[Congressional Record (Bound Edition), Volume 151 (2005), Part 21]
[House]
[Pages 28561-28687]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              {time}  1315
                     PENSION PROTECTION ACT OF 2005

  Mr. BOEHNER. Madam Speaker, pursuant to House Resolution 602, I call 
up the bill (H.R. 2830) to amend the Employee Retirement Income 
Security Act of 1974 and the Internal Revenue Code of 1986 to reform 
the pension funding rules, and for other purposes, and ask for its 
immediate consideration.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore (Mrs. Capito). Pursuant to House Resolution 
602, the bill is considered read.
  The text of the bill is as follows:

                               H.R. 2830

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Pension 
     Protection Act of 2005''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title and table of contents.

 TITLE I--REFORM OF FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT 
                             PENSION PLANS

 Subtitle A--Amendments to Employee Retirement Income Security Act of 
                                  1974

Sec. 101. Minimum funding standards.
Sec. 102. Funding rules for single-employer defined benefit pension 
              plans.
Sec. 103. Limitations on distributions and benefit accruals under 
              single-employer plans.
Sec. 104. Technical and conforming amendments.

        Subtitle B--Amendments to Internal Revenue Code of 1986

Sec. 111. Minimum funding standards.
Sec. 112. Funding rules for single-employer defined benefit pension 
              plans.
Sec. 113. Limitations on distributions and benefit accruals under 
              single-employer plans.
Sec. 114. Technical and conforming amendments.

                      Subtitle C--Other provisions

Sec. 121. Modification of transition rule to pension funding 
              requirements.

[[Page 28562]]

Sec. 122. Treatment of nonqualified deferred compensation plans when 
              employer defined benefit plan in at-risk status.

    TITLE II--FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS

 Subtitle A--Amendments to Employee Retirement Income Security Act of 
                                  1974

Sec. 201. Funding rules for multiemployer defined benefit plans.
Sec. 202. Additional funding rules for multiemployer plans in 
              endangered or critical status.
Sec. 203. Measures to forestall insolvency of multiemployer plans.
Sec. 204. Withdrawal liability reforms.
Sec. 205. Removal of restrictions with respect to procedures applicable 
              to disputes involving withdrawal liability.

        Subtitle B--Amendments to Internal Revenue Code of 1986

Sec. 211. Funding rules for multiemployer defined benefit plans.
Sec. 212. Additional funding rules for multiemployer plans in 
              endangered or critical status.

          TITLE III--OTHER INTEREST-RELATED FUNDING PROVISIONS

Sec. 301. Interest rate assumption for determination of lump sum 
              distributions.
Sec. 302. Interest rate assumption for applying benefit limitations to 
              lump sum distributions.

          TITLE IV--IMPROVEMENTS IN PBGC GUARANTEE PROVISIONS

Sec. 401. Increases in PBGC premiums.

                          TITLE V--DISCLOSURE

Sec. 501. Defined benefit plan funding notices.
Sec. 502. Additional disclosure requirements.
Sec. 503. Notice to participants and beneficiaries of section 4010 
              filings with the PBGC.

                      TITLE VI--INVESTMENT ADVICE

Sec. 601. Amendments to Employee Retirement Income Security Act of 1974 
              providing prohibited transaction exemption for provision 
              of investment advice.
Sec. 602. Amendments to Internal Revenue Code of 1986 providing 
              prohibited transaction exemption for provision of 
              investment advice.

                    TITLE VII--DEDUCTION LIMITATIONS

Sec. 701. Increase in deduction limits.
Sec. 702. Updating deduction rules for combination of plans.

 TITLE I--REFORM OF FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT 
                             PENSION PLANS

 Subtitle A--Amendments to Employee Retirement Income Security Act of 
                                  1974

     SEC. 101. MINIMUM FUNDING STANDARDS.

       (a) Repeal of Existing Funding Rules.--Sections 302 through 
     306 of the Employee Retirement Income Security Act of 1974 
     (29 U.S.C. 1082 through 1085a) are repealed.
       (b) New Minimum Funding Standards.--Part 3 of subtitle B of 
     title I of such Act (as amended by subsection (a)) is amended 
     further by inserting after section 301 the following new 
     section:


                      ``Minimum funding standards

       ``Sec. 302. (a) Requirement to Meet Minimum Funding 
     Standard.--
       ``(1) In general.--A plan to which this part applies shall 
     satisfy the minimum funding standard applicable to the plan 
     for any plan year.
       ``(2) Minimum funding standard.--For purposes of paragraph 
     (1), a plan shall be treated as satisfying the minimum 
     funding standard for a plan year if--
       ``(A) in the case of a defined benefit plan which is a 
     single-employer plan, the employer makes contributions to or 
     under the plan for the plan year which, in the aggregate, are 
     not less than the minimum required contribution determined 
     under section 303 for the plan for the plan year,
       ``(B) in the case of a money purchase plan which is a 
     single-employer plan, the employer makes contributions to or 
     under the plan for the plan year which are required under the 
     terms of the plan, and
       ``(C) in the case of a multiemployer plan, the employers 
     make contributions to or under the plan for any plan year 
     which, in the aggregate, are sufficient to ensure that the 
     plan does not have an accumulated funding deficiency under 
     section 304 as of the end of the plan year.
       ``(b) Liability for Contributions.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     amount of any contribution required by this section 
     (including any required installments under paragraphs (3) and 
     (4) of section 303(i)) shall be paid by any employer 
     responsible for making contributions to or under the plan.
       ``(2) Joint and several liability where employer member of 
     controlled group.--In the case of a single-employer plan, if 
     the employer referred to in paragraph (1) is a member of a 
     controlled group, each member of such group shall be jointly 
     and severally liable for payment of such contributions.
       ``(c) Variance From Minimum Funding Standards.--
       ``(1) Waiver in case of business hardship.--
       ``(A) In general.--If--
       ``(i) an employer is (or in the case of a multiemployer 
     plan, 10 percent or more of the number of employers 
     contributing to or under the plan is) unable to satisfy the 
     minimum funding standard for a plan year without temporary 
     substantial business hardship (substantial business hardship 
     in the case of a multiemployer), and
       ``(ii) application of the standard would be adverse to the 
     interests of plan participants in the aggregate,

     the Secretary of the Treasury may, subject to subparagraphs 
     (B) and (C), waive the requirements of subsection (a) for 
     such year with respect to all or any portion of the minimum 
     funding standard. The Secretary of the Treasury shall not 
     waive the minimum funding standard with respect to a plan for 
     more than 3 of any 15 (5 of any 15 in the case of a 
     multiemployer plan) consecutive plan years.
       ``(B) Effects of waiver.--If a waiver is granted under 
     subparagraph (A) for any plan year--
       ``(i) in the case of a single-employer plan, the minimum 
     required contribution under section 303 for the plan year 
     shall be reduced by the amount of the waived funding 
     deficiency and such amount shall be amortized as required 
     under section 303(j), and
       ``(ii) in the case of a multiemployer plan, the funding 
     standard account shall be credited under section 304(b)(3)(C) 
     with the amount of the waived funding deficiency and such 
     amount shall be amortized as required under section 
     304(b)(2)(C).
       ``(C) Waiver of amortized portion not allowed.--The 
     Secretary of the Treasury may not waive under subparagraph 
     (A) any portion of the minimum funding standard under 
     subsection (a) for a plan year which is attributable to any 
     amortization payment required to be made for such plan year 
     with respect to any amortization described in subparagraph 
     (B) of any waived portion of the minimum funding standard for 
     any preceding plan year.
       ``(2) Determination of business hardship.--For purposes of 
     this subsection, the factors taken into account in 
     determining temporary substantial business hardship 
     (substantial business hardship in the case of a multiemployer 
     plan) shall include (but shall not be limited to) whether or 
     not--
       ``(A) the employer is operating at an economic loss,
       ``(B) there is substantial unemployment or underemployment 
     in the trade or business and in the industry concerned,
       ``(C) the sales and profits of the industry concerned are 
     depressed or declining, and
       ``(D) it is reasonable to expect that the plan will be 
     continued only if the waiver is granted.
       ``(3) Waived funding deficiency.--For purposes of this 
     part, the term `waived funding deficiency' means the portion 
     of the minimum funding standard under subsection (a) 
     (determined without regard to the waiver) for a plan year 
     waived by the Secretary of the Treasury and not satisfied by 
     employer contributions.
       ``(4) Security for waivers for single-employer plans, 
     consultations.--
       ``(A) Security may be required.--
       ``(i) In general.--Except as provided in subparagraph (C), 
     the Secretary of the Treasury may require an employer 
     maintaining a defined benefit plan which is a single-employer 
     plan (within the meaning of section 4001(a)(15)) to provide 
     security to such plan as a condition for granting or 
     modifying a waiver under paragraph (1).
       ``(ii)  special rules.--Any security provided under clause 
     (i) may be perfected and enforced only by the Pension Benefit 
     Guaranty Corporation, or at the direction of the Corporation, 
     by a contributing sponsor (within the meaning of section 
     4001(a)(13)), or a member of such sponsor's controlled group 
     (within the meaning of section 4001(a)(14)).
       ``(B) Consultation with the pension benefit guaranty 
     corporation.--Except as provided in subparagraph (C), the 
     Secretary of the Treasury shall, before granting or modifying 
     a waiver under this subsection with respect to a plan 
     described in subparagraph (A)(i)--
       ``(i) provide the Pension Benefit Guaranty Corporation 
     with--

       ``(I) notice of the completed application for any waiver or 
     modification, and
       ``(II) an opportunity to comment on such application within 
     30 days after receipt of such notice, and

       ``(ii) consider--

       ``(I) any comments of the Corporation under clause (i)(II), 
     and
       ``(II) any views of any employee organization (within the 
     meaning of section 3(4)) representing participants in the 
     plan which are submitted in writing to the Secretary of the 
     Treasury in connection with such application.

     Information provided to the Corporation under this 
     subparagraph shall be considered tax return information and 
     subject to the safeguarding and reporting requirements of 
     section 6103(p) of the Internal Revenue Code of 1986.
       ``(C) Exception for certain waivers.--
       ``(i) In general.--The preceding provisions of this 
     paragraph shall not apply to any plan with respect to which 
     the sum of--

[[Page 28563]]

       ``(I) the shortfall amortization charge (within the meaning 
     of section 303(c)(1)) for the plan year, and
       ``(II) the aggregate total of shortfall amortization 
     installments determined for succeeding plan years under 
     section 303(c)(2),

     is less than $1,000,000.
       ``(ii) Treatment of waivers for which applications are 
     pending.--The amount described in clause (i)(I) shall include 
     any increase in such amount which would result if all 
     applications for waivers of the minimum funding standard 
     under this subsection which are pending with respect to such 
     plan were denied.
       ``(5) Special rules for single-employer plans.--
       ``(A) Application must be submitted before date 2\1/2\ 
     months after close of year.--In the case of a single-employer 
     plan, no waiver may be granted under this subsection with 
     respect to any plan for any plan year unless an application 
     therefor is submitted to the Secretary of the Treasury not 
     later than the 15th day of the 3rd month beginning after the 
     close of such plan year.
       ``(B) Special rule if employer is member of controlled 
     group.--In the case of a single-employer plan, if an employer 
     is a member of a controlled group, the temporary substantial 
     business hardship requirements of paragraph (1) shall be 
     treated as met only if such requirements are met--
       ``(i) with respect to such employer, and
       ``(ii) with respect to the controlled group of which such 
     employer is a member (determined by treating all members of 
     such group as a single employer).

     The Secretary of the Treasury may provide that an analysis of 
     a trade or business or industry of a member need not be 
     conducted if the Secretary of the Treasury determines such 
     analysis is not necessary because the taking into account of 
     such member would not significantly affect the determination 
     under this paragraph.
       ``(6) Notice to employee organizations.--
       ``(A) In general.--The Secretary of the Treasury shall, 
     before granting a waiver under this subsection, require each 
     applicant to provide evidence satisfactory to such Secretary 
     that the applicant has provided notice of the filing of the 
     application for such waiver to each employee organization 
     representing employees covered by the affected plan, and each 
     affected party (as defined in section 4001(a)(21)). Such 
     notice shall include a description of the extent to which the 
     plan is funded for benefits which are guaranteed under title 
     IV and for benefit liabilities.
       ``(B) Consideration of relevant information.--The Secretary 
     of the Treasury shall consider any relevant information 
     provided by a person to whom notice was given under 
     subparagraph (A).
       ``(7) Cross reference.--For corresponding duties of the 
     Secretary of the Treasury with regard to implementation of 
     the Internal Revenue Code of 1986, see section 412(c) of such 
     Code.
       ``(d) Miscellaneous Rules.--
       ``(1) Change in method or year.--If the funding method, the 
     valuation date, or a plan year for a plan is changed, the 
     change shall take effect only if approved by the Secretary of 
     the Treasury.
       ``(2) Certain retroactive plan amendments.--For purposes of 
     this section, any amendment applying to a plan year which--
       ``(A) is adopted after the close of such plan year but no 
     later than 2\1/2\ months after the close of the plan year 
     (or, in the case of a multiemployer plan, no later than 2 
     years after the close of such plan year),
       ``(B) does not reduce the accrued benefit of any 
     participant determined as of the beginning of the first plan 
     year to which the amendment applies, and
       ``(C) does not reduce the accrued benefit of any 
     participant determined as of the time of adoption except to 
     the extent required by the circumstances,

     shall, at the election of the plan administrator, be deemed 
     to have been made on the first day of such plan year. No 
     amendment described in this paragraph which reduces the 
     accrued benefits of any participant shall take effect unless 
     the plan administrator files a notice with the Secretary of 
     the Treasury notifying him of such amendment and such 
     Secretary has approved such amendment, or within 90 days 
     after the date on which such notice was filed, failed to 
     disapprove such amendment. No amendment described in this 
     subsection shall be approved by the Secretary of the Treasury 
     unless such Secretary determines that such amendment is 
     necessary because of a substantial business hardship (as 
     determined under subsection (c)(2)) and that a waiver under 
     subsection (c) (or, in the case of a multiemployer plan, any 
     extension of the amortization period under section 304(d)) is 
     unavailable or inadequate.
       ``(3) Controlled group.--For purposes of this section, the 
     term `controlled group' means any group treated as a single 
     employer under subsection (b), (c), (m), or (o) of section 
     414 of the Internal Revenue Code of 1986.''.
       (c) Clerical Amendment.--The table of contents in section 1 
     of such Act is amended by striking the items relating to 
     sections 302 through 306 and inserting the following new 
     item:

``Sec. 302. Minimum funding standards.''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after 2005.

     SEC. 102. FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT 
                   PENSION PLANS.

       (a) In General.--Part 3 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974 (as amended 
     by section 101 of this Act) is amended further by inserting 
     after section 302 the following new section.


``Minimum funding standards for single-employer defined benefit pension 
                                 plans

       ``Sec. 303. (a) Minimum Required Contribution.--
       ``(1) In general.--For purposes of section 302(a)(2)(A), 
     except as otherwise provided in this subsection, the minimum 
     required contribution with respect to a plan for a plan year 
     is the target normal cost of the plan for the plan year.
       ``(2) Shortfall amortization charge.--In any case in which 
     the value of plan assets (determined without regard to 
     subsection (e)(1)) of the plan for the plan year which are 
     held by the plan immediately before the valuation date is 
     less than the funding target of the plan for the plan year, 
     the minimum required contribution with respect to the plan 
     for the plan year is the sum of the amount determined under 
     paragraph (1) plus a shortfall amortization charge for such 
     plan year determined under subsection (c).
       ``(3) Credit for excess assets.--In any case in which the 
     value of plan assets of the plan for the plan year which are 
     held by the plan immediately before the valuation date exceed 
     the funding target of the plan for the plan year, the minimum 
     required contribution with respect to the plan for the plan 
     year is the amount determined under paragraph (1), reduced by 
     such excess.
       ``(4) Pre-funding balance.--In the case of any plan year in 
     which--
       ``(A) the ratio (expressed as a percentage) which--
       ``(i) the value of plan assets (determined without regard 
     to subsection (e)(1)(B)) for the preceding plan year, bears 
     to
       ``(ii) the funding target of the plan for the preceding 
     plan year (determined without regard to subsection (g)(1)),

     is at least 80 percent, and
       ``(B) the plan sponsor elects (in such form and manner as 
     shall be prescribed in regulations of the Secretary of the 
     Treasury) to credit against the minimum required contribution 
     for the current plan year all or a portion of the funding 
     standard carryover balance and the pre-funding balance (to 
     the extent provided in subsection (h)) for the preceding plan 
     year (not in excess of such minimum required contribution),

     the minimum required contribution for the plan year shall be 
     reduced by the amount so credited by the plan sponsor.
       ``(b) Target Normal Cost.--For purposes of this section, 
     subject to subsection (g)(2), the term `target normal cost' 
     means, for any plan year, the present value of all benefits 
     which are expected to accrue or to be earned under the plan 
     during the plan year. If any benefit attributable to services 
     performed in a preceding plan year is increased by reason of 
     any increase in compensation during the current plan year, 
     the increase shall be treated as having accrued during the 
     current plan year.
       ``(c) Shortfall Amortization Charge.--
       ``(1) In general.--The shortfall amortization charge for a 
     plan for any plan year is the aggregate total of the 
     shortfall amortization installments for such plan year with 
     respect to the shortfall amortization bases for such plan 
     year and each of the 6 preceding plan years.
       ``(2) Shortfall amortization installment.--
       ``(A) In general.--For purposes of paragraph (1), the plan 
     sponsor shall determine, with respect to the shortfall 
     amortization base of the plan for any plan year, the amounts 
     necessary to amortize such shortfall amortization base, in 
     level annual installments over a period of 7 plan years 
     beginning with such plan year. The annual installment of such 
     amortization for each plan year in such 7-plan-year period is 
     the shortfall amortization installment for such plan year 
     with respect to such shortfall amortization base.
       ``(B) Computation assumptions.--The determination of any 
     annual installment under subparagraph (A) for any plan year 
     shall be made as of the valuation date for such plan year, 
     using the effective rate of interest for the plan for such 
     plan year.
       ``(3) Shortfall amortization base.--The shortfall 
     amortization base of a plan for a plan year is the excess (if 
     any) of--
       ``(A) the funding shortfall of such plan for such plan 
     year, over
       ``(B) the present value (determined using the effective 
     interest rate of the plan for the plan year) of the aggregate 
     total of the shortfall amortization installments, for such 
     plan year and the 5 succeeding plan years, which have been 
     determined with respect to the shortfall amortization bases 
     of the plan for each of the 6 plan years preceding such plan 
     year.
       ``(4) Funding shortfall.--For purposes of this section, the 
     funding shortfall of a plan for any plan year is the excess 
     (if any) of--

[[Page 28564]]

       ``(A) the funding target of the plan for the plan year, 
     over
       ``(B) the value of plan assets of the plan for the plan 
     year which are held by the plan immediately before the 
     valuation date.
       ``(5) Early deemed amortization upon attainment of funding 
     target.--In any case in which the funding shortfall of a plan 
     for a plan year is zero, for purposes of determining the 
     shortfall amortization charge for such plan year and 
     succeeding plan years, the shortfall amortization base for 
     all preceding plan years shall be reduced to zero.
       ``(d) Rules Relating to Funding Target.--For purposes of 
     this section--
       ``(1) Funding target.--Except as provided in subsection 
     (g)(1), the funding target of a plan for a plan year is the 
     present value of all liabilities to participants and their 
     beneficiaries under the plan for the plan year.
       ``(2) Funding target attainment percentage.--The `funding 
     target attainment percentage' of a plan for a plan year is 
     the ratio (expressed as a percentage) which--
       ``(A) the value of plan assets for the plan year, bears to
       ``(B) the funding target of the plan for the plan year 
     (determined without regard to subsection (g)(1)).
       ``(e) Valuation of Plan Assets and Liabilities.--
       ``(1) Value of plan assets.--For purposes of this section 
     (other than paragraph (4) and subsections (a)(2) and (h)(3)), 
     the term `value of plan assets' means the excess of the value 
     of plan assets (determined without regard to this paragraph) 
     over the sum of--
       ``(A) the pre-funding balance of the plan maintained under 
     subsection (h)(1), and
       ``(B) the funding standard carryover balance of the plan 
     maintained under subsection (h)(2).
       ``(2) Timing of determinations.--Except as otherwise 
     provided under this subsection, all determinations under this 
     section for a plan year shall be made as of the valuation 
     date of the plan for such plan year.
       ``(3) Valuation date.--For purposes of this section--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the valuation date of a plan for any plan year shall be the 
     first day of the plan year.
       ``(B) Exception for small plans.--If, on each day during 
     the preceding plan year, a plan had 500 or fewer 
     participants, the plan may designate any day during the plan 
     year as its valuation date for such plan year. For purposes 
     of this subparagraph, all defined benefit plans (other than 
     multiemployer plans) maintained by the same employer (or any 
     member of such employer's controlled group) shall be treated 
     as 1 plan, but only employees of such employer or member 
     shall be taken into account.
       ``(C) Application of certain rules in determination of plan 
     size.--For purposes of this paragraph--
       ``(i) Plans not in existence in preceding year.--In the 
     case of the first plan year of any plan, subparagraph (B) 
     shall apply to such plan by taking into account the number of 
     participants that the plan is reasonably expected to have on 
     days during such first plan year.
       ``(ii) Predecessors.--Any reference in subparagraph (B) to 
     an employer shall include a reference to any predecessor of 
     such employer.
       ``(4) Authorization of use of actuarial value.--For 
     purposes of this section, the value of plan assets 
     (determined without regard to paragraph (1)) 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, except that--
       ``(A) any such method providing for averaging of fair 
     market values may not provide for averaging of such values 
     over more than the current plan year and the 2 preceding plan 
     years, and
       ``(B) any such method may not result in a determination of 
     the value of plan assets which, at any time, is lower than 90 
     percent or greater than 110 percent of the fair market value 
     of such assets at such time.
       ``(5) Accounting for contribution receipts.--For purposes 
     of this section--
       ``(A) Contributions for prior plan years taken into 
     account.--For purposes of determining the value of plan 
     assets for any current plan year, in any case in which a 
     contribution properly allocable to amounts owed for a 
     preceding plan year is made on or after the valuation date of 
     the plan for such current plan year, such contribution shall 
     be taken into account, except that any such contribution made 
     during any such current plan year beginning after 2006 shall 
     be taken into account only in an amount equal to its present 
     value (determined using the effective rate of interest for 
     the plan for the preceding plan year) as of the valuation 
     date of the plan for such current plan year.
       ``(B) Contributions for current plan year disregarded.--For 
     purposes of determining the value of plan assets for any 
     current plan year, contributions which are properly allocable 
     to amounts owed for such plan year shall not be taken into 
     account, and, in the case of any such contribution made 
     before the valuation date of the plan for such plan year, 
     such value of plan assets shall be reduced for interest on 
     such amount determined using the effective rate of interest 
     of the plan for the preceding plan year for the period 
     beginning when such payment was made and ending on the 
     valuation date of the plan.
       ``(6) Accounting for plan liabilities.--For purposes of 
     this section--
       ``(A) Liabilities taken into account for current plan 
     year.--In determining the value of liabilities under a plan 
     for a plan year, liabilities shall be taken into account to 
     the extent attributable to benefits (including any early 
     retirement or similar benefit) accrued as of the beginning of 
     the plan year.
       ``(B) Accruals during current plan year disregarded.--For 
     purposes of subparagraph (A), benefits accrued during such 
     plan year (after those taken into account under subparagraph 
     (A)) shall not be taken into account, irrespective of whether 
     the valuation date of the plan for such plan year is later 
     than the first day of such plan year.
       ``(f) Actuarial Assumptions and Methods.--
       ``(1) In general.--Subject to this subsection, the 
     determination of any present value or other computation under 
     this section shall be made on the basis of actuarial 
     assumptions and methods--
       ``(A) each of which is reasonable (taking into account the 
     experience of the plan and reasonable expectations), and
       ``(B) which, in combination, offer the actuary's best 
     estimate of anticipated experience under the plan.
       ``(2) Interest rates.--
       ``(A) Effective interest rate.--For purposes of this 
     section, the term `effective interest rate' means, with 
     respect to any plan for any plan year, the single rate of 
     interest which, if used to determine the present value of the 
     plan's liabilities referred to in subsection (d)(1) would 
     result in an amount equal to the funding target of the plan 
     for such plan year.
       ``(B) Application to funding target.--For purposes of 
     determining the funding target of a plan for any plan year, 
     the interest rate used in determining the present value of 
     the liabilities of the plan shall be--
       ``(i) in the case of liabilities reasonably determined to 
     be payable during the 5-year period beginning on the first 
     day of the plan year, the first segment rate with respect to 
     the applicable month,
       ``(ii) in the case of liabilities reasonably determined to 
     be payable during the 15-year period beginning at the end of 
     the period described in clause (i), the second segment rate 
     with respect to the applicable month, and
       ``(iii) in the case of liabilities reasonably determined to 
     be payable after the period described in clause (ii), the 
     third segment rate with respect to the applicable month.
       ``(C) Segment rates.--For purposes of this paragraph--
       ``(i) First segment rate.--The term `first segment rate' 
     means, with respect to any month, the single rate of interest 
     which shall be determined by the Secretary of the Treasury 
     for such month on the basis of the corporate bond yield curve 
     for such month, taking into account only that portion of such 
     yield curve which is based on bonds maturing during the 5-
     year period commencing with such month.
       ``(ii) Second segment rate.--The term `second segment rate' 
     means, with respect to any month, the single rate of interest 
     which shall be determined by the Secretary of the Treasury 
     for such month on the basis of the corporate bond yield curve 
     for such month, taking into account only that portion of such 
     yield curve which is based on bonds maturing during the 15-
     year period beginning at the end of the period described in 
     clause (i).
       ``(iii) Third segment rate.--The term `third segment rate' 
     means, with respect to any month, the single rate of interest 
     which shall be determined by the Secretary of the Treasury 
     for such month on the basis of the corporate bond yield curve 
     for such month, taking into account only that portion of such 
     yield curve which is based on bonds maturing during periods 
     beginning after the period described in clause (ii).
       ``(D) Corporate bond yield curve.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `corporate bond yield curve' 
     means, with respect to any month, a yield curve which is 
     prescribed by the Secretary of the Treasury for such month 
     and which reflects a 3-year weighted average of yields on 
     investment grade corporate bonds with varying maturities.
       ``(ii) 3-year weighted average.--The term `3-year weighted 
     average' means an averaging methodology under which the most 
     recent year is weighted 50 percent, the year preceding such 
     year is weighted 35 percent, and the second year preceding 
     such year is weighted 15 percent.
       ``(E) Applicable month.--For purposes of this paragraph, 
     the term `applicable month' means, with respect to any plan 
     for any plan year, the month which includes the valuation 
     date of such plan for such plan year or, at the election of 
     the plan administrator, any of the 4 months which precede 
     such month. Any election made under this subparagraph shall 
     apply to the plan year for which made and all succeeding plan 
     years unless revoked with the consent of the Secretary of the 
     Treasury.
       ``(F) Publication requirements.--The Secretary of the 
     Treasury shall publish for each

[[Page 28565]]

     month the corporate bond yield curve (and the corporate bond 
     yield curve reflecting the modification described in section 
     205(g)(3)(B)(iii)(I)) for such month and each of the rates 
     determined under subparagraph (B) for such month. The 
     Secretary of the Treasury shall also publish a description of 
     the methodology used to determine such yield curve and such 
     rates which is sufficiently detailed to enable plans to make 
     reasonable projections regarding the yield curve and such 
     rates for future months based on the plan's projection of 
     future interest rates.
       ``(G) Transition rule.--
       ``(i) In general.--Notwithstanding the preceding provisions 
     of this paragraph, for plan years beginning in 2006 or 2007, 
     the first, second, and third segment rates for a plan with 
     respect to any month shall be equal to the sum of--

       ``(I) the product of such rate for such month determined 
     without regard to this subparagraph, multiplied by the 
     applicable percentage, and
       ``(II) the product of the rate determined under the rules 
     of section 302(b)(5)(B)(ii)(II) (as in effect for plan years 
     beginning in 2005), multiplied by a percentage equal to 100 
     percent minus the applicable percentage.

