[Congressional Record Volume 160, Number 16 (Tuesday, January 28, 2014)]
[Senate]
[Pages S545-S554]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
COOPERATIVE AND SMALL EMPLOYER CHARITY PENSION FLEXIBILITY ACT
Mr. REID. Mr. President, I ask unanimous consent the Senate proceed
to
[[Page S546]]
Calendar No. 230, S. 1302; that the committee-reported substitute be
considered; the Harkin-Roberts substitute amendment which is at the
desk be agreed to; the committee-reported substitute, as amended, be
agreed to; the bill, as amended, be read a third time and passed, the
motions to reconsider be considered made and laid upon the table, with
no intervening action or debate; further, that if the Senate receives a
bill from the House that is identical to the text of S. 1302 as passed
by the Senate, then the House bill be read three times and passed with
no intervening action or debate.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senate proceeded to consider the bill (S. 1302) to amend the
Employee Retirement Income Security Act of 1974 and the Internal
Revenue Code of 1986 to provide for cooperative and small employer
charity pension plans, which had been reported from the Committee on
Health, Education, Labor, and Pensions, with an amendment to strike all
after the enacting clause and insert in lieu thereof the following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the
``Cooperative and Small Employer Charity Pension Flexibility
Act''.
(b) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Congressional findings and declarations of policy.
Sec. 3. Definition of cooperative and small employer charity pension
plans.
Sec. 4. Funding rules applicable to cooperative and small employer
charity pension plans.
Sec. 5. Transparency.
Sec. 6. Elections.
Sec. 7. Sponsor education and assistance.
Sec. 8. Effective date.
SEC. 2. CONGRESSIONAL FINDINGS AND DECLARATIONS OF POLICY.
Congress finds as follows:
(1) Defined benefit pension plans are a cost-effective way
for cooperative associations and charities to provide their
employees with economic security in retirement.
(2) Many cooperative associations and charitable
organizations are only able to provide their employees with
defined benefit pension plans because those organizations are
able to pool their resources using the multiple employer plan
structure.
(3) The pension funding rules should encourage cooperative
associations and charities to continue to provide their
employees with pension benefits.
SEC. 3. DEFINITION OF COOPERATIVE AND SMALL EMPLOYER CHARITY
PENSION PLANS.
(a) Amendment to ERISA.--Section 210 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1060) is
amended by adding at the end the following new subsection:
``(f) Cooperative and Small Employer Charity Pension
Plans.--
``(1) In general.--For purposes of this title, except as
provided in this subsection, a CSEC plan is an employee
pension benefit plan (other than a multiemployer plan) that
is a defined benefit plan--
``(A) to which section 104 of the Pension Protection Act of
2006 applies, without regard to--
``(i) section 104(a)(2) of such Act;
``(ii) the amendments to such section 104 by section 202(b)
of the Preservation of Access to Care for Medicare
Beneficiaries and Pension Relief Act of 2010; and
``(iii) paragraph (3)(B); or
``(B) that, as of January 1, 2013, was maintained by more
than one employer and all of the employers were organizations
described in section 501(c)(3) of the Internal Revenue Code
of 1986.
``(2) Aggregation.--All employers that are treated as a
single employer under subsection (b) or (c) of section 414 of
the Internal Revenue Code of 1986 shall be treated as a
single employer for purposes of determining if a plan was
maintained by more than one employer under paragraph
(1)(B).''.
(b) Amendment to Code.--Section 414 of the Internal Revenue
Code of 1986 is amended by adding at the end the following
new subsection:
``(y) Cooperative and Small Employer Charity Pension
Plans.--
``(1) In general.--For purposes of this title, except as
provided in this subsection, a CSEC plan is a defined benefit
plan (other than a multiemployer plan)--
``(A) to which section 104 of the Pension Protection Act of
2006 applies, without regard to--
``(i) section 104(a)(2) of such Act;
``(ii) the amendments to such section 104 by section 202(b)
of the Preservation of Access to Care for Medicare
Beneficiaries and Pension Relief Act of 2010; and
``(iii) paragraph (3)(B); or
``(B) that, as of January 1, 2013, was maintained by more
than one employer and all of the employers were organizations
described in section 501(c)(3).
``(2) Aggregation.--All employers that are treated as a
single employer under subsection (b) or (c) shall be treated
as a single employer for purposes of determining if a plan
was maintained by more than one employer under paragraph
(1)(B).''.
SEC. 4. FUNDING RULES APPLICABLE TO COOPERATIVE AND SMALL
EMPLOYER CHARITY PENSION PLANS.
(a) Amendments to ERISA.--
(1) Minimum funding standards under erisa.--Part 3 of title
I of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1081 et seq.) is amended by adding at the end the
following new section:
``SEC. 306. MINIMUM FUNDING STANDARDS.
``(a) General Rule.--For purposes of section 302, the term
`accumulated funding deficiency' for a CSEC plan means the
excess of the total charges to the funding standard account
for all plan years (beginning with the first plan year to
which section 302 applies) over the total credits to such
account for such years or, if less, the excess of the total
charges to the alternative minimum funding standard account
for such plan years over the total credits to such account
for such years.
``(b) Funding Standard Account.--
``(1) Account required.--Each plan to which this section
applies shall establish and maintain a funding standard
account. Such account shall be credited and charged solely as
provided in this section.
``(2) Charges to account.--For a plan year, the funding
standard account shall be charged with the sum of--
``(A) the normal cost of the plan for the plan year,
``(B) the amounts necessary to amortize in equal annual
installments (until fully amortized)--
``(i) in the case of a plan in existence on January 1,
1974, the unfunded past service liability under the plan on
the first day of the first plan year to which section 302
applies, over a period of 40 plan years,
``(ii) in the case of a plan which comes into existence
after January 1, 1974, but before the first day of the first
plan year beginning after December 31, 2013, the unfunded
past service liability under the plan on the first day of the
first plan year to which section 302 applies, over a period
of 30 plan years,
``(iii) in the case of a plan that is subject to section
303 for the last plan year beginning before January 1, 2014,
the sum of--
``(I) the plan's funding standard carryover balance and
prefunding balance (as such terms are defined in section
303(f)) as of the end of such plan year, and
``(II) the unfunded past service liability under the plan
for the first plan year beginning after December 31, 2013,
over a period of 15 years,
``(iv) 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,
``(v) separately, with respect to each plan year, the net
experience loss (if any) under the plan, over a period of 5
plan years, and
``(vi) separately, with respect to each plan year, the net
loss (if any) resulting from changes in actuarial assumptions
used under the plan, over a period of 10 plan years,
``(C) the amount necessary to amortize each waived funding
deficiency (within the meaning of section 302(c)(3)) for each
prior plan year in equal annual installments (until fully
amortized) over a period of 5 plan years,
``(D) the amount necessary to amortize in equal annual
installments (until fully amortized) over a period of 5 plan
years any amount credited to the funding standard account
under paragraph (3)(D), and
``(E) the amount necessary to amortize in equal annual
installments (until fully amortized) over a period of 20
years the contributions which would be required to be made
under the plan but for the provisions of section
302(c)(7)(A)(i)(I) (as in effect on the day before the
enactment of the Pension Protection Act of 2006).
``(3) Credits to account.--For a plan year, the funding
standard account shall be credited with the sum of--
``(A) the amount considered contributed by the employer to
or under the plan for the plan year,
``(B) the amount necessary to amortize in equal annual
installments (until fully amortized)--
``(i) separately, with respect to each plan year, the net
decrease (if any) in unfunded past service liability under
the plan arising from plan amendments adopted in such year,
over a period of 15 plan years,
``(ii) separately, with respect to each plan year, the net
experience gain (if any) under the plan, over a period of 5
plan years, and
``(iii) separately, with respect to each plan year, the net
gain (if any) resulting from changes in actuarial assumptions
used under the plan, over a period of 10 plan years,
``(C) the amount of the waived funding deficiency (within
the meaning of section 302(c)(3)) for the plan year,
``(D) in the case of a plan year for which the accumulated
funding deficiency is determined under the funding standard
account if such plan year follows a plan year for which such
deficiency was determined under the alternative minimum
funding standard, the excess (if any) of any debit balance in
the funding standard account (determined without regard to
this subparagraph) over any debit balance in the alternative
minimum funding standard account, and
``(E) for the first plan year beginning after December 31,
2013, in the case of a plan that is subject to section 303
for the last plan year beginning before January 1, 2014, the
sum of the plan's funding standard carryover balance and
prefunding balance (as such terms are defined in section
302(f)) as of the end of the last plan year beginning before
January 1, 2014.
``(4) Combining and offsetting amounts to be amortized.--
Under regulations prescribed
[[Page S547]]
by the Secretary of the Treasury, amounts required to be
amortized under paragraph (2) or paragraph (3), as the case
may be--
``(A) may be combined into one amount under such paragraph
to be amortized over a period determined on the basis of the
remaining amortization period for all items entering into
such combined amount, and
``(B) may be offset against amounts required to be
amortized under the other such paragraph, with the resulting
amount to be amortized over a period determined on the basis
of the remaining amortization periods for all items entering
into whichever of the two amounts being offset is the
greater.
``(5) Interest.--
``(A) In general.--Except as provided in subparagraph (B),
the funding standard account (and items therein) shall be
charged or credited (as determined under regulations
prescribed by the Secretary of the Treasury) with interest at
the appropriate rate consistent with the rate or rates of
interest used under the plan to determine costs.
``(B) Exception.--The interest rate used for purposes of
computing the amortization charge described in subsection
(b)(2)(C) or for purposes of any arrangement under subsection
(d) for any plan year shall be the greater of (i) 150 percent
of the Federal mid-term rate (as in effect under section 1274
of the Internal Revenue Code of 1986 for the 1st month of
such plan year), or (ii) the rate of interest determined
under subparagraph (A).
