executives to protect the
integrity of their pension programs. However this is not the case.
I am frustrated that this comes at the last minute with little chance
for review and without the full participation from conferees on both
sides of the aisle. Frankly, my staff and I and the people in my
district have had very little time to be able to fully analyze the
consequences of this legislation. This is not the best we can do, but
it looks to me like it's the best we can expect for now. I am quite
confident this is not the last word and I will vote in favor while
continuing to work to do a better job for American industry and its
workers.
Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise in opposition to H.R.
4, the Pension Protection Act of 2005. I support the Miller/Rangel
motion for several reasons. Specifically, I oppose the bill because I
am not satisfied that it adequately protects older workers' benefits in
cash balance conversions and ensures that airline pilots do not see
unfair cuts to their PBGC benefits because of the FAA's mandatory
retirement rules and agree to the Senate provisions on airlines. I
believe the bill can be designed better to prevent pension plan dumping
and to treat equally executive compensation and worker and executive
pensions equally.
PROVISIONS PROTECTING OLDER WORKERS' BENEFITS IN CASH BALANCE
CONVERSIONS
These provisions prohibit discrimination against older workers by the
practice of offsetting previously earned pension benefits against new
benefits under the plan, also known as ``wearaway'' of older worker
benefits. They also provide fair rules to protect workers' pensions in
conversions of traditional pension plans to cash balance pension plans.
[[Page H6162]]
In a recent study, the GAO found that, without these transition
protections, almost all workers could lose up to 50 percent of their
expected pension benefits in a cash balance conversion.
PROVISIONS THAT ENSURE THAT AIRLINE PILOTS DO NOT SEE UNFAIR CUTS TO
THEIR PBGC BENEFITS BECAUSE OF THE FAA's MANDATORY RETIREMENT RULES
Under FAA rules, airline pilots are required to retire at age 60, and
if they retire earlier than age 60, they cannot go back to work once
they hit age 60. When a pilot pension plan is terminated and sent to
the PBGC, the PBGC considers age 65 to be the normal retirement age,
treats age 60 as an early retirement, and cuts pilots guaranteed
benefits as a result. These provisions would require the PBGC to treat
age 60 as the normal retirement age for pilots and adjust their
guaranteed benefits accordingly. The motion would limit this treatment
to those pension plans which were terminated after September 11, 2001.
It could come no sooner. United Airlines pilots are seeing their
pensions cut by tens of thousands of dollars each year under the PBGC
rules. Their retirement nest eggs have been decimated. They are hit
twice--once by the company's unfair dumping and again by the PBGC's
benefit reductions.
PROTECTION OF AIRLINES
The airlines have been hurt by skyrocketing fuel prices and 9/11. It
would be devastating to hundreds of thousands of workers across the
Nation if more airlines are permitted to dump their plans into the
PBGC. These provisions give airlines the ability to keep their plans
going by stretching out payments over 20 years instead of 7 years.
PROVISIONS DESIGNED TO PREVENT PENSION PLAN DUMPING
These provisions allow the PBGC and Treasury Secretary to enter into
an alternative funding agreement with an employer if its pension plan
is in danger of being terminated. If workers and retirees are facing
the destruction of their pension plans, Congress should give the PBGC
and Treasury Departments the flexibility to work out alternatives to
termination. If such alternatives to simply dumping a plan were
available during the United Airlines crisis, the largest pension
termination in history might have been averted.
PROVISIONS ON EXECUTIVE COMPENSATION AND WORK TO TREAT WORKER AND
EXECUTIVE PENSIONS EQUALLY
Under the House bill, workers see benefit restrictions when a pension
plan falls below 80 percent funding. Executives, on the other hand,
only see limited benefit restrictions much later--at less than 60
percent funding. The Senate bill achieves greater parity than the House
bill in how workers and executives are treated. Over the last several
years, we have seen repeated cases where executives have protected or
even enhanced their own golden parachutes, while cutting or eliminating
workers' pensions. It is time for these unfair practices to end. If it
is good enough for the sailor, it is good enough for the captain.
CONCLUSION
For these reasons, I oppose H.R. 4 and urge my colleagues to join me.
Mr. KIND. Mr. Speaker, I rise in support of the legislation before us
tonight. The Pension Benefit Guaranty Corporation, PBGC, is dangerously
underfunded, current pension law is antiquated, and this Congress must
do all it can to shore up America's private pension system.
The bill addresses the concerns of both workers and employers and
makes necessary changes to shore up the Federal pension system. Among
the welcomed reforms are greater transparency and accountability in the
PBGC, the special consideration given to airlines, and the overall
tightening of rules so that companies will meet their financial
obligations to their employees and retirees.
As a cochair of the New Democrat Coalition, I believe it is important
to reform pensions so that promises to workers are kept, taxpayers are
not left footing the bill, and companies can continue to be good actors
and offer pension plans. In addition, any discussion of pension reform
must include an increased emphasis on personal responsibility.
Americans are not saving enough for retirement. In fact, the national
savings rate is at its lowest level since the 1930s, declining from 9.4
percent in 1970 to just 1 percent in 2004. In response to these weak
savings rates, we need to create new, simpler incentives for middle-
class Americans to save. Fewer than 40 percent of U.S. workers have
calculated how much they will need to retire, 30 percent have not saved
anything for retirement, and only 20 percent feel very confident about
having enough money to live comfortably in retirement. Therefore, I am
pleased by provisions in this bill making the saver's credit permanent
and encouraging automatic enrollment in 401Ks.
This legislation makes the necessary reforms to strengthen the
Federal pension system to the benefit of workers, retirees and
taxpayers alike.
Mr. LEVIN. Mr. Speaker, House Republicans are bringing this bill,
rather than a final conference report, for one reason and one reason
only--to prevent the inclusion of long-overdue provisions to extend
important business tax credits that reward things like research and
development and efforts to hire low-wage workers. Those credits expired
7 months ago and are now hostage to the Republican quest to pass tax
cuts for a tiny number of incredibly wealthy families. That is an
outrage.
However much I deplore the process by which this bill was rushed to
the floor, and however flawed it may be, it does include some
critically important and very time-sensitive provisions, and its worst
elements have been significantly improved since the original Bush
administration proposal. For that reason, I have decided to vote in
favor of this bill.
The bill includes provisions which must be enacted quickly if we hope
to save pension benefits for large numbers of workers in the airline
industry and in the building trades and other industries with multi-
employer pension plans.
Without a provision in this bill which would give airlines more time
to fully fund their pension plans, Northwest Airlines has said it will
have to terminate its pension plan and turn it over to the Federal
Pension Benefit Guaranty Corporation. That's a bad outcome for
everyone. It's a bad outcome for Northwest employees, because many of
them will not receive their full earned pensions if that happens. It's
a bad outcome for taxpayers, because we will assume Northwest's debt,
even though the company is eager to pay it, given time.
The bill also includes long-overdue reforms to multi-employer pension
plan law. These long-overdue reforms will allow multi-employer pension
plans to address what for some plans is a short-term funding crisis,
and will give all plans flexibility they didn't have before to advance
fund and guard against a future crisis. Republican leaders unfairly
dropped multi-employer pension plan reform from the pension reform bill
that addressed similar problems for single-employer plans several years
ago.
This final bill also represents a substantial improvement over the
original proposal put forth by the Bush administration, and the bills
that passed the House and Senate. Under the improved bill:
Companies will be spared the extreme funding unpredictability
proposed by the Bush administration, which advocated forcing companies
to respond to every short-term fluctuation in interest rates and
workforce composition, without any ``smoothing'' of interest rates at
all.
A provision which would have unfairly classified pension plans as
``at risk'' and subject to penalty if the company had a poor credit
rating, even if the plan itself was well-funded, has been removed. That
provision might have forced companies like General Motors to divert
resources from addressing business challenges and into an already well-
funded pension plan.
Plans will be allowed to amortize both gains and losses in their
pension plans over time, and will be able to use accurate assumptions
about early retirement to predict future liabilities so that the plans
are properly funded.
The flawed Bush administration proposal to deny all workers plant
shutdown benefits was mitigated, though not removed, and the conferees
adopted provisions from the Senate bill which we hope will prevent
employers from using pension plan underfunding as a tactic to cut
retirement benefits negotiated in collective bargaining.
Despite my decision to support the bill and address immediate needs,
I must admit I continue to have deep reservations about this bill's
long-term impact on our defined benefit pension system, which provides
guaranteed retirement income for millions of Americans. Knowing how
committed President Bush and his allies in the House are to Social
Security privatization increases my concerns, especially given the way
this bill came to the House floor.
The final bill includes fundamental changes to the way companies
determine their contributions to pension plans. The new ``yield curve''
methodology proposed by the Bush administration is completely untested,
and is likely to make required pension obligations much more
unpredictable. Many companies have suggested that this new
unpredictability may be the final straw that leads them to terminate
their guaranteed pension plans.
The final bill includes a requirement that companies subtract credit
balances they earned by making advance pension contributions before
calculating their plan funding level, a change which will provide a
strong disincentive to advance fund, since advance contributions will
be treated as if they don't exist in the future. Advance funding is
critical if companies are to balance the need to fully fund retirement
benefits with the need to direct resources to current operations in
difficult times.