       ``(ii) Applicable percentage.--For purposes of clause (i), 
     the applicable percentage is 33\1/3\ percent for plan years 
     beginning in 2006 and 66\2/3\ percent for plan years 
     beginning in 2007.
       ``(3) Mortality table.--
       ``(A) In general.--The mortality tables used in determining 
     any present value or making any computation under this 
     section shall be the RP-2000 Combined Mortality Table, as 
     published by the Society of American Actuaries, as in effect 
     on the date of the enactment of the Pension Protection Act of 
     2005 and as revised from time to time under subparagraph (B).
       ``(B) Periodic revision.--The Secretary of the Treasury 
     shall (at least every 10 years) make revisions in any tables 
     in effect under this paragraph to reflect the actual 
     experience of pension plans and projected trends in such 
     experience.
       ``(C) Transition rule.--Under regulations of the Secretary 
     of the Treasury, any difference in assumptions as set forth 
     in the mortality table specified in subparagraph (A) and 
     assumptions as set forth in the mortality table described in 
     section 302(d)(7)(C)(ii) (as in effect for plan years 
     beginning in 2005) shall be phased in ratably over the first 
     period of 5 plan years beginning in or after 2006 so as to be 
     fully effective for the fifth plan year.
       ``(4) Probability of benefit payments in the form of lump 
     sums or other optional forms.--For purposes of determining 
     any present value or making any computation under this 
     section, there shall be taken into account--
       ``(A) the probability that future benefit payments under 
     the plan will be made in the form of optional forms of 
     benefits provided under the plan (including lump sum 
     distributions, determined on the basis of the plan's 
     experience and other related assumptions), and
       ``(B) any difference in the present value of such future 
     benefit payments resulting from the use of actuarial 
     assumptions, in determining benefit payments in any such 
     optional form of benefits, which are different from those 
     specified in this subsection.
       ``(5) Approval of large changes in actuarial assumptions.--
       ``(A) In general.--No actuarial assumption used to 
     determine the funding target for a single-employer plan to 
     which this paragraph applies may be changed without the 
     approval of the Secretary of the Treasury.
       ``(B) Plans to which paragraph applies.--This paragraph 
     shall apply to a plan only if--
       ``(i) the 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
       ``(ii) the change in assumptions (determined after taking 
     into account any changes in interest rate and mortality 
     table) results in a decrease in the funding shortfall of the 
     plan for the current plan year that exceeds $50,000,000, or 
     that exceeds $5,000,000 and that is 5 percent or more of the 
     funding target of the plan before such change.
       ``(g) Special Rules for at-Risk Plans.--
       ``(1) Funding target for plans in at-risk status.--
       ``(A) In general.--In any case in which a plan is in at-
     risk status for a plan year, the funding target of the plan 
     for the plan year is the sum of--
       ``(i) the present value of all liabilities to participants 
     and their beneficiaries under the plan for the plan year, as 
     determined by using, in addition to the actuarial assumptions 
     described in subsection (f), the supplemental actuarial 
     assumptions described in subparagraph (B), plus
       ``(ii) a loading factor determined under subparagraph (C).
       ``(B) Supplemental actuarial assumptions.--The actuarial 
     assumptions used in determining the valuation of the funding 
     target shall include, in addition to the actuarial 
     assumptions described in subsection (f), an assumption that 
     all participants will elect benefits at such times and in 
     such forms as will result in the highest present value of 
     liabilities under subparagraph (A)(i).
       ``(C) Loading factor.--The loading factor applied with 
     respect to a plan under this paragraph for any plan year is 
     the sum of--
       ``(i) $700, times the number of participants in the plan, 
     plus
       ``(ii) 4 percent of the funding target (determined without 
     regard to this paragraph) of the plan for the plan year.
       ``(2) Target normal cost of at-risk plans.--
       ``(A) In general.--In any case in which a plan is in at-
     risk status for a plan year, the target normal cost of the 
     plan for such plan year shall be the sum of--
       ``(i) the present value of all benefits which are expected 
     to accrue under the plan during the plan year, determined 
     under the actuarial assumptions used under paragraph (1), 
     plus
       ``(ii) the loading factor under paragraph (1)(C), excluding 
     the portion of the loading factor described in paragraph 
     (1)(C)(i).
       ``(B) Minimum amount.--In no event shall the target normal 
     cost of a plan determined under this paragraph be less than 
     the target normal cost of such plan as determined without 
     regard to this paragraph.
       ``(3) Determination of at-risk status.--For purposes of 
     this subsection, a plan is in `at-risk status' for a plan 
     year if the funding target attainment percentage of the plan 
     for the preceding plan year was less than 60 percent.
       ``(4) Transition between applicable funding targets and 
     between applicable target normal cost.--
       ``(A) In general.--In any case in which a plan which is in 
     at-risk status for a plan year has been in such status for a 
     consecutive period of fewer than 5 plan years, the applicable 
     amount of the funding target and of the target normal cost 
     shall be, in lieu of the amount determined without regard to 
     this paragraph, the sum of--
       ``(i) the amount determined under this section without 
     regard to this subsection, plus
       ``(ii) the transition percentage for such plan year of the 
     excess of the amount determined under this subsection 
     (without regard to this paragraph) over the amount determined 
     under this section without regard to this subsection.
       ``(B) Transition percentage.--For purposes of this 
     paragraph, the `transition percentage' for a plan year is the 
     product derived by multiplying--
       ``(i) 20 percent, by
       ``(ii) the number of plan years during the period described 
     in subparagraph (A).
       ``(h) Pre-Funding and Funding Standard Carryover 
     Balances.--
       ``(1) Pre-funding balance.--
       ``(A) In general.--The plan sponsor of a pension plan which 
     is a single-employer plan shall maintain a pre-funding 
     balance for purposes of this subsection. Such balance shall 
     consist of a beginning balance of zero, increased and 
     decreased to the extent provided in subparagraphs (B) and 
     (C), and adjusted further as provided in paragraph (3).
       ``(B) Increases.--As of the valuation date for each plan 
     year beginning after 2006, the pre-funding balance of a plan 
     shall be increased by the amount elected by the plan sponsor 
     for the plan year. Such amount shall not exceed the excess 
     (if any) of--
       ``(i) the aggregate total of employer contributions to the 
     plan for the preceding plan year, over
       ``(ii) the minimum required contribution for such preceding 
     plan year (increased by interest on any portion of such 
     minimum required contribution remaining unpaid, at the 
     effective interest rate for the plan for the preceding plan 
     year, for the period beginning with the first day of such 
     preceding plan year and ending on the date that payment of 
     such portion is made).
       ``(C) Decreases.--As of the valuation date for each plan 
     year after 2006, the pre-funding balance of a plan shall be 
     decreased (but not below zero) by the sum of--
       ``(i) the amount credited under subsection (a)(4) (if any) 
     in reducing the minimum required contribution of the plan for 
     the preceding plan year, and
       ``(ii) the amount elected by the plan sponsor as a 
     reduction in the pre-funding balance (for purposes of the 
     determination under subsection (e)(1) and any other purpose 
     under this section).
       ``(D) Coordination with funding standard carryover 
     balance.--To the extent that any plan has a funding standard 
     carryover balance greater than zero--
       ``(i) no amount of the pre-funding balance of such plan may 
     be credited under subsection (a)(4) in reducing the minimum 
     required contribution, and
       ``(ii) no election may be made under subparagraph (C)(ii).
       ``(E) No use of balance to reduce minimum required 
     contribution if used to avoid shortfall amortization.--The 
     amount of the pre-funding balance of such plan may be 
     credited under subsection (a)(4) in reducing the minimum 
     required contribution only if the plan sponsor has elected to 
     apply subsection (a)(2) to the plan for such plan year by 
     substituting `subsection (e)(1)(B)' for `subsection (e)(1)'.

[[Page 28566]]

       ``(2) Funding standard carryover balance.--
       ``(A) In general.--The plan sponsor of a pension plan to 
     which this paragraph applies shall maintain a funding 
     standard carryover balance for purposes of this subsection. 
     Such balance shall consist of a beginning balance determined 
     under subparagraph (C), decreased to the extent provided in 
     subparagraph (D), and adjusted further as provided in 
     paragraph (3).
       ``(B) Plans to which this paragraph applies.--This 
     paragraph applies to any plan which--
       ``(i) is a single-employer plan subject to this part,
       ``(ii) was in effect for a plan year beginning in 2005, and
       ``(iii) had a positive balance in the funding standard 
     account under section 302(b) as in effect for such plan year 
     and determined as of the end of such plan year.
       ``(C) Beginning balance.--The beginning balance of the 
     funding standard carryover balance shall be the positive 
     balance described in subparagraph (B)(iii).
       ``(D) Decreases.--As of the valuation date for each plan 
     year after 2006, the funding standard carryover balance of a 
     plan shall be decreased (but not below zero) by the sum of--
       ``(i) the amount credited under subsection (a)(4) (if any) 
     in reducing the minimum required contribution of the plan for 
     the preceding plan year, and
       ``(ii) the amount elected by the plan sponsor as a 
     reduction in the funding standard carryover balance (for 
     purposes of the determination under subsection (e)(1) and any 
     other purpose under this section).
       ``(3) Adjustments.--In determining the pre-funding balance 
     or the funding standard carryover balance of a plan as of the 
     valuation date of the plan (before applying any increase or 
     decrease under paragraph (1) or (2)), the plan sponsor shall, 
     in accordance with regulations which shall be prescribed by 
     the Secretary of the Treasury, adjust such balance of the 
     plan so as to reflect the rate of net gain or loss 
     (determined, notwithstanding subsection (e)(4), on the basis 
     of fair market value) experienced by all plan assets for the 
     period beginning with the valuation date for the preceding 
     plan year and ending with the date preceding the valuation 
     date for the current plan year, properly taking into account, 
     in accordance with such regulations, all contributions, 
     distributions, and other plan payments made during such 
     period.
       ``(4) Elections.--Except as otherwise provided in this 
     subsection, any election made under this subsection shall be 
     made at such time and in such form and manner as the 
     Secretary of the Treasury may provide.
       ``(5) Coordination with waivers.--For purposes of this 
     subsection, the term `minimum required contribution' means 
     for any plan year the minimum required contribution for such 
     plan year determined without regard to this subsection and by 
     taking into account any waiver under section 302(c) and any 
     waiver amortization charge under subsection (j) for such plan 
     year.
       ``(i) Payment of Minimum Required Contributions.--
       ``(1) In general.--For purposes of this section, the due 
     date for any payment of any minimum required contribution for 
     any plan year shall be 8\1/2\ months after the close of the 
     plan year.
       ``(2) Interest.--Any payment required under paragraph (1) 
     for a plan year made after the valuation date for such plan 
     year shall be increased by interest, for the period from the 
     valuation date to the payment date, at the effective rate of 
     interest for the plan for such plan year.
       ``(3) Accelerated quarterly contribution schedule for 
     underfunded plans.--
       ``(A) Interest penalty for failure to meet accelerated 
     quarterly payment schedule.--In any case in which the plan 
     has a funding shortfall for the preceding plan year, if the 
     required installment is not paid in full, then the minimum 
     required contribution for the plan year (as increased under 
     paragraph (2)) shall be further increased by an amount equal 
     to the interest on the amount of the underpayment for the 
     period of the underpayment, using an interest rate equal to 
     the excess of--
       ``(i) 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), over
       ``(ii) the effective rate of interest for the plan for the 
     plan year.
       ``(B) Amount of underpayment, period of underpayment.--For 
     purposes of subparagraph (A)--
       ``(i) Amount.--The amount of the underpayment shall be the 
     excess of--

       ``(I) the required installment, over
       ``(II) the amount (if any) of the installment contributed 
     to or under the plan on or before the due date for the 
     installment.

       ``(ii) Period of underpayment.--The period for which any 
     interest is charged under this paragraph with respect to any 
     portion of the underpayment shall run from the due date for 
     the installment to the date on which such portion is 
     contributed to or under the plan.
       ``(iii) Order of crediting contributions.--For purposes of 
     clause (i)(II), contributions shall be credited against 
     unpaid required installments in the order in which such 
     installments are required to be paid.
       ``(C) Number of required installments; due dates.--For 
     purposes of this paragraph--
       ``(i) Payable in 4 installments.--There shall be 4 required 
     installments for each plan year.
       ``(ii) Time for payment of installments.--The due dates for 
     required installments are set forth in the following table:

 
  ``In the case of the following required
               installment:                       The due date is:
 
  1st.....................................  April 15
  2nd.....................................  July 15
  3rd.....................................  October 15
  4th.....................................  January 15 of the following
                                             year
 

       ``(D) Amount of required installment.--For purposes of this 
     paragraph--
       ``(i) In general.--The amount of any required installment 
     shall be 25 percent of the required annual payment.
       ``(ii) Required annual payment.--For purposes of clause 
     (i), the term `required annual payment' means the lesser of--

       ``(I) 90 percent of the minimum required contribution 
     (without regard to any waiver under section 302(c)) to the 
     plan for the plan year under this section, or
       ``(II) in the case of a plan year beginning after 2006, 100 
     percent of the minimum required contribution (without regard 
     to any waiver under section 302(c)) to the plan for the 
     preceding plan year.

     Subclause (II) shall not apply if the preceding plan year 
     referred to in such clause was not a year of 12 months.
       ``(E) Fiscal years and short years.--
       ``(i) Fiscal years.--In applying this paragraph to a plan 
     year beginning on any date other than January 1, there shall 
     be substituted for the months specified in this paragraph, 
     the months which correspond thereto.
       ``(ii) Short plan year.--This subparagraph shall be applied 
     to plan years of less than 12 months in accordance with 
     regulations prescribed by the Secretary of the Treasury.
       ``(4) Liquidity requirement in connection with quarterly 
     contributions.--
       ``(A) In general.--A plan to which this paragraph applies 
     shall be treated as failing to pay the full amount of any 
     required installment under paragraph (3) to the extent that 
     the value of the liquid assets paid in such installment is 
     less than the liquidity shortfall (whether or not such 
     liquidity shortfall exceeds the amount of such installment 
     required to be paid but for this paragraph).
       ``(B) Plans to which paragraph applies.--This paragraph 
     shall apply to a plan (other than a plan that would be 
     described in subsection (e)(3)(B) if `100' were substituted 
     for `500' therein) which--
       ``(i) is required to pay installments under paragraph (3) 
     for a plan year, and
       ``(ii) has a liquidity shortfall for any quarter during 
     such plan year.
       ``(C) Period of underpayment.--For purposes of paragraph 
     (3)(A), any portion of an installment that is treated as not 
     paid under subparagraph (A) shall continue to be treated as 
     unpaid until the close of the quarter in which the due date 
     for such installment occurs.
       ``(D) Limitation on increase.--If the amount of any 
     required installment is increased by reason of subparagraph 
     (A), in no event shall such increase exceed the amount which, 
     when added to prior installments for the plan year, is 
     necessary to increase the funding target attainment 
     percentage of the plan for the plan year (taking into account 
     the expected increase in funding target due to benefits 
     accruing or earned during the plan year) to 100 percent.
       ``(E) Definitions.--For purposes of this subparagraph:
       ``(i) Liquidity shortfall.--The term `liquidity shortfall' 
     means, with respect to any required installment, an amount 
     equal to the excess (as of the last day of the quarter for 
     which such installment is made) of--

       ``(I) the base amount with respect to such quarter, over
       ``(II) the value (as of such last day) of the plan's liquid 
     assets.

       ``(ii) Base amount.--

       ``(I) In general.--The term `base amount' means, with 
     respect to any quarter, an amount equal to 3 times the sum of 
     the adjusted disbursements from the plan for the 12 months 
     ending on the last day of such quarter.
       ``(II) Special rule.--If the amount determined under 
     subclause (I) exceeds an amount equal to 2 times the sum of 
     the adjusted disbursements from the plan for the 36 months 
     ending on the last day of the quarter and an enrolled actuary 
     certifies to the satisfaction of the Secretary of the 
     Treasury that such excess is the result of nonrecurring 
     circumstances, the base amount with respect to such quarter 
     shall be determined without regard to amounts related to 
     those nonrecurring circumstances.

       ``(iii) Disbursements from the plan.--The term 
     `disbursements from the plan' means all disbursements from 
     the trust, including purchases of annuities, payments of 
     single sums and other benefits, and administrative expenses.

[[Page 28567]]

       ``(iv) Adjusted disbursements.--The term `adjusted 
     disbursements' means disbursements from the plan reduced by 
     the product of--

       ``(I) the plan's funding target attainment percentage for 
     the plan year, and
       ``(II) the sum of the purchases of annuities, payments of 
     single sums, and such other disbursements as the Secretary of 
     the Treasury shall provide in regulations.

       ``(v) Liquid assets.--The term `liquid assets' means cash, 
     marketable securities, and such other assets as specified by 
     the Secretary of the Treasury in regulations.
       ``(vi) Quarter.--The term `quarter' means, with respect to 
     any required installment, the 3-month period preceding the 
     month in which the due date for such installment occurs.
       ``(F) Regulations.--The Secretary of the Treasury may 
     prescribe such regulations as are necessary to carry out this 
     paragraph.
       ``(j) Waiver Amortization Charge.--
       ``(1) In general.--The minimum required contribution for 
     any plan year under subsection (a) shall be increased by the 
     amount of the waiver amortization charge (if any) for such 
     plan year.
       ``(2) Determination of waiver amortization charge.--The 
     waiver amortization charge for a plan for any plan year is 
     the aggregate total of the waiver amortization installments 
     for such plan year with respect to the waiver amortization 
     bases for such plan year and each of the 4 preceding plan 
     years.
       ``(3) Waiver amortization installment.--For purposes of 
     paragraph (2), the plan sponsor shall determine, with respect 
     to the waiver amortization base of the plan for any plan 
     year, the amounts necessary to amortize such waiver 
     amortization base, in level annual installments over a period 
     of 5 plan years beginning with such plan year. The annual 
     installment of such amortization for each plan year in such 
     5-plan year period is the waiver amortization installment for 
     such plan year with respect to such waiver amortization base.
       ``(4) Computation assumptions.--The determination of any 
     annual installment under paragraph (2) for any plan year 
     shall be made as of the valuation date for such plan year, 
     using the effective rate of interest for the plan for the 
     preceding plan year.
       ``(5) Waiver amortization base.--The waiver amortization 
     base of a plan for a plan year is the excess (if any) of--
       ``(A) the portion of the minimum required contribution of 
     such plan waived under section 302(c) for such plan year, 
     over
       ``(B) the aggregate total of the waiver amortization 
     installments, for such plan year and the 3 succeeding plan 
     years, which have been determined with respect to the waiver 
     amortization bases of the plan for each of the 4 plan years 
     preceding such plan year.
       ``(k) Imposition of Lien Where Failure to Make Required 
     Contributions.--
       ``(1) In general.--In the case of a plan covered under 
     section 4021 of this Act and to which this subsection applies 
     (as provided under paragraph (2)), if--
       ``(A) any person fails to make a contribution payment 
     required by section 302 and this section before the due date 
     for such payment, and
       ``(B) the unpaid balance of such payment (including 
     interest), when added to the aggregate unpaid balance of all 
     preceding such payments for which payment was not made before 
     the due date (including interest), exceeds $1,000,000,

     then there shall be a lien in favor of the plan in the amount 
     determined under paragraph (3) upon all property and rights 
     to property, whether real or personal, belonging to such 
     person and any other person who is a member of the same 
     controlled group of which such person is a member.
       ``(2) Plans to which subsection applies.--This subsection 
     shall apply to a defined benefit plan which is a single-
     employer plan for any plan year for which the funding target 
     attainment percentage (as defined in subsection (d)(2)) of 
     such plan is less than 100 percent.
       ``(3) Amount of lien.--For purposes of paragraph (1), the 
     amount of the lien shall be equal to the aggregate unpaid 
     balance of contribution payments required under this section 
     and section 302 for which payment has not been made before 
     the due date.
       ``(4) Notice of failure; lien.--
       ``(A) Notice of failure.--A person committing a failure 
     described in paragraph (1) shall notify the Pension Benefit 
     Guaranty Corporation of such failure within 10 days of the 
     due date for the required contribution payment.
       ``(B) Period of lien.--The lien imposed by paragraph (1) 
     shall arise on the due date for the required contribution 
     payment and shall continue until the last day of the first 
     plan year in which the plan ceases to be described in 
     paragraph (1)(B). Such lien shall continue to run without 
     regard to whether such plan continues to be described in 
     paragraph (2) during the period referred to in the preceding 
     sentence.
       ``(C) Certain rules to apply.--Any amount with respect to 
     which a lien is imposed under paragraph (1) shall be treated 
     as taxes due and owing the United States and rules similar to 
     the rules of subsections (c), (d), and (e) of section 4068 
     shall apply with respect to a lien imposed by subsection (a) 
     and the amount with respect to such lien.
       ``(5) Enforcement.--Any lien created under paragraph (1) 
     may be perfected and enforced only by the Pension Benefit 
     Guaranty Corporation, or at the direction of the Pension 
     Benefit Guaranty Corporation, by the contributing sponsor (or 
     any member of the controlled group of the contributing 
     sponsor).
       ``(6) Definitions.--For purposes of this subsection--
       ``(A) Contribution payment.--The term `contribution 
     payment' means, in connection with a plan, a contribution 
     payment required to be made to the plan, including any 
     required installment under paragraphs (3) and (4) of 
     subsection (i).
       ``(B) Due date; required installment.--The terms `due date' 
     and `required installment' have the meanings given such terms 
     by subsection (i), except that in the case of a payment other 
     than a required installment, the due date shall be the date 
     such payment is required to be made under section 303.
       ``(C) Controlled group.--The term `controlled group' means 
     any group treated as a single employer under subsections (b), 
     (c), (m), and (o) of section 414 of the Internal Revenue Code 
     of 1986.
       ``(l) Qualified Transfers to Health Benefit Accounts.--In 
     the case of a qualified transfer (as defined in section 420 
     of the Internal Revenue Code of 1986), any assets so 
     transferred shall not, for purposes of this section, be 
     treated as assets in the plan.''.
       (b) Clerical Amendment.--The table of sections in section 1 
     of such Act (as amended by section 101) is amended by 
     inserting after the item relating to section 302 the 
     following new item:

``Sec. 303. Minimum funding standards for single-employer defined 
              benefit pension plans.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to plan years beginning after 2005.

     SEC. 103. LIMITATIONS ON DISTRIBUTIONS AND BENEFIT ACCRUALS 
                   UNDER SINGLE-EMPLOYER PLANS.

       (a) Prohibition of Shutdown Benefits and Other 
     Unpredictable Contingent Event Benefits Under Single-Employer 
     Plans.--Section 206 of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1056) is amended by adding at 
     the end the following new subsection:
       ``(g) Prohibition of Shutdown Benefits and Other 
     Unpredictable Contingent Event Benefits Under Single-Employer 
     Plans.--
       ``(1) In general.--No pension plan which is a single-
     employer plan may provide benefits which are payable upon the 
     occurrence of--
       ``(A) a plant shutdown, or
       ``(B) any other unpredictable contingent event.
       ``(2) Unpredictable contingent event.--For purposes of this 
     subsection, the term `unpredictable contingent event' means 
     an event other than--
       ``(A) attainment of any age, performance of any service, 
     receipt or derivation of any compensation, or the occurrence 
     of death or disability, or
       ``(B) an event which is reasonably and reliably predictable 
     (as determined by the Secretary of the Treasury).''.
       (b) Other Limits on Benefits and Benefit Accruals.--
       (1) In general.--Section 206 of such Act (as amended by 
     subsection (a)) is amended further by adding at the end the 
     following new subsection:
       ``(h) Funding-Based Limits on Benefits and Benefit Accruals 
     Under Single-Employer Plans.--
       ``(1) Limitations on plan amendments increasing liability 
     for benefits.--
       ``(A) In general.--No amendment to a single-employer plan 
     which has the effect of increasing liabilities of the plan by 
     reason of increases in benefits, establishment of new 
     benefits, changing the rate of benefit accrual, or changing 
     the rate at which benefits become nonforfeitable to the plan 
     may take effect during any plan year if the funding target 
     attainment percentage as of the valuation date of the plan 
     for such plan year is--
       ``(i) less than 80 percent, or
       ``(ii) would be less than 80 percent taking into account 
     such amendment.
       ``(B) Exemption.--Subparagraph (A) shall cease to apply 
     with respect to any plan year, effective as of the first date 
     of the plan year (or if later, the effective date of the 
     amendment), upon payment by the plan sponsor of a 
     contribution equal to--
       ``(i) in the case of subparagraph (A)(i), the amount of the 
     increase in the funding target of the plan (under section 
     303) for the plan year attributable to the amendment, and
       ``(ii) in the case of subparagraph (A)(ii), the amount 
     sufficient to result in a funding target attainment 
     percentage of 80 percent.
       ``(2) Funding-based limitation on certain forms of 
     distribution.--A single-employer plan shall provide that, in 
     any case in which the plan's funding target attainment 
     percentage as of the valuation date of the plan for a plan 
     year is less than 80 percent, the plan may not after such 
     date pay any prohibited payment (as defined in section 
     206(e)).
       ``(3) Limitations on benefit accruals for plans with severe 
     funding shortfalls.--A

[[Page 28568]]

     single-employer plan shall provide that, in any case in which 
     the plan's funding target attainment percentage as of the 
     valuation date of the plan for a plan year is less than 60 
     percent, all future benefit accruals under the plan shall 
     cease as of such date.
       ``(4) New plans.--Paragraphs (1) and (3) shall not apply to 
     a plan for the first 5 plan years of the plan. For purposes 
     of this paragraph, the reference in this paragraph to a plan 
     shall include a reference to any predecessor plan.
       ``(5) Presumed underfunding for purposes of benefit 
     limitations based on prior year's funding status.--
       ``(A) Presumption of continued underfunding.--In any case 
     in which a benefit limitation under paragraph (1), (2), or 
     (3) has been applied to a plan with respect to the plan year 
     preceding the current plan year, the funding target 
     attainment percentage of the plan as of the valuation date of 
     the plan for the current plan year shall be presumed to be 
     equal to the funding target attainment percentage of the plan 
     as of the valuation date of the plan for the preceding plan 
     year until the enrolled actuary of the plan certifies the 
     actual funding target attainment percentage of the plan as of 
     the valuation date of the plan for the current plan year.
       ``(B) Presumption of underfunding after 10th month.--In any 
     case in which no such certification is made with respect to 
     the plan before the first day of the 10th month of the 
     current plan year, for purposes of paragraphs (1), (2), and 
     (3), the plan's funding target attainment percentage shall be 
     conclusively presumed to be less than 60 percent as of the 
     first day of such 10th month, and such day shall be deemed, 
     for purposes of such paragraphs, to be the valuation date of 
     the plan for the current plan year.
       ``(C) Presumption of underfunding after 4th month for 
     nearly underfunded plans.--In any case in which--
       ``(i) a benefit limitation under paragraph (1), (2), or (3) 
     did not apply to a plan with respect to the plan year 
     preceding the current plan year, but the funding target 
     attainment percentage of the plan for such preceding plan 
     year was not more than 10 percentage points greater than the 
     percentage which would have caused such paragraph to apply to 
     the plan with respect to such preceding plan year, and
       ``(ii) as of the first day of the 4th month of the current 
     plan year, the enrolled actuary of the plan has not certified 
     the actual funding target attainment percentage of the plan 
     as of the valuation date of the plan for the current plan 
     year,

     until the enrolled actuary so certifies, such first day shall 
     be deemed, for purposes of such paragraph, to be the 
     valuation date of the plan for the current plan year and the 
     funding target attainment percentage of the plan as of such 
     first day shall, for purposes of such paragraph, be presumed 
     to be equal to 10 percentage points less than the funding 
     target attainment percentage of the plan as of the valuation 
     date of the plan for such preceding plan year.
       ``(6) Restoration by plan amendment of benefits or benefit 
     accrual.--In any case in which a prohibition under paragraph 
     (2) of the payment of lump sum distributions or benefits in 
     any other accelerated form or a cessation of benefit accruals 
     under paragraph (3) is applied to a plan with respect to any 
     plan year and such prohibition or cessation, as the case may 
     be, ceases to apply to any subsequent plan year, the plan may 
     provide for the resumption of such benefit payment or such 
     benefit accrual only by means of the adoption of a plan 
     amendment after the valuation date of the plan for such 
     subsequent plan year. The preceding sentence shall not apply 
     to a prohibition or cessation required by reason of paragraph 
     (5).
       ``(7) Funding target attainment percentage.--For purposes 
     of this subsection, the term `funding target attainment 
     percentage' has the meaning provided such term under section 
     303(d)(2).''.
       (2) Notice requirement.--
       (A) In general.--Section 101 of such Act (29 U.S.C. 1021) 
     is amended--
       (i) by redesignating subsection (j) as subsection (k); and
       (ii) by inserting after subsection (i) the following new 
     subsection:
       ``(j) Notice of Funding-Based Limitation on Certain Forms 
     of Distribution.--The plan administrator of a single-employer 
     plan shall provide a written notice to plan participants and 
     beneficiaries within 30 days after the plan has become 
     subject to the restriction described in section 206(h)(2) or 
     at such other time as may be deterimined by the Secretary.''.
       (B) Penalty.--Section 502(c)(1)(A) of such Act (29 U.S.C. 
     1132(c)(1)(A)) is amended by striking ``section 606'' and all 
     that follows through ``101(f)'' and inserting ``section 606, 
     101(e)(1), 101(f), or 101(j)''.
       (c) Special Rule for Plan Amendments.--A plan shall not 
     fail to meet the requirements of section 204(g) of the 
     Employee Retirement Income Security Act of 1974 or section 
     411(d)(6) of the Internal Revenue Code of 1986 solely by 
     reason of the adoption by the plan of an amendment necessary 
     to meet the requirements of the amendments made by this 
     section.
       (d) Effective Date.--
       (1) Shutdown benefits.--Except as provided in paragraph 
     (3), the amendments made by subsection (a) shall apply with 
     respect to plant shutdowns, or other unpredictable contingent 
     events, occurring after 2006.
       (2) Other benefits.--Except as provided in paragraph (3), 
     the amendments made by subsection (b) shall apply with 
     respect to plan years beginning after 2006.
       (3) Collective bargaining exception.--In the case of a plan 
     maintained pursuant to 1 or more collective bargaining 
     agreements between employee representatives and 1 or more 
     employers ratified before the date of the enactment of this 
     Act, the amendments made by this subsection shall not apply 
     to plan years beginning before the earlier of--
       (A) the later of--
       (i) the date on which the last collective bargaining 
     agreement relating to the plan terminates (determined without 
     regard to any extension thereof agreed to after the date of 
     the enactment of this Act), or
       (ii) the first day of the first plan year to which the 
     amendments made by this subsection would (but for this 
     subparagraph) apply, or
       (B) January 1, 2009

     .For purposes of clause (i), any plan amendment made pursuant 
     to a collective bargaining agreement relating to the plan 
     which amends the plan solely to conform to any requirement 
     added by this subsection shall not be treated as a 
     termination of such collective bargaining agreement.

     SEC. 104. TECHNICAL AND CONFORMING AMENDMENTS.

       (a) Security Required for Plan Amendment Resulting in 
     Significant Underfunding.--Section 307 of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1085b) is 
     amended--
       (1) in subsection (a)(1), by striking ``current liability 
     under the plan'' and inserting ``the funding target of the 
     plan'';
       (2) in subsection (a)(2), by striking ``funded current 
     liability percentage'' and inserting ``funding target 
     attainment percentage'', and by striking ``unfunded current 
     liability'' and inserting ``unfunded liabilities'';
       (3) in subsection (c)(1)(A), by striking ``funded current 
     liability percentage'' and inserting ``funding target 
     attainment percentage'', and by ``unfunded current 
     liability'' and inserting ``unfunded liabilities'';
       (4) in subsection (c)(1)(B), by striking ``current 
     liability'' and inserting ``funding target'';
       (5) in subsection (d), by striking ``funded current 
     liability percentage'' each place it appears and inserting 
     ``funding target attainment percentage''; and
       (6) in subsection (f), by striking ``the terms'' and all 
     that follows and inserting the following: ``the terms 
     `funding target' and `funding target attainment percentage' 
     shall have the meanings given such terms by sections 303(d) 
     and 303(g)(4), respectively, and the term `unfunded 
     liabilities' means, with respect to any plan year, the excess 
     (if any) of the funding target of the plan over the value of 
     the plan's assets determined under section 303(e)(4).''
       (b) Miscellaneous Amendments.--Subtitle B of title I of 
     such Act (29 U.S.C. 1021 et seq.) is amended--
       (1) in section 101(d)(3), by striking ``section 302(e)'' 
     and inserting ``section 303(i)'';
       (2) in section 101(f)(2)(B), by striking clause (i) and 
     inserting the following:
       ``(i) a statement as to whether--

       ``(I) in the case of a single-employer plan, the plan's 
     funding target attainment percentage (as defined in section 
     303(g)(4)), or
       ``(II) in the case of a multiemployer plan, the plan's 
     funded current liability percentage (as defined in section 
     305(e)(4)),

     is at least 100 percent (and, if note, the actual 
     percentage);'';
       (3) in section 103(d)(8)(B), by striking ``the requirements 
     of section 302(c)(3)'' and inserting ``the applicable 
     requirements of sections 303(f) and 304(c)(3)'';
       (4) in section 103(d), by striking paragraph (11) and 
     inserting the following:
       ``(11) If the current value of the assets of the plan is 
     less than 70 percent of--
       ``(A) in the case of a single-employer plan, the funding 
     target (as defined in section 303(d)) of the plan, or
       ``(B) in the case of a multiemployer plan, the current 
     liability (as defined in section 304(c)(6)(C)) under the 
     plan,

     the percentage which such value is of the amount described in 
     subparagraph (A) or (B).'';
       (5) in section 203(a)(3)(C), by striking ``section 
     302(c)(8)'' and inserting ``section 302(d)(2)'';
       (6) in section 204(g)(1), by striking ``section 302(c)(8)'' 
     and inserting ``section 302(d)(2)'';
       (7) in section 204(i)(2)(B), by striking ``section 
     302(c)(8)'' and inserting ``section 302(d)(2)'';
       (8) in section 204(i)(3), by striking ``funded current 
     liability percentage (within the meaning of section 302(d)(8) 
     of this Act)'' and inserting ``funding target attainment 
     percentage (as defined in section 303(g)(4))'';
       (9) in section 204(i)(4), by striking ``section 
     302(c)(11)(A), without regard to section 302(c)(11)(B)'' and 
     inserting ``section 302(b)(1), without regard to section 
     302(b)(2)'';
       (10) in section 206(e)(1), by striking ``subject to the 
     additional funding requirements of section 302(d)'' and 
     inserting ``in at-risk

[[Page 28569]]

     status under section 303(g)'', and by striking ``section 
     302(e)(5)'' and inserting ``section 303(i)(4)(E)(i)'';
       (11) in section 206(e)(3), by striking ``section 302(e) by 
     reason of paragraph (5)(A) thereof'' and inserting ``section 
     303(i)(3) by reason of section 303(i)(4)(A)''; and
       (12) in sections 101(e)(3), 403(c)(1), and 408(b)(13), by 
     striking ``American Jobs Creation Act of 2004'' and inserting 
     ``Pension Protection Act of 2005''.
       (c) Repeal of Expired Authority for Temporary Variances.--
     Section 207 of such Act (29 U.S.C. 1057) is repealed.
       (d) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after 2005.