``(6) Amortization schedules in effect.--Amortization
schedules for amounts described in paragraphs (2) and (3)
that are in effect as of the last day of the last plan year
beginning before January 1, 2014, by reason of section 104 of
the Pension Protection Act of 2006 shall remain in effect
pursuant to their terms and this section, except that such
amounts shall not be amortized again under this section. In
the case of a plan that is subject to section 303 for the
last plan year beginning before January 1, 2014, any
amortization schedules and bases for plan years beginning
before such date shall be reduced to zero.
``(c) Special Rules.--
``(1) Determinations to be made under funding method.--For
purposes of this section, normal costs, accrued liability,
past service liabilities, and experience gains and losses
shall be determined under the funding method used to
determine costs under the plan.
``(2) Valuation of assets.--
``(A) In general.--For purposes of this section, the value
of the plan's assets shall be determined on the basis of any
reasonable actuarial method of valuation which takes into
account fair market value and which is permitted under
regulations prescribed by the Secretary of the Treasury.
``(B) Dedicated bond portfolio.--The Secretary of the
Treasury may by regulations provide that the value of any
dedicated bond portfolio of a plan shall be determined by
using the interest rate under section 302(b)(5) (as in effect
on the day before the enactment of the Pension Protection Act
of 2006).
``(3) Actuarial assumptions must be reasonable.--For
purposes of this section, all costs, liabilities, rates of
interest, and other factors under the plan shall be
determined on the basis of actuarial assumptions and
methods--
``(A) each of which is reasonable (taking into account the
experience of the plan and reasonable expectations) or which,
in the aggregate, result in a total contribution equivalent
to that which would be determined if each such assumption and
method were reasonable, and
``(B) which, in combination, offer the actuary's best
estimate of anticipated experience under the plan.
``(4) Treatment of certain changes as experience gain or
loss.--For purposes of this section, if--
``(A) a change in benefits under the Social Security Act or
in other retirement benefits created under Federal or State
law, or
``(B) a change in the definition of the term `wages' under
section 3121 of the Internal Revenue Code of 1986 or a change
in the amount of such wages taken into account under
regulations prescribed for purposes of section 401(a)(5) of
such Code,
results in an increase or decrease in accrued liability under
a plan, such increase or decrease shall be treated as an
experience loss or gain.
``(5) Funding method and plan year.--
``(A) Funding methods available.--All funding methods
available to CSEC plans under section 302 (as in effect on
the day before the enactment of the Pension Protection Act of
2006) shall continue to be available under this section.
``(B) Not affected by cessation of benefit accruals.--The
availability of any funding method, including all spread gain
funding methods, shall not be affected by whether benefit
accruals under a plan have ceased. Except as otherwise
provided in subparagraph (C) or in regulations prescribed by
the Secretary of the Treasury, if benefit accruals have
ceased under a plan, the spread gain funding methods may be
applied by amortizing over the average expected future lives
of all participants.
``(C) Minimum amount.--In the case of a plan amortizing
over the average expected future lives of all participants
pursuant to the second sentence of subparagraph (B), such
amortization amount for any plan year shall not be less than
the sum of--
``(i) the amount determined by amortizing, as of the first
year for which the plan amortizes over the average future
lives of all participants, the entire unfunded past service
liability in equal installments over 15 years, and
``(ii) the amount determined by amortizing any increase or
decrease in such unfunded past service liability in any
subsequent year, other than an increase or decrease
attributable to contributions or expected experience, in
equal installments over 15 years.
``(D) Changes.--If the funding method for a plan is
changed, the new funding method shall become the funding
method used to determine costs and liabilities under the plan
only if the change is approved by the Secretary of the
Treasury. The preceding sentence shall not apply to any
change made pursuant to, or permitted by, the second sentence
of subparagraph (B) if such change is made for the first plan
year beginning after December 31, 2013. Any such change may
be made without the approval of the Secretary of the
Treasury. If the plan year for a plan is changed, the new
plan year shall become the plan year for the plan only if the
change is approved by the Secretary of the Treasury.
``(E) Approval required for certain changes in assumptions
by certain single-employer plans subject to additional
funding requirement.--
``(i) In general.--No actuarial assumption (other than the
assumptions described in subsection (h)(3)) used to determine
the current liability for a plan to which this subparagraph
applies may be changed without the approval of the Secretary.
``(ii) Plans to which subparagraph applies.--This
subparagraph shall apply to a plan only if--
``(I) the plan is a CSEC plan,
``(II) the aggregate unfunded vested benefits as of the
close of the preceding plan year (as determined under section
4006(a)(3)(E)(iii)) of such plan and all other plans
maintained by the contributing sponsors (as defined in
section 4001(a)(13)) and members of such sponsors' controlled
groups (as defined in section 4001(a)(14)) which are covered
by title IV (disregarding plans with no unfunded vested
benefits) exceed $50,000,000, and
``(III) the change in assumptions (determined after taking
into account any changes in interest rate and mortality
table) results in a decrease in the funding shortfall of the
plan for the current plan year that exceeds $50,000,000, or
that exceeds $5,000,000 and that is 5 percent or more of the
current liability of the plan before such change.
``(6) Full funding.--If, as of the close of a plan year, a
plan would (without regard to this paragraph) have an
accumulated funding deficiency (determined without regard to
the alternative minimum funding standard account permitted
under subsection (e)) in excess of the full funding
limitation--
``(A) the funding standard account shall be credited with
the amount of such excess, and
``(B) all amounts described in paragraphs (2)(B), (C), and
(D) and (3)(B) of subsection (b) which are required to be
amortized shall be considered fully amortized for purposes of
such paragraphs.
``(7) Full-funding limitation.--For purposes of paragraph
(6), the term `full-funding limitation' means the excess (if
any) of--
``(A) the accrued liability (including normal cost) under
the plan (determined under the entry age normal funding
method if such accrued liability cannot be directly
calculated under the funding method used for the plan), over
``(B) the lesser of--
``(i) the fair market value of the plan's assets, or
``(ii) the value of such assets determined under paragraph
(2).
``(C) Minimum amount.--
``(i) In general.--In no event shall the full-funding
limitation determined under subparagraph (A) be less than the
excess (if any) of--
``(I) 90 percent of the current liability (determined
without regard to paragraph (4) of subsection (h)) of the
plan (including the expected increase in such current
liability due to benefits accruing during the plan year),
over
``(II) the value of the plan's assets determined under
paragraph (2).
``(ii) Assets.--For purposes of clause (i), assets shall
not be reduced by any credit balance in the funding standard
account.
``(8) Annual valuation.--
``(A) In general.--For purposes of this section, a
determination of experience gains and losses and a valuation
of the plan's liability shall be made not less frequently
than once every year, except that such determination shall be
made more frequently to the extent required in particular
cases under regulations prescribed by the Secretary of the
Treasury.
``(B) Valuation date.--
``(i) Current year.--Except as provided in clause (ii), the
valuation referred to in subparagraph (A) shall be made as of
a date within the plan year to which the valuation refers or
within one month prior to the beginning of such year.
``(ii) Use of prior year valuation.--The valuation referred
to in subparagraph (A) may be made as of a date within the
plan year prior to the year to which the valuation refers if,
as of such date, the value of the assets of the plan are not
less than 100 percent of the plan's current liability.
``(iii) Adjustments.--Information under clause (ii) shall,
in accordance with regulations, be actuarially adjusted to
reflect significant differences in participants.
``(iv) Limitation.--A change in funding method to use a
prior year valuation, as provided in clause (ii), may not be
made unless as of the valuation date within the prior plan
year, the value of the assets of the plan are not less than
125 percent of the plan's current liability.
``(9) Time when certain contributions deemed made.--For
purposes of this section, any contributions for a plan year
made by an employer during the period--
``(A) beginning on the day after the last day of such plan
year, and
``(B) ending on the day which is 8\1/2\ months after the
close of the plan year,
[[Page S548]]
shall be deemed to have been made on such last day.
``(10) Anticipation of benefit increases effective in the
future.--In determining projected benefits, the funding
method of a collectively bargained CSEC plan described in
section 413(a) of the Internal Revenue Code of 1986 (other
than a multiemployer plan) shall anticipate benefit increases
scheduled to take effect during the term of the collective
bargaining agreement applicable to the plan.
``(d) Extension of Amortization Periods.--The period of
years required to amortize any unfunded liability (described
in any clause of subsection (b)(2)(B)) of any plan may be
extended by the Secretary for a period of time (not in excess
of 10 years) if such Secretary determines that such extension
would carry out the purposes of this Act and provide adequate
protection for participants under the plan and their
beneficiaries, and if such Secretary determines that the
failure to permit such extension would result in--
``(1) a substantial risk to the voluntary continuation of
the plan, or
``(2) a substantial curtailment of pension benefit levels
or employee compensation.
``(e) Alternative Minimum Funding Standard.--
``(1) In general.--A CSEC plan which uses a funding method
that requires contributions in all years not less than those
required under the entry age normal funding method may
maintain an alternative minimum funding standard account for
any plan year. Such account shall be credited and charged
solely as provided in this subsection.
``(2) Charges and credits to account.--For a plan year the
alternative minimum funding standard account shall be--
``(A) charged with the sum of--
``(i) the lesser of normal cost under the funding method
used under the plan or normal cost determined under the unit
credit method,
``(ii) the excess, if any, of the present value of accrued
benefits under the plan over the fair market value of the
assets, and
``(iii) an amount equal to the excess (if any) of credits
to the alternative minimum standard account for all prior
plan years over charges to such account for all such years,
and
``(B) credited with the amount considered contributed by
the employer to or under the plan for the plan year.
``(3) Special rules.--The alternative minimum funding
standard account (and items therein) shall be charged or
credited with interest in the manner provided under
subsection (b)(5) with respect to the funding standard
account.
``(f) Quarterly Contributions Required.--
``(1) In general.--If a CSEC plan which has a funded
current liability percentage for the preceding plan year of
less than 100 percent fails to pay the full amount of a
required installment for the plan year, then the rate of
interest charged to the funding standard account under
subsection (b)(5) with respect to the amount of the
underpayment for the period of the underpayment shall be
equal to the greater of--
``(A) 175 percent of the Federal mid-term rate (as in
effect under section 1274 of the Internal Revenue Code of
1986 for the 1st month of such plan year), or
``(B) the rate of interest used under the plan in
determining costs.