The final bill included provisions which may make workers pay the
price when companies don't fund their pensions, including provisions
[[Page H6163]]
which restrict benefits for workers when plants shut down and a
dangerous provision which would allow deeply underfunded multiemployer
pension plans to cut benefits that workers have already earned. The
bill also misses a real opportunity to enact better protections for
workers whose companies declare bankruptcy and terminate their pension
plans.
I regret that this bill was not crafted in a Congress that genuinely
believed in guaranteed retirement benefits and preserving them for the
future. There is much bad with the good, and much of the effort that
went into this bill was directed toward mitigating problems with the
original bill, rather than addressing real problems with retirement
security. I hope that in the next Congress, we will be in a position to
pass legislation that will strengthen retirement security for all
workers.
Mr. TIBERI. Mr. Speaker, H.R. 4 provides significant reforms of ERISA
prohibited transaction rules. These new exemptions are in addition to
exemptions that have already been granted by the Secretary of Labor or
are included in the ERISA statute.
I am supportive of the relief for the use of electronic communication
networks and similar trading venues. This reflects the availability of
new technology to make trading more efficient. ERISA plans are
incurring higher execution costs because of the difficulty of sending
ERISA plan trades to electronic trading systems. Greater access to
electronic trading can provide ERISA plan participants with the same
benefits that are available to non-ERISA plans and other institutional
investors.
The legislation requires plan fiduciary authorization and prior
notice before an ECN or similar trading venue can be used if the
manager or his affiliate has an ownership interest in the trading
venue. However, it recognizes that prior notice and authorization is
not required for exchanges or venues where a manager or its affiliate
have an ownership interest that is insignificant, such as under 10
percent. In addition, as under current law, a transaction executed on
an exchange or automated public quotation system will not result in a
prohibited transaction, even if it is owned in part by an affiliate of
an investment manager.
The SPEAKER pro tempore. All time for debate has expired.
Pursuant to House Resolution 966, the bill is considered read and the
previous question is ordered.
The question is on the engrossment and third reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.
Motion to Recommit Offered by Mr. George Miller of California
Mr. GEORGE MILLER of California. Mr. Speaker, I offer a motion to
recommit.
The SPEAKER pro tempore. Is the gentleman opposed to the bill?
Mr. GEORGE MILLER of California. I am in its current form.
The SPEAKER pro tempore. The Clerk will report the motion to
recommit.
The Clerk read as follows:
Mr. George Miller of California moves to recommit the bill
H.R. 4 to the Committee on Education and the Workforce with
instructions to report the same back to the House forthwith
with the following amendment:
At the end of title I add the following:
Subtitle C--Age Requirement for Employers
SEC. 121. AGE REQUIREMENT FOR EMPLOYERS.
(a) Single-Employer Plan Benefits Guaranteed.--Section
4022(b) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1322(b)) is amended in the flush matter
following paragraph (3), by adding at the end the following:
``If, at the time of termination of a plan under this title,
regulations prescribed by the Federal Aviation Administration
require an individual to separate from service as a
commercial airline pilot after attaining any age before age
65, paragraph (3) shall be applied to an individual who is a
participant in the plan by reason of such service by
substituting such age for age 65.''.
(b) Multiemployer Plan Benefits Guaranteed.--Section
4022B(a) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1322b(a)) is amended by adding at the end the
following: ``If, at the time of termination of a plan under
this title, regulations prescribed by the Federal Aviation
Administration require an individual to separate from service
as a commercial airline pilot after attaining any age before
age 65, this subsection shall be applied to an individual who
is a participant in the plan by reason of such service by
substituting such age for age 65.''.
(c) Effective Date.--The amendments made by this section
shall apply to benefits payable on or after the date of
enactment of this Act, but only with respect to plan
terminations occurring after September 11, 2001.
Strike section 402 and insert the following:
SEC. 402. SPECIAL FUNDING RULES FOR PLANS MAINTAINED BY
COMMERCIAL AIRLINES THAT ARE AMENDED TO CEASE
FUTURE BENEFIT ACCRUALS.
(a) In General.--If an election is made to have this
section apply to an eligible plan--
(1) in the case of any applicable plan year beginning
before January 1, 2007, the plan shall not have an
accumulated funding deficiency for purposes of section 302 of
the Employee Retirement Income Security Act of 1974 and
sections 412 and 4971 of the Internal Revenue Code of 1986 if
contributions to the plan for the plan year are not less than
the minimum required contribution determined under subsection
(d) for the plan for the plan year, and
(2) in the case of any applicable plan year beginning on or
after January 1, 2007, the minimum required contribution
determined under sections 303 of such Act and 430 of such
Code shall, for purposes of sections 302 and 303 of such Act
and sections 412, 430, and 4971 of such Code, be equal to the
minimum required contribution determined under subsection (d)
for the plan for the plan year.
(b) Eligible Plan.--For purposes of this section--
(1) In general.--The term ``eligible plan'' means a defined
benefit plan (other than a multiemployer plan) to which
sections 302 of such Act and 412 of such Code applies--
(A) which is sponsored by an employer--
(i) which is a commercial airline passenger airline, or
(ii) the principal business of which is providing catering
services to a commercial passenger airline, and
(B) with respect to which the requirements of paragraphs
(2) and (3) are met.
(2) Accrual restrictions.--
(A) In general.--The requirements of this paragraph are met
if, effective as of the first day of the first applicable
plan year and at all times thereafter while an election under
this section is in effect, the plan provides that--
(i) the accrued benefit, any death or disability benefit,
and any social security supplement described in the last
sentence of section 411(a)(9) of such Code and section
204(b)(1)(G) of such Act, of each participant are frozen at
the amount of such benefit or supplement immediately before
such first day, and
(ii) all other benefits under the plan are eliminated,
but only to the extent the freezing or elimination of such
benefits would have been permitted under section 411(d)(6) of
such Code and section 204(g) of such Act if they had been
implemented by a plan amendment adopted immediately before
such first day.
(B) Increases in section 415 limits disregarded.--If a plan
provides that an accrued benefit of a participant which has
been subject to any limitation under section 415 of such Code
will be increased if such limitation is increased, the plan
shall not be treated as meeting the requirements of this
paragraph unless, effective as of the first day of the first
applicable plan year and at all times thereafter while an
election under this section is in effect, the plan provides
that any such increase shall not take effect. A plan shall
not fail to meet the requirements of section 411(d)(6) of
such Code and section 204(g) of such Act solely because the
plan is amended to meet the requirements of this
subparagraph.
(3) Restriction on applicable benefit increases.--
(A) In general.--The requirements of this paragraph are met
if no applicable benefit increase takes effect at any time
during the period beginning on July 26, 2005, and ending on
the day before the first day of the first applicable plan
year.
(B) Applicable benefit increase.--For purposes of this
paragraph, the term ``applicable benefit increase'' means,
with respect to any plan year, any increase in liabilities of
the plan by plan amendment (or otherwise provided in
regulations provided by the Secretary) which, but for this
paragraph, would occur during the plan year by reason of--
(i) any increase in benefits,
(ii) any change in the accrual of benefits, or
(iii) any change in the rate at which benefits become
nonforfeitable under the plan.
(4) Exception for imputed disability service.--Paragraphs
(2) and (3) shall not apply to any accrual or increase with
respect to imputed service provided to a participant during
any period of the participant's disability occurring on or
after the effective date of the plan amendment providing the
restrictions under paragraph (2) if the participant--
(A) was receiving disability benefits as of such date, or
(B) was receiving sick pay and subsequently determined to
be eligible for disability benefits as of such date.
(c) Elections and Related Terms.--
(1) In general.--A plan sponsor shall make the election
under subsection (a) at such time and in such manner as the
Secretary of the Treasury may prescribe. Except as provided
in subsection (h)(5), such election, once made, may be
revoked only with the consent of such Secretary.
(2) Years for which election made.--
(A) In general.--The plan sponsor may select the first plan
year to which the election under subsection (a) applies from
among plan years ending after the date of the election. The
election shall apply to such plan year and all subsequent
years.
(B) Election of new plan year.--The plan sponsor may
specify a new plan year in the election under subsection (a)
and the plan year of the plan may be changed to such new plan
year without the approval of the Secretary of the Treasury.
[[Page H6164]]
(3) Applicable plan year.--The term ``applicable plan
year'' means each plan year to which the election under
subsection (a) applies under paragraph (1).
(d) Minimum Required Contribution.--
(1) In general.--In the case of any applicable plan year
during the amortization period, the minimum required
contribution shall be the amount necessary to amortize the
unfunded liability of the plan, determined as of the first
day of the plan year, in equal annual installments (until
fully amortized) over the remainder of the amortization
period. Such amount shall be separately determined for each
applicable plan year.
(2) Years after amortization period.--In the case of any
plan year beginning after the end of the amortization period,
section 302(a)(2)(A) of such Act and section 412(a)(2)(A) of
such Code shall apply to such plan, but the prefunding
balance as of the first day of the first of such years under
section 303(f) of such Act and section 430(f) of such Code
shall be zero.