        Subtitle B--Amendments to Internal Revenue Code of 1986

     SEC. 111. MINIMUM FUNDING STANDARDS.

       (a) In General.--Section 412 of the Internal Revenue Code 
     of 1986 (relating to minimum funding standards) is amended to 
     read as follows:

     ``SEC. 412. MINIMUM FUNDING STANDARDS.

       ``(a) Requirement to Meet Minimum Funding Standard.--
       ``(1) In general.--A plan to which this part applies shall 
     satisfy the minimum funding standard applicable to the plan 
     for any plan year.
       ``(2) Minimum funding standard.--For purposes of paragraph 
     (1), a plan shall be treated as satisfying the minimum 
     funding standard for a plan year if--
       ``(A) in the case of a defined benefit plan which is a 
     single-employer plan, the employer makes contributions to or 
     under the plan for the plan year which, in the aggregate, are 
     not less than the minimum required contribution determined 
     under section 430 for the plan for the plan year,
       ``(B) in the case of a money purchase plan which is a 
     single-employer plan, the employer makes contributions to or 
     under the plan for the plan year which are required under the 
     terms of the plan, and
       ``(C) in the case of a multiemployer plan, the employers 
     make contributions to or under the plan for any plan year 
     which, in the aggregate, are sufficient to ensure that the 
     plan does not have an accumulated funding deficiency under 
     section 431 as of the end of the plan year.
       ``(b) Liability for Contributions.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     amount of any contribution required by this section 
     (including any required installments under paragraphs (3) and 
     (4) of section 430(i)) shall be paid by any employer 
     responsible for making contributions to or under the plan.
       ``(2) Joint and several liability where employer member of 
     controlled group.--In the case of a single-employer plan, if 
     the employer referred to in paragraph (1) is a member of a 
     controlled group, each member of such group shall be jointly 
     and severally liable for payment of such contributions.
       ``(c) Variance From Minimum Funding Standards.--
       ``(1) Waiver in case of business hardship.--
       ``(A) In general.--If--
       ``(i) an employer is (or in the case of a multiemployer 
     plan, 10 percent or more of the number of employers 
     contributing to or under the plan is) unable to satisfy the 
     minimum funding standard for a plan year without temporary 
     substantial business hardship (substantial business hardship 
     in the case of a multiemployer), and
       ``(ii) application of the standard would be adverse to the 
     interests of plan participants in the aggregate,

     the Secretary may, subject to subparagraphs (B) and (C), 
     waive the requirements of subsection (a) for such year with 
     respect to all or any portion of the minimum funding 
     standard. The Secretary shall not waive the minimum funding 
     standard with respect to a plan for more than 3 of any 15 (5 
     of any 15 in the case of a multiemployer plan) consecutive 
     plan years.
       ``(B) Effects of waiver.--If a waiver is granted under 
     subparagraph (A) for any plan year--
       ``(i) in the case of a single-employer plan, the minimum 
     required contribution under section 430 for the plan year 
     shall be reduced by the amount of the waived funding 
     deficiency and such amount shall be amortized as required 
     under section 430(j), and
       ``(ii) in the case of a multiemployer plan, the funding 
     standard account shall be credited under section 431(b)(3)(C) 
     with the amount of the waived funding deficiency and such 
     amount shall be amortized as required under section 
     431(b)(2)(C).
       ``(C) Waiver of amortized portion not allowed.--The 
     Secretary may not waive under subparagraph (A) any portion of 
     the minimum funding standard under subsection (a) for a plan 
     year which is attributable to any amortization payment 
     required to be made for such plan year with respect to any 
     amortization described in subparagraph (B) of any waived 
     portion of the minimum funding standard for any preceding 
     plan year.
       ``(2) Determination of business hardship.--For purposes of 
     this subsection, the factors taken into account in 
     determining temporary substantial business hardship 
     (substantial business hardship in the case of a multiemployer 
     plan) shall include (but shall not be limited to) whether or 
     not--
       ``(A) the employer is operating at an economic loss,
       ``(B) there is substantial unemployment or underemployment 
     in the trade or business and in the industry concerned,
       ``(C) the sales and profits of the industry concerned are 
     depressed or declining, and
       ``(D) it is reasonable to expect that the plan will be 
     continued only if the waiver is granted.
       ``(3) Waived funding deficiency.--For purposes of this 
     part, the term `waived funding deficiency' means the portion 
     of the minimum funding standard under subsection (a) 
     (determined without regard to the waiver) for a plan year 
     waived by the Secretary and not satisfied by employer 
     contributions.
       ``(4) Security for waivers for single-employer plans, 
     consultations.--
       ``(A) Security may be required.--
       ``(i) In general.--Except as provided in subparagraph (C), 
     the Secretary may require an employer maintaining a defined 
     benefit plan which is a single-employer plan (within the 
     meaning of section 4001(a)(15) of the Employee Retirement and 
     Income Security Act of 1974) to provide security to such plan 
     as a condition for granting or modifying a waiver under 
     paragraph (1).
       ``(ii) Special rules.--Any security provided under clause 
     (i) may be perfected and enforced only by the Pension Benefit 
     Guaranty Corporation, or at the direction of the Corporation, 
     by a contributing sponsor (within the meaning of section 
     4001(a)(13) of such Act), or a member of such sponsor's 
     controlled group (within the meaning of section 4001(a)(14) 
     of such Act).
       ``(B) Consultation with the pension benefit guaranty 
     corporation.--Except as provided in subparagraph (C), the 
     Secretary shall, before granting or modifying a waiver under 
     this subsection with respect to a plan described in 
     subparagraph (A)(i)--
       ``(i) provide the Pension Benefit Guaranty Corporation 
     with--

       ``(I) notice of the completed application for any waiver or 
     modification, and
       ``(II) an opportunity to comment on such application within 
     30 days after receipt of such notice, and

       ``(ii) consider--

       ``(I) any comments of the Corporation under clause (i)(II), 
     and
       ``(II) any views of any employee organization (within the 
     meaning of section 3(4) of the Employee Retirement and Income 
     Security Act of 1974) representing participants in the plan 
     which are submitted in writing to the Secretary in connection 
     with such application.

     Information provided to the Corporation under this 
     subparagraph shall be considered tax return information and 
     subject to the safeguarding and reporting requirements of 
     section 6103(p).
       ``(C) Exception for certain waivers.--
       ``(i) In general.--The preceding provisions of this 
     paragraph shall not apply to any plan with respect to which 
     the sum of--

       ``(I) the shortfall amortization charge (within the meaning 
     of section 303(c)(1)) for the plan year, and
       ``(II) the aggregate total of shortfall amortization 
     installments determined for succeeding plan years under 
     section 303(c)(2),

     is less than $1,000,000.
       ``(ii) Treatment of waivers for which applications are 
     pending.--The amount described in clause (i)(I) shall include 
     any increase in such amount which would result if all 
     applications for waivers of the minimum funding standard 
     under this subsection which are pending with respect to such 
     plan were denied.
       ``(5) Special rules for single-employer plans.--
       ``(A) Application must be submitted before date 2\1/2\ 
     months after close of year.--In the case of a single-employer 
     plan, no waiver may be granted under this subsection with 
     respect to any plan for any plan year unless an application 
     therefor is submitted to the Secretary not later than the 
     15th day of the 3rd month beginning after the close of such 
     plan year.
       ``(B) Special rule if employer is member of controlled 
     group.--In the case of a single-employer plan, if an employer 
     is a member of a controlled group, the temporary substantial 
     business hardship requirements of paragraph (1) shall be 
     treated as met only if such requirements are met--
       ``(i) with respect to such employer, and
       ``(ii) with respect to the controlled group of which such 
     employer is a member (determined by treating all members of 
     such group as a single employer).

     The Secretary may provide that an analysis of a trade or 
     business or industry of a member need not be conducted if the 
     Secretary determines such analysis is not necessary because 
     the taking into account of such member would not 
     significantly affect the determination under this paragraph.
       ``(6) Notice to employee organizations.--
       ``(A) In general.--The Secretary shall, before granting a 
     waiver under this subsection, require each applicant to 
     provide evidence satisfactory to the Secretary that the 
     applicant has provided notice of the filing of the 
     application for such waiver to each employee organization 
     representing employees covered by the affected plan, and 
     participant, beneficiary, and alternate payee (within the 
     meaning of section 414(p)(8)). Such notice shall include a 
     description of the extent to which the plan is funded for 
     benefits which

[[Page 28570]]

     are guaranteed under title IV and for benefit liabilities.
       ``(B) Consideration of relevant information.--The Secretary 
     shall consider any relevant information provided by a person 
     to whom notice was given under subparagraph (A).
       ``(d) Miscellaneous Rules.--
       ``(1) Change in method or year.--If the funding method, the 
     valuation date, or a plan year for a plan is changed, the 
     change shall take effect only if approved by the Secretary.
       ``(2) Certain retroactive plan amendments.--For purposes of 
     this section, any amendment applying to a plan year which--
       ``(A) is adopted after the close of such plan year but no 
     later than 2\1/2\ months after the close of the plan year 
     (or, in the case of a multiemployer plan, no later than 2 
     years after the close of such plan year),
       ``(B) does not reduce the accrued benefit of any 
     participant determined as of the beginning of the first plan 
     year to which the amendment applies, and
       ``(C) does not reduce the accrued benefit of any 
     participant determined as of the time of adoption except to 
     the extent required by the circumstances,

     shall, at the election of the plan administrator, be deemed 
     to have been made on the first day of such plan year. No 
     amendment described in this paragraph which reduces the 
     accrued benefits of any participant shall take effect unless 
     the plan administrator files a notice with the Secretary 
     notifying him of such amendment and the Secretary has 
     approved such amendment, or within 90 days after the date on 
     which such notice was filed, failed to disapprove such 
     amendment. No amendment described in this subsection shall be 
     approved by the Secretary unless the Secretary determines 
     that such amendment is necessary because of a substantial 
     business hardship (as determined under subsection (c)(2)) and 
     that a waiver under subsection (c) (or, in the case of a 
     multiemployer plan, any extension of the amortization period 
     under section 431(d)) is unavailable or inadequate.
       ``(3) Controlled group.--For purposes of this section, the 
     term `controlled group' means any group treated as a single 
     employer under subsection (b), (c), (m), or (o) of section 
     414.
       ``(4) Certain insurance contract plans.--A plan is 
     described in this paragraph if--
       ``(A) the plan is funded exclusively by the purchase of 
     individual insurance contracts,
       ``(B) such contracts provide for level annual premium 
     payments to be paid extending not later than the retirement 
     age for each individual participating in the plan, and 
     commencing with the date the individual became a participant 
     in the plan (or, in the case of an increase in benefits, 
     commencing at the time such increase becomes effective),
       ``(C) benefits provided by the plan are equal to the 
     benefits provided under each contract at normal retirement 
     age under the plan and are guaranteed by an insurance carrier 
     (licensed under the laws of a State to do business with the 
     plan) to the extent premiums have been paid,
       ``(D) premiums payable for the plan year, and all prior 
     plan years, under such contracts have been paid before lapse 
     or there is reinstatement of the policy,
       ``(E) no rights under such contracts have been subject to a 
     security interest at any time during the plan year, and
       ``(F) no policy loans are outstanding at any time during 
     the plan year.

     A plan funded exclusively by the purchase of group insurance 
     contracts which is determined under regulations prescribed by 
     the Secretary to have the same characteristics as contracts 
     described in the preceding sentence shall be treated as a 
     plan described in this paragraph.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after 2005.

     SEC. 112. FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT 
                   PENSION PLANS.

       (a) In General.--Subchapter D of chapter 1 of the Internal 
     Revenue Code of 1986 (relating to deferred compensation, 
     etc.) is amended by adding at the end the following new part:

   ``PART III--MINIMUM FUNDING STANDARDS FOR SINGLE-EMPLOYER DEFINED 
                         BENEFIT PENSION PLANS

     ``SEC. 430. MINIMUM FUNDING STANDARDS FOR SINGLE-EMPLOYER 
                   DEFINED BENEFIT PENSION PLANS.

       ``(a) Minimum Required Contribution.--
       ``(1) In general.--For purposes of section 412(a)(2)(A), 
     except as otherwise provided in this subsection, the minimum 
     required contribution with respect to a plan for a plan year 
     is the target normal cost of the plan for the plan year.
       ``(2) Shortfall amortization charge.--In any case in which 
     the value of plan assets (determined without regard to 
     subsection (e)(1)) of the plan for the plan year which are 
     held by the plan immediately before the valuation date is 
     less than the funding target of the plan for the plan year, 
     the minimum required contribution with respect to the plan 
     for the plan year is the sum of the amount determined under 
     paragraph (1) plus a shortfall amortization charge for such 
     plan year determined under subsection (c).
       ``(3) Credit for excess assets.--In any case in which the 
     value of plan assets of the plan for the plan year which are 
     held by the plan immediately before the valuation date exceed 
     the funding target of the plan for the plan year, the minimum 
     required contribution with respect to the plan for the plan 
     year is the amount determined under paragraph (1), reduced by 
     such excess.
       ``(4) Pre-funding balance.--In the case of any plan year in 
     which--
       ``(A) the ratio (expressed as a percentage) which--
       ``(i) the value of plan assets (determined without regard 
     to subsection (e)(1)(B)) for the preceding plan year, bears 
     to
       ``(ii) the funding target of the plan for the preceding 
     plan year (determined without regard to subsection (g)(1)),
     is at least 80 percent, and
       ``(B) the plan sponsor elects (in such form and manner as 
     shall be prescribed in regulations of the Secretary) to 
     credit against the minimum required contribution for the 
     current plan year all or a portion of the funding standard 
     carryover balance and the pre-funding balance (to the extent 
     provided in subsection (h)) for the preceding plan year (not 
     in excess of such minimum required contribution),

     the minimum required contribution for the plan year shall be 
     reduced by the amount so credited by the plan sponsor.
       ``(b) Target Normal Cost.--For purposes of this section, 
     subject to subsection (g)(2), the term `target normal cost' 
     means, for any plan year, the present value of all benefits 
     which are expected to accrue or to be earned under the plan 
     during the plan year. If any benefit attributable to services 
     performed in a preceding plan year is increased by reason of 
     any increase in compensation during the current plan year, 
     the increase shall be treated as having accrued during the 
     current plan year.
       ``(c) Shortfall Amortization Charge.--
       ``(1) In general.--The shortfall amortization charge for a 
     plan for any plan year is the aggregate total of the 
     shortfall amortization installments for such plan year with 
     respect to the shortfall amortization bases for such plan 
     year and each of the 6 preceding plan years.
       ``(2) Shortfall amortization installment.--
       ``(A) In general.--For purposes of paragraph (1), the plan 
     sponsor shall determine, with respect to the shortfall 
     amortization base of the plan for any plan year, the amounts 
     necessary to amortize such shortfall amortization base, in 
     level annual installments over a period of 7 plan years 
     beginning with such plan year. The annual installment of such 
     amortization for each plan year in such 7-plan-year period is 
     the shortfall amortization installment for such plan year 
     with respect to such shortfall amortization base.
       ``(B) Computation assumptions.--The determination of any 
     annual installment under subparagraph (A) for any plan year 
     shall be made as of the valuation date for such plan year, 
     using the effective rate of interest for the plan for such 
     plan year.
       ``(3) Shortfall amortization base.--The shortfall 
     amortization base of a plan for a plan year is the excess (if 
     any) of--
       ``(A) the funding shortfall of such plan for such plan 
     year, over
       ``(B) the present value (determined using the effective 
     interest rate of the plan for the plan year) of the aggregate 
     total of the shortfall amortization installments, for such 
     plan year and the 5 succeeding plan years, which have been 
     determined with respect to the shortfall amortization bases 
     of the plan for each of the 6 plan years preceding such plan 
     year.
       ``(4) Funding shortfall.--For purposes of this section, the 
     funding shortfall of a plan for any plan year is the excess 
     (if any) of--
       ``(A) the funding target of the plan for the plan year, 
     over
       ``(B) the value of plan assets of the plan for the plan 
     year which are held by the plan immediately before the 
     valuation date.
       ``(5) Early deemed amortization upon attainment of funding 
     target.--In any case in which the funding shortfall of a plan 
     for a plan year is zero, for purposes of determining the 
     shortfall amortization charge for such plan year and 
     succeeding plan years, the shortfall amortization base for 
     all preceding plan years shall be reduced to zero.
       ``(d) Rules Relating to Funding Target.--For purposes of 
     this section--
       ``(1) Funding target.--Except as provided in subsection 
     (g)(1), the funding target of a plan for a plan year is the 
     present value of all liabilities to participants and their 
     beneficiaries under the plan for the plan year.
       ``(2) Funding target attainment percentage.--The `funding 
     target attainment percentage' of a plan for a plan year is 
     the ratio (expressed as a percentage) which--
       ``(A) the value of plan assets for the plan year, bears to
       ``(B) the funding target of the plan for the plan year 
     (determined without regard to subsection (g)(1)).
       ``(e) Valuation of Plan Assets and Liabilities.--
       ``(1) Value of plan assets.--For purposes of this section 
     (other than paragraph (4) and subsections (a)(2) and (h)(3)), 
     the term `value

[[Page 28571]]

     of plan assets' means the excess of the value of plan assets 
     (determined without regard to this paragraph) over the sum 
     of--
       ``(A) the pre-funding balance of the plan maintained under 
     subsection (h)(1), and
       ``(B) the funding standard carryover balance of the plan 
     maintained under subsection (h)(2).
       ``(2) Timing of determinations.--Except as otherwise 
     provided under this subsection, all determinations under this 
     section for a plan year shall be made as of the valuation 
     date of the plan for such plan year.
       ``(3) Valuation date.--For purposes of this section--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the valuation date of a plan for any plan year shall be the 
     first day of the plan year.
       ``(B) Exception for small plans.--If, on each day during 
     the preceding plan year, a plan had 500 or fewer 
     participants, the plan may designate any day during the plan 
     year as its valuation date for such plan year. For purposes 
     of this subparagraph, all defined benefit plans (other than 
     multiemployer plans) maintained by the same employer (or any 
     member of such employer's controlled group) shall be treated 
     as 1 plan, but only employees of such employer or member 
     shall be taken into account.
       ``(C) Application of certain rules in determination of plan 
     size.--For purposes of this paragraph--
       ``(i) Plans not in existence in preceding year.--In the 
     case of the first plan year of any plan, subparagraph (B) 
     shall apply to such plan by taking into account the number of 
     participants that the plan is reasonably expected to have on 
     days during such first plan year.
       ``(ii) Predecessors.--Any reference in subparagraph (B) to 
     an employer shall include a reference to any predecessor of 
     such employer.
       ``(4) Authorization of use of actuarial value.--For 
     purposes of this section, the value of plan assets 
     (determined without regard to paragraph (1)) 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, except that--
       ``(A) any such method providing for averaging of fair 
     market values may not provide for averaging of such values 
     over more than the current plan year and the 2 preceding plan 
     years, and
       ``(B) any such method may not result in a determination of 
     the value of plan assets which, at any time, is lower than 90 
     percent or greater than 110 percent of the fair market value 
     of such assets at such time.
       ``(5) Accounting for contribution receipts.--For purposes 
     of this section--
       ``(A) Contributions for prior plan years taken into 
     account.--For purposes of determining the value of plan 
     assets for any current plan year, in any case in which a 
     contribution properly allocable to amounts owed for a 
     preceding plan year is made on or after the valuation date of 
     the plan for such current plan year, such contribution shall 
     be taken into account, except that any such contribution made 
     during any such current plan year beginning after 2006 shall 
     be taken into account only in an amount equal to its present 
     value (determined using the effective rate of interest for 
     the plan for the preceding plan year) as of the valuation 
     date of the plan for such current plan year.
       ``(B) Contributions for current plan year disregarded.--For 
     purposes of determining the value of plan assets for any 
     current plan year, contributions which are properly allocable 
     to amounts owed for such plan year shall not be taken into 
     account, and, in the case of any such contribution made 
     before the valuation date of the plan for such plan year, 
     such value of plan assets shall be reduced for interest on 
     such amount determined using the effective rate of interest 
     of the plan for the preceding plan year for the period 
     beginning when such payment was made and ending on the 
     valuation date of the plan.
       ``(6) Accounting for plan liabilities.--For purposes of 
     this section--
       ``(A) Liabilities taken into account for current plan 
     year.--In determining the value of liabilities under a plan 
     for a plan year, liabilities shall be taken into account to 
     the extent attributable to benefits (including any early 
     retirement or similar benefit) accrued as of the beginning of 
     the plan year.
       ``(B) Accruals during current plan year disregarded.--For 
     purposes of subparagraph (A), benefits accrued during such 
     plan year (after those taken into account under subparagraph 
     (A)) shall not be taken into account, irrespective of whether 
     the valuation date of the plan for such plan year is later 
     than the first day of such plan year.
       ``(f) Actuarial Assumptions and Methods.--
       ``(1) In general.--Subject to this subsection, the 
     determination of any present value or other computation under 
     this section shall be made on the basis of actuarial 
     assumptions and methods--
       ``(A) each of which is reasonable (taking into account the 
     experience of the plan and reasonable expectations), and
       ``(B) which, in combination, offer the actuary's best 
     estimate of anticipated experience under the plan.
       ``(2) Interest rates.--
       ``(A) Effective interest rate.--For purposes of this 
     section, the term `effective interest rate' means, with 
     respect to any plan for any plan year, the single rate of 
     interest which, if used to determine the present value of the 
     plan's liabilities referred to in subsection (d)(1) would 
     result in an amount equal to the funding target of the plan 
     for such plan year.
       ``(B) Application to funding target.--For purposes of 
     determining the funding target of a plan for any plan year, 
     the interest rate used in determining the present value of 
     the liabilities of the plan shall be--
       ``(i) in the case of liabilities reasonably determined to 
     be payable during the 5-year period beginning on the first 
     day of the plan year, the first segment rate with respect to 
     the applicable month,
       ``(ii) in the case of liabilities reasonably determined to 
     be payable during the 15-year period beginning at the end of 
     the period described in clause (i), the second segment rate 
     with respect to the applicable month, and
       ``(iii) in the case of liabilities reasonably determined to 
     be payable after the period described in clause (ii), the 
     third segment rate with respect to the applicable month.
       ``(C) Segment rates.--For purposes of this paragraph--
       ``(i) First segment rate.--The term `first segment rate' 
     means, with respect to any month, the single rate of interest 
     which shall be determined by the Secretary for such month on 
     the basis of the corporate bond yield curve for such month, 
     taking into account only that portion of such yield curve 
     which is based on bonds maturing during the 5-year period 
     commencing with such month.
       ``(ii) Second segment rate.--The term `second segment rate' 
     means, with respect to any month, the single rate of interest 
     which shall be determined by the Secretary for such month on 
     the basis of the corporate bond yield curve for such month, 
     taking into account only that portion of such yield curve 
     which is based on bonds maturing during the 15-year period 
     beginning at the end of the period described in clause (i).
       ``(iii) Third segment rate.--The term `third segment rate' 
     means, with respect to any month, the single rate of interest 
     which shall be determined by the Secretary for such month on 
     the basis of the corporate bond yield curve for such month, 
     taking into account only that portion of such yield curve 
     which is based on bonds maturing during periods beginning 
     after the period described in clause (ii).
       ``(D) Corporate bond yield curve.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `corporate bond yield curve' 
     means, with respect to any month, a yield curve which is 
     prescribed by the Secretary for such month and which reflects 
     a 3-year weighted average of yields on investment grade 
     corporate bonds with varying maturities.
       ``(ii) 3-year weighted average.--The term `3-year weighted 
     average' means an averaging methodology under which the most 
     recent year is weighted 50 percent, the year preceding such 
     year is weighted 35 percent, and the second year preceding 
     such year is weighted 15 percent.
       ``(E) Applicable month.--For purposes of this paragraph, 
     the term `applicable month' means, with respect to any plan 
     for any plan year, the month which includes the valuation 
     date of such plan for such plan year or, at the election of 
     the plan administrator, any of the 4 months which precede 
     such month. Any election made under this subparagraph shall 
     apply to the plan year for which made and all succeeding plan 
     years unless revoked with the consent of the Secretary.
       ``(F) Publication requirements.--The Secretary shall 
     publish for each month the corporate bond yield curve (and 
     the corporate bond yield curve reflecting the modification 
     described in section 417(e)(3)(A)(iii)(I)) for such month and 
     each of the rates determined under subparagraph (B) for such 
     month. The Secretary shall also publish a description of the 
     methodology used to determine such yield curve and such rates 
     which is sufficiently detailed to enable plans to make 
     reasonable projections regarding the yield curve and such 
     rates for future months based on the plan's projection of 
     future interest rates.
       ``(G) Transition rule.--
       ``(i) In general.--Notwithstanding the preceding provisions 
     of this paragraph, for plan years beginning in 2006 or 2007, 
     the first, second, and third segment rates for a plan with 
     respect to any month shall be equal to the sum of--

       ``(I) the product of such rate for such month determined 
     without regard to this subparagraph, multiplied by the 
     applicable percentage, and
       ``(II) the product of the rate determined under the rules 
     of section 412(b)(5)(B)(ii)(II) (as in effect for plan years 
     beginning in 2005), multiplied by a percentage equal to 100 
     percent minus the applicable percentage.

       ``(ii) Applicable percentage.--For purposes of clause (i), 
     the applicable percentage is 33\1/3\ percent for plan years 
     beginning in 2006 and 66\2/3\ percent for plan years 
     beginning in 2007.
       ``(3) Mortality table.--

[[Page 28572]]

       ``(A) In general.--The mortality tables used in determining 
     any present value or making any computation under this 
     section shall be the RP-2000 Combined Mortality Table, as 
     published by the Society of American Actuaries, as in effect 
     on the date of the enactment of the Pension Protection Act of 
     2005 and as revised from time to time under subparagraph (B).
       ``(B) Periodic revision.--The Secretary shall (at least 
     every 10 years) make revisions in any tables in effect under 
     this paragraph to reflect the actual experience of pension 
     plans and projected trends in such experience.
       ``(C) Transition rule.--Under regulations of the Secretary, 
     any difference in assumptions as set forth in the mortality 
     table specified in subparagraph (A) and assumptions as set 
     forth in the mortality table described in section 
     412(d)(7)(C)(ii) (as in effect for plan years beginning in 
     2005) shall be phased in ratably over the first period of 5 
     plan years beginning in or after 2006 so as to be fully 
     effective for the fifth plan year.
       ``(4) Probability of benefit payments in the form of lump 
     sums or other optional forms.--For purposes of determining 
     any present value or making any computation under this 
     section, there shall be taken into account--
       ``(A) the probability that future benefit payments under 
     the plan will be made in the form of optional forms of 
     benefits provided under the plan (including lump sum 
     distributions, determined on the basis of the plan's 
     experience and other related assumptions), and
       ``(B) any difference in the present value of such future 
     benefit payments resulting from the use of actuarial 
     assumptions, in determining benefit payments in any such 
     optional form of benefits, which are different from those 
     specified in this subsection.
       ``(5) Approval of large changes in actuarial assumptions.--
       ``(A) In general.--No actuarial assumption used to 
     determine the funding target for a single-employer plan to 
     which this paragraph applies may be changed without the 
     approval of the Secretary.
       ``(B) Plans to which paragraph applies.--This paragraph 
     shall apply to a plan only if--
       ``(i) the 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 and 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
       ``(ii) the change in assumptions (determined after taking 
     into account any changes in interest rate and mortality 
     table) results in a decrease in the funding shortfall of the 
     plan for the current plan year that exceeds $50,000,000, or 
     that exceeds $5,000,000 and that is 5 percent or more of the 
     funding target of the plan before such change.
       ``(g) Special Rules for at-Risk Plans.--
       ``(1) Funding target for plans in at-risk status.--
       ``(A) In general.--In any case in which a plan is in at-
     risk status for a plan year, the funding target of the plan 
     for the plan year is the sum of--
       ``(i) the present value of all liabilities to participants 
     and their beneficiaries under the plan for the plan year, as 
     determined by using, in addition to the actuarial assumptions 
     described in subsection (f), the supplemental actuarial 
     assumptions described in subparagraph (B), plus
       ``(ii) a loading factor determined under subparagraph (C).
       ``(B) Supplemental actuarial assumptions.--The actuarial 
     assumptions used in determining the valuation of the funding 
     target shall include, in addition to the actuarial 
     assumptions described in subsection (f), an assumption that 
     all participants will elect benefits at such times and in 
     such forms as will result in the highest present value of 
     liabilities under subparagraph (A)(i).
       ``(C) Loading factor.--The loading factor applied with 
     respect to a plan under this paragraph for any plan year is 
     the sum of--
       ``(i) $700, times the number of participants in the plan, 
     plus
       ``(ii) 4 percent of the funding target (determined without 
     regard to this paragraph) of the plan for the plan year.
       ``(2) Target normal cost of at-risk plans.--
       ``(A) In general.--In any case in which a plan is in at-
     risk status for a plan year, the target normal cost of the 
     plan for such plan year shall be the sum of--
       ``(i) the present value of all benefits which are expected 
     to accrue under the plan during the plan year, determined 
     under the actuarial assumptions used under paragraph (1), 
     plus
       ``(ii) the loading factor under paragraph (1)(C), excluding 
     the portion of the loading factor described in paragraph 
     (1)(C)(i).
       ``(B) Minimum amount.--In no event shall the target normal 
     cost of a plan determined under this paragraph be less than 
     the target normal cost of such plan as determined without 
     regard to this paragraph.
       ``(3) Determination of at-risk status.--For purposes of 
     this subsection, a plan is in `at-risk status' for a plan 
     year if the funding target attainment percentage of the plan 
     for the preceding plan year was less than 60 percent.
       ``(4) Transition between applicable funding targets and 
     between applicable target normal cost.--
       ``(A) In general.--In any case in which a plan which is in 
     at-risk status for a plan year has been in such status for a 
     consecutive period of fewer than 5 plan years, the applicable 
     amount of the funding target and of the target normal cost 
     shall be, in lieu of the amount determined without regard to 
     this paragraph, the sum of--
       ``(i) the amount determined under this section without 
     regard to this subsection, plus
       ``(ii) the transition percentage for such plan year of the 
     excess of the amount determined under this subsection 
     (without regard to this paragraph) over the amount determined 
     under this section without regard to this subsection.
       ``(B) Transition percentage.--For purposes of this 
     paragraph, the `transition percentage' for a plan year is the 
     product derived by multiplying--
       ``(i) 20 percent, by
       ``(ii) the number of plan years during the period described 
     in subparagraph (A).
       ``(h) Pre-Funding and Funding Standard Carryover 
     Balances.--
       ``(1) Pre-funding balance.--
       ``(A) In general.--The plan sponsor of a pension plan which 
     is a single-employer plan shall maintain a pre-funding 
     balance for purposes of this subsection. Such balance shall 
     consist of a beginning balance of zero, increased and 
     decreased to the extent provided in subparagraphs (B) and 
     (C), and adjusted further as provided in paragraph (3).
       ``(B) Increases.--As of the valuation date for each plan 
     year beginning after 2006, the pre-funding balance of a plan 
     shall be increased by the amount elected by the plan sponsor 
     for the plan year. Such amount shall not exceed the excess 
     (if any) of--
       ``(i) the aggregate total of employer contributions to the 
     plan for the preceding plan year, over
       ``(ii) the minimum required contribution for such preceding 
     plan year (increased by interest on any portion of such 
     minimum required contribution remaining unpaid, at the 
     effective interest rate for the plan for the preceding plan 
     year, for the period beginning with the first day of such 
     preceding plan year and ending on the date that payment of 
     such portion is made).
       ``(C) Decreases.--As of the valuation date for each plan 
     year after 2006, the pre-funding balance of a plan shall be 
     decreased (but not below zero) by the sum of--
       ``(i) the amount credited under subsection (a)(4) (if any) 
     in reducing the minimum required contribution of the plan for 
     the preceding plan year, and
       ``(ii) the amount elected by the plan sponsor as a 
     reduction in the pre-funding balance (for purposes of the 
     determination under subsection (e)(1) and any other purpose 
     under this section).
       ``(D) Coordination with funding standard carryover 
     balance.--To the extent that any plan has a funding standard 
     carryover balance greater than zero--
       ``(i) no amount of the pre-funding balance of such plan may 
     be credited under subsection (a)(4) in reducing the minimum 
     required contribution, and
       ``(ii) no election may be made under subparagraph (C)(ii).
       ``(E) No use of balance to reduce minimum required 
     contribution if used to avoid shortfall amortization.--The 
     amount of the pre-funding balance of such plan may be 
     credited under subsection (a)(4) in reducing the minimum 
     required contribution only if the plan sponsor has elected to 
     apply subsection (a)(2) to the plan for such plan year by 
     substituting `subsection (e)(1)(B)' for `subsection (e)(1)'.
       ``(2) Funding standard carryover balance.--
       ``(A) In general.--The plan sponsor of a pension plan to 
     which this paragraph applies shall maintain a funding 
     standard carryover balance for purposes of this subsection. 
     Such balance shall consist of a beginning balance determined 
     under subparagraph (C), decreased to the extent provided in 
     subparagraph (D), and adjusted further as provided in 
     paragraph (3).
       ``(B) Plans to which this paragraph applies.--This 
     paragraph applies to any plan which--
       ``(i) is a single-employer plan subject to this part,
       ``(ii) was in effect for a plan year beginning in 2005, and
       ``(iii) had a positive balance in the funding standard 
     account under section 412(b) as in effect for such plan year 
     and determined as of the end of such plan year.
       ``(C) Beginning balance.--The beginning balance of the 
     funding standard carryover balance shall be the positive 
     balance described in subparagraph (B)(iii).
       ``(D) Decreases.--As of the valuation date for each plan 
     year after 2006, the funding standard carryover balance of a 
     plan shall be decreased (but not below zero) by the sum of--