``(2) Amount of underpayment, period of underpayment.--For
purposes of paragraph (1)--
``(A) Amount.--The amount of the underpayment shall be the
excess of--
``(i) the required installment, over
``(ii) the amount (if any) of the installment contributed
to or under the plan on or before the due date for the
installment.
``(B) Period of underpayment.--The period for which
interest is charged under this subsection with regard to any
portion of the underpayment shall run from the due date for
the installment to the date on which such portion is
contributed to or under the plan (determined without regard
to subsection (c)(9)).
``(C) Order of crediting contributions.--For purposes of
subparagraph (A)(ii), contributions shall be credited against
unpaid required installments in the order in which such
installments are required to be paid.
``(3) Number of required installments; due dates.--For
purposes of this subsection--
``(A) Payable in 4 installments.--There shall be 4 required
installments for each plan year.
``(B) Time for payment of installments.--
``In the case of the following required
installments: The due date is:
1st....................................... April 15
2nd....................................... July 15
3rd....................................... October 15
4th....................................... January 15 of the following
year.
``(4) Amount of required installment.--For purposes of this
subsection--
``(A) In general.--The amount of any required installment
shall be 25 percent of the required annual payment.
``(B) Required annual payment.--For purposes of
subparagraph (A), the term `required annual payment' means
the lesser of--
``(i) 90 percent of the amount required to be contributed
to or under the plan by the employer for the plan year under
section 302 (without regard to any waiver under subsection
(c) thereof), or
``(ii) 100 percent of the amount so required for the
preceding plan year.
Clause (ii) shall not apply if the preceding plan year was
not a year of 12 months.
``(5) Liquidity requirement.--
``(A) In general.--A plan to which this paragraph applies
shall be treated as failing to pay the full amount of any
required installment to the extent that the value of the
liquid assets paid in such installment is less than the
liquidity shortfall (whether or not such liquidity shortfall
exceeds the amount of such installment required to be paid
but for this paragraph).
``(B) Plans to which paragraph applies.--This paragraph
shall apply to a CSEC plan other than a plan described in
section 302(d)(6)(A) (as in effect on the day before the
enactment of the Pension Protection Act of 2006) which--
``(i) is required to pay installments under this subsection
for a plan year, and
``(ii) has a liquidity shortfall for any quarter during
such plan year.
``(C) Period of underpayment.--For purposes of paragraph
(1), any portion of an installment that is treated as not
paid under subparagraph (A) shall continue to be treated as
unpaid until the close of the quarter in which the due date
for such installment occurs.
``(D) Limitation on increase.--If the amount of any
required installment is increased by reason of subparagraph
(A), in no event shall such increase exceed the amount which,
when added to prior installments for the plan year, is
necessary to increase the funded current liability percentage
(taking into account the expected increase in current
liability due to benefits accruing during the plan year) to
100 percent.
``(E) Definitions.--For purposes of this paragraph:
``(i) Liquidity shortfall.--The term `liquidity shortfall'
means, with respect to any required installment, an amount
equal to the excess (as of the last day of the quarter for
which such installment is made) of the base amount with
respect to such quarter over the value (as of such last day)
of the plan's liquid assets.
``(ii) Base amount.--
``(I) In general.--The term `base amount' means, with
respect to any quarter, an amount equal to 3 times the sum of
the adjusted disbursements from the plan for the 12 months
ending on the last day of such quarter.
``(II) Special rule.--If the amount determined under
subclause (I) exceeds an amount equal to 2 times the sum of
the adjusted disbursements from the plan for the 36 months
ending on the last day of the quarter and an enrolled actuary
certifies to the satisfaction of the Secretary of the
Treasury that such excess is the result of nonrecurring
circumstances, the base amount with respect to such quarter
shall be determined without regard to amounts related to
those nonrecurring circumstances.
``(iii) Disbursements from the plan.--The term
`disbursements from the plan' means all disbursements from
the trust, including purchases of annuities, payments of
single sums and other benefits, and administrative expenses.
``(iv) Adjusted disbursements.--The term `adjusted
disbursements' means disbursements from the plan reduced by
the product of--
``(I) the plan's funded current liability percentage for
the plan year, and
``(II) the sum of the purchases of annuities, payments of
single sums, and such other disbursements as the Secretary of
the Treasury shall provide in regulations.
``(v) Liquid assets.--The term `liquid assets' means cash,
marketable securities and such other assets as specified by
the Secretary of the Treasury in regulations.
``(vi) Quarter.--The term `quarter' means, with respect to
any required installment, the 3-month period preceding the
month in which the due date for such installment occurs.
``(F) Regulations.--The Secretary of the Treasury may
prescribe such regulations as are necessary to carry out this
paragraph.
``(6) Fiscal years and short years.--
``(A) Fiscal years.--In applying this subsection to a plan
year beginning on any date other than January 1, there shall
be substituted for the months specified in this subsection,
the months which correspond thereto.
``(B) Short plan year.--This subsection shall be applied to
plan years of less than 12 months in accordance with
regulations prescribed by the Secretary of the Treasury.
``(g) Imposition of Lien Where Failure To Make Required
Contributions.--
``(1) In general.--In the case of a plan to which this
section applies, if--
``(A) any person fails to make a required installment under
subsection (f) or any other payment required under this
section before the due date for such installment or other
payment, and
``(B) the unpaid balance of such installment or other
payment (including interest), when added to the aggregate
unpaid balance of all preceding such installments or other
payments for which payment was not made before the due date
(including interest), exceeds $1,000,000,
then there shall be a lien in favor of the plan in the amount
determined under paragraph (3) upon all property and rights
to property, whether real or personal, belonging to such
person and any other person who is a member of the same
controlled group of which such person is a member.
``(2) Plans to which subsection applies.--This subsection
shall apply to a CSEC plan for any plan year for which the
funded current liability percentage of such plan is less than
100 percent. This subsection shall not apply to any plan to
which section 4021 does not apply (as such section is in
effect on the date of the enactment of the Retirement
Protection Act of 1994).
``(3) Amount of lien.--For purposes of paragraph (1), the
amount of the lien shall be equal to the aggregate unpaid
balance of required installments and other payments required
under this section (including interest)--
``(A) for plan years beginning after 1987, and
``(B) for which payment has not been made before the due
date.
``(4) Notice of failure; lien.--
[[Page S549]]
``(A) Notice of failure.--A person committing a failure
described in paragraph (1) shall notify the Pension Benefit
Guaranty Corporation of such failure within 10 days of the
due date for the required installment or other payment.
``(B) Period of lien.--The lien imposed by paragraph (1)
shall arise on the due date for the required installment or
other payment and shall continue until the last day of the
first plan year in which the plan ceases to be described in
paragraph (1)(B). Such lien shall continue to run without
regard to whether such plan continues to be described in
paragraph (2) during the period referred to in the preceding
sentence.
``(C) Certain rules to apply.--Any amount with respect to
which a lien is imposed under paragraph (1) shall be treated
as taxes due and owing the United States and rules similar to
the rules of subsections (c), (d), and (e) of section 4068
shall apply with respect to a lien imposed by subsection (a)
and the amount with respect to such lien.
``(5) Enforcement.--Any lien created under paragraph (1)
may be perfected and enforced only by the Pension Benefit
Guaranty Corporation, or at the direction of the Pension
Benefit Guaranty Corporation, by any contributing employer
(or any member of the controlled group of the contributing
employer).
``(6) Definitions.--For purposes of this subsection--
``(A) Due date; required installment.--The terms `due date'
and `required installment' have the meanings given such terms
by subsection (f), except that in the case of a payment other
than a required installment, the due date shall be the date
such payment is required to be made under this section.
``(B) Controlled group.--The term `controlled group' means
any group treated as a single employer under subsections (b),
(c), (m), and (o) of section 414 of the Internal Revenue Code
of 1986.
``(h) Current Liability.--For purposes of this section--
``(1) In general.--The term `current liability' means all
liabilities to employees and their beneficiaries under the
plan.
``(2) Treatment of unpredictable contingent event
benefits.--
``(A) In general.--For purposes of paragraph (1), any
unpredictable contingent event benefit shall not be taken
into account until the event on which the benefit is
contingent occurs.
``(B) Unpredictable contingent event benefit.--The term
`unpredictable contingent event benefit' means any benefit
contingent on an event other than--
``(i) age, service, compensation, death, or disability, or
``(ii) an event which is reasonably and reliably
predictable (as determined by the Secretary of the Treasury).
``(3) Interest rate and mortality assumptions used.--
``(A) Interest rate.--The rate of interest used to
determine current liability under this section shall be the
third segment rate determined under section 303(h)(2)(C).
``(B) Mortality tables.--
``(i) Secretarial authority.--The Secretary of the Treasury
may by regulation prescribe mortality tables to be used in
determining current liability under this subsection. Such
tables shall be based upon the actual experience of pension
plans and projected trends in such experience. In prescribing
such tables, the Secretary of the Treasury shall take into
account results of available independent studies of mortality
of individuals covered by pension plans.
``(ii) Periodic review.--The Secretary of the Treasury
shall periodically (at least every 5 years) review any tables
in effect under this subsection and shall, to the extent the
Secretary of the Treasury determines necessary, by regulation
update the tables to reflect the actual experience of pension
plans and projected trends in such experience.
``(C) Separate mortality tables for the disabled.--
Notwithstanding subparagraph (B)--
``(i) In general.--In the case of plan years beginning
after December 31, 1995, the Secretary of the Treasury shall
establish mortality tables which may be used (in lieu of the
tables under subparagraph (B)) to determine current liability
under this subsection for individuals who are entitled to
benefits under the plan on account of disability. The
Secretary of the Treasury shall establish separate tables for
individuals whose disabilities occur in plan years beginning
before January 1, 1995, and for individuals whose
disabilities occur in plan years beginning on or after such
date.