(3) Definitions.--For purposes of this section--
(A) Unfunded liability.--The term ``unfunded liability''
means the unfunded accrued liability under the plan,
determined under the unit credit funding method.
(B) Amortization period.--The term ``amortization period''
means the 20-plan year period beginning with the first
applicable plan year.
(4) Other rules.--In determining the minimum required
contribution and amortization amount under this subsection--
(A) the provisions of section 302(c)(3) of such Act and
section 412(c)(3) of such Code, as in effect before the date
of enactment of this section, shall apply,
(B) the rate of interest under section 302(b) of such Act
and section 412(b) of such Code, as so in effect, shall be
used for all calculations requiring an interest rate, and
(C) the value of plan assets shall be equal to their fair
market value.
(5) Special rule for certain plan spinoffs.--For purposes
of subsection (a), if, with respect to any eligible plan to
which this subsection applies--
(A) any applicable plan year includes the date of the
enactment of this Act,
(B) a plan was spun off from the eligible plan during the
plan year but before such date of enactment,
the minimum required contribution under subsection (a)(1) for
the eligible plan for such applicable plan year shall be
determined as if the plans were a single plan for that plan
year (based on the full 12-month plan year in effect prior to
the spin-off). The employer shall designate the allocation of
the minimum required contribution between such plans for the
applicable plan year and direct the appropriate reallocation
between the plans of any contributions for the applicable
plan year.
(e) Funding Standard Account and Prefunding Balance.--Any
charge or credit in the funding standard account under
section 302 of such Act or section 412 of such Code, and any
prefunding balance under section 303 of such Act or section
430 of such Code, as of the day before the first day of the
first applicable plan year, shall be reduced to zero.
(f) Amendments to Other Provisions.--
(1) Qualification requirement.--Section 401(a)(36) of the
Internal Revenue Code of 1986, as added by section 402 of
this Act, is amended by adding at the end the following:
``This paragraph shall also apply to any plan during any
period during which an amortization schedule under section
403 of the Pension Security and Transparency Act of 2005 is
in effect.''
(2) PBGC liability limited.--Section 4022 of the Employee
Retirement Income Security Act of 1974, as amended by this
Act, is amended by adding at the end the following new
subsection:
``(h) Special Rule for Plans Electing Certain Funding
Requirements.--During any period in which an election by a
plan under section 403 of the Pension Security and
Transparency Act of 2005 is in effect, then this section and
section 4044(a)(3) shall be applied by treating the first day
of the first applicable plan year as the termination date of
the plan. This subsection shall not apply to any plan for
which an election under section 403(h) of such Act is in
effect.''.
(3) Limitation on deductions under certain plans.--Section
404(a)(7)(C)(iii) of the Internal Revenue Code of 1986, as
added by this Act, is amended by adding at the end the
following new sentence: ``This clause shall also apply to any
plan for a plan year if an election under section 403 of the
Pension Security and Transparency Act of 2005 is in effect
for such year.''
(4) Notice.--In the case of a plan amendment adopted in
order to comply with this section, any notice required under
section 204(h) of such Act or section 4980F(e) of such Code
shall be provided within 15 days of the effective date of
such plan amendment. This subsection shall not apply to any
plan unless such plan is maintained pursuant to one or more
collective bargaining agreements between employee
representatives and 1 or more employers.
(g) Special Rules for Termination of Eligible Plans.--
During any period an election is in effect under this section
with respect to an eligible plan, the Pension Benefit
Guaranty Corporation shall, before it seeks or approves a
termination of such plan under section 4041(c) or 4042 of the
Employee Retirement Income Security Act of 1974--
(1) make a determination under section 4041(c)(4) or
4042(i) of such Act whether the termination would be
necessary if the Secretary of the Treasury were to enter into
an agreement under section 4047(a) of such Act which provides
an alternative funding agreement to replace the amortization
schedule under this section, and
(2) if the Corporation determines such an agreement would
make such termination unnecessary, take all necessary actions
to ensure the agreement is entered into.
The Pension Benefit Guaranty Corporation shall make the
determination under paragraph (1) within 90 days of receiving
all information needed in connection with a request for a
termination (or if no such request is made, within 90 days of
consideration of the termination by the Corporation).
(h) Certain Benefit Accruals and Increases Allowed if
Additional Contributions Made To Cover Costs.--
(1) In general.--If an employer elects the application of
this subsection--
(A) the requirements of paragraphs (2) and (3) of
subsection (b) shall not apply with respect to any eligible
plan maintained by the employer and specified in the
election, and
(B) the minimum required contribution under subsection (d)
for any plan year with respect to the plan shall be increased
by the amounts described in paragraphs (2) and (3).
Any liabilities and assets taken into account under this
subsection shall not be taken into account in determining the
unfunded liability of the plan for purposes of subsection
(d).
(2) Current funding of accruals and increases.--The amount
determined under this paragraph for any plan year is the
target normal cost which would occur under section 303(b) of
such Act and 430(b) of such Code if--
(A) any benefit accrual, or benefit increase taking effect,
during the plan year by reason of this subsection were
treated as having been accrued or earned during the plan
year, and
(B) the plan were treated as if it were in at-risk status.
(3) Funding must be maintained.--The amount determined
under this paragraph for any plan year is the amount of any
increase in the shortfall amortization charge which would
occur under section 303(c) of such Act and 430(c) of such
Code if--
(A) the funding target were determined by only taking into
account benefits to which paragraph (2) applied for preceding
plan years,
(B) the only assets taken into account were the
contributions required under this paragraph and paragraph (2)
for preceding plan years (and any earnings thereon),
(C) the amortization period included only the plan year,
(D) the transition rule under section 303(c)(4)(B) of such
Act and section 430(c)(4)(B) of such Code did not apply, and
(E) the plan were treated as if it were in at-risk status.
(4) Special rules for years before 2007.--Notwithstanding
any other provision of this Act, in the case of an applicable
plan year of an eligible plan to which this subsection
applies which begins before January 1, 2007, in determining
the amounts described in paragraphs (2) and (3) for such plan
year--
(A) the provisions of, and amendments made by, sections
101, 102, 111, and 112 shall apply to such plan year, except
that
(B) the interest rate used under section 303 of such Act
and section 430 of such Code for purposes of applying
paragraphs (2) and (3) to such plan year shall be the
interest rate determined under section 302(b)(5) of such Act
and section 412(b)(5) of such Code, as in effect for plan
years beginning in 2005.
(5) Election out of section.--An employer maintaining an
eligible plan to which this subsection applies may make a
one-time election with respect to any applicable plan year
not to have this section apply to such plan year and all
subsequent plan years. Subject to subsection (d)(2), the
minimum required contribution under section 303 of such Act
and 430 of such Code for all such plan years shall be
determined without regard to this section.
(i) Exclusion of Certain Employees From Minimum Coverage
Requirements.--
(1) In general.--Section 410(b)(3) of such Code is amended
by striking the last sentence and inserting the following:
``For purposes of subparagraph (B), management pilots who are
not represented in accordance with title II of the Railway
Labor Act shall be treated as covered by a collective
bargaining agreement described in such subparagraph if the
management pilots manage the flight operations of air pilots
who are so represented and the management pilots are,
pursuant to the terms of the agreement, included in the group
of employees benefitting under the trust described in such
subparagraph. Subparagraph (B) shall not apply in the case of
a plan which provides contributions or benefits for employees
whose principal duties are not customarily performed aboard
an aircraft in flight (other than management pilots described
in the preceding sentence).''
(2) Effective date.--The amendment made by this subsection
shall apply to years beginning before, on, or after the date
of the enactment of this Act.
(j) Effective Date.--Except as otherwise provided in this
section, the amendments made by this section shall apply to
plan years ending after the date of the enactment of this
Act.
Strike title VII of the bill and insert the the following:
[[Page H6165]]
TITLE VII--TREATMENT OF CASH BALANCE AND OTHER HYBRID DEFINED BENEFIT
PENSION PLANS
SEC. 701. PROSPECTIVE APPLICATION OF AGE DISCRIMINATION,
CONVERSION, AND PRESENT VALUE ASSUMPTION RULES.
(a) Application of Age Discrimination Prohibitions.--
(1) Amendment of erisa.--Section 204(b) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1054(b)) is
amended by adding at the end the following:
``(5) Special rules for cash balance and other hybrid
defined benefit plans.--
``(A) In general.--A qualified cash balance plan shall not
be treated as violating the requirements of paragraph (1)(H)
merely because it may reasonably be expected that the period
over which interest credits will be made to a participant's
accumulation account (or its equivalent) is longer for a
younger participant. This paragraph shall not apply to any
plan if the rate of any pay credit or interest credit to such
an account under the plan decreases by reason of the
participant's attainment of any age.
``(B) Qualified cash balance plan.--For purposes of this
paragraph--
``(i) In general.--The term `qualified cash balance plan'
means a cash balance plan which meets the vesting requirement
under clause (ii) and the interest credit requirement under
clause (iii).
``(ii) Vesting requirements.--A plan meets the requirements
of this clause if an employee who has completed at least 3
years of service has a nonforfeitable right to 100 percent of
the employee's accrued benefit derived from employer
contributions.