[[Page 28573]]

       ``(i) the amount credited under subsection (a)(4) (if any) 
     in reducing the minimum required contribution of the plan for 
     the preceding plan year, and
       ``(ii) the amount elected by the plan sponsor as a 
     reduction in the funding standard carryover balance (for 
     purposes of the determination under subsection (e)(1) and any 
     other purpose under this section).
       ``(3) Adjustments.--In determining the pre-funding balance 
     or the funding standard carryover balance of a plan as of the 
     valuation date of the plan (before applying any increase or 
     decrease under paragraph (1) or (2)), the plan sponsor shall, 
     in accordance with regulations which shall be prescribed by 
     the Secretary, adjust such balance of the plan so as to 
     reflect the rate of net gain or loss (determined, 
     notwithstanding subsection (e)(4), on the basis of fair 
     market value) experienced by all plan assets for the period 
     beginning with the valuation date for the preceding plan year 
     and ending with the date preceding the valuation date for the 
     current plan year, properly taking into account, in 
     accordance with such regulations, all contributions, 
     distributions, and other plan payments made during such 
     period.
       ``(4) Elections.--Except as otherwise provided in this 
     subsection, any election made under this subsection shall be 
     made at such time and in such form and manner as the 
     Secretary may provide.
       ``(5) Coordination with waivers.--For purposes of this 
     subsection, the term `minimum required contribution' means 
     for any plan year the minimum required contribution for such 
     plan year determined without regard to this subsection and by 
     taking into account any waiver under section 412(c) and any 
     waiver amortization charge under subsection (j) for such plan 
     year.
       ``(i) Payment of Minimum Required Contributions.--
       ``(1) In general.--For purposes of this section, the due 
     date for any payment of any minimum required contribution for 
     any plan year shall be 8\1/2\ months after the close of the 
     plan year.
       ``(2) Interest.--Any payment required under paragraph (1) 
     for a plan year made after the valuation date for such plan 
     year shall be increased by interest, for the period from the 
     valuation date to the payment date, at the effective rate of 
     interest for the plan for such plan year.
       ``(3) Accelerated quarterly contribution schedule for 
     underfunded plans.--
       ``(A) Interest penalty for failure to meet accelerated 
     quarterly payment schedule.--In any case in which the plan 
     has a funding shortfall for the preceding plan year, if the 
     required installment is not paid in full, then the minimum 
     required contribution for the plan year (as increased under 
     paragraph (2)) shall be further increased by an amount equal 
     to the interest on the amount of the underpayment for the 
     period of the underpayment, using an interest rate equal to 
     the excess of--
       ``(i) 175 percent of the Federal mid-term rate (as in 
     effect under section 1274 for the 1st month of such plan 
     year), over
       ``(ii) the effective rate of interest for the plan for the 
     plan year.
       ``(B) Amount of underpayment, period of underpayment.--For 
     purposes of subparagraph (A)--
       ``(i) Amount.--The amount of the underpayment shall be the 
     excess of--

       ``(I) the required installment, over
       ``(II) the amount (if any) of the installment contributed 
     to or under the plan on or before the due date for the 
     installment.

       ``(ii) Period of underpayment.--The period for which any 
     interest is charged under this paragraph with respect to any 
     portion of the underpayment shall run from the due date for 
     the installment to the date on which such portion is 
     contributed to or under the plan.
       ``(iii) Order of crediting contributions.--For purposes of 
     clause (i)(II), contributions shall be credited against 
     unpaid required installments in the order in which such 
     installments are required to be paid.
       ``(C) Number of required installments; due dates.--For 
     purposes of this paragraph--
       ``(i) Payable in 4 installments.--There shall be 4 required 
     installments for each plan year.
       ``(ii) Time for payment of installments.--The due dates for 
     required installments are set forth in the following table:

 
  ``In the case of the following required
               installment:                       The due date is:
 
  1st.....................................  April 15
  2nd.....................................  July 15
  3rd.....................................  October 15
  4th.....................................  January 15 of the following
                                             year
 

       ``(D) Amount of required installment.--For purposes of this 
     paragraph--
       ``(i) In general.--The amount of any required installment 
     shall be 25 percent of the required annual payment.
       ``(ii) Required annual payment.--For purposes of clause 
     (i), the term `required annual payment' means the lesser of--

       ``(I) 90 percent of the minimum required contribution 
     (without regard to any waiver under section 412(c)) to the 
     plan for the plan year under this section, or
       ``(II) in the case of a plan year beginning after 2006, 100 
     percent of the minimum required contribution (without regard 
     to any waiver under section 412(c)) to the plan for the 
     preceding plan year.

     Subclause (II) shall not apply if the preceding plan year 
     referred to in such clause was not a year of 12 months.
       ``(E) Fiscal years and short years.--
       ``(i) Fiscal years.--In applying this paragraph to a plan 
     year beginning on any date other than January 1, there shall 
     be substituted for the months specified in this paragraph, 
     the months which correspond thereto.
       ``(ii) Short plan year.--This subparagraph shall be applied 
     to plan years of less than 12 months in accordance with 
     regulations prescribed by the Secretary.
       ``(4) Liquidity requirement in connection with quarterly 
     contributions.--
       ``(A) In general.--A plan to which this paragraph applies 
     shall be treated as failing to pay the full amount of any 
     required installment under paragraph (3) to the extent that 
     the value of the liquid assets paid in such installment is 
     less than the liquidity shortfall (whether or not such 
     liquidity shortfall exceeds the amount of such installment 
     required to be paid but for this paragraph).
       ``(B) Plans to which paragraph applies.--This paragraph 
     shall apply to a plan (other than a plan that would be 
     described in subsection (e)(3)(B) if `100' were substituted 
     for `500' therein) which--
       ``(i) is required to pay installments under paragraph (3) 
     for a plan year, and
       ``(ii) has a liquidity shortfall for any quarter during 
     such plan year.
       ``(C) Period of underpayment.--For purposes of paragraph 
     (3)(A), any portion of an installment that is treated as not 
     paid under subparagraph (A) shall continue to be treated as 
     unpaid until the close of the quarter in which the due date 
     for such installment occurs.
       ``(D) Limitation on increase.--If the amount of any 
     required installment is increased by reason of subparagraph 
     (A), in no event shall such increase exceed the amount which, 
     when added to prior installments for the plan year, is 
     necessary to increase the funding target attainment 
     percentage of the plan for the plan year (taking into account 
     the expected increase in funding target due to benefits 
     accruing or earned during the plan year) to 100 percent.
       ``(E) Definitions.--For purposes of this subparagraph:
       ``(i) Liquidity shortfall.--The term `liquidity shortfall' 
     means, with respect to any required installment, an amount 
     equal to the excess (as of the last day of the quarter for 
     which such installment is made) of--

       ``(I) the base amount with respect to such quarter, over
       ``(II) the value (as of such last day) of the plan's liquid 
     assets.

       ``(ii) Base amount.--

       ``(I) In general.--The term `base amount' means, with 
     respect to any quarter, an amount equal to 3 times the sum of 
     the adjusted disbursements from the plan for the 12 months 
     ending on the last day of such quarter.
       ``(II) Special rule.--If the amount determined under 
     subclause (I) exceeds an amount equal to 2 times the sum of 
     the adjusted disbursements from the plan for the 36 months 
     ending on the last day of the quarter and an enrolled actuary 
     certifies to the satisfaction of the Secretary that such 
     excess is the result of nonrecurring circumstances, the base 
     amount with respect to such quarter shall be determined 
     without regard to amounts related to those nonrecurring 
     circumstances.

       ``(iii) Disbursements from the plan.--The term 
     `disbursements from the plan' means all disbursements from 
     the trust, including purchases of annuities, payments of 
     single sums and other benefits, and administrative expenses.
       ``(iv) Adjusted disbursements.--The term `adjusted 
     disbursements' means disbursements from the plan reduced by 
     the product of--

       ``(I) the plan's funding target attainment percentage for 
     the plan year, and
       ``(II) the sum of the purchases of annuities, payments of 
     single sums, and such other disbursements as the Secretary 
     shall provide in regulations.

       ``(v) Liquid assets.--The term `liquid assets' means cash, 
     marketable securities, and such other assets as specified by 
     the Secretary in regulations.
       ``(vi) Quarter.--The term `quarter' means, with respect to 
     any required installment, the 3-month period preceding the 
     month in which the due date for such installment occurs.
       ``(F) Regulations.--The Secretary may prescribe such 
     regulations as are necessary to carry out this paragraph.
       ``(j) Waiver Amortization Charge.--
       ``(1) In general.--The minimum required contribution for 
     any plan year under subsection (a) shall be increased by the 
     amount of the waiver amortization charge (if any) for such 
     plan year.
       ``(2) Determination of waiver amortization charge.--The 
     waiver amortization charge for a plan for any plan year is 
     the aggregate total of the waiver amortization installments 
     for such plan year with respect to the waiver amortization 
     bases for such plan year and each of the 4 preceding plan 
     years.

[[Page 28574]]

       ``(3) Waiver amortization installment.--For purposes of 
     paragraph (2), the plan sponsor shall determine, with respect 
     to the waiver amortization base of the plan for any plan 
     year, the amounts necessary to amortize such waiver 
     amortization base, in level annual installments over a period 
     of 5 plan years beginning with such plan year. The annual 
     installment of such amortization for each plan year in such 
     5-plan year period is the waiver amortization installment for 
     such plan year with respect to such waiver amortization base.
       ``(4) Computation assumptions.--The determination of any 
     annual installment under paragraph (2) for any plan year 
     shall be made as of the valuation date for such plan year, 
     using the effective rate of interest for the plan for the 
     preceding plan year.
       ``(5) Waiver amortization base.--The waiver amortization 
     base of a plan for a plan year is the excess (if any) of--
       ``(A) the portion of the minimum required contribution of 
     such plan waived under section 412(c) for such plan year, 
     over
       ``(B) the aggregate total of the waiver amortization 
     installments, for such plan year and the 3 succeeding plan 
     years, which have been determined with respect to the waiver 
     amortization bases of the plan for each of the 4 plan years 
     preceding such plan year.
       ``(k) Imposition of Lien Where Failure to Make Required 
     Contributions.--
       ``(1) In general.--In the case of a plan covered under 
     section 4021 of the Employee Retirement and Income Security 
     Act of 1974 and to which this subsection applies (as provided 
     under paragraph (2)), if--
       ``(A) any person fails to make a contribution payment 
     required by section 412 and this section before the due date 
     for such payment, and
       ``(B) the unpaid balance of such payment (including 
     interest), when added to the aggregate unpaid balance of all 
     preceding such payments for which payment was not made before 
     the due date (including interest), exceeds $1,000,000,

     then there shall be a lien in favor of the plan in the amount 
     determined under paragraph (3) upon all property and rights 
     to property, whether real or personal, belonging to such 
     person and any other person who is a member of the same 
     controlled group of which such person is a member.
       ``(2) Plans to which subsection applies.--This subsection 
     shall apply to a defined benefit plan which is a single-
     employer plan for any plan year for which the funding target 
     attainment percentage (as defined in subsection (d)(2)) of 
     such plan is less than 100 percent.
       ``(3) Amount of lien.--For purposes of paragraph (1), the 
     amount of the lien shall be equal to the aggregate unpaid 
     balance of contribution payments required under this section 
     and section 412 for which payment has not been made before 
     the due date.
       ``(4) Notice of failure; lien.--
       ``(A) Notice of failure.--A person committing a failure 
     described in paragraph (1) shall notify the Pension Benefit 
     Guaranty Corporation of such failure within 10 days of the 
     due date for the required contribution payment.
       ``(B) Period of lien.--The lien imposed by paragraph (1) 
     shall arise on the due date for the required contribution 
     payment and shall continue until the last day of the first 
     plan year in which the plan ceases to be described in 
     paragraph (1)(B). Such lien shall continue to run without 
     regard to whether such plan continues to be described in 
     paragraph (2) during the period referred to in the preceding 
     sentence.
       ``(C) Certain rules to apply.--Any amount with respect to 
     which a lien is imposed under paragraph (1) shall be treated 
     as taxes due and owing the United States and rules similar to 
     the rules of subsections (c), (d), and (e) of section 4068 of 
     the Employee Retirement and Income Security Act of 1974 shall 
     apply with respect to a lien imposed by subsection (a) and 
     the amount with respect to such lien.
       ``(5) Enforcement.--Any lien created under paragraph (1) 
     may be perfected and enforced only by the Pension Benefit 
     Guaranty Corporation, or at the direction of the Pension 
     Benefit Guaranty Corporation, by the contributing sponsor (or 
     any member of the controlled group of the contributing 
     sponsor).
       ``(6) Definitions.--For purposes of this subsection--
       ``(A) Contribution payment.--The term `contribution 
     payment' means, in connection with a plan, a contribution 
     payment required to be made to the plan, including any 
     required installment under paragraphs (3) and (4) of 
     subsection (i).
       ``(B) Due date; required installment.--The terms `due date' 
     and `required installment' have the meanings given such terms 
     by subsection (i), except that in the case of a payment other 
     than a required installment, the due date shall be the date 
     such payment is required to be made under section 430.
       ``(C) Controlled group.--The term `controlled group' means 
     any group treated as a single employer under subsections (b), 
     (c), (m), and (o) of section 414.
       ``(l) Qualified Transfers to Health Benefit Accounts.--In 
     the case of a qualified transfer (as defined in section 420), 
     any assets so transferred shall not, for purposes
     of this section, be treated as assets in the
     plan.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply with respect to plan years beginning after 2005.

     SEC. 113. LIMITATIONS ON DISTRIBUTIONS AND BENEFIT ACCRUALS 
                   UNDER SINGLE-EMPLOYER PLANS.

       (a) Prohibition of Shutdown Benefits and Other 
     Unpredictable Contingent Event Benefits Under Single-Employer 
     Plans.--Part III of subchapter D of chapter 1 of the Internal 
     Revenue Code of 1986 (relating to deferred compensation, 
     etc.) is amended--
       (1) by striking the heading and inserting the following:

  ``PART III--RULES RELATING TO MINIMUM FUNDING STANDARDS AND BENEFIT 
                              LIMITATIONS

``Subpart A. Minimum funding standards for pension plans.
``Subpart B. Benefit limitations under single-employer plans.

        ``Subpart A--Minimum Funding Standards for Pension Plans

``Sec. 430. Minimum funding standards for single-employer defined 
              benefit pension plans.'',

     and
       (2) by adding at the end the following new subpart:

      ``Subpart B--Benefit Limitations Under Single-employer Plans

``Sec. 436. Prohibition of shutdown benefits and other unpredictable 
              contingent event benefits.

     ``SEC. 436. PROHIBITION OF SHUTDOWN BENEFITS AND OTHER 
                   UNPREDICTABLE CONTINGENT EVENT BENEFITS.

       ``(a) In General.--No pension plan which is a single-
     employer plan may provide benefits which are payable upon the 
     occurrence of--
       ``(1) a plant shutdown, or
       ``(2) any other unpredictable contingent event.
       ``(b) Unpredictable Contingent Event.--For purposes of this 
     subsection, the term `unpredictable contingent event' means 
     an event other than--
       ``(1) attainment of any age, performance of any service, 
     receipt or derivation of any compensation, or the occurrence 
     of death or disability, or
       ``(2) an event which is reasonably and reliably predictable 
     (as determined by the Secretary).''.
       (b) Other Limits on Benefits and Benefit Accruals.--
       (1) In general.--Subpart B of part III of subchapter D of 
     chapter 1 of such Code is amended by adding at the end the 
     following:

     ``SEC. 437. BENEFIT LIMIATIONS ON UNDERFUNDED PLANS.

       ``(a) Limitations on Plan Amendments Increasing Liability 
     for Benefits.--
       ``(1) In general.--No amendment to a defined benefit plan 
     (other than a multiemployer plan) which has the effect of 
     increasing liabilities of the plan by reason of increases in 
     benefits, establishment of new benefits, changing the rate of 
     benefit accrual, or changing the rate at which benefits 
     become nonforfeitable to the plan may take effect during any 
     plan year if the funding target attainment percentage as of 
     the valuation date of the plan for such plan year is--
       ``(A) less than 80 percent, or
       ``(B) would be less than 80 percent taking into account 
     such amendment.
       ``(2) Exemption.--Paragraph (1) shall cease to apply with 
     respect to any plan year, effective as of the first date of 
     the plan year (or if later, the effective date of the 
     amendment), upon payment by the plan sponsor of a 
     contribution equal to--
       ``(A) in the case of paragraph (1)(A), the amount of the 
     increase in the funding target of the plan (under section 
     430) for the plan year attributable to the amendment, and
       ``(B) in the case of subparagraph (1)(B), the amount 
     sufficient to result in a funding target attainment 
     percentage of 80 percent.
       ``(b) Funding-Based Limitation on Certain Forms of 
     Distribution.--A defined benefit plan (other than a 
     multiemployer plan) shall provide that, in any case in which 
     the plan's funding target attainment percentage as of the 
     valuation date of the plan for a plan year is less than 80 
     percent, the plan may not after such date pay any prohibited 
     payment (as defined in section 206(e) of the Employee 
     Retirement and Income Security Act of 1974).
       ``(c) Limitations on Benefit Accruals for Plans With Severe 
     Funding Shortfalls.--A defined benefit plan (other than a 
     multiemployer plan) shall provide that, in any case in which 
     the plan's funding target attainment percentage as of the 
     valuation date of the plan for a plan year is less than 60 
     percent, all future benefit accruals under the plan shall 
     cease as of such date.
       ``(d) New Plans.--Subsections (a) and (c) shall not apply 
     to a plan for the first 5 plan years of the plan. For 
     purposes of this subsection, the reference in this subsection 
     to a plan shall include a reference to any predecessor plan.
       ``(e) Presumed Underfunding for Purposes of Benefit 
     Limitations Based on Prior Year's Funding Status.--

[[Page 28575]]

       ``(1) Presumption of continued underfunding.--In any case 
     in which a benefit limitation under subsections (a), (b), or 
     (c) has been applied to a plan with respect to the plan year 
     preceding the current plan year, the funding target 
     attainment percentage of the plan as of the valuation date of 
     the plan for the current plan year shall be presumed to be 
     equal to the funding target attainment percentage of the plan 
     as of the valuation date of the plan for the preceding plan 
     year until the enrolled actuary of the plan certifies the 
     actual funding target attainment percentage of the plan as of 
     the valuation date of the plan for the current plan year.
       ``(2) Presumption of underfunding after 10th month.--In any 
     case in which no such certification is made with respect to 
     the plan before the first day of the 10th month of the 
     current plan year, for purposes of subsections (a), (b), and 
     (c), the plan's funding target attainment percentage shall be 
     conclusively presumed to be less than 60 percent as of the 
     first day of such 10th month, and such day shall be deemed, 
     for purposes of such paragraphs, to be the valuation date of 
     the plan for the current plan year.
       ``(3) Presumption of underfunding after 4th month for 
     nearly underfunded plans.--In any case in which--
       ``(A) a benefit limitation under subsections (a), (b), or 
     (c) did not apply to a plan with respect to the plan year 
     preceding the current plan year, but the funding target 
     attainment percentage of the plan for such preceding plan 
     year was not more than 10 percentage points greater than the 
     percentage which would have caused such paragraph to apply to 
     the plan with respect to such preceding plan year, and
       ``(B) as of the first day of the 4th month of the current 
     plan year, the enrolled actuary of the plan has not certified 
     the actual funding target attainment percentage of the plan 
     as of the valuation date of the plan for the current plan 
     year,

     until the enrolled actuary so certifies, such first day shall 
     be deemed, for purposes of such subsection, to be the 
     valuation date of the plan for the current plan year and the 
     funding target attainment percentage of the plan as of such 
     first day shall, for purposes of such subsection, be presumed 
     to be equal to 10 percentage points less than the funding 
     target attainment percentage of the plan as of the valuation 
     date of the plan for such preceding plan year.
       ``(f) Restoration by Plan Amendment of Benefits or Benefit 
     Accrual.--In any case in which a prohibition under subsection 
     (b) of the payment of lump sum distributions or benefits in 
     any other accelerated form or a cessation of benefit accruals 
     under subsection (c) is applied to a plan with respect to any 
     plan year and such prohibition or cessation, as the case may 
     be, ceases to apply to any subsequent plan year, the plan may 
     provide for the resumption of such benefit payment or such 
     benefit accrual only by means of the adoption of a plan 
     amendment after the valuation date of the plan for such 
     subsequent plan year. The preceding sentence shall not apply 
     to a prohibition or cessation required by reason of 
     subsection (e).
       ``(g) Funding Target Attainment Percentage.--For purposes 
     of this section, the term `funding target attainment 
     percentage' has the meaning provided such term under section 
     430(d)(2).''.
       (2) Clerical amendment.--The table of sections for such 
     subpart is amended by adding at the end the following new 
     item:

``Sec. 437. Benefit limitations on underfunded plans.''.

       (c) Special Rule for Plan Amendments.--A plan shall not 
     fail to meet the requirements of section 204(g) of the 
     Employee Retirement Income Security Act of 1974 or section 
     411(d)(6) of the Internal Revenue Code of 1986 solely by 
     reason of the adoption by the plan of an amendment necessary 
     to meet the requirements of the amendments made by this 
     section.
       (d) Effective Date.--
       (1) Shutdown benefits.--Except as provided in paragraph 
     (3), the amendments made by subsection (a) shall apply with 
     respect to plant shutdowns, or other unpredictable contingent 
     events, occurring after 2006.
       (2) Other benefits.--Except as provided in paragraph (3), 
     the amendments made by subsection (b) shall apply with 
     respect to plan years beginning after 2006.
       (3) Collective bargaining exception.--In the case of a plan 
     maintained pursuant to 1 or more collective bargaining 
     agreements between employee representatives and 1 or more 
     employers ratified before the date of the enactment of this 
     Act, the amendments made by this subsection shall not apply 
     to plan years beginning before the earlier of--
       (A) the later of--
       (i) the date on which the last collective bargaining 
     agreement relating to the plan terminates (determined without 
     regard to any extension thereof agreed to after the date of 
     the enactment of this Act), or
       (ii) the first day of the first plan year to which the 
     amendments made by this subsection would (but for this 
     subparagraph) apply, or
       (B) January 1, 2009.

     For purposes of clause (i), any plan amendment made pursuant 
     to a collective bargaining agreement relating to the plan 
     which amends the plan solely to conform to any requirement 
     added by this subsection shall not be treated as a 
     termination of such collective bargaining agreement.

     SEC. 114. TECHNICAL AND CONFORMING AMENDMENTS.

       (a) Amendments Related to Qualification Requirements.--
       (1) Section 401(a)(29) of the Internal Revenue Code of 1986 
     is amended to read as follows:
       ``(29) Benefit limitations on plans in at-risk status.--In 
     the case of a defined benefit plan (other than a 
     multiemployer plan) to which the requirements of section 412 
     apply, the trust of which the plan is a part shall not 
     constitute a qualified trust under this subsection unless the 
     plan meets the requirements of sections 436 and 437.''.
       (2) Section 401(a)(32) of such Code is amended--
       (A) in subparagraph (A), by striking ``412(m)(5)'' each 
     place it appears and inserting ``section 430(i)(4)'', and
       (B) in subparagraph (C), by striking ``section 412(m)'' and 
     inserting ``section 430(i)''.
       (3) Section 401(a) is amended by striking paragraph (33) 
     and by redesignating paragraph (34) as paragraph (33).
       (b) Vesting Rules.--Section 411 of such Code is amended--
       (1) by striking ``section 412(c)(8)'' in subsection 
     (a)(3)(C) and inserting ``section 412(d)(2)'',
       (2) in subsection (b)(1)(F)--
       (A) by striking ``paragraphs (2) and (3) of section 
     412(i)'' in clause (ii) and inserting ``subparagraphs (B) and 
     (C) of section 412(d)(4)'', and
       (B) by striking ``paragraphs (4), (5), and (6) of section 
     412(i)'' and inserting ``subparagraphs (D), (E), and (F) of 
     section 412(d)(4)'', and
       (3) by striking ``section 412(c)(8)'' in subsection 
     (d)(6)(A) and inserting ``section 412(e)(3)''.
       (c) Mergers and Consolidations of Plans.--Subclause (I) of 
     section 414(l)(2)(B)(i) of such Code is amended to read as 
     follows:

       ``(I) the amount determined under section 431(c)(6)(A)(i) 
     in the case of a multiemployer plan (and the sum of the 
     target liability amount and target normal cost determined 
     under section 430 in the case of any other plan), over''.

       (d) Transfer of Excess Pension Assets to Retiree Health 
     Accounts.--
       (1) Section 420(e)(2) of such Code is amended to read as 
     follows:
       ``(2) Excess pension assets.--The term `excess pension 
     assets' means the excess (if any) of--
       ``(A) the lesser of--
       ``(i) the fair market value of the plan's assets (reduced 
     by the pre-funding balance and the funding standard carryover 
     balance, as determined under section 430(e)(1)), or
       ``(ii) the value of plan assets as determined under section 
     430(e)(4) after reduction under section 430(e)(1), over
       ``(B) 125 percent of the sum of the target liability amount 
     and the target normal cost determined under section 430 for 
     such plan year.''.
       (2) Section 420(e)(4) of such Code is amended to read as 
     follows:
       ``(4) Coordination with section 430.--In the case of a 
     qualified transfer, any assets so transferred shall not, for 
     purposes of this section, be treated as assets in the 
     plan.''.
       (e) Excise Taxes.--
       (1) In general.--Subsections (a) and (b) of section 4971 of 
     such Code are amended to read as follows:
       ``(a) Initial Tax.--If at any time during any taxable year 
     an employer maintains a plan to which section 412 applies, 
     there is hereby imposed for the taxable year a tax equal to--
       ``(1) in the case of a single-employer plan, 10 percent of 
     the aggregate unpaid minimum required contributions for all 
     plan years remaining unpaid as of the end of any plan year 
     ending with or within the taxable year, and
       ``(2) in the case of a multiemployer plan, 5 percent of the 
     accumulated funding deficiency determined under section 431 
     as of the end of any plan year ending with or within the 
     taxable year.
       ``(b) Additional Tax.--If--
       ``(1) a tax is imposed under subsection (a)(1) on any 
     unpaid required minimum contribution and such amount remains 
     unpaid as of the close of the taxable period, or
       ``(2) a tax is imposed under subsection (a)(2) on any 
     accumulated funding deficiency and the accumulated funding 
     deficiency is not corrected within the taxable period,

     there is hereby imposed a tax equal to 100 percent of the 
     unpaid minimum required contribution or accumulated funding 
     deficiency, whichever is applicable, to the extent not so 
     paid or corrected.''.
       (2) Section 4971(c) of such Code is amended--
       (A) by striking ``the last two sentences of section 
     412(a)'' in paragraph (1) and inserting ``section 431'', and
       (B) by adding at the end the following new paragraph:
       ``(4) Unpaid minimum required contribution.--
       ``(A) In general.--The term `unpaid minimum required 
     contribution' means, with respect to any plan year, any 
     minimum required contribution under section 430 for the

[[Page 28576]]

     plan year which is not paid on or before the due date (as 
     determined under section 430(i)(1)) for the plan year.
       ``(B) Ordering rule.--Any payment to or under a plan for 
     any plan year shall be allocated first to unpaid minimum 
     required contributions for all preceding plan years on a 
     first-in, first-out basis and then to the minimum required 
     contribution under section 430 for the plan year.''.
       (3) Section 4971(e)(1) of such Code is amended by striking 
     ``section 412(b)(3)(A)'' and inserting ``section 
     412(a)(1)(A)''.
       (4) Section 4971(f)(1) of such Code is amended--
       (A) by striking ``section 412(m)(5)'' and inserting 
     ``section 430(i)(4)'', and
       (B) by striking ``section 412(m)'' and inserting ``section 
     430(i)''.
       (5) Section 4972(c)(7) of such Code is amended by striking 
     ``except to the extent that such contributions exceed the 
     full-funding limitation (as defined in section 412(c)(7), 
     determined without regard to subparagraph (A)(i)(I) 
     thereof)'' and inserting ``except, in the case of a 
     multiemployer plan, to the extent that such contributions 
     exceed the full-funding limitation (as defined in section 
     431(c)(6))''.
       (f) Reporting Requirements.--Section 6059(b) of such Code 
     is amended--
       (1) by striking ``the accumulated funding deficiency (as 
     defined in section 412(a))'' in paragraph (2) and inserting 
     ``the minimum required contribution determined under section 
     430, or the accumulated funding deficiency determined under 
     section 431,'', and
       (2) by striking paragraph (3)(B) and inserting:
       ``(B) the requirements for reasonable actuarial assumptions 
     under section 430(f)(1) or 431(c)(3), whichever are 
     applicable, have been complied with.''.