``(ii) Special rule for disabilities occurring after
1994.--In the case of disabilities occurring in plan years
beginning after December 31, 1994, the tables under clause
(i) shall apply only with respect to individuals described in
such subclause who are disabled within the meaning of title
II of the Social Security Act and the regulations thereunder.
``(4) Certain service disregarded.--
``(A) In general.--In the case of a participant to whom
this paragraph applies, only the applicable percentage of the
years of service before such individual became a participant
shall be taken into account in computing the current
liability of the plan.
``(B) Applicable percentage.--For purposes of this
subparagraph, the applicable percentage shall be determined
as follows:
The applicable percentage
``If the years of participation are: is:
1......................................... 20
2......................................... 40
3......................................... 60
4......................................... 80
5 or more................................. 100.
``(C) Participants to whom paragraph applies.--This
subparagraph shall apply to any participant who, at the time
of becoming a participant--
``(i) has not accrued any other benefit under any defined
benefit plan (whether or not terminated) maintained by the
employer or a member of the same controlled group of which
the employer is a member,
``(ii) who first becomes a participant under the plan in a
plan year beginning after December 31, 1987, and
``(iii) has years of service greater than the minimum years
of service necessary for eligibility to participate in the
plan.
``(D) Election.--An employer may elect not to have this
subparagraph apply. Such an election, once made, may be
revoked only with the consent of the Secretary of the
Treasury.
``(i) Funded Current Liability Percentage.--For purposes of
this section, the term `funded current liability percentage'
means, with respect to any plan year, the percentage which--
``(1) the value of the plan's assets determined under
subsection (c)(2), is of
``(2) the current liability under the plan.
``(j) Transition.--The Secretary of the Treasury may
prescribe such rules as are necessary or appropriate with
respect to the transition of a CSEC plan from the application
of section 303 to the application of this section.''.
(2) Separate rules for csec plans.--
(A) In general.--Paragraph (2) of section 302(a) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1082(a)) is amended by striking ``and'' at the end of
subparagraph (B), by striking the period at the end of
subparagraph (C) and inserting ``, and'', and by inserting at
the end thereof the following new subparagraph:
``(D) in the case of a CSEC plan, the employers make
contributions to or under the plan for any plan year which,
in the aggregate, are sufficient to ensure that the plan does
not have an accumulated funding deficiency under section 306
as of the end of the plan year.''.
(B) Conforming amendments.--Section 302 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1082) is
amended--
(i) by striking ``multiemployer plan'' the first place it
appears in clause (i) of subsection (c)(1)(A) and the last
place it appears in paragraph (2) of subsection (d), and
inserting ``multiemployer plan or a CSEC plan'',
(ii) by striking ``303(j)'' in paragraph (1) of subsection
(b) and inserting ``303(j) or under 306(f)'',
(iii)(I) by striking ``and'' at the end of clause (i) of
subsection (c)(1)(B),
(II) by striking the period at the end of clause (ii) of
subsection (c)(1)(B), and inserting ``, and'', and
(III) by inserting the following new clause after clause
(ii) of subsection (c)(1)(B):
``(iii) in the case of a CSEC plan, the funding standard
account shall be credited under section 306(b)(3)(C) with the
amount of the waived funding deficiency and such amount shall
be amortized as required under section 306(b)(2)(C).'',
(iv) by striking ``under paragraph (1)'' in clause (i) of
subsection (c)(4)(A) and inserting ``under paragraph (1) or
for granting an extension under section 306(d)'',
(v) by striking ``waiver under this subsection'' in
subparagraph (B) of subsection (c)(4) and inserting ``waiver
under this subsection or an extension under 306(d)'',
(vi) by striking ``waiver or modification'' in subclause
(I) of subsection (c)(4)(B)(i) and inserting ``waiver,
modification, or extension'',
(vii) by striking ``waivers'' in the heading of subsection
(c)(4)(C) and of clause (ii) of subsection (c)(4)(C) and
inserting ``waivers or extensions'',
(viii) by striking ``section 304(d)'' in subparagraph (A)
of subsection (c)(7) and in paragraph (2) of subsection (d)
and inserting ``section 304(d) or section 306(d)'',
(ix) by striking ``and'' at the end of subclause (I) of
subsection (c)(4)(C)(i) and adding ``or the accumulated
funding deficiency under section 306, whichever is
applicable,'',
(x) by striking ``303(e)(2),'' in subclause (II) of
subsection (c)(4)(C)(i) and inserting ``303(e)(2) or
306(b)(2)(C), whichever is applicable, and'',
(xi) by adding immediately after subclause (II) of
subsection (c)(4)(C)(i) the following new subclause:
``(III) the total amounts not paid by reason of an
extension in effect under section 306(d),'',
(xii) by striking ``for waivers of'' in clause (ii) of
subsection (c)(4)(C) and inserting ``for waivers or
extensions with respect to'', and
(xiii) by striking ``single-employer plan'' in subparagraph
(A) of subsection (a)(2) and in clause (i) of subsection
(c)(1)(B) and inserting ``single-employer plan (other than a
CSEC plan)''.
(3) Benefit restrictions.--
(A) In general.--Subsection (g) of section 206 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1056) is amended by adding at the end thereof the following
new paragraph:
``(12) CSEC plans.--This subsection shall not apply to a
CSEC plan (as defined in section 210(f)).''.
(B) Effective date.--Any restriction under section 206(g)
of the Employee Retirement Income Security Act of 1974 that
is in effect with respect to a CSEC plan as of the last day
of the last plan year beginning before January 1, 2014, shall
cease to apply as of the first day of the following plan
year.
(4) Benefit increases.--Paragraph (3) of section 204(i) of
the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1054(i)) is amended by striking ``multiemployer
plans'' and inserting ``multiemployer plans or CSEC plans''.
(5) Section 103.--Subparagraph (B) of section 103(d)(8) of
the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1023(d)(8)) is
[[Page S550]]
amended by striking ``303(h) and 304(c)(3)'' and inserting
``303(h), 304(c)(3), and 306(c)(3)''.
(6) Section 4003.--Subparagraph (B) of section 4003(e)(1)
of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1303(e)(1)) is amended by striking ``303(k)(1)(A) and
(B) of this Act or section 430(k)(1)(A) and (B) of the
Internal Revenue Code of 1986'' and inserting ``303(k)(1)(A)
and (B) or 306(g)(1)(A) and (B) of this Act or section
430(k)(1)(A) and (B) or 433(g)(1)(A) and (B) of the Internal
Revenue Code of 1986''.
(7) Section 4010.--Paragraph (2) of section 4010(b) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1310(b)) is amended by striking ``303(k)(1)(A) and (B) of
this Act or section 430(k)(1)(A) and (B) of the Internal
Revenue Code of 1986'' and inserting ``303(k)(1)(A) and (B)
or 306(g)(1)(A) and (B) of this Act or section 430(k)(1)(A)
and (B) or 433(g)(1)(A) and (B) of the Internal Revenue Code
of 1986''.
(8) Section 4071.--Section 4071 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1371) is amended by
striking ``section 303(k)(4)'' and inserting ``section
303(k)(4) or 306(g)(4)''.
(b) Amendments to Code.--
(1) Minimum funding standards under the internal revenue
code.--Subpart A of part III of subchapter D of chapter 1 of
subtitle A of the Internal Revenue Code of 1986 is amended by
adding at the end the following new section:
``SEC. 433. MINIMUM FUNDING STANDARDS.
``(a) General Rule.--For purposes of section 412, the term
`accumulated funding deficiency' for a CSEC plan means the
excess of the total charges to the funding standard account
for all plan years (beginning with the first plan year to
which section 412 applies) over the total credits to such
account for such years or, if less, the excess of the total
charges to the alternative minimum funding standard account
for such plan years over the total credits to such account
for such years.
``(b) Funding Standard Account.--
``(1) Account required.--Each plan to which this section
applies shall establish and maintain a funding standard
account. Such account shall be credited and charged solely as
provided in this section.
``(2) Charges to account.--For a plan year, the funding
standard account shall be charged with the sum of--
``(A) the normal cost of the plan for the plan year,
``(B) the amounts necessary to amortize in equal annual
installments (until fully amortized)--
``(i) in the case of a plan in existence on January 1,
1974, the unfunded past service liability under the plan on
the first day of the first plan year to which section 412
applies, over a period of 40 plan years,
``(ii) in the case of a plan which comes into existence
after January 1, 1974, but before the first day of the first
plan year beginning after December 31, 2013, the unfunded
past service liability under the plan on the first day of the
first plan year to which section 412 applies, over a period
of 30 plan years,
``(iii) in the case of a plan that is subject to section
430 for the last plan year beginning before January 1, 2014,
the sum of--
``(I) the plan's funding standard carryover balance and
prefunding balance (as such terms are defined in section
430(f)) as of the end of such plan year, and
``(II) the unfunded past service liability under the plan
for the first plan year beginning after December 31, 2013,
over a period of 15 years,
``(iv) 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,
``(v) separately, with respect to each plan year, the net
experience loss (if any) under the plan, over a period of 5
plan years, and
``(vi) separately, with respect to each plan year, the net
loss (if any) resulting from changes in actuarial assumptions
used under the plan, over a period of 10 plan years,
``(C) the amount necessary to amortize each waived funding
deficiency (within the meaning of section 412(c)(3)) for each
prior plan year in equal annual installments (until fully
amortized) over a period of 5 plan years,
``(D) the amount necessary to amortize in equal annual
installments (until fully amortized) over a period of 5 plan
years any amount credited to the funding standard account
under paragraph (3)(D), and
``(E) the amount necessary to amortize in equal annual
installments (until fully amortized) over a period of 20
years the contributions which would be required to be made
under the plan but for the provisions of section
412(c)(7)(A)(i)(I) (as in effect on the day before the
enactment of the Pension Protection Act of 2006).