``(iii) Interest credits.--A plan meets the requirements of
this clause if the terms of the plan provide that any
interest credit (or equivalent amount) for any plan year
shall be at a rate which--
``(I) is not less than the applicable Federal mid-term
interest rate (as determined under section 1274(d)(1) of the
Internal Revenue Code of 1986), and
``(II) is not greater than the greater of the rate
determined under subclause (I) or a rate equal to the rate of
interest on amounts invested conservatively in long-term
investment grade corporate bonds.
``(iv) Determination of rates.--For purposes of clause
(iii)(II), the rate of interest on amounts invested
conservatively in long-term investment grade corporate bonds
shall be determined by the Secretary of the Treasury on the
basis of 2 or more indices that are selected periodically by
the Secretary of the Treasury. The Secretary of the Treasury
shall make publicly available the indices and methodology
used to determine the rate.
``(v) Variable rate of interest.--If the interest credit
rate under the plan is a variable rate, the plan shall
provide that, upon the termination of the plan, the rate of
interest used to determine accrued benefits under the plan
shall be equal to the average of the rates of interest used
under the plan during the 5-year period ending on the
termination date.
``(C) Cash balance plan.--For purposes of this paragraph,
the term `cash balance plan' means a defined benefit plan
under which--
``(i) the accrued benefit is determined by reference to the
balance of a hypothetical accumulation account, and
``(ii) pay credits and interest credits are credited to
such account.
``(D) Regulations to include similar or other hybrid
plans.--
``(i) Cash balance plan.--The Secretary of the Treasury
shall issue regulations which include in the definition of
cash balance plan any defined benefit plan (or any portion of
such a plan) which has an effect similar to a cash balance
plan. Such regulations may provide that if a plan sponsor
represents in communications to participants and
beneficiaries that a plan amendment results in a plan being
described in the preceding sentence, such plan shall be
treated as a cash balance plan.
``(ii) Qualified cash balance plan.--The Secretary of the
Treasury may in the regulations issued under clause (i)
provide for the treatment of a cash balance plan as a
qualified cash balance plan in cases where the cash balance
plan has an effect similar to the qualified cash balance
plan.''.
(2) Age discrimination in employment act.--Section 4(i)(2)
of the Age Discrimination of Employment Act of 1967 (29
U.S.C. 623(i)(2)) is amended--
(A) by inserting ``(A)'' after ``(2)'', and
(B) by adding at the end the following new subparagraph:
``(B) A defined benefit plan which is treated as a
qualified cash balance plan for purposes of section 204(b)(5)
of the Employee Retirement Income Security Act of 1974 shall
not be treated as violating the requirements of paragraph
(1)(A) merely because it may reasonably be expected that the
period over which interest credits will be made under the
plan to a participant's accumulation account (or its
equivalent) is longer for a younger participant. This
subparagraph shall not apply to any plan if the rate of any
pay credit or interest credit to such an account under the
plan decreases by reason of the participant's attainment of
any age.''.
(3) Amendment of internal revenue code.--Section 411(b) of
the Internal Revenue Code of 1986 (relating to accrued
benefit requirements) is amended by adding at the end the
following:
``(5) Special rules for cash balance and other hybrid
defined benefit plans.--
``(A) In general.--A qualified cash balance plan shall not
be treated as violating the requirements of paragraph (1)(H)
merely because it may reasonably be expected that the period
over which interest credits will be made to a participant's
accumulation account (or its equivalent) is longer for a
younger participant. This paragraph shall not apply to any
plan if the rate of any pay credit or interest credit to such
an account under the plan decreases by reason of the
participant's attainment of any age.
``(B) Qualified cash balance plan.--For purposes of this
paragraph--
``(i) In general.--The term `qualified cash balance plan'
means a cash balance plan which meets the vesting requirement
under clause (ii) and the interest credit requirement under
clause (iii).
``(ii) Vesting requirements.--A plan meets the requirements
of this clause if an employee who has completed at least 3
years of service has a nonforfeitable right to 100 percent of
the employee's accrued benefit derived from employer
contributions.
``(iii) Interest credits.--A plan meets the requirements of
this clause if the terms of the plan provide that any
interest credit (or equivalent amount) for any plan year
shall be at a rate which--
``(I) is not less than the applicable Federal mid-term
interest rate (as determined under section 1274(d)(1)), and
``(II) is not greater than the greater of the rate
determined under subclause (I) or a rate equal to the rate of
interest on amounts invested conservatively in long-term
investment grade corporate bonds.
``(iv) Determination of rates.--For purposes of clause
(iii)(II), the rate of interest on amounts invested
conservatively in long-term investment grade corporate bonds
shall be determined by the Secretary on the basis of 2 or
more indices that are selected periodically by the Secretary.
The Secretary shall make publicly available the indices and
methodology used to determine the rate.
``(v) Variable rate of interest.--If the interest credit
rate under the plan is a variable rate, the plan shall
provide that, upon the termination of the plan, the rate of
interest used to determine accrued benefits under the plan
shall be equal to the average of the rates of interest used
under the plan during the 5-year period ending on the
termination date.
``(C) Cash balance plan.--For purposes of this paragraph,
the term `cash balance plan' means a defined benefit plan
under which--
``(i) the accrued benefit is determined by reference to the
balance of a hypothetical accumulation account, and
``(ii) pay credits and interest credits are credited to
such account.
``(D) Regulations to include similar or other hybrid
plans.--
``(i) Cash balance plan.--The Secretary shall issue
regulations which include in the definition of cash balance
plan any defined benefit plan (or any portion of such a plan)
which has an effect similar to a cash balance plan. Such
regulations may provide that if a plan sponsor represents in
communications to participants and beneficiaries that a plan
amendment results in a plan being described in the preceding
sentence, such plan shall be treated as a cash balance plan.
``(ii) Qualified cash balance plan.--The Secretary may in
the regulations issued under clause (i) provide for the
treatment of a cash balance plan as a qualified cash balance
plan in cases where the cash balance plan has an effect
similar to the qualified cash balance plan.''.
(b) Rules Applicable to Accrued Benefits Under Converted
Plans.--
(1) Amendment of erisa.--Section 204(g) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)) is
amended by adding at the end the following new paragraph:
``(6) Treatment of conversions to cash balance or other
hybrid plans.--
``(A) In general.--For purposes of this subsection, an
applicable plan amendment shall be treated as reducing the
accrued benefit of a participant if, under the terms of the
plan as in effect after the amendment, the accrued benefit of
any participant who was a participant as of the effective
date of the amendment may at any time be less than the
accrued benefit determined under the method under
subparagraph (B), (C), or (D) which is specified in the plan
and applies uniformly to all participants. An applicable plan
amendment shall in no event be treated as meeting the
requirements of any such subparagraph if the conversion
described in subparagraph (G)(i) is into a cash balance plan
other than a qualified cash balance plan (as defined in
subsection (b)(5)(B)).
``(B) No wearaway.--
``(i) In general.--The accrued benefit determined under
this subparagraph is the sum of--
``(I) the participant's accrued benefit for years of
service before the effective date of the amendment,
determined under the terms of the plan as in effect before
the amendment, plus
``(II) except as provided in clause (ii), the participant's
accrued benefit for years of service after the effective date
of the amendment, determined under the terms of the plan as
in effect after the amendment.
``(ii) Required amounts for certain periods.--
Notwithstanding clause (i)(II), the plan shall provide that
either--
``(I) the accrued benefit of all participants for each of
the first 5 plan years to which the amendment applies shall
be equal to the greater of the accrued benefit determined
[[Page H6166]]
under the terms of the plan as in effect both before and
after the amendment, or
``(II) the accrued benefit for periods after the effective
date of the amendment of all participants who, as of the
effective date of the amendment, had attained the age of 40
and had a combined age and years of service under the plan of
not less than 55 shall be determined under either of the
methods described in clause (iii) which is selected by the
plan and which is specified in the amendment.
``(iii) Applicable method.--For purposes of clause
(ii)(II), the plan shall select 1 of the following methods:
``(I) The accrued benefit shall be equal to the greater of
the accrued benefit determined under the terms of the plan as
in effect both before and after the amendment.
``(II) At the election of the participant, the accrued
benefit shall be determined under the terms of the plan as in
effect either before or after the amendment.
``(C) Greater of old or new or election of either.--The
accrued benefit determined under this subparagraph is the
accrued benefit determined under 1 of the following methods
which is selected by the plan and which is specified in the
amendment:
``(i) The accrued benefit shall be equal to the greater of
the accrued benefit determined under the terms of the plan as
in effect both before and after the amendment.
``(ii) At the election of the participant, the accrued
benefit shall be determined under the terms of the plan as in
effect either before or after the amendment.
``(D) Method prescribed by secretary.--The accrued benefit
determined under this subparagraph shall be determined under
regulations prescribed by the Secretary which are consistent
with the purposes of this paragraph and which may require a
plan to provide a credit of additional amounts or increases
in initial account balances in amounts substantially
equivalent to the benefits that would be required to be
provided to meet the requirements of subparagraphs (B) or
(C).