                      Subtitle C--Other Provisions

     SEC. 121. MODIFICATION OF TRANSITION RULE TO PENSION FUNDING 
                   REQUIREMENTS.

       (a) In General.--In the case of a plan that--
       (1) was not required to pay a variable rate premium for the 
     plan year beginning in 1996,
       (2) has not, in any plan year beginning after 1995, merged 
     with another plan (other than a plan sponsored by an employer 
     that was in 1996 within the controlled group of the plan 
     sponsor); and
       (3) is sponsored by a company that is engaged primarily in 
     the interurban or interstate passenger bus service,

     the rules described in subsection (b) shall apply for any 
     plan year beginning after 2005.
       (b) Modified Rules.--The rules described in this subsection 
     are as follows:
       (1) For purposes of section 430(i)(3) of the Internal 
     Revenue Code of 1986 and section 303(i)(3) of the Employee 
     Retirement Income Security Act of 1974, the plan shall be 
     treated as not having a funding shortfall for any plan year.
       (2) For purposes of--
       (A) determining unfunded vested benefits under section 
     4006(a)(3)(E)(iii) of such Act, and
       (B) determining any present value or making any computation 
     under section 412 of such Code or section 302 of such Act,

     the mortality table shall be the mortality table used by the 
     plan.
       (c) Conforming Amendment.--
       (1) Section 769 of the Retirement Protection Act of 1994 is 
     amended by striking subsection (c).
       (2) The amendment made this subsection shall apply to plan 
     years beginning after 2005.

     SEC. 122. TREATMENT OF NONQUALIFIED DEFERRED COMPENSATION 
                   PLANS WHEN EMPLOYER DEFINED BENEFIT PLAN IN AT-
                   RISK STATUS.

       (a) In General.--Subsection (b) of section 409A of the 
     Internal Revenue Code of 1986 (providing rules relating to 
     funding) is amended by redesignating paragraphs (3) and (4) 
     as paragraphs (4) and (5), respectively, and by inserting 
     after paragraph (2) the following new paragraph:
       ``(3) Employer's defined benefit plan in at-risk status.--
     In the case of a plan to which section 412 applies, if--
       ``(A) during any period in which any defined benefit plan 
     of an employer is in an at-risk status (as defined in section 
     412(g)(3)), assets are set aside (directly or indirectly) in 
     a trust (or other arrangement determined by the Secretary), 
     or transferred to such a trust or other arrangement, for 
     purposes of paying deferred compensation under a nonqualified 
     deferred compensation plan of the employer, or
       ``(B) a nonqualified deferred compensation plan of the 
     employer provides that assets will become restricted to the 
     provision of benefits under the plan in connection with such 
     at-risk status (or other similar financial measure determined 
     by the Secretary) of the defined benefit plan, or assets are 
     so restricted,

     such assets shall for purposes of section 83 be treated as 
     property transferred in connection with the performance of 
     services whether or not such assets are available to satisfy 
     claims of general creditors.''.
       (b) Conforming Amendments.--Paragraphs (4) and (5) of 
     section 409A(b) of such Code, as redesignated by subsection 
     (a) of this subsection, are each amended by striking 
     ``paragraph (1) or (2)'' each place it appears and inserting 
     ``paragraph (1), (2), or (3)''.
       (c)  Effective Date.--The amendments made by this section 
     shall take effect on January 1, 2006.

    TITLE II--FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS

 Subtitle A--Amendments to Employee Retirement Income Security Act of 
                                  1974

     SEC. 201. FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT 
                   PLANS.

       (a) In General.--Part 3 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974 (as amended 
     by section 102) is amended further by inserting after section 
     303 the following new section:


          ``Minimum funding standards for multiemployer plans

       ``Sec. 304. (a) In General.--For purposes of section 302, 
     the accumulated funding deficiency of a multiemployer plan 
     for any plan year is--
       ``(1) except as provided in paragraph (2), the amount, 
     determined as of the end of the plan year, equal to the 
     excess (if any) of the total charges to the funding standard 
     account of the plan for all plan years (beginning with the 
     first plan year for which this part applies to the plan) over 
     the total credits to such account for such years, and
       ``(2) if the multiemployer plan is in reorganization for 
     any plan year, the accumulated funding deficiency of the plan 
     determined under section 4243.
       ``(b) Funding Standard Account.--
       ``(1) Account required.--Each multiemployer plan to which 
     this part applies shall establish and maintain a funding 
     standard account. Such account shall be credited and charged 
     solely as provided in this section.
       ``(2) Charges to account.--For a plan year, the funding 
     standard account shall be charged with the sum of--
       ``(A) the normal cost of the plan for the plan year,
       ``(B) the amounts necessary to amortize in equal annual 
     installments (until fully amortized)--
       ``(i) in the case of a plan 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 this section 
     applies, over a period of 40 plan years,
       ``(ii) in the case of a plan which comes into existence 
     after January 1, 1974, the unfunded past service liability 
     under the plan on the first day of the first plan year to 
     which this section applies, over a period of 15 plan years,
       ``(iii) separately, with respect to each plan year, the net 
     increase (if any) in unfunded past service liability under 
     the plan arising from plan amendments adopted in such year, 
     over a period of 15 plan years,
       ``(iv) separately, with respect to each plan year, the net 
     experience loss (if any) under the plan, over a period of 15 
     plan years, and
       ``(v) separately, with respect to each plan year, the net 
     loss (if any) resulting from changes in actuarial assumptions 
     used under the plan, over a period of 15 plan years,
       ``(C) the amount necessary to amortize each waived funding 
     deficiency (within the meaning of section 302(c)(3)) for each 
     prior plan year in equal annual installments (until fully 
     amortized) over a period of 15 plan years,
       ``(D) the amount necessary to amortize in equal annual 
     installments (until fully amortized) over a period of 5 plan 
     years any amount credited to the funding standard account 
     under section 302(b)(3)(D) (as in effect on the day before 
     the date of the enactment of this section), and
       ``(E) the amount necessary to amortize in equal annual 
     installments (until fully amortized) over a period of 20 
     years the contributions which would be required to be made 
     under the plan but for the provisions of section 
     302(c)(7)(A)(i)(I) (as in effect on the day before the date 
     of the enactment of this section).
       ``(3) Credits to account.--For a plan year, the funding 
     standard account shall be credited with the sum of--
       ``(A) the amount considered contributed by the employer to 
     or under the plan for the plan year,
       ``(B) the amount necessary to amortize in equal annual 
     installments (until fully amortized)--
       ``(i) separately, with respect to each plan year, the net 
     decrease (if any) in unfunded past service liability under 
     the plan arising from plan amendments adopted in such year, 
     over a period of 15 plan years,
       ``(ii) separately, with respect to each plan year, the net 
     experience gain (if any) under the plan, over a period of 15 
     plan years, and
       ``(iii) separately, with respect to each plan year, the net 
     gain (if any) resulting from changes in actuarial assumptions 
     used under the plan, over a period of 15 plan years,
       ``(C) the amount of the waived funding deficiency (within 
     the meaning of section 302(c)(3)) for the plan year, and
       ``(D) in the case of a plan year for which the accumulated 
     funding deficiency is determined under the funding standard 
     account if such plan year follows a plan year for which such 
     deficiency was determined under the alternative minimum 
     funding standard under section 305 (as in effect on the day 
     before the date of the enactment of this section), the

[[Page 28577]]

     excess (if any) of any debit balance in the funding standard 
     account (determined without regard to this subparagraph) over 
     any debit balance in the alternative minimum funding standard 
     account.
       ``(4) Special rule for amounts first amortized to plan 
     years before 2006.--In the case of any amount amortized under 
     section 302(b) (as in effect before the date of the enactment 
     of Pension Protection Act of 2005) over any period beginning 
     with a plan year beginning before 2006, in lieu of the 
     amortization described in paragraphs (2)(B) and (3)(B), such 
     amount shall continue to be amortized under such section as 
     so in effect.
       ``(5) Combining and offsetting amounts to be amortized.--
     Under regulations prescribed by the Secretary of the 
     Treasury, amounts required to be amortized under paragraph 
     (2) or paragraph (3), as the case may be--
       ``(A) may be combined into one amount under such paragraph 
     to be amortized over a period determined on the basis of the 
     remaining amortization period for all items entering into 
     such combined amount, and
       ``(B) may be offset against amounts required to be 
     amortized under the other such paragraph, with the resulting 
     amount to be amortized over a period determined on the basis 
     of the remaining amortization periods for all items entering 
     into whichever of the two amounts being offset is the 
     greater.
       ``(6) Interest.--The funding standard account (and items 
     therein) shall be charged or credited (as determined under 
     regulations prescribed by the Secretary of the Treasury) with 
     interest at the appropriate rate consistent with the rate or 
     rates of interest used under the plan to determine costs.
       ``(7) Certain amortization charges and credits.--In the 
     case of a plan which, immediately before the date of the 
     enactment of the Multiemployer Pension Plan Amendments Act of 
     1980, was a multiemployer plan (within the meaning of section 
     3(37) as in effect immediately before such date)--
       ``(A) any amount described in paragraph (2)(B)(ii), 
     (2)(B)(iii), or (3)(B)(i) of this subsection which arose in a 
     plan year beginning before such date shall be amortized in 
     equal annual installments (until fully amortized) over 40 
     plan years, beginning with the plan year in which the amount 
     arose;
       ``(B) any amount described in paragraph (2)(B)(iv) or 
     (3)(B)(ii) of this subsection which arose in a plan year 
     beginning before such date shall be amortized in equal annual 
     installments (until fully amortized) over 20 plan years, 
     beginning with the plan year in which the amount arose;
       ``(C) any change in past service liability which arises 
     during the period of 3 plan years beginning on or after such 
     date, and results from a plan amendment adopted before such 
     date, shall be amortized in equal annual installments (until 
     fully amortized) over 40 plan years, beginning with the plan 
     year in which the change arises; and
       ``(D) any change in past service liability which arises 
     during the period of 2 plan years beginning on or after such 
     date, and results from the changing of a group of 
     participants from one benefit level to another benefit level 
     under a schedule of plan benefits which--
       ``(i) was adopted before such date, and
       ``(ii) was effective for any plan participant before the 
     beginning of the first plan year beginning on or after such 
     date,

     shall be amortized in equal annual installments (until fully 
     amortized) over 40 plan years, beginning with the plan year 
     in which the change arises.
       ``(8) Special rules relating to charges and credits to 
     funding standard account.--For purposes of this part--
       ``(A) Withdrawal liability.--Any amount received by a 
     multiemployer plan in payment of all or part of an employer's 
     withdrawal liability under part 1 of subtitle E of title IV 
     shall be considered an amount contributed by the employer to 
     or under the plan. The Secretary of the Treasury may 
     prescribe by regulation additional charges and credits to a 
     multiemployer plan's funding standard account to the extent 
     necessary to prevent withdrawal liability payments from being 
     unduly reflected as advance funding for plan liabilities.
       ``(B) Adjustments when a multiemployer plan leaves 
     reorganization.--If a multiemployer plan is not in 
     reorganization in the plan year but was in reorganization in 
     the immediately preceding plan year, any balance in the 
     funding standard account at the close of such immediately 
     preceding plan year--
       ``(i) shall be eliminated by an offsetting credit or charge 
     (as the case may be), but
       ``(ii) shall be taken into account in subsequent plan years 
     by being amortized in equal annual installments (until fully 
     amortized) over 30 plan years.

     The preceding sentence shall not apply to the extent of any 
     accumulated funding deficiency under section 4243(a) as of 
     the end of the last plan year that the plan was in 
     reorganization.
       ``(C) Plan payments to supplemental program or withdrawal 
     liability payment fund.--Any amount paid by a plan during a 
     plan year to the Pension Benefit Guaranty Corporation 
     pursuant to section 4222 of this Act or to a fund exempt 
     under section 501(c)(22) of the Internal Revenue Code of 1986 
     pursuant to section 4223 of this Act shall reduce the amount 
     of contributions considered received by the plan for the plan 
     year.
       ``(D) Interim withdrawal liability payments.--Any amount 
     paid by an employer pending a final determination of the 
     employer's withdrawal liability under part 1 of subtitle E of 
     title IV and subsequently refunded to the employer by the 
     plan shall be charged to the funding standard account in 
     accordance with regulations prescribed by the Secretary of 
     the Treasury.
       ``(E) Election for deferral of charge for portion of net 
     experience loss.--If an election is in effect under section 
     302(b)(7)(F) (as in effect on the day before the date of the 
     enactment of this section) for any plan year, the funding 
     standard account shall be charged in the plan year to which 
     the portion of the net experience loss deferred by such 
     election was deferred with the amount so deferred (and 
     paragraph (2)(B)(iv) shall not apply to the amount so 
     charged).
       ``(F) Financial assistance.--Any amount of any financial 
     assistance from the Pension Benefit Guaranty Corporation to 
     any plan, and any repayment of such amount, shall be taken 
     into account under this section and section 412 in such 
     manner as is determined by the Secretary of the Treasury.
       ``(G) Short-term benefits.--To the extent that any plan 
     amendment increases the unfunded past service liability under 
     the plan by reason of an increase in benefits which are 
     payable under the plan during a period that does not exceed 
     14 years, paragraph (2)(B)(iii) shall be applied separately 
     with respect to such increase in unfunded past service 
     liability by substituting the number of years of the period 
     during which such benefits are payable for `15'.
       ``(c) Additional Rules.--
       ``(1) Determinations to be made under funding method.--For 
     purposes of this part, normal costs, accrued liability, past 
     service liabilities, and experience gains and losses shall be 
     determined under the funding method used to determine costs 
     under the plan.
       ``(2) Valuation of assets.--
       ``(A) In general.--For purposes of this part, the value of 
     the plan's assets shall be determined on the basis of any 
     reasonable actuarial method of valuation which takes into 
     account fair market value and which is permitted under 
     regulations prescribed by the Secretary of the Treasury.
       ``(B) Election with respect to bonds.--The value of a bond 
     or other evidence of indebtedness which is not in default as 
     to principal or interest may, at the election of the plan 
     administrator, be determined on an amortized basis running 
     from initial cost at purchase to par value at maturity or 
     earliest call date. Any election under this subparagraph 
     shall be made at such time and in such manner as the 
     Secretary of the Treasury shall by regulations provide, shall 
     apply to all such evidences of indebtedness, and may be 
     revoked only with the consent of such Secretary.
       ``(3) Actuarial assumptions must be reasonable.--For 
     purposes of this section, all costs, liabilities, rates of 
     interest, and other factors under the plan shall be 
     determined on the basis of actuarial assumptions and 
     methods--
       ``(A) which, in the aggregate, are reasonable (taking into 
     account the experience of the plan and reasonable 
     expectations), and
       ``(B) which, in combination, offer the actuary's best 
     estimate of anticipated experience under the plan.
       ``(4) Treatment of certain changes as experience gain or 
     loss.--For purposes of this section, if--
       ``(A) a change in benefits under the Social Security Act or 
     in other retirement benefits created under Federal or State 
     law, or
       ``(B) a change in the definition of the term `wages' under 
     section 3121 of the Internal Revenue Code of 1986, or a 
     change in the amount of such wages taken into account under 
     regulations prescribed for purposes of section 401(a)(5) of 
     such Code,

     results in an increase or decrease in accrued liability under 
     a plan, such increase or decrease shall be treated as an 
     experience loss or gain.
       ``(5) Full funding.--If, as of the close of a plan year, a 
     plan would (without regard to this paragraph) have an 
     accumulated funding deficiency in excess of the full funding 
     limitation--
       ``(A) the funding standard account shall be credited with 
     the amount of such excess, and
       ``(B) all amounts described in subparagraphs (B), (C), and 
     (D) of paragraph (2) and subparagraph (B) of subsection 
     (b)(3) which are required to be amortized shall be considered 
     fully amortized for purposes of such subparagraphs.
       ``(6) Full-funding limitation.--
       ``(A) In general.--For purposes of paragraph (5), the term 
     `full-funding limitation' means the excess (if any) of--
       ``(i) the accrued liability (including normal cost) under 
     the plan (determined under the entry age normal funding 
     method if such accrued liability cannot be directly 
     calculated under the funding method used for the plan), over
       ``(ii) the lesser of--

       ``(I) the fair market value of the plan's assets, or
       ``(II) the value of such assets determined under paragraph 
     (2).

[[Page 28578]]

       ``(B) Minimum amount.--
       ``(i) In general.--In no event shall the full-funding 
     limitation determined under subparagraph (A) be less than the 
     excess (if any) of--

       ``(I) 90 percent of the current liability of the plan 
     (including the expected increase in current liability due to 
     benefits accruing during the plan year), over
       ``(II) the value of the plan's assets determined under 
     paragraph (2).

       ``(ii) Assets.--For purposes of clause (i), assets shall 
     not be reduced by any credit balance in the funding standard 
     account.
       ``(C) Current liability.--For purposes of this paragraph--
       ``(i) In general.--The term `current liability' means all 
     liabilities to employees and their beneficiaries under the 
     plan.
       ``(ii) Treatment of unpredictable contingent event 
     benefits.--For purposes of clause (i), any benefit contingent 
     on an event other than--

       ``(I) age, service, compensation, death, or disability, or
       ``(II) an event which is reasonably and reliably 
     predictable (as determined by the Secretary of the Treasury),

     shall not be taken into account until the event on which the 
     benefit is contingent occurs.
       ``(iii) Interest rate used.--The rate of interest used to 
     determine current liability under this paragraph shall be the 
     rate of interest determined under subparagraph (D).
       ``(iv) Mortality tables.--

       ``(I) Commissioners' standard table.--In the case of plan 
     years beginning before the first plan year to which the first 
     tables prescribed under subclause (II) apply, the mortality 
     table used in determining current liability under this 
     paragraph shall be the table prescribed by the Secretary of 
     the Treasury which is based on the prevailing commissioners' 
     standard table (described in section 807(d)(5)(A) of the 
     Internal Revenue Code of 1986) used to determine reserves for 
     group annuity contracts issued on January 1, 1993.
       ``(II) Secretarial authority.--The Secretary of the 
     Treasury may by regulation prescribe for plan years beginning 
     after December 31, 1999, mortality tables to be used in 
     determining current liability under this subsection. Such 
     tables shall be based upon the actual experience of pension 
     plans and projected trends in such experience. In prescribing 
     such tables, such Secretary shall take into account results 
     of available independent studies of mortality of individuals 
     covered by pension plans.

       ``(v) Separate mortality tables for the disabled.--
     Notwithstanding clause (iv)--

       ``(I) In general.--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 clause (ii)) to determine current liability 
     under this subsection for individuals who are entitled to 
     benefits under the plan on account of disability. Such 
     Secretary shall establish separate tables for individuals 
     whose disabilities occur in plan years beginning before 
     January 1, 1995, and for individuals whose disabilities occur 
     in plan years beginning on or after such date.
       ``(II) Special rule for disabilities occurring after 
     1994.--In the case of disabilities occurring in plan years 
     beginning after December 31, 1994, the tables under subclause 
     (I) shall apply only with respect to individuals described in 
     such subclause who are disabled within the meaning of title 
     II of the Social Security Act and the regulations thereunder.

       ``(vi) Periodic review.--The Secretary of the Treasury 
     shall periodically (at least every 5 years) review any tables 
     in effect under this subparagraph and shall, to the extent 
     such Secretary determines necessary, by regulation update the 
     tables to reflect the actual experience of pension plans and 
     projected trends in such experience.
       ``(D) Required change of interest rate.--For purposes of 
     determining a plan's current liability for purposes of this 
     paragraph--
       ``(i) In general.--If any rate of interest used under the 
     plan under subsection (b)(5) to determine cost is not within 
     the permissible range, the plan shall establish a new rate of 
     interest within the permissible range.
       ``(ii) Permissible range.--For purposes of this 
     subparagraph--

       ``(I) In general.--Except as provided in subclause (II), 
     the term `permissible range' means a rate of interest which 
     is not more than 5 percent above, and not more than 10 
     percent below, the weighted average of the rates of interest 
     on 30-year Treasury securities during the 4-year period 
     ending on the last day before the beginning of the plan year.
       ``(II) Secretarial authority.--If the Secretary of the 
     Treasury finds that the lowest rate of interest permissible 
     under subclause (I) is unreasonably high, such Secretary may 
     prescribe a lower rate of interest, except that such rate may 
     not be less than 80 percent of the average rate determined 
     under such subclause.

       ``(iii) Assumptions.--Notwithstanding paragraph (3)(A), the 
     interest rate used under the plan shall be--

       ``(I) determined without taking into account the experience 
     of the plan and reasonable expectations, but
       ``(II) consistent with the assumptions which reflect the 
     purchase rates which would be used by insurance companies to 
     satisfy the liabilities under the plan.

       ``(E) Full funding limitation.--For purposes of this 
     paragraph, unless otherwise provided by the plan, the accrued 
     liability under a multiemployer plan shall not include 
     benefits which are not nonforfeitable under the plan after 
     the termination of the plan (taking into consideration 
     section 411(d)(3) of the Internal Revenue Code of 1986).
       ``(7) Annual valuation.--
       ``(A) In general.--For purposes of this section, a 
     determination of experience gains and losses and a valuation 
     of the plan's liability shall be made not less frequently 
     than once every year, except that such determination shall be 
     made more frequently to the extent required in particular 
     cases under regulations prescribed by the Secretary of the 
     Treasury.
       ``(B) Valuation date.--
       ``(i) Current year.--Except as provided in clause (ii), the 
     valuation referred to in subparagraph (A) shall be made as of 
     a date within the plan year to which the valuation refers or 
     within one month prior to the beginning of such year.
       ``(ii) Use of prior year valuation.--The valuation referred 
     to in subparagraph (A) may be made as of a date within the 
     plan year prior to the year to which the valuation refers if, 
     as of such date, the value of the assets of the plan are not 
     less than 100 percent of the plan's current liability (as 
     defined in paragraph (6)(C) without regard to clause (iv) 
     thereof).
       ``(iii) Adjustments.--Information under clause (ii) shall, 
     in accordance with regulations, be actuarially adjusted to 
     reflect significant differences in participants.
       ``(iv) Limitation.--A change in funding method to use a 
     prior year valuation, as provided in clause (ii), may not be 
     made unless as of the valuation date within the prior plan 
     year, the value of the assets of the plan are not less than 
     125 percent of the plan's current liability (as defined in 
     paragraph (6)(C) without regard to clause (iv) thereof).
       ``(8) Time when certain contributions deemed made.--For 
     purposes of this section, any contributions for a plan year 
     made by an employer after the last day of such plan year, but 
     not later than two and one-half months after such day, shall 
     be deemed to have been made on such last day. For purposes of 
     this subparagraph, such two and one-half month period may be 
     extended for not more than six months under regulations 
     prescribed by the Secretary of the Treasury.
       ``(d) Extension of Amortization Periods for Multiemployer 
     Plans.--In the case of a multiemployer plan--
       ``(1) Automatic extension.--The Secretary of the Treasury 
     shall, upon application and subject to the requirements of 
     paragraph (4), extend the period of years required to 
     amortize any unfunded liability (described in any clause of 
     subsection (b)(2)(B)) of the plan for a period of time not in 
     excess of 5 years.
       ``(2) Extension for cause.--The period of years required to 
     amortize any unfunded liability (described in any clause of 
     subsection (b)(2)(B)) of any multiemployer plan may be 
     extended (in addition to any extension under paragraph (1)) 
     by the Secretary of the Treasury for a period of time (not in 
     excess of 5 years) if he determines that such extension would 
     carry out the purposes of this Act and would provide adequate 
     protection for participants under the plan and their 
     beneficiaries and if he determines that the failure to permit 
     such extension would--
       ``(A) result in--
       ``(i) a substantial risk to the voluntary continuation of 
     the plan, or
       ``(ii) a substantial curtailment of pension benefit levels 
     or employee compensation, and
       ``(B) be adverse to the interests of plan participants in 
     the aggregate.
       ``(3) Interest rate.--The interest rate applicable for any 
     plan year under any arrangement entered into by the Secretary 
     of the Treasury in connection with an extension granted under 
     this subsection shall be the greater of--
       ``(A) 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
       ``(B) the rate of interest used under the plan for 
     determining costs.
       ``(4) Required notice.--
       ``(A) In general.--The Secretary of the Treasury shall, 
     before granting an extension under this section, require each 
     applicant to provide evidence satisfactory to such Secretary 
     that the applicant has provided notice of the filing of the 
     application for such extension to each employee organization 
     representing employees covered by the affected plan and to 
     the Pension Benefit Guaranty Corporation.
       ``(B) Consideration of relevant information.--The Secretary 
     of the Treasury shall consider any relevant information 
     provided by a person to whom notice was given under paragraph 
     (1).
       ``(e) Restriction on Plan Amendments.--
       ``(1) In general.--No amendment of a multiemployer plan 
     which increases the liabilities of the plan by reason of any 
     increase in

[[Page 28579]]

     benefits, any change in the accrual of benefits, or any 
     change in the rate at which benefits become nonforfeitable 
     under the plan shall be adopted if a waiver under section 
     302(c) or an extension of time under subsection (d) is in 
     effect with respect to the plan, or if a plan amendment 
     described in section 302(d)(2) has been made at any time in 
     the preceding 24 months. If a plan is amended in violation of 
     the preceding sentence, any such waiver, or extension of 
     time, shall not apply to any plan year ending on or after the 
     date on which such amendment is adopted.
       ``(2) Exception.--Paragraph (1) shall not apply to any plan 
     amendment which--
       ``(A) the Secretary determines to be reasonable and which 
     provides for only de minimis increases in the liabilities of 
     the plan,
       ``(B) only repeals an amendment described in section 
     302(d)(2), or
       ``(C) is required as a condition of qualification under 
     part I of subchapter D, of chapter 1, of the Internal Revenue 
     Code of 1986.''.
       (b) Conforming Amendments.--
       (1) Section 301 of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1081) is amended by striking 
     subsection (d).
       (2) The table of contents in section 1 of such Act (as 
     amended by section 102 of this Act) is amended further by 
     inserting after the item relating to section 303 the 
     following new item:

``Sec. 304. Minimum funding standards for multiemployer plans.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after 2005.

     SEC. 202. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS IN 
                   ENDANGERED OR CRITICAL STATUS.

       (a) In General.--Part 3 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974 (as amended 
     by the preceding provisions of this Act) is amended further 
     by inserting after section 304 the following new section:


``Additional funding rules for multiemployer plans in endangered status 
                           or critical status

       ``Sec. 305. (a) Annual Certification by Plan Actuary.--
       ``(1) In general.--During the 90-day period beginning on 
     first day of each plan year of a multiemployer plan, the plan 
     actuary of shall certify to the Secretary of the Treasury 
     whether or not the plan is in endangered status for such plan 
     year and whether or not the plan is in critical status for 
     such plan year.
       ``(2) Actuarial projections of assets and liabilities.--
       ``(A) In general.--In making the determinations under 
     paragraph (1), the plan actuary shall make projections under 
     subsections (b)(2) and (c)(2) for the current and succeeding 
     plan years, using reasonable actuarial assumptions and 
     methods, of the current value of the assets of the plan and 
     the present value of all liabilities to participants and 
     beneficiaries under the plan for the current plan year as of 
     the beginning of such year, as set forth in the actuarial 
     statement prepared for the preceding plan year under section 
     103(d).
       ``(B) Determinations of future contributions.--Any such 
     actuarial projection of plan assets shall assume--
       ``(i) reasonably anticipated employer and employee 
     contributions for the current and succeeding plan years, 
     assuming that the terms of the one or more collective 
     bargaining agreements pursuant to which the plan is 
     maintained for the current plan year continue in effect for 
     succeeding plan years, or
       ``(ii) employer and employee contributions projected for 
     the current and succeeding plan years under the terms of such 
     collective bargaining agreements (assuming the continued 
     application of such terms indefinitely to such plan years), 
     but only if the plan actuary determines there have been no 
     significant demographic changes that would make continued 
     application of such terms unreasonable.
       ``(3) Presumed status in absence of timely actuarial 
     certification.--If certification under this subsection is not 
     made before the end of the 90-day period specified in 
     paragraph (1), the plan shall be presumed to be in critical 
     status for such plan year until such time as the actuary 
     makes a contrary certification.
       ``(4) Notice.--In any case in which a multiemployer plan is 
     certified to be in endangered or critical status for a plan 
     year under paragraph (1), is presumed to be in critical 
     status under paragraph (3), or is deemed to be in critical 
     status under subsection (b)(7), the plan sponsor shall, not 
     later than 30 days after the date of the certification, 
     presumption, or deeming, provide notification of the 
     endangered or critical status to the participants and 
     beneficiaries, the bargaining parties, the Pension Benefit 
     Guaranty Corporation, the Secretary of the Treasury, and the 
     Secretary of Labor.
       ``(b) Funding Rules for Multiemployer Plans in Endangered 
     Status.--
       ``(1) In general.--In any case in which a multiemployer 
     plan is in endangered status for a plan year, the plan 
     sponsor shall, in accordance with this subsection, amend the 
     plan to include a funding improvement plan upon approval 
     thereof by the bargaining parties under this subsection. The 
     amendment shall be adopted not later than 240 days after the 
     date on which the plan is certified to be in endangered 
     status under subsection (a)(1).
       ``(2) Endangered status.--A multiemployer plan is in 
     endangered status for a plan year if, as determined by the 
     plan actuary under subsection (c)--
       ``(A) the plan's funded percentage for such plan year is 
     less than 80 percent, or
       ``(B) the plan has an accumulated funding deficiency for 
     such plan year under section 304 or is projected to have such 
     an accumulated funding deficiency for any of the 6 succeeding 
     plan years, taking into account any extension of amortization 
     periods under section 304(d).
       ``(3) Funding improvement plan.--
       ``(A) Benchmarks.--A funding improvement plan shall consist 
     of amendments to the plan formulated to provide, under 
     reasonable actuarial assumptions, for the attainment, during 
     the funding improvement period under the funding improvement 
     plan, of the following benchmarks:
       ``(i) Reduction in unfunded current liability.--A 
     percentage decrease in the plan's unfunded current liability 
     from the amount for the first plan year of the funding 
     improvement period to the amount for the last plan year of 
     the funding improvement period, of at least 33\1/3\ percent.
       ``(ii) Avoidance of accumulated funding deficiencies.--No 
     accumulated funding deficiency for any plan year during the 
     funding improvement period (taking into account any extension 
     of amortization periods under section 304(d)).
       ``(B) Funding improvement period.--The funding improvement 
     period for any funding improvement plan adopted pursuant to 
     this subsection is the 10-year period beginning on the 
     earlier of--
       ``(i) the second anniversary of the date of the adoption of 
     the funding improvement plan, or
       ``(ii) the first day of the first plan year of the 
     multiemployer plan following the plan year in which occurs 
     the first date after the day of the certification as of which 
     collective bargaining agreements covering on the day of such 
     certification at least 75 percent of active participants in 
     such multiemployer plan have expired.
       ``(C) Reporting.--A summary of any funding improvement plan 
     or modification thereto adopted during any plan year shall be 
     included in the annual report for such plan year under 
     section 104(a) and in the summary annual report described in 
     section 104(b)(3).
       ``(4) Development of funding improvement plan.--
       ``(A) Actions by plan sponsor pending approval.--Pending 
     the approval of a funding improvement plan under this 
     paragraph, the plan sponsor shall take all reasonable 
     actions, consistent with the terms of the plan and applicable 
     law, necessary to ensure--
       ``(i) an increase in the plan's funded percentage, and
       ``(ii) postponement of an accumulated funding deficiency 
     for at least 1 additional plan year.