``(3) Credits to account.--For a plan year, the funding
standard account shall be credited with the sum of--
``(A) the amount considered contributed by the employer to
or under the plan for the plan year,
``(B) the amount necessary to amortize in equal annual
installments (until fully amortized)--
``(i) separately, with respect to each plan year, the net
decrease (if any) in unfunded past service liability under
the plan arising from plan amendments adopted in such year,
over a period of 15 plan years,
``(ii) separately, with respect to each plan year, the net
experience gain (if any) under the plan, over a period of 5
plan years, and
``(iii) separately, with respect to each plan year, the net
gain (if any) resulting from changes in actuarial assumptions
used under the plan, over a period of 10 plan years,
``(C) the amount of the waived funding deficiency (within
the meaning of section 412(c)(3)) for the plan year,
``(D) in the case of a plan year for which the accumulated
funding deficiency is determined under the funding standard
account if such plan year follows a plan year for which such
deficiency was determined under the alternative minimum
funding standard, the excess (if any) of any debit balance in
the funding standard account (determined without regard to
this subparagraph) over any debit balance in the alternative
minimum funding standard account, and
``(E) for the first plan year beginning after December 31,
2013, in the case of a plan that is subject to section 430
for the last plan year beginning before January 1, 2014, the
sum of the plan's funding standard carryover balance and
prefunding balance (as such terms are defined in section
430(f)) as of the end of the last plan year beginning before
January 1, 2014.
``(4) Combining and offsetting amounts to be amortized.--
Under regulations prescribed by the Secretary, amounts
required to be amortized under paragraph (2) or paragraph
(3), as the case may be--
``(A) may be combined into one amount under such paragraph
to be amortized over a period determined on the basis of the
remaining amortization period for all items entering into
such combined amount, and
``(B) may be offset against amounts required to be
amortized under the other such paragraph, with the resulting
amount to be amortized over a period determined on the basis
of the remaining amortization periods for all items entering
into whichever of the two amounts being offset is the
greater.
``(5) Interest.--
``(A) Except as provided in subparagraph (B), the funding
standard account (and items therein) shall be charged or
credited (as determined under regulations prescribed by the
Secretary) with interest at the appropriate rate consistent
with the rate or rates of interest used under the plan to
determine costs.
``(B) The interest rate used for purposes of computing the
amortization charge described in subsection (b)(2)(C) or for
purposes of any arrangement under subsection (d) for any plan
year shall be the greater of--
``(i) 150 percent of the Federal mid-term rate (as in
effect under section 1274 for the 1st month of such plan
year), or
``(ii) the rate of interest determined under subparagraph
(A).
``(6) Amortization schedules in effect.--Amortization
schedules for amounts described in paragraphs (2) and (3)
that are in effect as of the last day of the last plan year
beginning before January 1, 2014, by reason of section 104 of
the Pension Protection Act of 2006 shall remain in effect
pursuant to their terms and this section, except that such
amounts shall not be amortized again under this section. In
the case of a plan that is subject to section 430 for the
last plan year beginning before January 1, 2014, any
amortization schedules and bases for plan years beginning
before such date shall be reduced to zero.
``(c) Special Rules.--
``(1) Determinations to be made under funding method.--For
purposes of this section, normal costs, accrued liability,
past service liabilities, and experience gains and losses
shall be determined under the funding method used to
determine costs under the plan.
``(2) Valuation of assets.--
``(A) In general.--For purposes of this section, the value
of the plan's assets shall be determined on the basis of any
reasonable actuarial method of valuation which takes into
account fair market value and which is permitted under
regulations prescribed by the Secretary.
``(B) Dedicated bond portfolio.--The Secretary may by
regulations provide that the value of any dedicated bond
portfolio of a plan shall be determined by using the interest
rate under section 412(b)(5) (as in effect on the day before
the enactment of the Pension Protection Act of 2006).
``(3) Actuarial assumptions must be reasonable.--For
purposes of this section, all costs, liabilities, rates of
interest, and other factors under the plan shall be
determined on the basis of actuarial assumptions and
methods--
``(A) each of which is reasonable (taking into account the
experience of the plan and reasonable expectations) or which,
in the aggregate, result in a total contribution equivalent
to that which would be determined if each such assumption and
method were reasonable, and
``(B) which, in combination, offer the actuary's best
estimate of anticipated experience under the plan.
``(4) Treatment of certain changes as experience gain or
loss.--For purposes of this section, if--
``(A) a change in benefits under the Social Security Act or
in other retirement benefits created under Federal or State
law, or
``(B) a change in the definition of the term `wages' under
section 3121 or a change in the amount of such wages taken
into account under regulations prescribed for purposes of
section 401(a)(5),
results in an increase or decrease in accrued liability under
a plan, such increase or decrease shall be treated as an
experience loss or gain.
``(5) Funding method and plan year.--
``(A) Funding methods available.--All funding methods
available to CSEC plans under section 412 (as in effect on
the day before the enactment of the Pension Protection Act of
2006) shall continue to be available under this section.
``(B) Not affected by cessation of benefit accruals.--The
availability of any funding method, including all spread gain
funding methods, shall not be affected by whether benefit
accruals under a plan have ceased. Except as otherwise
provided in subparagraph (C) or in regulations prescribed by
the Secretary, if benefit accruals have ceased under a plan,
the spread
[[Page S551]]
gain funding methods may be applied by amortizing over the
average expected future lives of all participants.
``(C) Minimum amount.--In the case of a plan amortizing
over the average expected future lives of all participants
pursuant to the second sentence of subparagraph (B), such
amortization amount for any plan year shall not be less than
the sum of--
``(i) the amount determined by amortizing, as of the first
year for which the plan amortizes over the average future
lives of all participants, the entire unfunded past service
liability in equal installments over 15 years, and
``(ii) the amount determined by amortizing any increase or
decrease in such unfunded past service liability in any
subsequent year, other than an increase or decrease
attributable to contributions or expected experience, in
equal installments over 15 years.
``(D) Changes.--If the funding method for a plan is
changed, the new funding method shall become the funding
method used to determine costs and liabilities under the plan
only if the change is approved by the Secretary. The
preceding sentence shall not apply to any change made
pursuant to, or permitted by, the second sentence of
subparagraph (B) if such change is made for the first plan
year beginning after December 31, 2013. Any such change may
be made without the approval of the Secretary. If the plan
year for a plan is changed, the new plan year shall become
the plan year for the plan only if the change is approved by
the Secretary.
``(E) Approval required for certain changes in assumptions
by certain single-employer plans subject to additional
funding requirement.--
``(i) In general.--No actuarial assumption (other than the
assumptions described in subsection (h)(3)) used to determine
the current liability for a plan to which this subparagraph
applies may be changed without the approval of the Secretary.
``(ii) Plans to which subparagraph applies.--This
subparagraph shall apply to a plan only if--
``(I) the plan is a CSEC plan,
``(II) the aggregate unfunded vested benefits as of the
close of the preceding plan year (as determined under section
4006(a)(3)(E)(iii) of the Employee Retirement Income Security
Act of 1974) of such plan and all other plans maintained by
the contributing sponsors (as defined in section 4001(a)(13)
of such Act) and members of such sponsors' controlled groups
(as defined in section 4001(a)(14) of such Act) which are
covered by title IV (disregarding plans with no unfunded
vested benefits) exceed $50,000,000, and
``(III) the change in assumptions (determined after taking
into account any changes in interest rate and mortality
table) results in a decrease in the funding shortfall of the
plan for the current plan year that exceeds $50,000,000, or
that exceeds $5,000,000 and that is 5 percent or more of the
current liability of the plan before such change.
``(6) Full funding.--If, as of the close of a plan year, a
plan would (without regard to this paragraph) have an
accumulated funding deficiency (determined without regard to
the alternative minimum funding standard account permitted
under subsection (e)) in excess of the full funding
limitation--
``(A) the funding standard account shall be credited with
the amount of such excess, and
``(B) all amounts described in paragraphs (2)(B), (C), and
(D) and (3)(B) of subsection (b) which are required to be
amortized shall be considered fully amortized for purposes of
such paragraphs.
``(7) Full-funding limitation.--For purposes of paragraph
(6), the term `full-funding limitation' means the excess (if
any) of--
``(A) the accrued liability (including normal cost) under
the plan (determined under the entry age normal funding
method if such accrued liability cannot be directly
calculated under the funding method used for the plan), over
``(B) the lesser of--
``(i) the fair market value of the plan's assets, or
``(ii) the value of such assets determined under paragraph
(2).
``(C) Minimum amount.--
``(i) In general.--In no event shall the full-funding
limitation determined under subparagraph (A) be less than the
excess (if any) of--
``(I) 90 percent of the current liability (determined
without regard to paragraph (4) of subsection (h)) of the
plan (including the expected increase in such current
liability due to benefits accruing during the plan year),
over
``(II) the value of the plan's assets determined under
paragraph (2).
``(ii) Assets.--For purposes of clause (i), assets shall
not be reduced by any credit balance in the funding standard
account.
``(8) Annual valuation.--
``(A) In general.--For purposes of this section, a
determination of experience gains and losses and a valuation
of the plan's liability shall be made not less frequently
than once every year, except that such determination shall be
made more frequently to the extent required in particular
cases under regulations prescribed by the Secretary.
``(B) Valuation date.--
``(i) Current year.--Except as provided in clause (ii), the
valuation referred to in subparagraph (A) shall be made as of
a date within the plan year to which the valuation refers or
within one month prior to the beginning of such year.
``(ii) Use of prior year valuation.--The valuation referred
to in subparagraph (A) may be made as of a date within the
plan year prior to the year to which the valuation refers if,
as of such date, the value of the assets of the plan are not
less than 100 percent of the plan's current liability.
``(iii) Adjustments.--Information under clause (ii) shall,
in accordance with regulations, be actuarially adjusted to
reflect significant differences in participants.