``(E) Inclusion of prior accrued benefit into initial
account balance.--
``(i) In general.--If, for purposes of subparagraphs (B),
(C), or (D), an applicable plan amendment provides that an
amount will be initially credited to a participant's
accumulation account (or its equivalent) on the effective
date of the amendment with respect to the participant's
accrued benefit for periods before such date, the
requirements of such subparagraph shall be treated as met
with respect to such accrued benefit if the amount initially
credited is not less than the present value of the
participant's accrued benefit determined by using the
applicable mortality table and the lower of the applicable
interest rate under section 205(g)(3)(A), or the interest
rate used to credit interest under the plan, as of such date.
``(ii) Adjustments for certain subsidized benefits.--For
purposes of subparagraph (B), if any early retirement benefit
or retirement-type subsidy (within the meaning of paragraph
(6)(B)(i)) is not included in the initial account balance
under clause (i), the plan shall credit the accumulation
account with the amount of such benefit or subsidy for the
plan year in which the participant retires if, as of such
time, the participant has met the age, years of service, and
other requirements under the plan for entitlement to such
benefit or subsidy.
``(F) Requirements where participant offered choice.--If a
plan provides a participant with an election described in
subparagraph (B)(iii)(II) or (C)(ii), the following rules
shall apply:
``(i) Notice.--The plan shall not be treated as meeting the
requirements of either such subparagraph unless the plan
provides the participant a notice of the right to make such
election which includes information (meeting such
requirements as may be prescribed by the Secretary of the
Treasury)--
``(I) by which the participant may project benefits under
the formulas from which the participant may choose and may
model the impact of any such choice, and
``(II) with respect to circumstances under which a
participant may not receive the projected accrued benefits by
reason of a plan termination or otherwise.
``(ii) Significant reduction of rate of accrual.--The plan
shall provide that if, during any of the first 5 plan years
during which such an election is in effect, the plan adopts
an amendment which results in a significant reduction in the
rate of future benefit accrual (within the meaning of section
204(h)), the accrued benefit of the participant shall be
determined as if the participant had made the election which
resulted in the greatest accrued benefit.
``(iii) Benefits must not be contingent on election.--The
plan shall not be treated as meeting the requirements of
either such subparagraph if any other benefit is conditioned
(directly or indirectly) on such election.
``(G) Applicable plan amendment.--For purposes of this
paragraph--
``(i) In general.--The term `applicable plan amendment'
means an amendment to a defined benefit plan which has the
effect of converting the plan to a cash balance plan.
``(ii) Special rule for coordinated benefits.--If the
benefits of 2 or more defined benefit plans established or
maintained by an employer are coordinated in such a manner as
to have the effect of the adoption of an amendment described
in clause (i), the sponsor of the defined benefit plan or
plans providing for such coordination shall be treated as
having adopted such a plan amendment as of the date such
coordination begins.
``(iii) Multiple amendments.--The Secretary of the Treasury
shall issue regulations to prevent the avoidance of the
purposes of this paragraph through the use of 2 or more plan
amendments rather than a single amendment.
``(iv) Cash balance plan.--For purposes of this paragraph,
the term `cash balance plan' has the meaning given such term
by subsection (b)(5)(C).
``(v) Coordination with accrual rules.--If a plan amendment
is treated as meeting the requirements of this paragraph with
respect to any participant because such participant is
eligible to continue to accrue benefits in the same manner as
under the terms of the plan in effect before the amendment,
the Secretary of the Treasury shall prescribe regulations
under which the plan shall not be treated as failing to meet
the requirements of subparagraph (A), (B), or (C) of section
204(b)(1) if the requirements of this paragraph are met.
``(H) Application of certain rules to early-retirement
benefits.--Rules similar to the rules of clauses (i), (ii),
and (iii) of subparagraph (B) and subparagraph (C) shall
apply in the case of any early retirement benefit or
retirement-type subsidy (within the meaning of section
204(g)(2)(A)).''.
(2) Amendment of internal revenue code.--Section 411(d) of
the Internal Revenue Code of 1986 (relating to special rules)
is amended by adding at the end the following new paragraph:
``(7) Treatment of conversions to cash balance or other
hybrid plans.--
``(A) In general.--For purposes of paragraph (6), an
applicable plan amendment shall be treated as reducing the
accrued benefit of a participant if, under the terms of the
plan as in effect after the amendment, the accrued benefit of
any participant who was a participant as of the effective
date of the amendment may at any time be less than the
accrued benefit determined under the method under
subparagraph (B), (C), or (D) which is specified in the plan
and applies uniformly to all participants. An applicable plan
amendment shall in no event be treated as meeting the
requirements of any such subparagraph if the conversion
described in subparagraph (G)(i) is into a cash balance plan
other than a qualified cash balance plan (as defined in
subsection (b)(5)(B)).
``(B) No wearaway.--
``(i) In general.--The accrued benefit determined under
this subparagraph is the sum of--
``(I) the participant's accrued benefit for years of
service before the effective date of the amendment,
determined under the terms of the plan as in effect before
the amendment, plus
``(II) except as provided in clause (ii), the participant's
accrued benefit for years of service after the effective date
of the amendment, determined under the terms of the plan as
in effect after the amendment.
A similar rule shall apply in the case of any early
retirement benefit or retirement-type subsidy (within the
meaning of section 411(d)(6)(B)(i)).
``(ii) Required amounts for certain periods.--
Notwithstanding clause (i)(II), the plan shall provide that
either--
``(I) the accrued benefit of all participants for each of
the first 5 plan years to which the amendment applies shall
be equal to the greater of the accrued benefit determined
under the terms of the plan as in effect both before and
after the amendment, or
``(II) the accrued benefit for periods after the effective
date of the amendment of all participants who, as of the
effective date of the amendment, had attained the age of 40
and had a combined age and years of service under the plan of
not less than 55 shall be determined under either of the
methods described in clause (iii) which is selected by the
plan and which is specified in the amendment.
``(iii) Applicable method.--For purposes of clause
(ii)(II), the plan shall select 1 of the following methods:
``(I) The accrued benefit shall be equal to the greater of
the accrued benefit determined under the terms of the plan as
in effect both before and after the amendment.
``(II) At the election of the participant, the accrued
benefit shall be determined under the terms of the plan as in
effect either before or after the amendment.
``(C) Greater of old or new or election of either.--The
accrued benefit determined under this subparagraph is the
accrued benefit determined under 1 of the following methods
which is selected by the plan and which is specified in the
amendment:
``(i) The accrued benefit shall be equal to the greater of
the accrued benefit determined under the terms of the plan as
in effect both before and after the amendment.
``(ii) At the election of the participant, the accrued
benefit shall be determined under the terms of the plan as in
effect either before or after the amendment.
``(D) Method prescribed by secretary.--The accrued benefit
determined under this subparagraph shall be determined under
regulations prescribed by the Secretary which are consistent
with the purposes of this paragraph and which may require a
plan to provide a credit of additional amounts or increases
in initial account balances in amounts substantially
equivalent to the benefits that would be required to be
provided to meet the requirements of subparagraphs (B) or
(C).
[[Page H6167]]
``(E) Inclusion of prior accrued benefit into initial
account balance.--
``(i) In general.--If, for purposes of subparagraphs (B),
(C), or (D), an applicable plan amendment provides that an
amount will be initially credited to a participant's
accumulation account (or its equivalent) on the effective
date of the amendment with respect to the participant's
accrued benefit for periods before such date, the
requirements of such subparagraph shall be treated as met
with respect to such accrued benefit if the amount initially
credited is not less than the present value of the
participant's accrued benefit determined by using the
applicable mortality table and the lower of the applicable
interest rate under section 417(e)(3)(A), or the interest
rate used to credit interest under the plan, as of such date.
``(ii) Adjustments for certain subsidized benefits.--For
purposes of subparagraph (B), if any early retirement benefit
or retirement-type subsidy (within the meaning of paragraph
(6)(B)(i)) is not included in the initial account balance
under clause (i), the plan shall credit the accumulation
account with the amount of such benefit or subsidy for the
plan year in which the participant retires if, as of such
time, the participant has met the age, years of service, and
other requirements under the plan for entitlement to such
benefit or subsidy.
``(F) Requirements where participant offered choice.--If a
plan provides a participant with an election described in
subparagraph (B)(iii)(II) or (C)(ii), the following rules
shall apply:
``(i) Notice.--The plan shall not be treated as meeting the
requirements of either such subparagraph unless the plan
provides the participant a notice of the right to make such
election which includes information (meeting such
requirements as may be prescribed by the Secretary)--
``(I) by which the participant may project benefits under
the formulas from which the participant may choose and may
model the impact of any such choice, and
``(II) with respect to circumstances under which a
participant may not receive the projected accrued benefits by
reason of a plan termination or otherwise.
``(ii) Significant reduction of rate of accrual.--The plan
shall provide that if, during any of the first 5 plan years
during which such an election is in effect, the plan adopts
an amendment which results in a significant reduction in the
rate of future benefit accrual (within the meaning of section
4980F(e)), the accrued benefit of the participant shall be
determined as if the participant had made the election which
resulted in the greatest accrued benefit.
``(iii) Benefits must not be contingent on election.--The
plan shall not be treated as meeting the requirements of
either such subparagraph if any other benefit is conditioned
(directly or indirectly) on such election.