     Such actions include applications for extensions of 
     amortization periods under section 304(d), use of the 
     shortfall funding method in making funding standard account 
     computations, amendments to the plan's benefit structure, 
     reductions in future benefit accruals, and other reasonable 
     actions consistent with the terms of the plan and applicable 
     law.
       ``(B) Recommendations by plan sponsor.--
       ``(i) In general.--During the period of 90 days following 
     the date on which a multiemployer plan is certified to be in 
     endangered status, the plan sponsor shall develop and provide 
     to the bargaining parties alternative proposals for revised 
     benefit structures, contribution structures, or both, which, 
     if adopted as amendments to the plan, may be reasonably 
     expected to meet the benchmarks described in paragraph 
     (3)(A). Such proposals shall include--

       ``(I) at least one proposal for reductions in the amount of 
     future benefit accruals necessary to achieve the benchmarks, 
     assuming no amendments increasing contributions under the 
     plan (other than amendments increasing contributions 
     necessary to achieve the benchmarks after amendments have 
     reduced future benefit accruals to the maximum extent 
     permitted by law), and
       ``(II) at least one proposal for increases in contributions 
     under the plan necessary to achieve the benchmarks, assuming 
     no amendments reducing future benefit accruals under the 
     plan.

       ``(ii) Requests by bargaining parties.--Upon the request of 
     any bargaining party who--

       ``(I) employs at least 5 percent of the active 
     participants, or
       ``(II) represents as an employee organization, for purposes 
     of collective bargaining, at least 5 percent of the active 
     participants,

     the plan sponsor shall provide all such parties information 
     as to other combinations of increases in contributions and 
     reductions in future benefit accruals which would result in 
     achieving the benchmarks.
       ``(iii) Other information.--The plan sponsor may, as it 
     deems appropriate, prepare

[[Page 28580]]

     and provide the bargaining parties with additional 
     information relating to contribution structures or benefit 
     structures or other information relevant to the funding 
     improvement plan.
       ``(5) Maintenance of contributions pending approval of 
     funding improvement plan.--Pending approval of a funding 
     improvement plan by the bargaining parties with respect to a 
     multiemployer plan, the multiemployer plan may not be amended 
     so as to provide--
       ``(A) a reduction in the level of contributions for 
     participants who are not in pay status,
       ``(B) a suspension of contributions with respect to any 
     period of service, or
       ``(C) any new direct or indirect exclusion of younger or 
     newly hired employees from plan participation.
       ``(6) Benefit restrictions pending approval of funding 
     improvement plan.--Pending approval of a funding improvement 
     plan by the bargaining parties with respect to a 
     multiemployer plan--
       ``(A) Restrictions on lump sum distributions and similar 
     distributions.--The multiemployer plan may not be amended so 
     as to provide additional forms of benefits.
       ``(B) Prohibition on benefit increases.--
       ``(i) In general.--No amendment of the plan which increases 
     the liabilities of the plan by reason of any increase in 
     benefits, any change in the accrual of benefits, or any 
     change in the rate at which benefits become nonforfeitable 
     under the plan may be adopted.
       ``(ii) Exception.--Clause (i) shall not apply to any plan 
     amendment which--

       ``(I) the Secretary of the Treasury determines to be 
     reasonable and which provides for only de minimis increases 
     in the liabilities of the plan,
       ``(II) only repeals an amendment described in section 
     302(d)(2), or
       ``(III) is required as a condition of qualification under 
     part I of subchapter D of chapter 1 of subtitle A of the 
     Internal Revenue Code of 1986.

       ``(7) Default critical status if no funding improvement 
     plan adopted.--If no plan amendment adopting a funding 
     improvement plan has been adopted by the end of the 240-day 
     period referred to in subsection (a)(1), the plan shall be in 
     critical status as of the first day of the succeeding plan 
     year.
       ``(8) Restrictions upon approval of funding improvement 
     plan.--Upon adoption of a funding improvement plan with 
     respect to a multiemployer plan, the plan may not be 
     amended--
       ``(A) so as to be inconsistent with the funding improvement 
     plan, or
       ``(B) so as to increase future benefit accruals, unless the 
     plan actuary certifies in advance that, after taking into 
     account the proposed increase, the plan is reasonably 
     expected to meet the the benchmarks described in paragraph 
     (3)(A).
       ``(c) Funding Rules for Multiemployer Plans in Critical 
     Status.--
       ``(1) In general.--In any case in which a multiemployer 
     plan is in critical status for a plan year, the plan sponsor 
     shall, in accordance with this subsection, amend the plan to 
     include a rehabilitation plan under this subsection. The 
     amendment shall be adopted not later than 240 days after the 
     date on which the plan is certified to be in critical status 
     under subsection (a)(1) or is presumed to be in critical 
     status under subsection (a)(3), or the first day of the plan 
     year in the case of a plan that is deemed to be in critical 
     status under subsection (b)(7).
       ``(2) Critical status.--A multiemployer plan is in critical 
     status for a plan year if--
       ``(A) the plan is in endangered status for the plan year 
     and the requirements of subsection (b)(1) are not met with 
     respect to the plan for such plan year, or
       ``(B) as determined by the plan actuary under subsection 
     (a), the plan is described in paragraph (3).

     Any multiemployer plan which is in critical status under 
     subparagraph (A) or (B) for a plan year shall be treated as 
     in critical status also for the succeeding plan year.
       ``(3) Criticality description.--For purposes of paragraph 
     (2)(B), a plan is described in this paragraph if the plan is 
     described in at least one of the following subparagraphs:
       ``(A) A plan is described in this subparagraph if, as of 
     the beginning of the current plan year--
       ``(i) the funded percentage of the plan is less than 65 
     percent, and
       ``(ii) the sum of--

       ``(I) the market value of plan assets, plus
       ``(II) the present value of the reasonably anticipated 
     employer and employee contributions for the current plan year 
     and each of the 6 succeeding plan years, assuming that the 
     terms of the one or more collective bargaining agreements 
     pursuant to which the plan is maintained for the current plan 
     year continue in effect for succeeding plan years,

     is less than the present value of all nonforfeitable benefits 
     for all participants and beneficiaries projected to be 
     payable under the plan during the current plan year and each 
     of the 6 succeeding plan years (plus administrative expenses 
     for such plan years).
       ``(B) A plan is described in this subparagraph if, as of 
     the beginning of the current plan year, the sum of--
       ``(i) the market value of plan assets, plus
       ``(ii) the present value of the reasonably anticipated 
     employer and employee contributions for the current plan year 
     and each of the 4 succeeding plan years, assuming that the 
     terms of the one or more collective bargaining agreements 
     pursuant to which the plan is maintained for the current plan 
     year remain in effect for succeeding plan years,

     is less than the present value of all nonforfeitable benefits 
     for all participants and beneficiaries projected to be 
     payable under the plan during the current plan year and each 
     of the 4 succeeding plan years (plus administrative expenses 
     for such plan years).
       ``(C) A plan is described in this subparagraph if--
       ``(i) as of the beginning of the current plan year, the 
     funded percentage of the plan is less than 65 percent, and
       ``(ii) the plan has an accumulated funding deficiency for 
     the current plan year or is projected to have an accumulated 
     funding deficiency for any of the 4 succeeding plan years, 
     taking into account any extension of amortization periods 
     under section 304(e).
       ``(D) A plan is described in this subparagraph if--
       ``(i)(I) the plan's normal cost for the current plan year, 
     plus interest (determined at the rate used for determining 
     cost under the plan) for the current plan year on the amount 
     of unfunded benefit liabilities under the plan as of the last 
     date of the preceding plan year, exceeds
       ``(II) the present value, as of the beginning of the 
     current plan year, of the reasonably anticipated employer and 
     employee contributions for the current plan year,
       ``(ii) the present value, as of the beginning of the 
     current plan year, of nonforfeitable benefits of inactive 
     participants is greater than the present value, as of the 
     beginning of the current plan year, of nonforfeitable 
     benefits of active participants, and
       ``(iii) the plan is projected to have an accumulated 
     funding deficiency for the current plan year or any of the 4 
     succeeding plan years.
       ``(E) A plan is described in this subparagraph if--
       ``(i) the funded percentage of the plan is greater than 65 
     percent for the current plan year, and
       ``(ii) the plan is projected to have an accumulated funding 
     deficiency during either of the following 3 plan years.
       ``(4) Rehabilitation plan.--
       ``(A) In general.--A rehabilitation plan shall consist of--
       ``(i) amendments to the plan providing (under reasonable 
     actuarial assumptions) for measures, agreed to by the 
     bargaining parties, to increase contributions, reduce plan 
     expenditures (including plan mergers and consolidations), or 
     reduce future benefit accruals, or to take any combination of 
     such actions, determined necessary to cause the plan to 
     cease, during the rehabilitation period, to be in critical 
     status,
       ``(ii) measures, agreed to by the bargaining parties, to 
     provide funding relief, or
       ``(iii) reasonable measures to forestall possible 
     insolvency (within the meaning of section 4245) if the plan 
     sponsor determines that, upon exhaustion of all reasonable 
     measures, the plan would not cease during the rehabilitation 
     period to be in critical status.
       ``(B) Rehabilitation period.--The rehabilitation period for 
     any rehabilitation plan adopted pursuant to this section is 
     the 10-year period beginning on the earlier of--
       ``(i) the second anniversary of the date of the adoption of 
     the rehabilitation plan, or
       ``(ii) the first day of the first plan year of the 
     multiemployer plan following the plan year in which occurs 
     the first date after the day of the certification as of which 
     collective bargaining agreements covering on the day of such 
     certification at least 75 percent of active participants in 
     such multiemployer plan have expired.
       ``(C) Reporting.--A summary of any rehabilitation plan or 
     modification thereto adopted during any plan year, together 
     with annual updates regarding the funding ratio of the plan, 
     shall be included in the annual report for such plan year 
     under section 104(a) and in the summary annual report 
     described in section 104(b)(3).
       ``(5) Development of rehabilitation plan.--
       ``(A) Proposals by plan sponsor.--
       ``(i) In general.--Within 90 days after the date of the 
     certification under subsection (a) that the plan is in 
     critical status (or the date as of which the requirements of 
     subsection (b)(1) are not met with respect to the plan), the 
     plan sponsor shall propose to all bargaining parties a range 
     of alternative schedules of increases in contributions and 
     reductions in future benefit accruals that would serve to 
     carry out a rehabilitation plan under this subsection.
       ``(ii) Proposal assuming no contribution increases.--Such 
     proposals shall include, as one of the proposed schedules, a 
     schedule of those reductions in future benefit accruals that 
     would be necessary to cause the plan to cease to be in 
     critical status if there were no further increases in rates 
     of contribution to the plan.
       ``(iii) Proposal where contributions are necessary.--If the 
     plan sponsor determines that the plan will not cease to be in 
     critical

[[Page 28581]]

     status during the rehabilitation period unless the plan is 
     amended to provide for an increase in contributions, the plan 
     sponsor's proposals shall include a schedule of those 
     increases in contribution rates that would be necessary to 
     cause the plan to cease to be in critical status if future 
     benefit accruals were reduced to the maximum extent permitted 
     by law and the rate of future benefit accruals did not exceed 
     1 percent per plan year.
       ``(B) Requests for additional schedules.--Upon the joint 
     request of all bargaining parties, each of whom--
       ``(i) employs at least 5 percent of the active 
     participants, or
       ``(ii) represents as an employee organization, for purposes 
     of collective bargaining, at least 5 percent of the active 
     participants,

     the plan sponsor shall include among the proposed schedules 
     such schedules of increases in contributions and reductions 
     in future benefit accruals as may be specified by the 
     bargaining parties.
       ``(C) Default schedule.--In any case in which the 
     bargaining parties, as of 240 days after the later of the 
     date of the certification under subsection (a) or the first 
     day the plan is in critical status under subsection (a)(3) or 
     (b)(7), have not agreed to at least one of the proposed 
     schedules, the plan sponsor shall amend the plan to implement 
     the schedule required by subparagraph (A)(ii).
       ``(D) Subsequent amendments.--Upon the adoption of a 
     schedule of increases in contributions or reductions in 
     future benefit accruals as part of the rehabilitation plan, 
     the plan sponsor may amend the plan thereafter to update the 
     schedule to adjust for any experience of the plan contrary to 
     past actuarial assumptions, except that such an amendment may 
     be made not more than once in any 3-year period.
       ``(E) Allocation of reductions in future benefit 
     accruals.--Any schedule containing reductions in future 
     benefit accruals forming a part of a rehabilitation plan 
     shall be applicable with respect to any group of active 
     participants who are employed by any bargaining party (as an 
     employer obligated to contribute under the plan) in 
     proportion to the extent to which increases in contributions 
     under such schedule apply to such bargaining party.
       ``(6) Maintenance of contributions and restrictions on 
     benefits pending adoption of rehabilitation plan.--The rules 
     of paragraphs (5) and (6) of subsection (b) shall apply for 
     purposes of this subsection by substituting the term 
     `rehabilitation plan' for `funding improvement plan'.
       ``(7) Deemed withdrawal.--Upon the failure of any employer 
     who has an obligation to contribute under the plan to make 
     contributions in compliance with the schedule adopted under 
     paragraph (6) as part of the rehabilitation plan, the failure 
     of the employer may, at the discretion of the plan sponsor, 
     be treated as a withdrawal by the employer from the plan 
     under section 4203 or a partial withdrawal by the employer 
     under section 4205.
       ``(d) Definitions.--For purposes of this section--
       ``(1) Bargaining party.--The term `bargaining party' means, 
     in connection with a multiemployer plan--
       ``(A) an employer who has an obligation to contribute under 
     the plan, and
       ``(B) an employee organization which, for purposes of 
     collective bargaining, represents plan participants employed 
     by such an employer.
       ``(2) Current liability.--The term `current liability' has 
     the meaning provided such term in section 304(c)(6)(C).
       ``(3) Unfunded current liability.--The term `unfunded 
     current liability' means the excess (if any) of--
       ``(A) the current liability of the plan, over
       ``(B) the value of the plan's assets determined under 
     section 304(c)(2).
       ``(4) Funded percentage.--The term `funded percentage' 
     means the percentage expressed as a ratio of which--
       ``(A) the numerator of which is the value of the plan's 
     assets, as determined under section 304(c)(2), and
       ``(B) the denominator of which is the accrued liability of 
     the plan.
       ``(5) Unfunded vested benefits.--The term `unfunded vested 
     benefits' has the meaning provided in section 4241(b)(9).
       ``(6) Accumulated funding deficiency.--The term 
     `accumulated funding deficiency' has the meaning provided 
     such term in section 304(a).
       ``(7) Active participant.--The term `active participant' 
     means, in connection with a multiemployer plan, a participant 
     who is in covered service under the plan.
       ``(8) Inactive participant.--The term `inactive 
     participant' means, in connection with a multiemployer plan, 
     a participant who--
       ``(A) is not in covered service under the plan, and
       ``(B) is in pay status under the plan or has a 
     nonforfeitable right to benefits under the plan.
       ``(9) Pay status.--A person is in `pay status' under a 
     multiemployer plan if--
       ``(A) at any time during the current plan year, such person 
     is a participant or beneficiary under the plan and is paid an 
     early, late, normal, or disability retirement benefit under 
     the plan (or a death benefit under the plan related to a 
     retirement benefit), or
       ``(B) to the extent provided in regulations of the 
     Secretary of the Treasury, such person is entitled to such a 
     benefit under the plan.
       ``(10) Obligation to contribute.--The term `obligation to 
     contribute' has the meaning provided such term under section 
     4212(a).''.
       (b) Conforming Amendment.--The table of contents in section 
     1 of such Act (as amended by the preceding provisions of this 
     Act) is amended further by inserting after the item relating 
     to section 304 the following new item:

``Sec. 305. Additional funding rules for multiemployer plans in 
              endangered status or critical status.''.

       (c) Effective Date.--The amendment made by this section 
     shall apply with respect to plan years beginning after 2005.

     SEC. 203. MEASURES TO FORESTALL INSOLVENCY OF MULTIEMPLOYER 
                   PLANS.

       (a) Advance Determination of Impending Insolvency Over 5 
     Years.--Section 4245(d)(1) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1426(d)(1)) is amended--
       (1) by striking ``3 plan years'' the second place it 
     appears and inserting ``5 plan years''; and
       (2) by adding at the end the following new sentence: ``If 
     the plan sponsor makes such a determination that the plan 
     will be insolvent in any of the next 5 plan years, the plan 
     sponsor shall make the comparison under this paragraph at 
     least annually until the plan sponsor makes a determination 
     that the plan will not be insolvent in any of the next 5 plan 
     years.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply with respect to determinations made in plan years 
     beginning after 2005.

     SEC. 204. WITHDRAWAL LIABILITY REFORMS.

       (a) Repeal of Limitation on Withdrawal Liability in the 
     Event of Certain Sales of Employer Assets to Unrelated 
     Parties.--
       (1) In general.--Section 4225 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1405) is repealed.
       (2) Conforming amendment.--The table of contents in section 
     1 of such Act is amended by striking the item relating to 
     section 4225.
       (3) Effective date.--The amendments made by this section 
     shall apply with respect to sales occurring on or after 
     January 1, 2006.
       (b) Repeal of Limitation to 20 Annual Payments.--
       (1) In general.--Section 4219(c)(1) of such Act (29 U.S.C. 
     1399(c)(1)) is amended by striking subparagraph (B).
       (2) Effective date.--The amendment made by this section 
     shall apply with respect to withdrawals occurring on or after 
     January 1, 2006.
       (c) Partial Withdrawals by Means of Outsourcing.--
       (1) In general.--Section 4205(b)(2)(A) of such Act (29 
     U.S.C. 1385(b)(2)(A)) is amended--
       (A) by striking ``or'' at the end of clause (i);
       (B) by striking ``ceased.'' at the end of clause (ii) and 
     inserting ``ceased, or''; and
       (C) by adding at the end the following new clause:
       ``(iii) an employer continues to perform work of the type 
     for which contributions are made under the plan by means of 
     services of individuals who are not employees of such 
     employer covered by such plan.''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply with respect to work performed on or after 
     January 1, 2006.
       (d) Repeal of Special Rule for Long and Short Haul Trucking 
     Industry.--
       (1) In general.--Subsection (d) of section 4203 of such Act 
     (29 U.S.C. 1383(d)) is repealed.
       (2) Effective date.--The repeal under this subsection shall 
     apply with respect to cessations to have obligations to 
     contribute to multiemployer plans and cessations of covered 
     operations under such plans occurring on or after January 1, 
     2006.
       (e) Application of Forgiveness Rule to Plans Primarily 
     Covering Employees in the Building and Construction.--
       (1) In general.--Section 4210(b) of such Act (29 U.S.C. 
     1390(b)) is amended--
       (A) by striking paragraph (1); and
       (B) by redesignating paragraphs (2) through (4) as 
     paragraphs (1) through (3), respectively.
       (2) Effective date.--The amendments made by this subsection 
     shall apply with respect to plan withdrawals occurring on or 
     after January 1, 2006.

     SEC. 205. REMOVAL OF RESTRICTIONS WITH RESPECT TO PROCEDURES 
                   APPLICABLE TO DISPUTES INVOLVING WITHDRAWAL 
                   LIABILITY.

       (a) In General.--Section 4221(f)(1) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1401(f)(1)) 
     is amended--
       (1) in subparagraph (A) by inserting ``and'' after 
     ``plan,'', and
       (2) by striking subparagraphs (B) and (C) and inserting the 
     following new subparagraph:
       ``(B) such determination is based in whole or in part on a 
     finding by the plan sponsor under section 4212(c) that a 
     principal purpose of any transaction which occurred at least 
     5

[[Page 28582]]

     years (2 years in the case of a small employer) before the 
     date of the complete or partial withdrawal was to evade or 
     avoid withdrawal liability under this subtitle,''.
       (b) Small Employer.--Paragraph (2) of section 4221(f) of 
     such Act is amended by adding at the end the following new 
     subparagraph:
       ``(C) Small employer.--For purposes of paragraph (1)(B)--
       ``(i) In general.--The term `small employer' means any 
     employer who (as of immediately before the transaction 
     referred to in paragraph (1)(B)) employs not more than 250 
     employees.
       ``(ii) Controlled group.--Any group treated as a single 
     employer under subsection (b), (c), (m), or (o) of section 
     414 of the Internal Revenue Code of 1986 shall be treated as 
     a single employer for purposes of this subparagraph.''.
       (c) Conforming Amendment.--Subparagraph (A) of section 
     4221(f)(2) of such Act is amended by striking 
     ``Notwithstanding'' and inserting ``In the case of a 
     transaction occurring before January 1, 1999, and at least 5 
     years before the date of the complete or partial withdrawal, 
     notwithstanding''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to any employer that receives a notification 
     under section 4219(b)(1) of the Employee Retirement Income 
     Security Act of 1974 on or after the date of the enactment of 
     this Act.

        Subtitle B--Amendments to Internal Revenue Code of 1986

     SEC. 211. FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT 
                   PLANS.

       (a) In General.--Subpart A of part III of subchapter D of 
     chapter 1 of the Internal Revenue Code of 1986 (added by 
     section 112 of this Act) is amended by adding at the end the 
     following new section:

     ``SEC. 431. MINIMUM FUNDING STANDARDS FOR MULTIEMPLOYER 
                   PLANS.

       ``(a) In General.--For purposes of section 412, the 
     accumulated funding deficiency of a multiemployer plan for 
     any plan year is--
       ``(1) except as provided in paragraph (2), the amount, 
     determined as of the end of the plan year, equal to the 
     excess (if any) of the total charges to the funding standard 
     account of the plan for all plan years (beginning with the 
     first plan year for which this part applies to the plan) over 
     the total credits to such account for such years, and
       ``(2) if the multiemployer plan is in reorganization for 
     any plan year, the accumulated funding deficiency of the plan 
     determined under section 418B.
       ``(b) Funding Standard Account.--
       ``(1) Account required.--Each multiemployer plan to which 
     this part applies shall establish and maintain a funding 
     standard account. Such account shall be credited and charged 
     solely as provided in this section.
       ``(2) Charges to account.--For a plan year, the funding 
     standard account shall be charged with the sum of--
       ``(A) the normal cost of the plan for the plan year,
       ``(B) the amounts necessary to amortize in equal annual 
     installments (until fully amortized)--
       ``(i) in the case of a plan 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 this section 
     applies, over a period of 40 plan years,
       ``(ii) in the case of a plan which comes into existence 
     after January 1, 1974, the unfunded past service liability 
     under the plan on the first day of the first plan year to 
     which this section applies, over a period of 15 plan years,
       ``(iii) separately, with respect to each plan year, the net 
     increase (if any) in unfunded past service liability under 
     the plan arising from plan amendments adopted in such year, 
     over a period of 15 plan years,
       ``(iv) separately, with respect to each plan year, the net 
     experience loss (if any) under the plan, over a period of 15 
     plan years, and
       ``(v) separately, with respect to each plan year, the net 
     loss (if any) resulting from changes in actuarial assumptions 
     used under the plan, over a period of 15 plan years,
       ``(C) the amount necessary to amortize each waived funding 
     deficiency (within the meaning of section 412(c)(3)) for each 
     prior plan year in equal annual installments (until fully 
     amortized) over a period of 15 plan years,
       ``(D) the amount necessary to amortize in equal annual 
     installments (until fully amortized) over a period of 5 plan 
     years any amount credited to the funding standard account 
     under section 412(b)(3)(D) (as in effect on the day before 
     the date of the enactment of this section), and
       ``(E) the amount necessary to amortize in equal annual 
     installments (until fully amortized) over a period of 20 
     years the contributions which would be required to be made 
     under the plan but for the provisions of section 
     412(c)(7)(A)(i)(I) (as in effect on the day before the date 
     of the enactment of this section).
       ``(3) Credits to account.--For a plan year, the funding 
     standard account shall be credited with the sum of--
       ``(A) the amount considered contributed by the employer to 
     or under the plan for the plan year,
       ``(B) the amount necessary to amortize in equal annual 
     installments (until fully amortized)--
       ``(i) separately, with respect to each plan year, the net 
     decrease (if any) in unfunded past service liability under 
     the plan arising from plan amendments adopted in such year, 
     over a period of 15 plan years,
       ``(ii) separately, with respect to each plan year, the net 
     experience gain (if any) under the plan, over a period of 15 
     plan years, and
       ``(iii) separately, with respect to each plan year, the net 
     gain (if any) resulting from changes in actuarial assumptions 
     used under the plan, over a period of 15 plan years,
       ``(C) the amount of the waived funding deficiency (within 
     the meaning of section 412(c)(3)) for the plan year, and
       ``(D) in the case of a plan year for which the accumulated 
     funding deficiency is determined under the funding standard 
     account if such plan year follows a plan year for which such 
     deficiency was determined under the alternative minimum 
     funding standard under section 412(g) (as in effect on the 
     day before the date of the enactment of this section), the 
     excess (if any) of any debit balance in the funding standard 
     account (determined without regard to this subparagraph) over 
     any debit balance in the alternative minimum funding standard 
     account.
       ``(4) Special rule for amounts first amortized to plan 
     years before 2006.--In the case of any amount amortized under 
     section 412(b) (as in effect before the date of the enactment 
     of Pension Protection Act of 2005) over any period beginning 
     with a plan year beginning before 2006, in lieu of the 
     amortization described in paragraphs (2)(B) and (3)(B), such 
     amount shall continue to be amortized under such section as 
     so in effect.
       ``(5) Combining and offsetting amounts to be amortized.--
     Under regulations prescribed by the Secretary, amounts 
     required to be amortized under paragraph (2) or paragraph 
     (3), as the case may be--
       ``(A) may be combined into one amount under such paragraph 
     to be amortized over a period determined on the basis of the 
     remaining amortization period for all items entering into 
     such combined amount, and
       ``(B) may be offset against amounts required to be 
     amortized under the other such paragraph, with the resulting 
     amount to be amortized over a period determined on the basis 
     of the remaining amortization periods for all items entering 
     into whichever of the two amounts being offset is the 
     greater.
       ``(6) Interest.--The funding standard account (and items 
     therein) shall be charged or credited (as determined under 
     regulations prescribed by the Secretary) with interest at the 
     appropriate rate consistent with the rate or rates of 
     interest used under the plan to determine costs.
       ``(7) Certain amortization charges and credits.--In the 
     case of a plan which, immediately before the date of the 
     enactment of the Multiemployer Pension Plan Amendments Act of 
     1980, was a multiemployer plan (within the meaning of section 
     414(f) as in effect immediately before such date)--
       ``(A) any amount described in paragraph (2)(B)(ii), 
     (2)(B)(iii), or (3)(B)(i) of this subsection which arose in a 
     plan year beginning before such date shall be amortized in 
     equal annual installments (until fully amortized) over 40 
     plan years, beginning with the plan year in which the amount 
     arose;
       ``(B) any amount described in paragraph (2)(B)(iv) or 
     (3)(B)(ii) of this subsection which arose in a plan year 
     beginning before such date shall be amortized in equal annual 
     installments (until fully amortized) over 20 plan years, 
     beginning with the plan year in which the amount arose;
       ``(C) any change in past service liability which arises 
     during the period of 3 plan years beginning on or after such 
     date, and results from a plan amendment adopted before such 
     date, shall be amortized in equal annual installments (until 
     fully amortized) over 40 plan years, beginning with the plan 
     year in which the change arises; and
       ``(D) any change in past service liability which arises 
     during the period of 2 plan years beginning on or after such 
     date, and results from the changing of a group of 
     participants from one benefit level to another benefit level 
     under a schedule of plan benefits which--
       ``(i) was adopted before such date, and
       ``(ii) was effective for any plan participant before the 
     beginning of the first plan year beginning on or after such 
     date,

     shall be amortized in equal annual installments (until fully 
     amortized) over 40 plan years, beginning with the plan year 
     in which the change arises.
       ``(8) Special rules relating to charges and credits to 
     funding standard account.--For purposes of this part--
       ``(A) Withdrawal liability.--Any amount received by a 
     multiemployer plan in payment of all or part of an employer's 
     withdrawal liability under part 1 of subtitle E of title IV 
     shall be considered an amount contributed by the employer to 
     or under the plan. The Secretary may prescribe by regulation 
     additional charges and credits to a multiemployer plan's 
     funding standard account to the extent necessary to prevent 
     withdrawal liability payments from being unduly reflected as 
     advance funding for plan liabilities.
       ``(B) Adjustments when a multiemployer plan leaves 
     reorganization.--If a multiemployer plan is not in 
     reorganization in the plan year but was in reorganization in 
     the

[[Page 28583]]

     immediately preceding plan year, any balance in the funding 
     standard account at the close of such immediately preceding 
     plan year--
       ``(i) shall be eliminated by an offsetting credit or charge 
     (as the case may be), but
       ``(ii) shall be taken into account in subsequent plan years 
     by being amortized in equal annual installments (until fully 
     amortized) over 30 plan years.