``(iv) Limitation.--A change in funding method to use a
prior year valuation, as provided in clause (ii), may not be
made unless as of the valuation date within the prior plan
year, the value of the assets of the plan are not less than
125 percent of the plan's current liability.
``(9) Time when certain contributions deemed made.--For
purposes of this section, any contributions for a plan year
made by an employer during the period--
``(A) beginning on the day after the last day of such plan
year, and
``(B) ending on the day which is 8\1/2\ months after the
close of the plan year,
shall be deemed to have been made on such last day.
``(10) Anticipation of benefit increases effective in the
future.--In determining projected benefits, the funding
method of a collectively bargained CSEC plan described in
section 413(a) (other than a multiemployer plan) shall
anticipate benefit increases scheduled to take effect during
the term of the collective bargaining agreement applicable to
the plan.
``(d) Extension of Amortization Periods.--The period of
years required to amortize any unfunded liability (described
in any clause of subsection (b)(2)(B)) of any plan may be
extended by the Secretary of Labor for a period of time (not
in excess of 10 years) if such Secretary determines that such
extension would carry out the purposes of the Employee
Retirement Income Security Act of 1974 and provide adequate
protection for participants under the plan, and their
beneficiaries and if such Secretary determines that the
failure to permit such extension would result in--
``(1) a substantial risk to the voluntary continuation of
the plan, or
``(2) a substantial curtailment of pension benefit levels
or employee compensation.
``(e) Alternative Minimum Funding Standard.--
``(1) In general.--A CSEC plan which uses a funding method
that requires contributions in all years not less than those
required under the entry age normal funding method may
maintain an alternative minimum funding standard account for
any plan year. Such account shall be credited and charged
solely as provided in this subsection.
``(2) Charges and credits to account.--For a plan year the
alternative minimum funding standard account shall be--
``(A) charged with the sum of--
``(i) the lesser of normal cost under the funding method
used under the plan or normal cost determined under the unit
credit method,
``(ii) the excess, if any, of the present value of accrued
benefits under the plan over the fair market value of the
assets, and
``(iii) an amount equal to the excess (if any) of credits
to the alternative minimum standard account for all prior
plan years over charges to such account for all such years,
and
``(B) credited with the amount considered contributed by
the employer to or under the plan for the plan year.
``(3) Special rules.--The alternative minimum funding
standard account (and items therein) shall be charged or
credited with interest in the manner provided under
subsection (b)(5) with respect to the funding standard
account.
``(f) Quarterly Contributions Required.--
``(1) In general.--If a CSEC plan which has a funded
current liability percentage for the preceding plan year of
less than 100 percent fails to pay the full amount of a
required installment for the plan year, then the rate of
interest charged to the funding standard account under
subsection (b)(5) with respect to the amount of the
underpayment for the period of the underpayment shall be
equal to the greater of--
``(A) 175 percent of the Federal mid-term rate (as in
effect under section 1274 for the 1st month of such plan
year), or
``(B) the rate of interest used under the plan in
determining costs.
``(2) Amount of underpayment, period of underpayment.--For
purposes of paragraph (1)--
``(A) Amount.--The amount of the underpayment shall be the
excess of--
``(i) the required installment, over
``(ii) the amount (if any) of the installment contributed
to or under the plan on or before the due date for the
installment.
``(B) Period of underpayment.--The period for which
interest is charged under this subsection with regard to any
portion of the underpayment shall run from the due date for
the installment to the date on which such portion is
contributed to or under the plan (determined without regard
to subsection (c)(9)).
``(C) Order of crediting contributions.--For purposes of
subparagraph (A)(ii), contributions shall be credited against
unpaid required installments in the order in which such
installments are required to be paid.
``(3) Number of required installments; due dates.--For
purposes of this subsection--
``(A) Payable in 4 installments.--There shall be 4 required
installments for each plan year.
``(B) Time for payment of installments.--
``In the case of the following required
installments: The due date is:
1st....................................... April 15
2nd....................................... July 15
3rd....................................... October 15
4th....................................... January 15 of the following
year.
``(4) Amount of required installment.--For purposes of this
subsection--
[[Page S552]]
``(A) In general.--The amount of any required installment
shall be 25 percent of the required annual payment.
``(B) Required annual payment.--For purposes of
subparagraph (A), the term `required annual payment' means
the lesser of--
``(i) 90 percent of the amount required to be contributed
to or under the plan by the employer for the plan year under
section 412 (without regard to any waiver under subsection
(c) thereof), or
``(ii) 100 percent of the amount so required for the
preceding plan year.
Clause (ii) shall not apply if the preceding plan year was
not a year of 12 months.
``(5) Liquidity requirement.--
``(A) In general.--A plan to which this paragraph applies
shall be treated as failing to pay the full amount of any
required installment to the extent that the value of the
liquid assets paid in such installment is less than the
liquidity shortfall (whether or not such liquidity shortfall
exceeds the amount of such installment required to be paid
but for this paragraph).
``(B) Plans to which paragraph applies.--This paragraph
shall apply to a CSEC plan other than a plan described in
section 412(l)(6)(A) (as in effect on the day before the
enactment of the Pension Protection Act of 2006) which--
``(i) is required to pay installments under this subsection
for a plan year, and
``(ii) has a liquidity shortfall for any quarter during
such plan year.
``(C) Period of underpayment.--For purposes of paragraph
(1), any portion of an installment that is treated as not
paid under subparagraph (A) shall continue to be treated as
unpaid until the close of the quarter in which the due date
for such installment occurs.
``(D) Limitation on increase.--If the amount of any
required installment is increased by reason of subparagraph
(A), in no event shall such increase exceed the amount which,
when added to prior installments for the plan year, is
necessary to increase the funded current liability percentage
(taking into account the expected increase in current
liability due to benefits accruing during the plan year) to
100 percent.
``(E) Definitions.--For purposes of this paragraph:
``(i) Liquidity shortfall.--The term `liquidity shortfall'
means, with respect to any required installment, an amount
equal to the excess (as of the last day of the quarter for
which such installment is made) of the base amount with
respect to such quarter over the value (as of such last day)
of the plan's liquid assets.
``(ii) Base amount.--
``(I) In general.--The term `base amount' means, with
respect to any quarter, an amount equal to 3 times the sum of
the adjusted disbursements from the plan for the 12 months
ending on the last day of such quarter.
``(II) Special rule.--If the amount determined under
subclause (I) exceeds an amount equal to 2 times the sum of
the adjusted disbursements from the plan for the 36 months
ending on the last day of the quarter and an enrolled actuary
certifies to the satisfaction of the Secretary that such
excess is the result of nonrecurring circumstances, the base
amount with respect to such quarter shall be determined
without regard to amounts related to those nonrecurring
circumstances.
``(iii) Disbursements from the plan.--The term
`disbursements from the plan' means all disbursements from
the trust, including purchases of annuities, payments of
single sums and other benefits, and administrative expenses.
``(iv) Adjusted disbursements.--The term `adjusted
disbursements' means disbursements from the plan reduced by
the product of--
``(I) the plan's funded current liability percentage for
the plan year, and
``(II) the sum of the purchases of annuities, payments of
single sums, and such other disbursements as the Secretary
shall provide in regulations.
``(v) Liquid assets.--The term `liquid assets' means cash,
marketable securities and such other assets as specified by
the Secretary in regulations.
``(vi) Quarter.--The term `quarter' means, with respect to
any required installment, the 3-month period preceding the
month in which the due date for such installment occurs.
``(F) Regulations.--The Secretary may prescribe such
regulations as are necessary to carry out this paragraph.
``(6) Fiscal years and short years.--
``(A) Fiscal years.--In applying this subsection to a plan
year beginning on any date other than January 1, there shall
be substituted for the months specified in this subsection,
the months which correspond thereto.
``(B) Short plan year.--This subsection shall be applied to
plan years of less than 12 months in accordance with
regulations prescribed by the Secretary.
``(g) Imposition of Lien Where Failure To Make Required
Contributions.--
``(1) In general.--In the case of a plan to which this
section applies, if--
``(A) any person fails to make a required installment under
subsection (f) or any other payment required under this
section before the due date for such installment or other
payment, and
``(B) the unpaid balance of such installment or other
payment (including interest), when added to the aggregate
unpaid balance of all preceding such installments or other
payments for which payment was not made before the due date
(including interest), exceeds $1,000,000,
then there shall be a lien in favor of the plan in the amount
determined under paragraph (3) upon all property and rights
to property, whether real or personal, belonging to such
person and any other person who is a member of the same
controlled group of which such person is a member.
``(2) Plans to which subsection applies.--This subsection
shall apply to a CSEC plan for any plan year for which the
funded current liability percentage of such plan is less than
100 percent. This subsection shall not apply to any plan to
which section 4021 of the Employee Retirement Income Security
Act of 1974 does not apply (as such section is in effect on
the date of the enactment of the Retirement Protection Act of
1994).
``(3) Amount of lien.--For purposes of paragraph (1), the
amount of the lien shall be equal to the aggregate unpaid
balance of required installments and other payments required
under this section (including interest)--
``(A) for plan years beginning after 1987, and
``(B) for which payment has not been made before the due
date.
``(4) Notice of failure; lien.--
``(A) Notice of failure.--A person committing a failure
described in paragraph (1) shall notify the Pension Benefit
Guaranty Corporation of such failure within 10 days of the
due date for the required installment or other payment.
``(B) Period of lien.--The lien imposed by paragraph (1)
shall arise on the due date for the required installment or
other payment and shall continue until the last day of the
first plan year in which the plan ceases to be described in
paragraph (1)(B). Such lien shall continue to run without
regard to whether such plan continues to be described in
paragraph (2) during the period referred to in the preceding
sentence.
``(C) Certain rules to apply.--Any amount with respect to
which a lien is imposed under paragraph (1) shall be treated
as taxes due and owing the United States and rules similar to
the rules of subsections (c), (d), and (e) of section 4068 of
the Employee Retirement Income Security Act of 1974 shall
apply with respect to a lien imposed by subsection (a) and
the amount with respect to such lien.