``(G) Applicable plan amendment.--For purposes of this
paragraph--
``(i) In general.--The term `applicable plan amendment'
means an amendment to a defined benefit plan which has the
effect of converting the plan to a cash balance plan.
``(ii) Special rule for coordinated benefits.--If the
benefits of 2 or more defined benefit plans established or
maintained by an employer are coordinated in such a manner as
to have the effect of the adoption of an amendment described
in clause (i), the sponsor of the defined benefit plan or
plans providing for such coordination shall be treated as
having adopted such a plan amendment as of the date such
coordination begins.
``(iii) Multiple amendments.--The Secretary shall issue
regulations to prevent the avoidance of the purposes of this
paragraph through the use of 2 or more plan amendments rather
than a single amendment.
``(iv) Cash balance plan.--For purposes of this paragraph,
the term `cash balance plan' has the meaning given such term
by subsection (b)(5)(C).
``(v) Coordination with accrual and nondiscrimination
rules.--If a plan amendment is treated as meeting the
requirements of this paragraph with respect to any
participant because such participant is eligible to continue
to accrue benefits in the same manner as under the terms of
the plan in effect before the amendment, the Secretary shall
prescribe regulations under which--
``(I) the plan shall not be treated as failing to meet the
requirements of subparagraph (A), (B), or (C) of section
411(b)(1) if the requirements of this paragraph are met, and
``(II) the plan shall, subject to such terms and conditions
as may be provided in such regulations, not be treated as
failing to meet the requirements of section 401(a)(4) merely
because the plan provides any accrual or benefit which is
required to be provided under subparagraph (B), (C), or (D)
or because only participants as of the effective date of the
amendment are so eligible, except that this subclause shall
only apply if the plan met the requirements of section
401(a)(4) under the terms of the plan as in effect before the
amendment.
``(H) Application of certain rules to early-retirement
benefits.--Rules similar to the rules of clauses (i), (ii),
and (iii) of subparagraph (B) and subparagraph (C) shall
apply in the case of any early retirement benefit or
retirement-type subsidy (within the meaning of section
411(d)(6)(B)(i)).''.
(c) Assumptions Used in Computing Present Value of Accrued
Benefit.--
(1) Amendment of erisa.--Section 205(g)(3) of such Act (29
U.S.C. 1055(g)(3)), is amended--
(A) by striking ``or (B)'' in subparagraph (A)(i) and
inserting ``, (B), or (C)'', and
(B) by adding at the end the following new subparagraph:
``(C) Present value of accrued benefit under cash balance
plan.--Except as provided in regulations, in the case of a
qualified cash balance plan (as defined in section
204(g)(6)(B)), the present value of the accrued benefit of
any participant shall, for purposes of paragraphs (1) and
(2), be equal to the balance in the participant's
accumulation account (or its equivalent) as of the time the
present value determination is being made.''.
(2) Amendment of internal revenue code.--Section 417(e)(3)
of such Code, is amended--
(A) by striking ``or (B)'' in subparagraph (A)(i) and
inserting ``, (B), or (C)'', and
(B) by adding at the end the following new subparagraph:
``(C) Present value of accrued benefit under cash balance
plan.--Except as provided in regulations, in the case of a
qualified cash balance plan (as defined in section
411(d)(7)(B)), the present value of the accrued benefit of
any participant shall, for purposes of paragraphs (1) and
(2), be equal to the balance in the participant's
accumulation account (or its equivalent) as of the time the
present value determination is being made.''
(d) No Inference.--Nothing in the amendments made by this
section shall be construed to infer the proper treatment of
cash balance plans or conversions to cash balance plans under
sections 204(b)(1)(H) of the Employee Retirement Income
Security Act of 1974, 4(i)(1) of the Age Discrimination in
Employment Act of 1967, and 411(b)(1)(H) of the Internal
Revenue Code of 1986, as in effect before such amendments.
Mr. GEORGE MILLER of California (during the reading). Mr. Speaker, I
ask unanimous consent that the motion to recommit be considered as read
and printed in the Record.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from California?
Mr. THOMAS. Mr. Speaker, reserving the right to object, I know some
people complained about having only a number of hours to read the bill,
but this was just handed to me, and I am tempted to say that perhaps 30
seconds ought to be allowed, because it could have been handed anytime
during the debate. But I know you were very busy over there, so you
were only able to get it to us at the close of debate. We appreciate
that.
Mr. Speaker, I withdraw my reservation of objection.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from California?
There was no objection.
The SPEAKER pro tempore. The gentleman is recognized for 5 minutes.
Mr. GEORGE MILLER of California. Mr. Speaker, this motion does two
things. First, it sends the pension bill back to committee to include
all of the airline protection provisions that were included in the
Senate-passed pension bill. Second, it seeks to send back to the
committee to add the Senate-passed provisions providing for the
transition protections for older workers affected by cash balance
conversions.
Both of these are critical to protecting America's workers' pensions
and their retirement security. All across America, employees are
worried sick about their retirement nest egg. They have seen big
airlines like U.S. Air and United cut and run on their obligations to
pay promised benefits and are wondering if they are next.
The House bill protects Delta and Northwest and enables them to
extend their pension payments over 17 years at the plan's interest
rate. However, the bill only provides American and Continental a 10-
year payment and at a much lower interest rate, making their pension
payments much higher. We would extend the same period of time, work-out
time, for the airlines if they chose to provide for the freezing of
their plans.
The bill does nothing for airline pilots who are forced to retire at
age 60 and who received PBGC pensions reduced by 35 percent because of
their age. All airlines were hurt by 9/11 and the skyrocketing fuel
prices and the downturn in the economy.
It would be devastating to hundreds of thousands of workers across
the Nation if more airlines were permitted to dump their plans into the
PBGC. When this happens, the big losers are the employees. Look at what
happened to the pilots at United, for example. They had vested pension
benefits cut in half. The average pilot lost $1,270 a month. That is
why we offer these protections.
Finally, the motion would report back this pension bill to provide
for the
[[Page H6168]]
protection of older workers who are facing conversions in cash balance
plans. This means the older workers who the companies are now putting
on notice that they will lower their benefits will now get a substitute
plan called a cash balance plan.
Despite overwhelming votes in support of protecting older workers'
pensions in the House and Senate, Republican leadership has excluded
these vital transition protections. Many workers will lose hundreds of
dollars a month in expected retirement benefits. Many of these workers
will be in excess of 50 years of age, and it is highly unlikely they
will be able to recover the retirement benefits that they have been
counting on for many years, that they signed a contract for in exchange
for their labor with their employers.
Today, the Congress is getting ready to tell them they are not going
to make the employers live up to their agreements, and we are not going
to even provide a transition to soften the economic blow when those
agreements are changed.
Here is what AARP CEO William Novelli said about the backroom
Republican deal for older workers: ``AARP cannot support legislation
that would undermine the age discrimination laws and prevent the
reduction of pension benefits for older workers, thus discouraging
older workers from continuing to participate in the workforce,'' unless
they get a second job to make up for the loss of their retirement, of
course. ``Our members and older workers in general care a great detail
about these issues.'' That is why we brought this motion to recommit.
Again, time and again the House and Senate have voted to provide
these protections for older workers. We would have carried that message
to the conference committee, but we were not allowed into those
discussions and apparently the conference committee couldn't hear the
Members of this House on the bipartisan basis that voted overwhelmingly
to provide these protections, both to the airlines and to the older
workers.
Mr. Speaker, I yield back the balance of my time.
Mr. THOMAS. Mr. Speaker, I rise in opposition to the motion to
recommit.
The SPEAKER pro tempore. The gentleman is recognized for 5 minutes.
Mr. THOMAS. Mr. Speaker, I have in high regard those Members who
focus on issues which they are concerned about in the pension bill, and
I know that there are a number of sections that people could focus on
in terms of their concern about the bill. And I know it is absolutely,
totally a coincidence that one Member on this side of the aisle spoke
against the bill.
Yet, as I am going through this particular motion to recommit, page
after page after page refers to, you got it, the airline provisions. So
I am quite sure on the basis of wanting to go through a 1,000-page bill
to create a motion to recommit, that the fact that the one area that
appears to be a bit sensitive on this side of the aisle is what the
motion to recommit is all about.
I guess in that regard I hold in minimum high regard, on something as
important as this legislation, to get it on the books as quickly as we
can, that this motion to recommit is focused in a way, in my opinion,
to advance political interests rather than policy interests.
I guess I am just a little bit bewildered when the gentleman from
Ohio, the majority leader, handed me a letter, because as a conferee I
received a letter that said we want you in the areas of key concern to
be supportive of what we do in this pension bill.
There were two signatures on that letter. One was the majority
leader, the gentleman from Ohio. The other one was the senior Senator
from Massachusetts, Senator Kennedy, urging us to make sure key
provisions in the pension bill are preserved, because we want to
preserve those, and not the whole bill, or in fact send the Senate the
whole bill because Senator Kennedy will be supportive of this bill once
it is received in the Senate.
The idea that members of the conference don't know what is in it and
aren't supportive is absolutely and totally refuted by the signature of
the senior Senator from Massachusetts, Senator Kennedy.