     The preceding sentence shall not apply to the extent of any 
     accumulated funding deficiency under section 418B(a) as of 
     the end of the last plan year that the plan was in 
     reorganization.
       ``(C) Plan payments to supplemental program or withdrawal 
     liability payment fund.--Any amount paid by a plan during a 
     plan year to the Pension Benefit Guaranty Corporation 
     pursuant to section 4222 of the Employee Retirement Income 
     Security Act of 1974 or to a fund exempt under section 
     501(c)(22) pursuant to section 4223 of such Act shall reduce 
     the amount of contributions considered received by the plan 
     for the plan year.
       ``(D) Interim withdrawal liability payments.--Any amount 
     paid by an employer pending a final determination of the 
     employer's withdrawal liability under part 1 of subtitle E of 
     title IV and subsequently refunded to the employer by the 
     plan shall be charged to the funding standard account in 
     accordance with regulations prescribed by the Secretary.
       ``(E) Election for deferral of charge for portion of net 
     experience loss.--If an election is in effect under section 
     412(b)(7)(F) (as in effect on the day before the date of the 
     enactment of this section) for any plan year, the funding 
     standard account shall be charged in the plan year to which 
     the portion of the net experience loss deferred by such 
     election was deferred with the amount so deferred (and 
     paragraph (2)(B)(iv) shall not apply to the amount so 
     charged).
       ``(F) Financial assistance.--Any amount of any financial 
     assistance from the Pension Benefit Guaranty Corporation to 
     any plan, and any repayment of such amount, shall be taken 
     into account under this section and section 412 in such 
     manner as is determined by the Secretary.
       ``(G) Short-term benefits.--To the extent that any plan 
     amendment increases the unfunded past service liability under 
     the plan by reason of an increase in benefits which are 
     payable under the plan during a period that does not exceed 
     14 years, paragraph (2)(B)(iii) shall be applied separately 
     with respect to such increase in unfunded past service 
     liability by substituting the number of years of the period 
     during which such benefits are payable for `15'.
       ``(c) Additional Rules.--
       ``(1) Determinations to be made under funding method.--For 
     purposes of this part, normal costs, accrued liability, past 
     service liabilities, and experience gains and losses shall be 
     determined under the funding method used to determine costs 
     under the plan.
       ``(2) Valuation of assets.--
       ``(A) In general.--For purposes of this part, the value of 
     the plan's assets shall be determined on the basis of any 
     reasonable actuarial method of valuation which takes into 
     account fair market value and which is permitted under 
     regulations prescribed by the Secretary.
       ``(B) Election with respect to bonds.--The value of a bond 
     or other evidence of indebtedness which is not in default as 
     to principal or interest may, at the election of the plan 
     administrator, be determined on an amortized basis running 
     from initial cost at purchase to par value at maturity or 
     earliest call date. Any election under this subparagraph 
     shall be made at such time and in such manner as the 
     Secretary shall by regulations provide, shall apply to all 
     such evidences of indebtedness, and may be revoked only with 
     the consent of the Secretary.
       ``(3) Actuarial assumptions must be reasonable.--For 
     purposes of this section, all costs, liabilities, rates of 
     interest, and other factors under the plan shall be 
     determined on the basis of actuarial assumptions and 
     methods--
       ``(A) which, in the aggregate, are reasonable (taking into 
     account the experience of the plan and reasonable 
     expectations), and
       ``(B) which, in combination, offer the actuary's best 
     estimate of anticipated experience under the plan.
       ``(4) Treatment of certain changes as experience gain or 
     loss.--For purposes of this section, if--
       ``(A) a change in benefits under the Social Security Act or 
     in other retirement benefits created under Federal or State 
     law, or
       ``(B) a change in the definition of the term `wages' under 
     section 3121, or a change in the amount of such wages taken 
     into account under regulations prescribed for purposes of 
     section 401(a)(5),

     results in an increase or decrease in accrued liability under 
     a plan, such increase or decrease shall be treated as an 
     experience loss or gain.
       ``(5) Full funding.--If, as of the close of a plan year, a 
     plan would (without regard to this paragraph) have an 
     accumulated funding deficiency in excess of the full funding 
     limitation--
       ``(A) the funding standard account shall be credited with 
     the amount of such excess, and
       ``(B) all amounts described in subparagraphs (B), (C), and 
     (D) of paragraph (2) and subparagraph (B) of subsection 
     (b)(3) which are required to be amortized shall be considered 
     fully amortized for purposes of such subparagraphs.
       ``(6) Full-funding limitation.--
       ``(A) In general.--For purposes of paragraph (5), the term 
     `full-funding limitation' means the excess (if any) of--
       ``(i) the accrued liability (including normal cost) under 
     the plan (determined under the entry age normal funding 
     method if such accrued liability cannot be directly 
     calculated under the funding method used for the plan), over
       ``(ii) the lesser of--

       ``(I) the fair market value of the plan's assets, or
       ``(II) the value of such assets determined under paragraph 
     (2).

       ``(B) Minimum amount.--
       ``(i) In general.--In no event shall the full-funding 
     limitation determined under subparagraph (A) be less than the 
     excess (if any) of--

       ``(I) 90 percent of the current liability of the plan 
     (including the expected increase in current liability due to 
     benefits accruing during the plan year), over
       ``(II) the value of the plan's assets determined under 
     paragraph (2).

       ``(ii) Assets.--For purposes of clause (i), assets shall 
     not be reduced by any credit balance in the funding standard 
     account.
       ``(C) Current liability.--For purposes of this paragraph--
       ``(i) In general.--The term `current liability' means all 
     liabilities to employees and their beneficiaries under the 
     plan.
       ``(ii) Treatment of unpredictable contingent event 
     benefits.--For purposes of clause (i), any benefit contingent 
     on an event other than--

       ``(I) age, service, compensation, death, or disability, or
       ``(II) an event which is reasonably and reliably 
     predictable (as determined by the Secretary),

     shall not be taken into account until the event on which the 
     benefit is contingent occurs.
       ``(iii) Interest rate used.--The rate of interest used to 
     determine current liability under this paragraph shall be the 
     rate of interest determined under subparagraph (D).
       ``(iv) Mortality tables.--

       ``(I) Commissioners' standard table.--In the case of plan 
     years beginning before the first plan year to which the first 
     tables prescribed under subclause (II) apply, the mortality 
     table used in determining current liability under this 
     paragraph shall be the table prescribed by the Secretary 
     which is based on the prevailing commissioners' standard 
     table (described in section 807(d)(5)(A)) used to determine 
     reserves for group annuity contracts issued on January 1, 
     1993.
       ``(II) Secretarial authority.--The Secretary may by 
     regulation prescribe for plan years beginning after December 
     31, 1999, mortality tables to be used in determining current 
     liability under this subsection. Such tables shall be based 
     upon the actual experience of pension plans and projected 
     trends in such experience. In prescribing such tables, the 
     Secretary shall take into account results of available 
     independent studies of mortality of individuals covered by 
     pension plans.

       ``(v) Separate mortality tables for the disabled.--
     Notwithstanding clause (iv)--

       ``(I) In general.--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 clause (ii)) to determine current liability under this 
     subsection for individuals who are entitled to benefits under 
     the plan on account of disability. The Secretary shall 
     establish separate tables for individuals whose disabilities 
     occur in plan years beginning before January 1, 1995, and for 
     individuals whose disabilities occur in plan years beginning 
     on or after such date.
       ``(II) Special rule for disabilities occurring after 
     1994.--In the case of disabilities occurring in plan years 
     beginning after December 31, 1994, the tables under subclause 
     (I) shall apply only with respect to individuals described in 
     such subclause who are disabled within the meaning of title 
     II of the Social Security Act and the regulations thereunder.

       ``(vi) Periodic review.--The Secretary shall periodically 
     (at least every 5 years) review any tables in effect under 
     this subparagraph and shall, to the extent the Secretary 
     determines necessary, by regulation update the tables to 
     reflect the actual experience of pension plans and projected 
     trends in such experience.
       ``(D) Required change of interest rate.--For purposes of 
     determining a plan's current liability for purposes of this 
     paragraph--
       ``(i) In general.--If any rate of interest used under the 
     plan under subsection (b)(5) to determine cost is not within 
     the permissible range, the plan shall establish a new rate of 
     interest within the permissible range.
       ``(ii) Permissible range.--For purposes of this 
     subparagraph--

       ``(I) In general.--Except as provided in subclause (II), 
     the term `permissible range' means a rate of interest which 
     is not more than 5 percent above, and not more than 10

[[Page 28584]]

     percent below, the weighted average of the rates of interest 
     on 30-year Treasury securities during the 4-year period 
     ending on the last day before the beginning of the plan year.
       ``(II) Secretarial authority.--If the Secretary finds that 
     the lowest rate of interest permissible under subclause (I) 
     is unreasonably high, the Secretary may prescribe a lower 
     rate of interest, except that such rate may not be less than 
     80 percent of the average rate determined under such 
     subclause.

       ``(iii) Assumptions.--Notwithstanding paragraph (3)(A), the 
     interest rate used under the plan shall be--

       ``(I) determined without taking into account the experience 
     of the plan and reasonable expectations, but
       ``(II) consistent with the assumptions which reflect the 
     purchase rates which would be used by insurance companies to 
     satisfy the liabilities under the plan.

       ``(E) Full funding limitation.--For purposes of this 
     paragraph, unless otherwise provided by the plan, the accrued 
     liability under a multiemployer plan shall not include 
     benefits which are not nonforfeitable under the plan after 
     the termination of the plan (taking into consideration 
     section 411(d)(3)).
       ``(7) Annual valuation.--
       ``(A) In general.--For purposes of this section, a 
     determination of experience gains and losses and a valuation 
     of the plan's liability shall be made not less frequently 
     than once every year, except that such determination shall be 
     made more frequently to the extent required in particular 
     cases under regulations prescribed by the Secretary.
       ``(B) Valuation date.--
       ``(i) Current year.--Except as provided in clause (ii), the 
     valuation referred to in subparagraph (A) shall be made as of 
     a date within the plan year to which the valuation refers or 
     within one month prior to the beginning of such year.
       ``(ii) Use of prior year valuation.--The valuation referred 
     to in subparagraph (A) may be made as of a date within the 
     plan year prior to the year to which the valuation refers if, 
     as of such date, the value of the assets of the plan are not 
     less than 100 percent of the plan's current liability (as 
     defined in paragraph (6)(C) without regard to clause (iv) 
     thereof).
       ``(iii) Adjustments.--Information under clause (ii) shall, 
     in accordance with regulations, be actuarially adjusted to 
     reflect significant differences in participants.
       ``(iv) Limitation.--A change in funding method to use a 
     prior year valuation, as provided in clause (ii), may not be 
     made unless as of the valuation date within the prior plan 
     year, the value of the assets of the plan are not less than 
     125 percent of the plan's current liability (as defined in 
     paragraph (6)(C) without regard to clause (iv) thereof).
       ``(8) Time when certain contributions deemed made.--For 
     purposes of this section, any contributions for a plan year 
     made by an employer after the last day of such plan year, but 
     not later than two and one-half months after such day, shall 
     be deemed to have been made on such last day. For purposes of 
     this subparagraph, such two and one-half month period may be 
     extended for not more than six months under regulations 
     prescribed by the Secretary.
       ``(d) Extension of Amortization Periods for Multiemployer 
     Plans.--In the case of a multiemployer plan--
       ``(1) Automatic extension.--The Secretary shall, upon 
     application and subject to the requirements of paragraph (4), 
     extend the period of years required to amortize any unfunded 
     liability (described in any clause of subsection (b)(2)(B)) 
     of the plan for a period of time not in excess of 5 years.
       ``(2) Extension for cause.--The period of years required to 
     amortize any unfunded liability (described in any clause of 
     subsection (b)(2)(B)) of any multiemployer plan may be 
     extended (in addition to any extension under paragraph (1)) 
     by the Secretary for a period of time (not in excess of 5 
     years) if he determines that such extension would carry out 
     the purposes of this Act and would provide adequate 
     protection for participants under the plan and their 
     beneficiaries and if he determines that the failure to permit 
     such extension would--
       ``(A) result in--
       ``(i) a substantial risk to the voluntary continuation of 
     the plan, or
       ``(ii) a substantial curtailment of pension benefit levels 
     or employee compensation, and
       ``(B) be adverse to the interests of plan participants in 
     the aggregate.
       ``(3) Interest rate.--The interest rate applicable for any 
     plan year under any arrangement entered into by the Secretary 
     in connection with an extension granted under this subsection 
     shall be the greater of--
       ``(A) 150 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 for 
     determining costs.
       ``(4) Required notice.--
       ``(A) In general.--The Secretary shall, before granting an 
     extension under this section, require each applicant to 
     provide evidence satisfactory to the Secretary that the 
     applicant has provided notice of the filing of the 
     application for such extension to each employee organization 
     representing employees covered by the affected plan and to 
     the Pension Benefit Guaranty Corporation.
       ``(B) Consideration of relevant information.--The Secretary 
     shall consider any relevant information provided by a person 
     to whom notice was given under paragraph (1).
       ``(e) Restriction on Plan Amendments.--
       ``(1) In general.--No amendment of a multiemployer plan 
     which increases the liabilities of the plan by reason of any 
     increase in benefits, any change in the accrual of benefits, 
     or any change in the rate at which benefits become 
     nonforfeitable under the plan shall be adopted if a waiver 
     under section 412(c) or an extension of time under subsection 
     (d) is in effect with respect to the plan, or if a plan 
     amendment described in section 412(d)(2) has been made at any 
     time in the preceding 24 months. If a plan is amended in 
     violation of the preceding sentence, any such waiver, or 
     extension of time, shall not apply to any plan year ending on 
     or after the date on which such amendment is adopted.
       ``(2) Exception.--Paragraph (1) shall not apply to any plan 
     amendment which--
       ``(A) the Secretary determines to be reasonable and which 
     provides for only de minimis increases in the liabilities of 
     the plan,
       ``(B) only repeals an amendment described in section 
     412(d)(2), or
       ``(C) is required as a condition of qualification under 
     part I of subchapter D, of chapter 1.''.
       (b) Conforming Amendments.--
       (1) Section 418(b)(2) of such Code is amended--
       (A) by striking ``section 412(b)(2)'' in subparagraph (A) 
     and inserting ``section 431(b)(2)'', and
       (B) by striking ``section 412(b)(3)(B)'' in subparagraph 
     (B) and inserting ``section 431(b)(3)(B)''.
       (2) Section 418B of such Code is amended--
       (A) by striking ``section 412(b)(2)(A) or (B)'' in 
     subsection (d)(1)(B) and inserting ``section 431(b)(2)(A) or 
     (B)'',
       (B) by striking ``section 412(c)(8)'' in subsection (e) and 
     inserting ``section 412(g)(2)'', and
       (C) by striking ``section 412(c)(3)'' in subsection (g) and 
     inserting ``section 431(c)(3)''.
       (3) Section 418D(a)(2) of such Code is amended--
       (A) by striking ``section 412(c)(8)'' and inserting 
     ``section 412(g)(2)'', and
       (B) by striking ``section 412(c)(10)'' and inserting 
     ``section 431(c)(8)''.
       (c) Clerical Amendment.--The table of sections for subpart 
     A of part III of subchapter D of chapter 1 of such Code is 
     amended by adding after the item relating to section 430 the 
     following new item:

``Sec. 431. Minimum funding standards for multiemployer plans.''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after 2005.

     SEC. 212. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS IN 
                   ENDANGERED OR CRITICAL STATUS.

       (a) In General.--Subpart A of part III of subchapter D of 
     chapter 1 of the Internal Revenue Code of 1986 is amended by 
     inserting after section 431 the following new section:

     ``SEC. 432. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS 
                   IN ENDANGERED STATUS OR CRITICAL STATUS.

       ``(a) Annual Certification by Plan Actuary.--
       ``(1) In general.--During the 90-day period beginning on 
     first day of each plan year of a multiemployer plan, the plan 
     actuary of shall certify to the Secretary whether or not the 
     plan is in endangered status for such plan year and whether 
     or not the plan is in critical status for such plan year.
       ``(2) Actuarial projections of assets and liabilities.--
       ``(A) In general.--In making the determinations under 
     paragraph (1), the plan actuary shall make projections under 
     subsections (b)(2) and (c)(2) for the current and succeeding 
     plan years, using reasonable actuarial assumptions and 
     methods, of the current value of the assets of the plan and 
     the present value of all liabilities to participants and 
     beneficiaries under the plan for the current plan year as of 
     the beginning of such year, as set forth in the actuarial 
     statement prepared for the preceding plan year under section 
     6058.
       ``(B) Determinations of future contributions.--Any such 
     actuarial projection of plan assets shall assume--
       ``(i) reasonably anticipated employer and employee 
     contributions for the current and succeeding plan years, 
     assuming that the terms of the one or more collective 
     bargaining agreements pursuant to which the plan is 
     maintained for the current plan year continue in effect for 
     succeeding plan years, or
       ``(ii) employer and employee contributions projected for 
     the current and succeeding plan years under the terms of such 
     collective bargaining agreements (assuming the continued 
     application of such terms indefinitely to such plan years), 
     but only if the plan actuary determines there have been no 
     significant demographic changes that would make continued 
     application of such terms unreasonable.

[[Page 28585]]

       ``(3) Presumed status in absence of timely actuarial 
     certification.--If certification under this subsection is not 
     made before the end of the 90-day period specified in 
     paragraph (1), the plan shall be presumed to be in critical 
     status for such plan year until such time as the actuary 
     makes a contrary certification.
       ``(4) Notice.--In any case in which a multiemployer plan is 
     certified to be in endangered or critical status for a plan 
     year under paragraph (1), is presumed to be in critical 
     status under paragraph (3), or is deemed to be in critical 
     status under subsection (b)(7), the plan sponsor shall, not 
     later than 30 days after the date of the certification, 
     presumption, or deeming, provide notification of the 
     endangered or critical status to the participants and 
     beneficiaries, the bargaining parties, the Pension Benefit 
     Guaranty Corporation, the Secretary of the Treasury, and the 
     Secretary of Labor.
       ``(b) Funding Rules for Multiemployer Plans in Endangered 
     Status.--
       ``(1) In general.--In any case in which a multiemployer 
     plan is in endangered status for a plan year, the plan 
     sponsor shall, in accordance with this subsection, amend the 
     plan to include a funding improvement plan upon approval 
     thereof by the bargaining parties under this subsection. The 
     amendment shall be adopted not later than 240 days after the 
     date on which the plan is certified to be in endangered 
     status under subsection (a)(1).
       ``(2) Endangered status.--A multiemployer plan is in 
     endangered status for a plan year if, as determined by the 
     plan actuary under subsection (c)--
       ``(A) the plan's funded percentage for such plan year is 
     less than 80 percent, or
       ``(B) the plan has an accumulated funding deficiency for 
     such plan year under section 431 or is projected to have such 
     an accumulated funding deficiency for any of the 6 succeeding 
     plan years, taking into account any extension of amortization 
     periods under section 431(d).
       ``(3) Funding improvement plan.--
       ``(A) Benchmarks.--A funding improvement plan shall consist 
     of amendments to the plan formulated to provide, under 
     reasonable actuarial assumptions, for the attainment, during 
     the funding improvement period under the funding improvement 
     plan, of the following benchmarks:
       ``(i) Reduction in unfunded current liability.--A 
     percentage decrease in the plan's unfunded current liability 
     from the amount for the first plan year of the funding 
     improvement period to the amount for the last plan year of 
     the funding improvement period, of at least 33\1/3\ percent.
       ``(ii) Avoidance of accumulated funding deficiencies.--No 
     accumulated funding deficiency for any plan year during the 
     funding improvement period (taking into account any extension 
     of amortization periods under section 431(d)).
       ``(B) Funding improvement period.--The funding improvement 
     period for any funding improvement plan adopted pursuant to 
     this subsection is the 10-year period beginning on the 
     earlier of--
       ``(i) the second anniversary of the date of the adoption of 
     the funding improvement plan, or
       ``(ii) the first day of the first plan year of the 
     multiemployer plan following the plan year in which occurs 
     the first date after the day of the certification as of which 
     collective bargaining agreements covering on the day of such 
     certification at least 75 percent of active participants in 
     such multiemployer plan have expired.
       ``(C) Reporting.--A summary of any funding improvement plan 
     or modification thereto adopted during any plan year shall be 
     included in the annual report for such plan year under 
     section 104(a) of the Employee Retirement and Income Security 
     Act of 1974 and in the summary annual report described in 
     section 104(b)(3) of such Act.
       ``(4) Development of funding improvement plan.--
       ``(A) Actions by plan sponsor pending approval.--Pending 
     the approval of a funding improvement plan under this 
     paragraph, the plan sponsor shall take all reasonable 
     actions, consistent with the terms of the plan and applicable 
     law, necessary to ensure--
       ``(i) an increase in the plan's funded percentage, and
       ``(ii) postponement of an accumulated funding deficiency 
     for at least 1 additional plan year.

     Such actions include applications for extensions of 
     amortization periods under section 431(d), use of the 
     shortfall funding method in making funding standard account 
     computations, amendments to the plan's benefit structure, 
     reductions in future benefit accruals, and other reasonable 
     actions consistent with the terms of the plan and applicable 
     law.
       ``(B) Recommendations by plan sponsor.--
       ``(i) In general.--During the period of 90 days following 
     the date on which a multiemployer plan is certified to be in 
     endangered status, the plan sponsor shall develop and provide 
     to the bargaining parties alternative proposals for revised 
     benefit structures, contribution structures, or both, which, 
     if adopted as amendments to the plan, may be reasonably 
     expected to meet the benchmarks described in paragraph 
     (3)(A). Such proposals shall include--

       ``(I) at least one proposal for reductions in the amount of 
     future benefit accruals necessary to achieve the benchmarks, 
     assuming no amendments increasing contributions under the 
     plan (other than amendments increasing contributions 
     necessary to achieve the benchmarks after amendments have 
     reduced future benefit accruals to the maximum extent 
     permitted by law), and
       ``(II) at least one proposal for increases in contributions 
     under the plan necessary to achieve the benchmarks, assuming 
     no amendments reducing future benefit accruals under the 
     plan.

       ``(ii) Requests by bargaining parties.--Upon the request of 
     any bargaining party who--

       ``(I) employs at least 5 percent of the active 
     participants, or
       ``(II) represents as an employee organization, for purposes 
     of collective bargaining, at least 5 percent of the active 
     participants,

     the plan sponsor shall provide all such parties information 
     as to other combinations of increases in contributions and 
     reductions in future benefit accruals which would result in 
     achieving the benchmarks.
       ``(iii) Other information.--The plan sponsor may, as it 
     deems appropriate, prepare and provide the bargaining parties 
     with additional information relating to contribution 
     structures or benefit structures or other information 
     relevant to the funding improvement plan.
       ``(5) Maintenance of contributions pending approval of 
     funding improvement plan.--Pending approval of a funding 
     improvement plan by the bargaining parties with respect to a 
     multiemployer plan, the multiemployer plan may not be amended 
     so as to provide--
       ``(A) a reduction in the level of contributions for 
     participants who are not in pay status,
       ``(B) a suspension of contributions with respect to any 
     period of service, or
       ``(C) any new direct or indirect exclusion of younger or 
     newly hired employees from plan participation.
       ``(6) Benefit restrictions pending approval of funding 
     improvement plan.--Pending approval of a funding improvement 
     plan by the bargaining parties with respect to a 
     multiemployer plan--
       ``(A) Restrictions on lump sum distributions and similar 
     distributions.--The multiemployer plan may not be amended so 
     as to provide additional forms of benefits.
       ``(B) Prohibition on benefit increases.--
       ``(i) In general.--No amendment of the plan which increases 
     the liabilities of the plan by reason of any increase in 
     benefits, any change in the accrual of benefits, or any 
     change in the rate at which benefits become nonforfeitable 
     under the plan may be adopted.
       ``(ii) Exception.--Clause (i) shall not apply to any plan 
     amendment which--

       ``(I) the Secretary determines to be reasonable and which 
     provides for only de minimis increases in the liabilities of 
     the plan,
       ``(II) only repeals an amendment described in section 
     430(d)(2), or
       ``(III) is required as a condition of qualification under 
     part I of subchapter D of chapter 1 of subtitle A.

       ``(7) Default critical status if no funding improvement 
     plan adopted.--If no plan amendment adopting a funding 
     improvement plan has been adopted by the end of the 240-day 
     period referred to in subsection (a)(1), the plan shall be in 
     critical status as of the first day of the succeeding plan 
     year.
       ``(8) Restrictions upon approval of funding improvement 
     plan.--Upon adoption of a funding improvement plan with 
     respect to a multiemployer plan, the plan may not be 
     amended--
       ``(A) so as to be inconsistent with the funding improvement 
     plan, or
       ``(B) so as to increase future benefit accruals, unless the 
     plan actuary certifies in advance that, after taking into 
     account the proposed increase, the plan is reasonably 
     expected to meet the the benchmarks described in paragraph 
     (3)(A).
       ``(c) Funding Rules for Multiemployer Plans in Critical 
     Status.--
       ``(1) In general.--In any case in which a multiemployer 
     plan is in critical status for a plan year, the plan sponsor 
     shall, in accordance with this subsection, amend the plan to 
     include a rehabilitation plan under this subsection. The 
     amendment shall be adopted not later than 240 days after the 
     date on which the plan is certified to be in critical status 
     under subsection (a)(1) or is presumed to be in critical 
     status under subsection (a)(3), or the first day of the plan 
     year in the case of a plan that is deemed to be in critical 
     status under subsection (b)(7).
       ``(2) Critical status.--A multiemployer plan is in critical 
     status for a plan year if--
       ``(A) the plan is in endangered status for the plan year 
     and the requirements of subsection (b)(1) are not met with 
     respect to the plan for such plan year, or
       ``(B) as determined by the plan actuary under subsection 
     (a), the plan is described in paragraph (3).

     Any multiemployer plan which is in critical status under 
     subparagraph (A) or (B) for a plan year shall be treated as 
     in critical status also for the succeeding plan year.

[[Page 28586]]

       ``(3) Criticality description.--For purposes of paragraph 
     (2)(B), a plan is described in this paragraph if the plan is 
     described in at least one of the following subparagraphs:
       ``(A) A plan is described in this subparagraph if, as of 
     the beginning of the current plan year--
       ``(i) the funded percentage of the plan is less than 65 
     percent, and
       ``(ii) the sum of--

       ``(I) the market value of plan assets, plus
       ``(II) the present value of the reasonably anticipated 
     employer and employee contributions for the current plan year 
     and each of the 6 succeeding plan years, assuming that the 
     terms of the one or more collective bargaining agreements 
     pursuant to which the plan is maintained for the current plan 
     year continue in effect for succeeding plan years,

     is less than the present value of all nonforfeitable benefits 
     for all participants and beneficiaries projected to be 
     payable under the plan during the current plan year and each 
     of the 6 succeeding plan years (plus administrative expenses 
     for such plan years).
       ``(B) A plan is described in this subparagraph if, as of 
     the beginning of the current plan year, the sum of--
       ``(i) the market value of plan assets, plus
       ``(ii) the present value of the reasonably anticipated 
     employer and employee contributions for the current plan year 
     and each of the 4 succeeding plan years, assuming that the 
     terms of the one or more collective bargaining agreements 
     pursuant to which the plan is maintained for the current plan 
     year remain in effect for succeeding plan years,

     is less than the present value of all nonforfeitable benefits 
     for all participants and beneficiaries projected to be 
     payable under the plan during the current plan year and each 
     of the 4 succeeding plan years (plus administrative expenses 
     for such plan years).
       ``(C) A plan is described in this subparagraph if--
       ``(i) as of the beginning of the current plan year, the 
     funded percentage of the plan is less than 65 percent, and
       ``(ii) the plan has an accumulated funding deficiency for 
     the current plan year or is projected to have an accumulated 
     funding deficiency for any of the 4 succeeding plan years, 
     taking into account any extension of amortization periods 
     under section 431(d).
       ``(D) A plan is described in this subparagraph if--
       ``(i)(I) the plan's normal cost for the current plan year, 
     plus interest (determined at the rate used for determining 
     cost under the plan) for the current plan year on the amount 
     of unfunded benefit liabilities under the plan as of the last 
     date of the preceding plan year, exceeds
       ``(II) the present value, as of the beginning of the 
     current plan year, of the reasonably anticipated employer and 
     employee contributions for the current plan year,
       ``(ii) the present value, as of the beginning of the 
     current plan year, of nonforfeitable benefits of inactive 
     participants is greater than the present value, as of the 
     beginning of the current plan year, of nonforfeitable 
     benefits of active participants, and
       ``(iii) the plan is projected to have an accumulated 
     funding deficiency for the current plan year or any of the 4 
     succeeding plan years.
       ``(E) A plan is described in this subparagraph if--
       ``(i) the funded percentage of the plan is greater than 65 
     percent for the current plan year, and
       ``(ii) the plan is projected to have an accumulated funding 
     deficiency during either of the following 3 plan years.
       ``(4) Rehabilitation plan.--
       ``(A) In general.--A rehabilitation plan shall consist of--
       ``(i) amendments to the plan providing (under reasonable 
     actuarial assumptions) for measures, agreed to by the 
     bargaining parties, to increase contributions, reduce plan 
     expenditures (including plan mergers and consolidations), or 
     reduce future benefit accruals, or to take any combination of 
     such actions, determined necessary to cause the plan to 
     cease, during the rehabilitation period, to be in critical 
     status,
       ``(ii) measures, agreed to by the bargaining parties, to 
     provide funding relief, or
       ``(iii) reasonable measures to forestall possible 
     insolvency (within the meaning of section 418E) if the plan 
     sponsor determines that, upon exhaustion of all reasonable 
     measures, the plan would not cease during the rehabilitation 
     period to be in critical status.
       ``(B) Rehabilitation period.--The rehabilitation period for 
     any rehabilitation plan adopted pursuant to this section is 
     the 10-year period beginning on the earlier of--
       ``(i) the second anniversary of the date of the adoption of 
     the rehabilitation plan, or
       ``(ii) the first day of the first plan year of the 
     multiemployer plan following the plan year in which occurs 
     the first date after the day of the certification as of which 
     collective bargaining agreements covering on the day of such 
     certification at least 75 percent of active participants in 
     such multiemployer plan have expired.
       ``(C) Reporting.--A summary of any rehabilitation plan or 
     modification thereto adopted during any plan year, together 
     with annual updates regarding the funding ratio of the plan, 
     shall be included in the annual report for such plan year 
     under section 104(a) and in the summary annual report 
     described in section 104(b)(3) of the Employee Retirement and 
     Income Security Act of 1974.
       ``(5) Development of rehabilitation plan.--
       ``(A) Proposals by plan sponsor.--
       ``(i) In general.--Within 90 days after the date of the 
     certification under subsection (a) that the plan is in 
     critical status (or the date as of which the requirements of 
     subsection (b)(1) are not met with respect to the plan), the 
     plan sponsor shall propose to all bargaining parties a range 
     of alternative schedules of increases in contributions and 
     reductions in future benefit accruals that would serve to 
     carry out a rehabilitation plan under this subsection.
       ``(ii) Proposal assuming no contribution increases.--Such 
     proposals shall include, as one of the proposed schedules, a 
     schedule of those reductions in future benefit accruals that 
     would be necessary to cause the plan to cease to be in 
     critical status if there were no further increases in rates 
     of contribution to the plan.
       ``(iii) Proposal where contributions are necessary.--If the 
     plan sponsor determines that the plan will not cease to be in 
     critical status during the rehabilitation period unless the 
     plan is amended to provide for an increase in contributions, 
     the plan sponsor's proposals shall include a schedule of 
     those increases in contribution rates that would be necessary 
     to cause the plan to cease to be in critical status if future 
     benefit accruals were reduced to the maximum extent permitted 
     by law and the rate of future benefit accruals did not exceed 
     1 percent per plan year.
       ``(B) Requests for additional schedules.--Upon the joint 
     request of all bargaining parties, each of whom--
       ``(i) employs at least 5 percent of the active 
     participants, or
       ``(ii) represents as an employee organization, for purposes 
     of collective bargaining, at least 5 percent of the active 
     participants,

     the plan sponsor shall include among the proposed schedules 
     such schedules of increases in contributions and reductions 
     in future benefit accruals as may be specified by the 
     bargaining parties.
       ``(C) Default schedule.--In any case in which the 
     bargaining parties, as of 240 days after the later of the 
     date of the certification under subsection (a) or the first 
     day the plan is in critical status under subsection (a)(3) or 
     (b)(7), have not agreed to at least one of the proposed 
     schedules, the plan sponsor shall amend the plan to implement 
     the schedule required by subparagraph (A)(ii).
       ``(D) Subsequent amendments.--Upon the adoption of a 
     schedule of increases in contributions or reductions in 
     future benefit accruals as part of the rehabilitation plan, 
     the plan sponsor may amend the plan thereafter to update the 
     schedule to adjust for any experience of the plan contrary to 
     past actuarial assumptions, except that such an amendment may 
     be made not more than once in any 3-year period.
       ``(E) Allocation of reductions in future benefit 
     accruals.--Any schedule containing reductions in future 
     benefit accruals forming a part of a rehabilitation plan 
     shall be applicable with respect to any group of active 
     participants who are employed by any bargaining party (as an 
     employer obligated to contribute under the plan) in 
     proportion to the extent to which increases in contributions 
     under such schedule apply to such bargaining party.
       ``(6) Maintenance of contributions and restrictions on 
     benefits pending adoption of rehabilitation plan.--The rules 
     of paragraphs (5) and (6) of subsection (b) shall apply for 
     purposes of this subsection by substituting the term 
     `rehabilitation plan' for `funding improvement plan'.
       ``(7) Deemed withdrawal.--Upon the failure of any employer 
     who has an obligation to contribute under the plan to make 
     contributions in compliance with the schedule adopted under 
     paragraph (6) as part of the rehabilitation plan, the failure 
     of the employer may, at the discretion of the plan sponsor, 
     be treated as a withdrawal by the employer from the plan 
     under section 4203 of the Employee Retirement and Income 
     Security Act of 1974 or a partial withdrawal by the employer 
     under section 4205 of such Act.
       ``(d) Definitions.--For purposes of this section--
       ``(1) Bargaining party.--The term `bargaining party' means, 
     in connection with a multiemployer plan--
       ``(A) an employer who has an obligation to contribute under 
     the plan, and
       ``(B) an employee organization which, for purposes of 
     collective bargaining, represents plan participants employed 
     by such an employer.
       ``(2) Current liability.--The term `current liability' has 
     the meaning provided such term in section 431(c)(6)(C).
       ``(3) Unfunded current liability.--The term `unfunded 
     current liability' means the excess (if any) of--
       ``(A) the current liability of the plan, over
       ``(B) the value of the plan's assets determined under 
     section 431(c)(2).