``(5) Enforcement.--Any lien created under paragraph (1)
may be perfected and enforced only by the Pension Benefit
Guaranty Corporation, or at the direction of the Pension
Benefit Guaranty Corporation, by any contributing employer
(or any member of the controlled group of the contributing
employer).
``(6) Definitions.--For purposes of this subsection--
``(A) Due date; required installment.--The terms `due date'
and `required installment' have the meanings given such terms
by subsection (f), except that in the case of a payment other
than a required installment, the due date shall be the date
such payment is required to be made under this section.
``(B) Controlled group.--The term `controlled group' means
any group treated as a single employer under subsections (b),
(c), (m), and (o) of section 414.
``(h) Current Liability.--For purposes of this section--
``(1) In general.--The term `current liability' means all
liabilities to employees and their beneficiaries under the
plan.
``(2) Treatment of unpredictable contingent event
benefits.--
``(A) In general.--For purposes of paragraph (1), any
unpredictable contingent event benefit shall not be taken
into account until the event on which the benefit is
contingent occurs.
``(B) Unpredictable contingent event benefit.--The term
`unpredictable contingent event benefit' means any benefit
contingent on an event other than--
``(i) age, service, compensation, death, or disability, or
``(ii) an event which is reasonably and reliably
predictable (as determined by the Secretary).
``(3) Interest rate and mortality assumptions used.--
``(A) Interest rate.--The rate of interest used to
determine current liability under this section shall be the
third segment rate determined under section 430(h)(2)(C).
``(B) Mortality tables.--
``(i) Secretarial authority.--The Secretary may by
regulation prescribe mortality tables to be used in
determining current liability under this subsection. Such
tables shall be based upon the actual experience of pension
plans and projected trends in such experience. In prescribing
such tables, the Secretary shall take into account results of
available independent studies of mortality of individuals
covered by pension plans.
``(ii) Periodic review.--The Secretary shall periodically
(at least every 5 years) review any tables in effect under
this subsection and shall, to the extent the Secretary
determines necessary, by regulation update the tables to
reflect the actual experience of pension plans and projected
trends in such experience.
``(C) Separate mortality tables for the disabled.--
Notwithstanding subparagraph (B)--
``(i) In general.--In the case of plan years beginning
after December 31, 1995, the Secretary shall establish
mortality tables which may be used (in lieu of the tables
under subparagraph (B)) to determine current liability under
this subsection for individuals who are entitled to benefits
under the plan on account of disability. The Secretary shall
establish separate tables for individuals whose disabilities
occur in plan years beginning before January 1, 1995, and for
individuals whose disabilities occur in plan years beginning
on or after such date.
``(ii) Special rule for disabilities occurring after
1994.--In the case of disabilities occurring in plan years
beginning after December 31, 1994, the tables under clause
(i) shall apply only with respect to individuals described in
such subclause who are disabled within the meaning of title
II of the Social Security Act and the regulations thereunder.
``(4) Certain service disregarded.--
[[Page S553]]
``(A) In general.--In the case of a participant to whom
this paragraph applies, only the applicable percentage of the
years of service before such individual became a participant
shall be taken into account in computing the current
liability of the plan.
``(B) Applicable percentage.--For purposes of this
subparagraph, the applicable percentage shall be determined
as follows:
The applicable percentage
``If the years of participation are: is:
1......................................... 20
2......................................... 40
3......................................... 60
4......................................... 80
5 or more................................. 100.
``(C) Participants to whom paragraph applies.--This
subparagraph shall apply to any participant who, at the time
of becoming a participant--
``(i) has not accrued any other benefit under any defined
benefit plan (whether or not terminated) maintained by the
employer or a member of the same controlled group of which
the employer is a member,
``(ii) who first becomes a participant under the plan in a
plan year beginning after December 31, 1987, and
``(iii) has years of service greater than the minimum years
of service necessary for eligibility to participate in the
plan.
``(D) Election.--An employer may elect not to have this
subparagraph apply. Such an election, once made, may be
revoked only with the consent of the Secretary.
``(i) Funded Current Liability Percentage.--For purposes of
this section, the term `funded current liability percentage'
means, with respect to any plan year, the percentage which--
``(1) the value of the plan's assets determined under
subsection (c)(2), is of
``(2) the current liability under the plan.
``(j) Transition.--The Secretary may prescribe such rules
as are necessary or appropriate with respect to the
transition of a CSEC plan from the application of section 430
to the application of this section.''.
(2) Separate rules for csec plans.--
(A) In general.--Paragraph (2) of section 412(a) of the
Internal Revenue Code of 1986 is amended by striking ``and''
at the end of subparagraph (B), by striking the period at the
end of subparagraph (C) and inserting ``, and'', and by
inserting at the end thereof the following new subparagraph:
``(D) in the case of a CSEC plan, the employers make
contributions to or under the plan for any plan year which,
in the aggregate, are sufficient to ensure that the plan does
not have an accumulated funding deficiency under section 433
as of the end of the plan year.''.
(B) Conforming amendments.--Section 412 of the Internal
Revenue Code of 1986 is amended--
(i) by striking ``multiemployer plan'' in paragraph (A) of
subsection (a)(2), in clause (i) of subsection (c)(1)(B), the
first place it appears in clause (i) of subsection (c)(1)(A),
and the last place it appears in paragraph (2) of subsection
(d), and inserting ``multiemployer plan or a CSEC plan'',
(ii) by striking ``430(j)'' in paragraph (1) of subsection
(b) and inserting ``430(j) or under 433(f)'',
(iii)(I) by striking ``and'' at the end of clause (i) of
subsection (c)(1)(B),
(II) by striking the period at the end of clause (ii) of
subsection (c)(1)(B) and inserting ``, and'', and
(III) by inserting the following new clause after clause
(ii) of subsection (c)(1)(B):
``(iii) in the case of a CSEC plan, the funding standard
account shall be credited under section 433(b)(3)(C) with the
amount of the waived funding deficiency and such amount shall
be amortized as required under section 433(b)(2)(C).'',
(iv) by striking ``under paragraph (1)'' in clause (i) of
subsection (c)(4)(A) and inserting ``under paragraph (1) or
for granting an extension under section 433(d)'',
(v) by striking ``waiver under this subsection'' in
subparagraph (B) of subsection (c)(4) and inserting ``waiver
under this subsection or an extension under 433(d)'',
(vi) by striking ``waiver or modification'' in subclause
(I) of subsection (c)(4)(B)(i) and inserting ``waiver,
modification, or extension'',
(vii) by striking ``waivers'' in the heading of subsection
(c)(4)(C) and of clause (ii) of subsection (c)(4)(C) and
inserting ``waivers or extensions'',
(viii) by striking ``section 431(d)'' in subparagraph (A)
of subsection (c)(7) and in paragraph (2) of subsection (d)
and inserting ``section 431(d) or section 433(d)'',
(ix) by striking ``and'' at the end of subclause (I) of
subsection (c)(4)(C)(i) and inserting ``or the accumulated
funding deficiency under section 433, whichever is
applicable,'',
(x) by striking ``430(e)(2),'' in subclause (II) of
subsection (c)(4)(C)(i) and inserting ``430(e)(2) or
433(b)(2)(C), whichever is applicable, and'',
(xi) by adding immediately after subclause (II) of
subsection (c)(4)(C)(i) the following new subclause:
``(III) the total amounts not paid by reason of an
extension in effect under section 433(d),'', and
(xii) by striking ``for waivers of'' in clause (ii) of
subsection (c)(4)(C) and inserting ``for waivers or
extensions with respect to''.
(3) Benefit restrictions.--
(A) In general.--Paragraph (29) of section 401(a) of the
Internal Revenue Code of 1986 is amended by striking
``multiemployer plan'' and inserting ``multiemployer plan or
a CSEC plan''.
(B) Conforming change.--Subsection (a) of section 436 of
the Internal Revenue Code of 1986 is amended by striking
``single-employer plan'' and inserting ``single-employer plan
(other than a CSEC plan)''.
(C) Effective date.--Any restriction under sections
401(a)(29) and 436 of the Internal Revenue Code of 1986 that
is in effect with respect to a CSEC plan as of the last day
of the last plan year beginning before January 1, 2014, shall
cease to apply as of the first day of the following plan
year.
(4) Benefit increases.--Subparagraph (C) of section
401(a)(33) of the Internal Revenue Code of 1986 is amended by
striking ``multiemployer plans'' and inserting
``multiemployer plans or CSEC plans''.
SEC. 5. TRANSPARENCY.
(a) Notice to Participants.--
(1) In general.--Paragraph (2) of section 101(f) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1021(f)) is amended by adding at the end the following new
subparagraph:
``(E) Effect of csec plan rules on plan funding.--
``(i) In general.--In the case of a CSEC plan, each notice
under paragraph (1) shall include--
``(I) a statement that different rules apply to CSEC plans
than apply to single-employer plans, and
``(II) for the first 2 plan years beginning after December
31, 2013, a statement that, as a result of changes in the law
made by the Cooperative and Small Employer Charity Pension
Flexibility Act, the contributions to the plan may have
changed.
``(ii) Applicable plan year.--For purposes of this
subparagraph, the term `applicable plan year' means any plan
year beginning after December 31, 2013, for which--
``(I) the plan has a funding shortfall (as defined in
section 303(c)(4)) greater than $1,000,000, and
``(II) the plan had 50 or more participants on any day
during the preceding plan year.
For purposes of any determination under subclause (II), the
aggregation rule under the last sentence of section
303(g)(2)(B) shall apply.
``(iii) Special rule for plan years beginning before
2014.--In the case of a preceding plan year referred to in
clause (i)(III) which begins before January 1, 2014, the
information described in such clause shall be provided only
without regard to the different rules applicable to CSEC
plans.''.
(2) Model notice.--The Secretary of Labor may modify the
model notice required to be published under section 501(c) of
the Pension Protection Act of 2006 to include the information
described in section 101(f)(2)(E) of the Employee Retirement
Income Security Act of 1974, as added by this subsection.