Mr. Speaker, I yield to the majority leader, the gentleman from Ohio
(Mr. Boehner).
Mr. BOEHNER. Mr. Speaker, let me thank my colleague for yielding.
There is a very delicate balance in this bill. My colleague from
California talked about the airline provisions. I am going to talk
about one of the most important provisions in this bill, and that is
the protection for hybrid plans, or cash balance pension plans.
This was a very difficult issue in the House; it was a very difficult
issue in the conference. It has been worked out in a bipartisan way to
the satisfaction of those on the farthest on the left in the Senate and
the farthest on the right in the House. And to rewrite this provision
in a motion to recommit I think is irresponsible.
I would say to my colleagues who have worked on this bipartisan
pension bill for a long time, the balance of this bill is right. Let's
support the underlying bill and reject the motion to recommit.
Mrs. JACKSON-LEE of Texas. Mr. Speaker, I rise in support of the
Miller/Rangel Motion to Recommit with Instructions to Conferees on H.R.
4, the ``Pension Protection Act of 2005.'' I support the Miller/Rangel
motion for several reasons. Specifically, I agree that conferees should
be instructed to agree to the Senate provisions: (1) protecting older
workers' benefits in cash balance conversions; (2) ensuring that
airline pilots do not see unfair cuts to their PBGC benefits because of
the FAA's mandatory retirement rules and agree to the Senate provisions
on airlines; (3) designed to prevent pension plan dumping; (4) on
executive compensation and work to treat worker and executive pensions
equally.
AGREE TO THE SENATE PROVISIONS PROTECTING OLDER WORKERS' BENEFITS IN
CASH BALANCE CONVERSIONS
These provisions prohibit discrimination against older workers by the
practice of offsetting previously earned pension benefits against new
benefits under the plan, also known as ``wearaway'' of older worker
benefits. They also provide fair rules to protect workers' pensions in
conversions of traditional pension plans to cash balance pension plans.
In a recent study, the GAG found that, without these transition
protections, almost all workers could lose up to 50 percent of their
expected pension benefits in a cash balance conversion.
AGREE TO THE SENATE PROVISIONS THAT ENSURE THAT AIRLINE PILOTS DO NOT
SEE UNFAIR CUTS TO THEIR PBGC BENEFITS BECAUSE OF THE FAA's MANDATORY
RETIREMENT RULES
Under FAA rules, airline pilots are required to retire at age 60, and
if they retire earlier than age 60, they cannot go back to work once
they hit age 60. When a pilot pension plan is terminated and sent to
the PBGC, the PBGC considers age 65 to be the normal retirement age,
treats age 60 as an early retirement, and cuts pilots guaranteed
benefits as a result. These provisions would require the PBGC to treat
age 60 as the normal retirement age for pilots and adjust their
guaranteed benefits accordingly. The motion would limit this treatment
to those pension plans which were terminated after September 11, 2001.
It could come no sooner. United Airlines pilots are seeing their
pensions cut by tens of thousands of dollars each year under the PBGC
rules. Their retirement nest eggs have been decimated. They are hit
twice--once by the company's unfair dumping and again by the PBGC's
benefit reductions.
AGREE TO THE SENATE PROVISIONS ON AIRLINES
The airlines have been hurt by skyrocketing fuel prices and 9/11. It
would be devastating to hundreds of thousands of workers across the
nation if more airlines are permitted to dump their plans into the
PBGC. These provisions give airlines the ability to keep their plans
going by stretching out payments over 20 years instead of 7 years.
AGREE TO THE SENATE PROVISIONS DESIGNED TO PREVENT PENSION PLAN DUMPING
These provisions allow the PBGC and Treasury Secretary to enter into
an alternative funding agreement with an employer if its pension plan
is in danger of being terminated. If workers and retirees are facing
the destruction of their pension plans, Congress should give the PBGC
and Treasury Departments the flexibility to work out alternatives to
termination. If such alternatives to simply dumping a plan were
available during the United Airlines crisis, the largest pension
termination in history might have been averted.
AGREE TO THE SENATE PROVISIONS ON EXECUTIVE COMPENSATION AND WORK TO
TREAT WORKER AND EXECUTIVE PENSIONS EQUALLY
Under the House bill, workers see benefit restrictions when a pension
plan falls below 80 percent funding. Executives, on the other hand,
only see limited benefit restrictions much later--at less than 60
percent funding. The Senate bill achieves greater parity than the House
bill in how workers and executives are treated. Over the last several
years, we have seen repeated cases where executives have protected or
even enhanced their own
[[Page H6169]]
golden parachutes, while cutting or eliminating workers' pensions. It
is time for these unfair practices to end. If it is good enough for the
sailor, it is good enough for the captain.
CONCLUSION
For these reasons, I support the Motion to Recommit with Instructions
on H.R. 4 and urge my colleagues to support it also.
Mr. THOMAS. Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. Without objection, the previous question is
ordered on the motion to recommit.
There was no objection.
The SPEAKER pro tempore. The question is on the motion to recommit.
The question was taken; and the Speaker pro tempore announced that
the noes appeared to have it.
Mr. GEORGE MILLER of California. Mr. Speaker, on that I demand the
yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 and clause 9 of rule
XX, this 15-minute vote on the motion to recommit will be followed by
5-minute votes on passage of H.R. 4, if ordered, and suspending the
rules on H. Res. 844.
The vote was taken by electronic device, and there were--yeas 189,
nays 222, not voting 22, as follows:
[Roll No. 421]
YEAS--189
Abercrombie
Ackerman
Allen
Andrews
Baird
Baldwin
Barrow
Bean
Becerra
Berkley
Berman
Berry
Bishop (NY)
Blumenauer
Boren
Boswell
Boucher
Boyd
Brady (PA)
Brown (OH)
Brown, Corrine
Butterfield
Capps
Capuano
Cardin
Cardoza
Carnahan
Case
Chandler
Clay
Cleaver
Clyburn
Conyers
Cooper
Costa
Costello
Cramer
Crowley
Cuellar
Cummings
Davis (AL)
Davis (CA)
Davis (FL)
Davis (IL)
Davis (TN)
DeFazio
DeGette
Delahunt
DeLauro
Dicks
Doggett
Doyle
Edwards
Emanuel
Engel
Eshoo
Etheridge
Farr
Fattah
Filner
Ford
Frank (MA)
Gonzalez
Green, Al
Green, Gene
Grijalva
Gutierrez
Harman
Hastings (FL)
Herseth
Higgins
Hinchey
Hinojosa
Holden
Holt
Honda
Hooley
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kilpatrick (MI)
Kind
Kucinich
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lipinski
Lofgren, Zoe
Lowey
Lynch
Maloney
Markey
Marshall
Matheson
Matsui
McCarthy
McCollum (MN)
McDermott
McGovern
McIntyre
McNulty
Meek (FL)
Meeks (NY)
Melancon
Michaud
Millender-McDonald
Miller (NC)
Miller, George
Mollohan
Moore (KS)
Moore (WI)
Moran (VA)
Murtha
Nadler
Napolitano
Neal (MA)
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Paul
Pelosi
Peterson (MN)
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Ross
Rothman
Roybal-Allard
Ruppersberger
Rush
Ryan (OH)
Sabo
Sanchez, Linda T.
Sanchez, Loretta
Sanders
Schakowsky
Schiff
Schwartz (PA)
Scott (VA)
Serrano
Sherman
Skelton
Slaughter
Smith (WA)
Snyder
Solis
Spratt
Strickland
Stupak
Tanner
Tauscher
Taylor (MS)
Thompson (CA)
Thompson (MS)
Tierney
Towns
Udall (CO)
Udall (NM)
Van Hollen
Velazquez
Visclosky
Wasserman Schultz
Waters
Watson
Watt
Waxman
Weiner
Wexler
Woolsey
Wu
Wynn
NAYS--222
Aderholt
Akin
Alexander
Bachus
Baker
Barrett (SC)
Bartlett (MD)
Barton (TX)
Bass
Beauprez
Biggert
Bilbray
Bishop (GA)
Bishop (UT)
Blackburn
Blunt
Boehner
Bonilla
Bonner
Bono
Boozman
Boustany
Bradley (NH)
Brady (TX)
Brown (SC)
Brown-Waite, Ginny
Burgess
Burton (IN)
Calvert
Camp (MI)
Campbell (CA)
Cannon
Cantor
Capito
Carter
Castle
Chabot
Chocola
Cole (OK)
Conaway
Crenshaw
Cubin
Culberson
Davis (KY)
Davis, Tom
Dent
Diaz-Balart, L.
Diaz-Balart, M.
Dingell
Doolittle
Drake
Dreier
Duncan
Ehlers
Emerson
English (PA)
Everett
Feeney
Ferguson
Fitzpatrick (PA)
Flake
Foley
Forbes
Fortenberry
Fossella
Foxx
Franks (AZ)
Frelinghuysen
Gallegly
Garrett (NJ)
Gerlach
Gibbons
Gilchrest
Gillmor
Gingrey
Goode
Goodlatte
Granger
Graves
Green (WI)
Gutknecht
Hall
Harris
Hart
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Hensarling
Herger
Hobson
Hoekstra
Hostettler
Hulshof
Hunter
Hyde
Inglis (SC)
Issa
Jenkins
Jindal
Johnson (CT)
Johnson (IL)
Johnson, Sam
Keller
Kelly
Kennedy (MN)
King (IA)
King (NY)
Kingston
Kirk
Kline
Knollenberg
Kolbe
Kuhl (NY)
LaHood
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
LoBiondo
Lucas
Lungren, Daniel E.
Mack
Manzullo
Marchant
McCaul (TX)
McCotter
McCrery
McHenry
McHugh
McKeon
McMorris
Mica
Miller (FL)
Miller (MI)
Miller, Gary
Moran (KS)
Murphy
Musgrave
Myrick
Neugebauer
Ney
Norwood
Nunes
Nussle
Oberstar
Osborne
Otter
Pearce
Pence
Peterson (PA)
Petri
Pickering
Pitts
Platts
Poe
Pombo
Porter
Price (GA)
Pryce (OH)
Putnam
Radanovich
Ramstad
Regula
Rehberg
Reichert
Renzi
Reynolds
Rogers (AL)
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Royce
Ryan (WI)
Ryun (KS)
Saxton
Schmidt
Schwarz (MI)
Scott (GA)
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Smith (NJ)
Smith (TX)
Sodrel
Souder
Stearns
Sullivan
Sweeney
Tancredo
Taylor (NC)
Terry
Thomas
Thornberry
Tiahrt
Tiberi
Turner
Upton
Walden (OR)
Walsh
Wamp
Weldon (FL)
Weldon (PA)
Weller
Westmoreland
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Young (AK)
Young (FL)
NOT VOTING--22
Baca
Bilirakis
Boehlert
Buyer
Carson
Coble
Davis, Jo Ann
Deal (GA)
Evans
Gohmert
Gordon
Istook
Jones (NC)
Lewis (GA)
Linder
McKinney
Meehan
Northup
Oxley
Payne
Salazar
Stark
{time} 2327
Messrs. SAXTON, TAYLOR of North Carolina, DINGELL, FOLEY, BISHOP of
Georgia, and Miss McMORRIS changed their vote from ``yea'' to ``nay.''
Messrs. GENE GREEN of Texas, EMANUEL, WEXLER, CLEAVER, BROWN of Ohio,
and HOYER changed their vote from ``nay'' to ``yea.''
So the motion to instruct was rejected.
The result of the vote was announced as above recorded.
The SPEAKER pro tempore. The question is on the passage of the bill.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Recorded Vote
Mr. RANGEL. Mr. Speaker, I demand a recorded vote.
A recorded vote was ordered.
The SPEAKER pro tempore. This will be a 5-minute vote.
The vote was taken by electronic device, and there were--ayes 279,
noes 131, answered ``present'' 1, not voting 22, as follows:
[Roll No. 422]
AYES--279
Ackerman
Aderholt
Akin
Alexander
Bachus
Baker
Barrett (SC)
Barrow
Bartlett (MD)
Bass
Bean
Beauprez
Berry
Biggert
Bilbray
Bishop (GA)
Bishop (UT)
Blackburn
Blumenauer
Blunt
Boehner
Bonner
Bono
Boozman
Boren
Boswell
Boucher
Boustany
Boyd
Bradley (NH)
Brown (SC)
Brown-Waite, Ginny
Burton (IN)
Butterfield
Calvert
Camp (MI)
Campbell (CA)
Cannon
Cantor
Capito
Cardoza
Case
Castle
Chabot
Chandler
Chocola
Clay
Cleaver
Clyburn
Cole (OK)
Conyers
Cooper
Costa
Cramer
Crenshaw
Crowley
Cubin
Cuellar
Davis (AL)
Davis (KY)
Davis (TN)
Davis, Tom
DeFazio
Delahunt
Dent
Diaz-Balart, L.
Diaz-Balart, M.
Dicks
Dingell
Doolittle
Drake
Dreier
Duncan
Ehlers
Emanuel
Emerson
Engel
English (PA)
Everett
Feeney
Ferguson
Fitzpatrick (PA)
Foley
Forbes
Ford
Fortenberry
Fossella
Foxx
Franks (AZ)
Frelinghuysen
Gallegly
Garrett (NJ)
Gerlach
Gibbons
Gilchrest
Gillmor
Gingrey
Goode
Goodlatte
Granger
Graves
Green (WI)
Gutknecht
Harman
Harris
Hart
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Herseth
Higgins
Hobson
Hoekstra
Hooley
Hostettler
Hulshof
Hunter
Hyde
Inglis (SC)
Israel
Issa
Jefferson
Jenkins
Jindal
Johnson (CT)
Johnson (IL)
Kaptur
Keller
Kelly
Kennedy (MN)
Kildee
Kilpatrick (MI)
Kind
King (IA)
King (NY)
Kingston
Kirk
Kline
Knollenberg
Kolbe
Kuhl (NY)
LaHood
Latham
LaTourette
Leach
Levin
Lewis (CA)
Lewis (KY)
Lipinski
LoBiondo
Lucas
Lungren, Daniel E.
Lynch
Mack
Manzullo
Marchant
Marshall
Matheson
Matsui
McCarthy
McCollum (MN)
McCotter
McCrery
McHenry
McHugh
McIntyre
McKeon
McMorris
Meek (FL)
[[Page H6170]]
Meeks (NY)
Melancon
Mica
Miller (FL)
Miller (MI)
Miller, Gary
Moore (KS)
Moran (KS)
Murphy
Musgrave
Myrick
Ney
Norwood
Nunes
Nussle
Oberstar
Osborne
Otter
Pearce
Pence
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Porter
Price (GA)
Pryce (OH)
Putnam
Radanovich
Rahall
Ramstad
Regula
Rehberg
Reichert
Renzi
Reynolds
Rogers (AL)
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Ross
Rothman
Royce
Ruppersberger
Rush
Ryan (WI)
Ryun (KS)
Sabo
Saxton
Schmidt
Schwarz (MI)
Scott (GA)
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Shuster
Simmons
Simpson
Skelton
Smith (NJ)
Smith (TX)
Sodrel
Souder
Stearns
Strickland
Stupak
Sullivan
Sweeney
Tancredo
Tanner
Tauscher
Taylor (NC)
Terry
Thomas
Thompson (CA)
Thompson (MS)
Tiahrt
Tiberi
Towns
Turner
Udall (CO)
Upton
Velazquez
Walden (OR)
Walsh
Wamp
Weldon (FL)
Weldon (PA)
Weller
Westmoreland
Whitfield
Wicker
Wilson (NM)
Wilson (SC)
Wolf
Wu
Wynn
Young (AK)
Young (FL)
NOES--131
Abercrombie
Allen
Andrews
Baldwin
Barton (TX)
Becerra
Berkley
Berman
Bishop (NY)
Bonilla
Brady (PA)
Brady (TX)
Brown (OH)
Brown, Corrine
Burgess
Capps
Capuano
Cardin
Carnahan
Carter
Conaway
Costello
Culberson
Cummings
Davis (CA)
Davis (FL)
Davis (IL)
DeGette
DeLauro
Doggett
Doyle
Edwards
Eshoo
Etheridge
Farr
Fattah
Filner
Flake
Frank (MA)
Gonzalez
Green, Al
Green, Gene
Grijalva
Gutierrez
Hall
Hastings (FL)
Hensarling
Hinchey
Hinojosa
Holden
Holt
Honda
Hoyer
Inslee
Jackson (IL)
Jackson-Lee (TX)
Johnson, E. B.
Johnson, Sam
Jones (OH)
Kanjorski
Kennedy (RI)
Kucinich
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Lofgren, Zoe
Lowey
Maloney
Markey
McCaul (TX)
McDermott
McGovern
McNulty
Michaud
Millender-McDonald
Miller (NC)
Miller, George
Mollohan
Moore (WI)
Moran (VA)
Murtha
Nadler
Napolitano
Neal (MA)
Neugebauer
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Paul
Pelosi
Poe
Pomeroy
Price (NC)
Rangel
Reyes
Roybal-Allard
Ryan (OH)
Sanchez, Linda T.
Sanchez, Loretta
Sanders
Schakowsky
Schiff
Schwartz (PA)
Scott (VA)
Serrano
Sherman
Slaughter
Smith (WA)
Snyder
Solis
Spratt
Taylor (MS)
Thornberry
Tierney
Udall (NM)
Van Hollen
Visclosky
Wasserman Schultz
Waters
Watson
Watt
Waxman
Weiner
Wexler
Woolsey
ANSWERED ``PRESENT''--1
Baird
NOT VOTING--22
Baca
Bilirakis
Boehlert
Buyer
Carson
Coble
Davis, Jo Ann
Deal (GA)
Evans
Gohmert
Gordon
Istook
Jones (NC)
Lewis (GA)
Linder
McKinney
Meehan
Northup
Oxley
Payne
Salazar
Stark
Announcement by the Speaker Pro Tempore
The SPEAKER pro tempore (during the vote). Members are advised there
are 2 minutes remaining in this vote.
{time} 2334
Mr. HALL changed his vote from ``aye'' to ``no.''
So the bill was passed.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.
____________________