(b) Notice of Failure To Meet Minimum Funding Standards.--
(1) Pending waivers.--Paragraph (2) of section 101(d) of
the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1021(d)) is amended by striking ``303'' and inserting
``303 or 306''.
(2) Definitions.--Paragraph (3) of section 101(d) of the
Employee Retirement Income Security Act of 1974 (21 U.S.C.
1021(d)) is amended by striking ``303(j)'' and inserting
``303(j) or 306(f), whichever is applicable''.
(c) Additional Reporting Requirements.--Section 103 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1023) is amended by adding at the end the following new
subsection:
``(g) Additional Information With Respect to CSEC Plans.--
With respect to any CSEC plan, an annual report under this
section for a plan year shall include a list of participating
employers and a good faith estimate of the percentage of
total contributions made by such participating employers
during the plan year.''.
SEC. 6. ELECTIONS.
(a) Election Not To Be Treated as a CSEC Plan.--
(1) Amendment to erisa.--Subsection (f) of section 210 of
the Employee Retirement Income Security Act of 1974, as added
by section 3, is amended by adding at the end the following
new paragraph:
``(3) Election.--
``(A) In general.--If a plan falls within the definition of
a CSEC plan under this subsection (without regard to this
paragraph), such plan shall be a CSEC plan unless the plan
sponsor elects not later than the close of the first plan
year of the plan beginning after December 31, 2013, not to be
treated as a CSEC plan. An election under the preceding
sentence shall take effect for such plan year and, once made,
may be revoked only with the consent of the Secretary of the
Treasury.
``(B) Special rule.--If a plan described in subparagraph
(A) is treated as a CSEC plan, section 104 of the Pension
Protection Act of 2006, as amended by the Preservation of
Access to Care for Medicare Beneficiaries and Pension Relief
Act of 2010, shall cease to apply to such plan as of the
first date as of which such plan is treated as a CSEC
plan.''.
(2) Amendment to the code.--Section 414(y) of the Internal
Revenue Code of 1986, as added by section 3, is amended by
adding at the end the following new paragraph:
``(3) Election.--
``(A) In general.--If a plan falls within the definition of
a CSEC plan under this subsection (without regard to this
paragraph), such plan shall be a CSEC plan unless the plan
sponsor elects not later than the close of the first plan
year of the plan beginning after December 31, 2013, not to be
treated as a CSEC plan. An election under the preceding
sentence shall take effect for such plan year and, once made,
may be revoked only with the consent of the Secretary.
``(B) Special rule.--If a plan described in subparagraph
(A) is treated as a CSEC plan, section 104 of the Pension
Protection Act of 2006, as amended by the Preservation of
Access to Care for Medicare Beneficiaries and Pension Relief
Act of 2010, shall cease to apply to such
[[Page S554]]
plan as of the first date as of which such plan is treated as
a CSEC plan.''.
(b) Election To Cease To Be Treated as an Eligible Charity
Plan.--
(1) In general.--Subsection (d) of section 104 of the
Pension Protection Act of 2006, as added by section 202 of
the Preservation of Access to Care for Medicare Beneficiaries
and Pension Relief Act of 2010, is amended by--
(A) striking ``For purposes of'' and inserting ``(1) In
general.--For purposes of'', and
(B) adding at the end the following:
``(2) Election not to be an eligible charity plan.--A plan
sponsor may elect for a plan to cease to be treated as an
eligible charity plan for plan years beginning after December
31, 2013. Such election shall be made at such time and in
such form and manner as shall be prescribed by the Secretary
of the Treasury. Any such election may be revoked only with
the consent of the Secretary of the Treasury.
``(3) Election to use funding options available to other
plan sponsors.--
``(A) A plan sponsor that makes the election described in
paragraph (2) may elect for a plan to apply the rules
described in subparagraphs (B), (C), and (D) for plan years
beginning after December 31, 2013. Such election shall be
made at such time and in such form and manner as shall be
prescribed by the Secretary of the Treasury. Any such
election may be revoked only with the consent of the
Secretary of the Treasury.
``(B) Under the rules described in this subparagraph, for
the first plan year beginning after December 31, 2013, a plan
has--
``(i) an 11-year shortfall amortization base,
``(ii) a 12-year shortfall amortization base, and
``(iii) a 7-year shortfall amortization base.
``(C) Under the rules described in this subparagraph,
section 303(c)(2)(A) and (B) of the Employee Retirement
Income Security Act of 1974, and section 430(c)(2)(A) and (B)
of the Internal Revenue Code of 1986 shall be applied by--
``(i) in the case of an 11-year shortfall amortization
base, substituting `11-plan-year period' for `7-plan-year
period' wherever such phrase appears, and
``(ii) in the case of a 12-year shortfall amortization
base, substituting `12-plan-year period' for `7-plan-year
period' wherever such phrase appears.
``(D) Under the rules described in this subparagraph,
section 303(c)(7) of the Employee Retirement Income Security
Act of 1974, and section 430(c)(7) of the Internal Revenue
Code of 1986 shall apply to a plan for which an election has
been made under subparagraph (A). Such provisions shall apply
in the following manner:
``(i) The first plan year beginning after December 31,
2013, shall be treated as an election year, and no other plan
years shall be so treated.
``(ii) All references in section 303(c)(7) of such Act and
section 430(c)(7) of such Code to `February 28, 2010' or
`March 1, 2010' shall be treated as references to `February
28, 2013' or `March 1, 2013', respectively.
``(E) For purposes of this paragraph, the 11-year
amortization base is an amount, determined for the first plan
year beginning after December 31, 2013, equal to the
unamortized principal amount of the shortfall amortization
base (as defined in section 303(c)(3) of the Employee
Retirement Income Security Act of 1974 and section 430(c)(3)
of the Internal Revenue Code of 1986) that would have applied
to the plan for the first plan beginning after December 31,
2009, if--
``(i) the plan had never been an eligible charity plan,
``(ii) the plan sponsor had made the election described in
section 303(c)(2)(D)(i) of the Employee Retirement Income
Security Act of 1974 and in section 430(c)(2)(D)(i) of the
Internal Revenue Code of 1986 to have section 303(c)(2)(D)(i)
of such Act and section 430(c)(2)(D)(iii) of such Code apply
with respect to the shortfall amortization base for the first
plan year beginning after December 31, 2009, and
``(iii) no event had occurred under paragraph (6) or (7) of
section 303(c) of such Act or paragraph (6) or (7) of section
430(c) of such Code that, as of the first day of the first
plan year beginning after December 31, 2013, would have
modified the shortfall amortization base or the shortfall
amortization installments with respect to the first plan year
beginning after December 31, 2009.
``(F) For purposes of this paragraph, the 12-year
amortization base is an amount, determined for the first plan
year beginning after December 31, 2013, equal to the
unamortized principal amount of the shortfall amortization
base (as defined in section 303(c)(3) of the Employee
Retirement Income Security Act of 1974 and section 430(c)(3)
of the Internal Revenue Code of 1986) that would have applied
to the plan for the first plan beginning after December 31,
2010, if--
``(i) the plan had never been an eligible charity plan,
``(ii) the plan sponsor had made the election described in
section 303(c)(2)(D)(i) of the Employee Retirement Income
Security Act of 1974 and in section 430(c)(2)(D)(i) of the
Internal Revenue Code of 1986 to have section 303(c)(2)(D)(i)
of such Act and section 430(c)(2)(D)(iii) of such Code apply
with respect to the shortfall amortization base for the first
plan year beginning after December 31, 2010, and
``(iii) no event had occurred under paragraph (6) or (7) of
section 303(c) of such Act or paragraph (6) or (7) of section
430(c) of such Code that, as of the first day of the first
plan year beginning after December 31, 2013, would have
modified the shortfall amortization base or the shortfall
amortization installments with respect to the first plan year
beginning after December 31, 2010.
``(G) For purposes of this paragraph, the 7-year shortfall
amortization base is an amount, determined for the first plan
year beginning after December 31, 2013, equal to--
``(i) the shortfall amortization base for the first plan
year beginning after December 31, 2013, without regard to
this paragraph, minus
``(ii) the sum of the 11-year shortfall amortization base
and the 12-year shortfall amortization base.''.
(c) Deemed Election.--For purposes of sections 4(b)(2) and
4021(b)(3) of the Employee Retirement Income Security Act of
1974, a plan shall be deemed to have made an irrevocable
election under section 410(d) of the Internal Revenue Code of
1986 if--
(1) the plan was established before January 1, 2014;
(2) the plan falls within the definition of a CSEC plan;
(3) the plan sponsor does not make an election under
section 210(f)(3)(A) of the Employee Retirement Income
Security Act of 1974 and section 414(y)(3)(A) of the Internal
Revenue Code of 1986, as added by this Act; and
(4) the plan, plan sponsor, administrator, or fiduciary
remits one or more premium payments for the plan to the
Pension Benefit Guaranty Corporation for a plan year
beginning after December 31, 2013.
(d) Effective Date.--The amendments made by this section
shall apply as of the date of enactment of this Act.
SEC. 7. SPONSOR EDUCATION AND ASSISTANCE.
(a) Definition.--In this section, the term ``CSEC plan''
has the meaning given that term in subsection (f)(1) of
section 210 of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1060(f)(1)) (as added by this Act).
(b) Education.--The Participant and Plan Sponsor Advocate
established under section 4004 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1304) shall make
itself available to assist CSEC plan sponsors and
participants as part of the duties it performs under the
general supervision of the Board of Directors under section
4004(b) of such Act (29 U.S.C. 1304(b)).
SEC. 8. EFFECTIVE DATE.
Unless otherwise specified in this Act, the provisions of
this Act shall apply to years beginning after December 31,
2013.
The amendment (No. 2701) was agreed to.
(The amendment is printed in today's Record under ``Text of
Amendments.'')
The committee-reported substitute, as amended, was agreed to.
The bill was ordered to be engrossed for a third reading, was read
the third time, and passed.
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