[[Page 28587]]

       ``(4) Funded percentage.--The term `funded percentage' 
     means the percentage expressed as a ratio of which--
       ``(A) the numerator of which is the value of the plan's 
     assets, as determined under section 431(c)(2), and
       ``(B) the denominator of which is the accrued liability of 
     the plan.
       ``(5) Unfunded vested benefits.--The term `unfunded vested 
     benefits' has the meaning provided in section 418(b)(7).
       ``(6) Accumulated funding deficiency.--The term 
     `accumulated funding deficiency' has the meaning provided 
     such term in section 431(a).
       ``(7) Active participant.--The term `active participant' 
     means, in connection with a multiemployer plan, a participant 
     who is in covered service under the plan.
       ``(8) Inactive participant.--The term `inactive 
     participant' means, in connection with a multiemployer plan, 
     a participant who--
       ``(A) is not in covered service under the plan, and
       ``(B) is in pay status under the plan or has a 
     nonforfeitable right to benefits under the plan.
       ``(9) Pay status.--A person is in `pay status' under a 
     multiemployer plan if--
       ``(A) at any time during the current plan year, such person 
     is a participant or beneficiary under the plan and is paid an 
     early, late, normal, or disability retirement benefit under 
     the plan (or a death benefit under the plan related to a 
     retirement benefit), or
       ``(B) to the extent provided in regulations of the 
     Secretary, such person is entitled to such a benefit under 
     the plan.
       ``(10) Obligation to contribute.--The term `obligation to 
     contribute' has the meaning provided such term under section 
     4212(a).''.
       (b) Clerical Amendment.--The table of sections for subpart 
     A of part III of subchapter D of chapter 1 of such Code is 
     amended by adding at the end the following new item:

``Sec. 432. Additional funding rules for multiemployer plans in 
              endangered status or critical status.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after 2005.

          TITLE III--OTHER INTEREST-RELATED FUNDING PROVISIONS

     SEC. 301. INTEREST RATE ASSUMPTION FOR DETERMINATION OF LUMP 
                   SUM DISTRIBUTIONS.

       (a) Amendments to Employee Retirement Income Security Act 
     of 1974.--Subparagraph (B) of section 205(g)(3) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1055(g)(3)) is amended to read as follows:
       ``(B) For purposes of subparagraph (A)--
       ``(i) The term `applicable mortality table' means the 
     mortality table specified for the plan year under section 
     303(f)(3).
       ``(ii) The term `applicable interest rate' means the 
     adjusted first, second, and third segment rates applied under 
     rules similar to the rules of section 303(f)(2)(B).
       ``(iii) For purposes of clause (ii), the adjusted first, 
     second, and third segment rates are the first, second, and 
     third segment rates which would be determined under section 
     303(f)(2)(C) if--
       ``(I) section 303(f)(2)(D)(i) were applied by substituting 
     `the yields' for `a 3-year weighted average of yields', and
       ``(II) the applicable percentage under section 303(f)(2)(G) 
     were determined in accordance with the following table:

------------------------------------------------------------------------
                                              The applicable percentage
 ``In the case of plan years beginning in:               is:
------------------------------------------------------------------------
  2006....................................  20 percent
  2007....................................  40 percent
  2008....................................  60 percent
  2009....................................  80 percent.''.
------------------------------------------------------------------------

       (b) Amendments to Internal Revenue Code of 1986.--Section 
     417(e)(3)(A) of the Internal Revenue Code of 1986 is amended 
     by striking clause (ii) and inserting the following:
       ``(ii) Applicable mortality table.--For purposes of clause 
     (i), the term `applicable mortality table' means the 
     mortality table specified for the plan under section 
     430(f)(3).
       ``(iii) Applicable interest rate.--For purposes of clause 
     (i), the term `applicable interest rate' means the adjusted 
     first, second, and third segment rates applied under rules 
     similar to the rules of section 430(f)(2)(B).
       ``(iv) Adjusted first, second, and third segment rates.--
     For purposes of clause (iii), the adjusted first, second, and 
     third segment rates are the first, second, and third segment 
     rates which would be determined under section 430(f)(2)(C) 
     if--

       ``(I) section 430(f)(2)(D)(i) were applied by substituting 
     `the yields' for `a 3-year weighted average of yields', and
       ``(II) the applicable percentage under section 430(f)(2)(G) 
     were determined in accordance with the following table:

------------------------------------------------------------------------
                                              The applicable percentage
 ``In the case of plan years beginning in:               is:
------------------------------------------------------------------------
  2006....................................  20 percent
  2007....................................  40 percent
  2008....................................  60 percent
  2009....................................  80 percent.''.
------------------------------------------------------------------------

       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to plan years beginning after 2005.

     SEC. 302. INTEREST RATE ASSUMPTION FOR APPLYING BENEFIT 
                   LIMITATIONS TO LUMP SUM DISTRIBUTIONS.

       (a) In General.--Clause (ii) of section 415(b)(2)(E) of the 
     Internal Revenue Code of 1986 is amended to read as follows:
       ``(ii) For purposes of adjusting any benefit under 
     subparagraph (B) for any form of benefit subject to section 
     417(e)(3), the interest rate assumption shall not be less 
     than the greater of--

       ``(I) 5.5 percent,
       ``(II) the rate that provides a benefit of not more than 
     105 percent of the benefit that would be provided if the 
     applicable interest rate (as defined in section 417(e)(3)) 
     were the interest rate assumption, or
       ``(III) the rate specified under the plan.''.

       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to distributions made in years beginning after 
     2005.

          TITLE IV--IMPROVEMENTS IN PBGC GUARANTEE PROVISIONS

     SEC. 401. INCREASES IN PBGC PREMIUMS.

       (a) Flat-Rate Premiums.--Section 4006(a)(3) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)(3)) 
     is amended--
       (1) by striking clause (i) of subparagraph (A) and 
     inserting the following:
       ``(i) in the case of a single-employer plan--
       ``(I) for plan years beginning after December 31, 1990, and 
     before January 1, 2008, an amount equal to the sum of $19, 
     and
       ``(II) for plan years beginning after December 31, 2007, an 
     amount determined under subparagraph (F),
     plus the additional premium (if any) determined under 
     subparagraph (E) for each individual who is a participant in 
     such plan during the plan year;''; and
       (2) by adding at the end the following new subparagraph:
       ``(F)(i) Except as otherwise provided in this subparagraph, 
     for purposes of determining the annual premium rate payable 
     to the corporation by a single-employer plan for basic 
     benefits guaranteed under this title, the amount determined 
     under this subparagraph is the greater of $30 or the adjusted 
     amount determined under clause (ii).
       ``(ii) The adjusted amount determined under this clause is 
     the product derived by multiplying $30 by the ratio of--
       ``(I) the national average wage index (as defined in 
     section 209(k)(1) of the Social Security Act) for the first 
     of the 2 calendar years preceding the calendar year before 
     the calendar year in which the plan year begins, to
       ``(II) the national average wage index (as so defined) for 
     2006,
     with such product, if not a multiple of $1, being rounded to 
     the next higher multiple of $1 where such product is a 
     multiple of $0.50 but not of $1, and to the nearest multiple 
     of $1 in any other case.
       ``(iii) For purposes of determining the annual premium rate 
     payable to the corporation by a single-employer plan for 
     basic benefits guaranteed under this title for any plan year 
     beginning after 2007 and before 2012--
       ``(I) except as provided in subclause (II), the premium 
     amount referred to in subparagraph (A)(i)(II) for any such 
     plan year is the amount set forth in connection with such 
     plan year in the following table:

------------------------------------------------------------------------
       ``If the plan year begins in:               The amount is:
------------------------------------------------------------------------
  2008....................................  $21.20
  2009....................................  $23.40
  2010....................................  $25.60
  2011....................................  $27.80; or
------------------------------------------------------------------------

       ``(II) if the plan's funding target attainment percentage 
     for the plan year preceding the current plan year was less 
     than 80 percent, the premium amount referred to in 
     subparagraph (A)(i)(II) for such current plan year is the 
     amount set forth in connection with such current plan year in 
     the following table:

------------------------------------------------------------------------
       ``If the plan year begins in:               The amount is:
------------------------------------------------------------------------
  2008....................................  $22.67
  2009....................................  $26.33
  2010 or 2011............................  the amount provided under
                                             clause (i)
------------------------------------------------------------------------

       ``(iv) For purposes of this subparagraph, the term `funding 
     target attainment percentage' has the meaning provided such 
     term in section 303(d)(2).''.
       (b) Risk-Based Premiums.--
       (1) In general.--Section 4006(a)(3)(E) of such Act (29 
     U.S.C. 1306(a)(3)(E)) is amended--
       (A) in clause (ii), by striking ``$9.00'' and inserting 
     ``the greater of $9.00 or the adjusted amount determined 
     under clause (iii)'';
       (B) by redesignating clauses (iii) and (iv) as clauses (iv) 
     and (v), respectively; and
       (C) by inserting after clause (ii) the following new 
     clause:
       ``(iii) The adjusted amount determined under this clause is 
     the product derived by multiplying $9.00 by the ratio of--

[[Page 28588]]

       ``(I) the national average wage index (as defined in 
     section 209(k)(1) of the Social Security Act) for the first 
     of the 2 calendar years preceding the calendar year before 
     the calendar year in which the plan year begins, to
       ``(II) the national average wage index (as so defined) for 
     2006,
     with such product, if not a multiple of $1.00, being rounded 
     to the next higher multiple of $1.00 where such product is a 
     multiple of $0.50 but not of $1.00, and to the nearest 
     multiple of $1.00 in any other case.''.
       (2) Conforming amendments related to funding rules for 
     single-employer plans.--Section 4006(a)(3)(E) of such Act (as 
     amended by paragraph (1)) is amended further--
       (A) by striking clause (iv) and inserting the following:
       ``(iv)(I) For purposes of clause (ii), except as provided 
     in subclause (II) or (III), the term `unfunded benefits' 
     means, for a plan year, the amount which would be the plan's 
     funding shortfall (as defined in section 303(c)(4)), if the 
     value of plan assets of the plan were equal to the fair 
     market value of such assets and determined without regard to 
     section 303(e)(1), and only vested benefits were taken into 
     account.
       ``(II) The interest rate used in valuing vested benefits 
     for purposes of subclause (I) shall be equal to the first, 
     second, or third segment rate which would be determined under 
     section 303(f)(2)(C) if section 303(f)(2)(D)(i) were applied 
     by substituting `the yields' for `the 3-year weighted average 
     of yields', as applicable under rules similar to the rules 
     under section 303(f)(2)(B).''; and
       (B) by striking clause (iv).
       (3) Effective dates.--
       (A) The amendments made by paragraph (1) shall apply with 
     respect to premiums for plan years after 2007.
       (B) The amendments made by paragraph (2) shall apply with 
     respect to plan years beginning after 2005.

                          TITLE V--DISCLOSURE

     SEC. 501. DEFINED BENEFIT PLAN FUNDING NOTICES.

       (a) Application of Plan Funding Notice Requirements to All 
     Defined Benefit Plans.--Section 101(f) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1021(f)) is 
     amended--
       (1) in the heading, by striking ``Multiemployer'';
       (2) in paragraph (1), by striking ``which is a 
     multiemployer plan''; and
       (3) in paragraph (2)(B)(iii), by inserting after ``plan'' 
     the following: ``, and a summary of the rules governing 
     termination of single-employer plans under subtitle C of 
     title IV''.
       (b) Inclusion of Statement of the Ratio of Inactive 
     Participants to Active Participants.--Section 101(f)(2)(B) of 
     such Act (29 U.S.C. 1021(f)(2)(B)) is amended--
       (1) in clause (iii)(II) (added by subsection (a)(3) of this 
     section), by striking ``and'' at the end;
       (2) in clause (iv), by striking ``apply.'' and inserting 
     ``apply; and''; and
       (3) by adding at the end the following new clause:
       ``(v) a statement of the ratio, as of the end of the plan 
     year to which the notice relates, of--

       ``(I) the number of participants who are not in covered 
     service under the plan and are in pay status under the plan 
     or have a nonforfeitable right to benefits under the plan, to
       ``(II) the number of participants who are in covered 
     service under the plan.''.

       (c) Comparison of Monthly Average of Value of Plan Assets 
     to Projected Current Liabilities.--Section 101(f)(2)(B) of 
     such Act (29 U.S.C. 1021(f)(2)(B)) (as amended by the 
     preceding provisions of this section) is amended further--
       (1) by striking clause (ii) and inserting the following:
       ``(ii) a statement of a reasonable estimate of--

       ``(I) the value of the plan's assets for the plan year to 
     which the notice relates,
       ``(II) projected liabilities of the plan for the plan year 
     to which the notice relates, and
       ``(III) the ratio of the estimated amount determined under 
     subclause (I) to the estimated amount determined under 
     subclause (II);''; and

       (2) by adding at the end (after and below clause (v)) the 
     following:
     ``For purposes of determining a plan's projected liabilities 
     for a plan year under clause (ii)(II), such projected 
     liabilities shall be determined by projecting forward in a 
     reasonable manner to the end of the plan year the liabilities 
     of the plan to participants and beneficiaries as of the first 
     day of the plan year, taking into account any significant 
     events that occur during the plan year and that have a 
     material effect on such liabilities, including any plan 
     amendments in effect for the plan year.''.
       (d) Statement of Plan's Funding Policy and Method of Asset 
     Allocation.--Section 101(f)(2)(B) of such Act (as amended by 
     the preceding provisions of this section) is amended 
     further--
       (1) in clause (iv), by striking ``and'' at the end;
       (2) in clause (v), by striking the period and inserting 
     ``; and''; and
       (3) by inserting after clause (v) the following new clause:
       ``(vi) a statement setting forth the funding policy of the 
     plan and the asset allocation of investments under the plan 
     (expressed as percentages of total assets) as of the end of 
     the plan year to which the notice relates.''.
       (e) Notice of Funding Improvement Plan or Rehabilitation 
     Plan Adopted by Multiemployer Plan.--Section 101(f)(2)(B) of 
     such Act (as amended by the preceding provisions of this 
     section) is amended further--
       (1) in clause (v), by striking ``and'' at the end;
       (2) in clause (vi), by striking the period and inserting 
     ``; and''; and
       (3) by inserting after clause (vi) the following new 
     clause:
       ``(vii) a summary of any funding improvement plan, 
     rehabilitation plan, or modification thereof adopted under 
     section 305 during the plan year to which the notice 
     relates.''.
       (f) Notice Provided to Alternate Payees.--Section 101(f)(1) 
     of such Act (29 U.S.C. 1021(f)(1)) is amended by adding at 
     the end the following new sentence: ``For purposes of this 
     paragraph, the term `beneficiary' includes an alternate payee 
     (within the meaning of section 206(d)(3)(K)) under an 
     applicable qualified domestic relations order (within the 
     meaning of section 206(d)(3)(B)(i)) receiving benefits under 
     the plan.''.
       (g) Notice Due 90 Days After Plan's Valuation Date.--
     Section 101(f)(3) of such Act (29 U.S.C. 1021(f)(3)) is 
     amended by striking ``two months after the deadline 
     (including extensions) for filing the annual report for the 
     plan year'' and inserting ``90 days after the end of the plan 
     year''.
       (h) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2005.

     SEC. 502. ADDITIONAL DISCLOSURE REQUIREMENTS.

       (a) Additional Annual Reporting Requirements.--Section 103 
     of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1023) is amended--
       (1) in subsection (a)(1)(B), by striking ``subsections (d) 
     and (e)'' and inserting ``subsections (d), (e), and (f)''; 
     and
       (2) by adding at the end the following new subsection:
       ``(f)(1) With respect to any defined benefit plan, an 
     annual report under this section for a plan year shall 
     include the following:
       ``(A)(i) The ratio of the number of inactive participants 
     under the plan as of the end of such plan year to the number 
     of active participants as of the end of such plan year.
       ``(ii) For purposes of clause (i)--
       ``(I) the term `active participant' means an individual who 
     is in covered service under the plan, and
       ``(II) the term `inactive participant' means an individual 
     who is not in covered service under the plan who is in pay 
     status under the plan or has a nonforfeitable right to 
     benefits under the plan.
       ``(B) In any case in which any liabilities to participants 
     or their beneficiaries under such plan as of the end of such 
     plan year consist (in whole or in part) of liabilities to 
     such participants and beneficiaries borne by 2 or more 
     pension plans as of immediately before such plan year, the 
     funded ratio of each of such 2 or more pension plans as of 
     immediately before such plan year and the funded ratio of the 
     plan with respect to which the annual report is filed as of 
     the end of such plan year.
       ``(C) For purposes of this paragraph, the term `funded 
     ratio' means, in connection with a plan, the percentage 
     which--
       ``(i) the value of the plan's assets is of
       ``(ii) the liabilities to participants and beneficiaries 
     under the plan.
       ``(2) With respect to any defined benefit plan which is a 
     multiemployer plan, an annual report under this section for a 
     plan year shall include the following:
       ``(A) The number of employers obligated to contribute to 
     the plan as of the end of such plan year.
       ``(B) The number of participants under the plan on whose 
     behalf no employer contributions have been made to the plan 
     for such plan year. For purposes of this subparagraph, the 
     term `employer contribution' means, in connection with a 
     participant, a contribution made by an employer as an 
     employer of such participant.''.
       (b) Additional Information in Annual Actuarial Statement 
     Regarding Plan Retirement Projections.--Section 103(d) of 
     such Act (29 U.S.C. 1023(d)) is amended--
       (1) by redesignating paragraphs (12) and (13) as paragraphs 
     (13) and (14), respectively; and
       (2) by inserting after paragraph (11) the following new 
     paragraph:
       ``(12) A statement explaining the actuarial assumptions and 
     methods used in projecting future retirements and asset 
     distributions under the plan.''.
       (c) Summary Annual Report Filed Within 15 Days After 
     Deadline for Filing of Annual Report.--Section 104(b)(3) of 
     such Act (29 U.S.C. 1024(b)(3)) is amended--
       (1) by striking ``Within 210 days after the close of the 
     fiscal year,'' and inserting ``Within 15 business days after 
     the due date under subsection (a)(1) for the filing of the 
     annual report for the fiscal year of the plan''; and
       (2) by striking ``the latest'' and inserting ``such''.

[[Page 28589]]

       (d) Information Made Available to Participants, 
     Beneficiaries, and Employers With Respect to Multiemployer 
     Plans.--
       (1) In general.--Section 101 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1021) is amended--
       (A) by redesignating subsection (j) as subsection (k); and
       (B) by inserting after subsection (i) the following new 
     subsection:
       ``(j) Multiemployer Plan Information Made Available on 
     Request.--
       ``(1) In general.--Each administrator of a multiemployer 
     plan shall furnish to any plan participant or beneficiary or 
     any employer having an obligation to contribute to the plan, 
     who so requests in writing--
       ``(A) a copy of any actuary report received by the plan for 
     any plan year which has been in receipt by the plan for at 
     least 30 days, and
       ``(B) a copy of any financial report prepared for the plan 
     by any plan investment manager or advisor or other person who 
     is a plan fiduciary which has been in receipt by the plan for 
     at least 30 days.
       ``(2) Compliance.--Information required to be provided 
     under paragraph (1) --
       ``(A) shall be provided to the requesting participant, 
     beneficiary, or employer within 30 days after the request in 
     a form and manner prescribed in regulations of the Secretary, 
     and
       ``(B) may be provided in written, electronic, or other 
     appropriate form to the extent such form is reasonably 
     accessible to persons to whom the information is required to 
     be provided.
       ``(3) Limitations.--In no case shall a participant, 
     beneficiary, or employer be entitled under this subsection to 
     receive more than one copy of any report described in 
     paragraph (1) during any one 12-month period. The 
     administrator may make a reasonable charge to cover copying, 
     mailing, and other costs of furnishing copies of information 
     pursuant to paragraph (1). The Secretary may by regulations 
     prescribe the maximum amount which will constitute a 
     reasonable charge under the preceding sentence.''.
       (2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C. 
     1132(c)(4)) is amended by inserting ``or 101(j)'' after 
     ``101(f)(1)''.
       (3) Regulations.--The Secretary shall prescribe regulations 
     under section 101(j)(2) of the Employee Retirement Income 
     Security Act of 1974 (added by paragraph (1) of this 
     subsection) not later than 90 days after the date of the 
     enactment of this Act.
       (e) Notice of Potential Withdrawal Liability to 
     Multiemployer Plans.--
       (1) In general.--Section 101 of such Act (as amended by 
     subsection (e) of this section) is amended further--
       (A) by redesignating subsection (k) as subsection (l); and
       (B) by inserting after subsection (j) the following new 
     subsection:
       ``(k) Notice of Potential Withdrawal Liability.--
       ``(1) In general.--The plan sponsor or administrator shall 
     furnish to any employer who has an obligation to contribute 
     under the plan and who so requests in writing notice of--
       ``(A) the amount which would be the amount of such 
     employer's withdrawal liability under part 1 of subtitle E of 
     title IV if such employer withdrew on the last day of the 
     plan year preceding the date of the request, and
       ``(B) the average increase, per participant under the plan, 
     in accrued liabilities under the plan as of the end of such 
     plan year to participants under such plan on whose behalf no 
     employer contributions are payable (or their beneficiaries), 
     which would be attributable to such a withdrawal by such 
     employer.
     For purposes of subparagraph (B), the term `employer 
     contribution' means, in connection with a participant, a 
     contribution made by an employer as an employer of such 
     participant.
       ``(2) Compliance.--Any notice required to be provided under 
     paragraph (1)--
       ``(A) shall be provided to the requesting employer within 
     180 days after the request in a form and manner prescribed in 
     regulations of the Secretary, and
       ``(B) may be provided in written, electronic, or other 
     appropriate form to the extent such form is reasonably 
     accessible to employers to whom the information is required 
     to be provided.
       ``(3) Limitations.--In no case shall an employer be 
     entitled under this subsection to receive more than one 
     notice described in paragraph (1) during any one 12-month 
     period. The person required to provide such notice may make a 
     reasonable charge to cover copying, mailing, and other costs 
     of furnishing such notice pursuant to paragraph (1). The 
     Secretary may by regulations prescribe the maximum amount 
     which will constitute a reasonable charge under the preceding 
     sentence.''.
       (f) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2005.

     SEC. 503. NOTICE TO PARTICIPANTS AND BENEFICIARIES OF SECTION 
                   4010 FILINGS WITH THE PBGC.

       (a) In General.--Section 4010 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1310) is amended by 
     adding at the end the following new subsection:
       ``(d) Notice to Participants and Beneficiaries.--
       ``(1) In general.--Not later than 90 days after the 
     submission by any person to the corporation of information or 
     documentary material with respect to any plan pursuant to 
     subsection (a), such person shall provide notice of such 
     submission to each participant and beneficiary under the plan 
     (and under all plans maintained by members of the controlled 
     group of each contributing sponsor of the plan). Such notice 
     shall also set forth--
       ``(A) the number of single-employer plans covered by this 
     title which are in at-risk status and are maintained by 
     contributing sponsors of such plan (and by members of their 
     controlled groups) with respect to which the funding target 
     attainment percentage for the preceding plan year of each 
     plan is less than 60 percent;
       ``(B) the value of the assets of each of the plans 
     described in subparagraph (A) for the plan year, the funding 
     target for each of such plans for the plan year, and the 
     funding target attainment percentage of each of such plans 
     for the plan year; and
       ``(C) taking into account all single-employer plans 
     maintained by the contributing sponsor and the members of its 
     controlled group as of the end of such plan year--
       ``(i) the aggregate total of the values of plan assets of 
     such plans as of the end of such plan year,
       ``(ii) the aggregate total of the funding targets of such 
     plans, as of the end of such plan year, taking into account 
     only benefits to which participants and beneficiaries have a 
     nonforfeitable right, and
       ``(iii) the aggregate funding targets attainment percentage 
     with respect to the contributing sponsor for the preceding 
     plan year.
       ``(2) Definitions.--For purposes of this subsection--
       ``(A) Value of plan assets.--The term `value of plan 
     assets' means the value of plan assets, as determined under 
     section 303(a)(2).
       ``(B) Funding target.--The term `funding target' has the 
     meaning provided under section 303(d)(1).
       ``(C) Funding target attainment percentage.--The term 
     `funding target attainment percentage' has the meaning 
     provided in section 303(d)(2).
       ``(D) Aggregate funding target attainment percentage.--The 
     term `aggregate funding targets attainment percentage' with 
     respect to a contributing sponsor for a plan year is the 
     percentage, taking into account all plans maintained by the 
     contributing sponsor and the members of its controlled group 
     as of the end of such plan year, which
       ``(i) the aggregate total of the values of plan assets, as 
     of the end of such plan year, of such plans, is of
       ``(ii) the aggregate total of the funding targets of such 
     plans, as of the end of such plan year, taking into account 
     only benefits to which participants and beneficiaries have a 
     nonforfeitable right.
       ``(E) At-risk status.--The term `at-risk status' has the 
     meaning provided in section 303(h)(3).
       ``(3) Compliance.--
       ``(A) In general.--Any notice required to be provided under 
     paragraph (1) may be provided in written, electronic, or 
     other appropriate form to the extent such form is reasonably 
     accessible to individuals to whom the information is required 
     to be provided.
       ``(B) Limitations.--In no case shall a participant or 
     beneficiary be entitled under this subsection to receive more 
     than one notice described in paragraph (1) during any one 12-
     month period. The person required to provide such notice may 
     make a reasonable charge to cover copying, mailing, and other 
     costs of furnishing such notice pursuant to paragraph (1). 
     The corporation may by regulations prescribe the maximum 
     amount which will constitute a reasonable charge under the 
     preceding sentence.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply with respect to plan years beginning after 2006.

                      TITLE VI--INVESTMENT ADVICE

     SEC. 601. AMENDMENTS TO EMPLOYEE RETIREMENT INCOME SECURITY 
                   ACT OF 1974 PROVIDING PROHIBITED TRANSACTION 
                   EXEMPTION FOR PROVISION OF INVESTMENT ADVICE.

       (a) Exemption From Prohibited Transactions.--Section 408(b) 
     of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1108(b)) is amended by adding at the end the following 
     new paragraph:
       ``(14)(A) Any transaction described in subparagraph (B) in 
     connection with the provision of investment advice described 
     in section 3(21)(A)(ii), in any case in which--
       ``(i) the investment of assets of the plan is subject to 
     the direction of plan participants or beneficiaries,
       ``(ii) the advice is provided to the plan or a participant 
     or beneficiary of the plan by a fiduciary adviser in 
     connection with any sale, acquisition, or holding of a 
     security or other property for purposes of investment of plan 
     assets, and
       ``(iii) the requirements of subsection (g) are met in 
     connection with the provision of the advice.
       ``(B) The transactions described in this subparagraph are 
     the following:
       ``(i) the provision of the advice to the plan, participant, 
     or beneficiary;

[[Page 28590]]

       ``(ii) the sale, acquisition, or holding of a security or 
     other property (including any lending of money or other 
     extension of credit associated with the sale, acquisition, or 
     holding of a security or other property) pursuant to the 
     advice; and
       ``(iii) the direct or indirect receipt of fees or other 
     compensation by the fiduciary adviser or an affiliate thereof 
     (or any employee, agent, or registered representative of the 
     fiduciary adviser or affiliate) in connection with the 
     provision of the advice or in connection with a sale, 
     acquisition, or holding of a security or other property 
     pursuant to the advice.''.
       (b) Requirements.--Section 408 of such Act is amended 
     further by adding at the end the following new subsection:
       ``(g) Requirements Relating to Provision of Investment 
     Advice by Fiduciary Advisers.--
       ``(1) In general.--The requirements of this subsection are 
     met in connection with the provision of investment advice 
     referred to in section 3(21)(A)(ii), provided to an employee 
     benefit plan or a participant or beneficiary of an employee 
     benefit plan by a fiduciary adviser with respect to the plan 
     in connection with any sale, acquisition, or holding of a 
     security or other property for purposes of investment of 
     amounts held by the plan, if--
       ``(A) in the case of the initial provision of the advice 
     with regard to the security or other property by the 
     fiduciary adviser to the plan, participant, or beneficiary, 
     the fiduciary adviser provides to the recipient of the 
     advice, at a time reasonably contemporaneous with the initial 
     provision of the advice, a written notification (which may 
     consist of notification by means of electronic 
     communication)--
       ``(i) of all fees or other compensation relating to the 
     advice that the fiduciary adviser or any affiliate thereof is 
     to receive (including compensation provided by any third 
     party) in connection with the provision of the advice or in 
     connection with the sale, acquisition, or holding of the 
     security or other property,
       ``(ii) of any material affiliation or contractual 
     relationship of the fiduciary adviser or affiliates thereof 
     in the security or other property,
       ``(iii) of any limitation placed on the scope of the 
     investment advice to be provided by the fiduciary adviser 
     with respect to any such sale, acquisition, or holding of a 
     security or other property,
       ``(iv) of the types of services provided by the fiduciary 
     adviser in connection with the provision of investment advice 
     by the fiduciary adviser,
       ``(v) that the adviser is acting as a fiduciary of the plan 
     in connection with the provision of the advice, and
       ``(vi) that a recipient of the advice may separately 
     arrange for the provision of advice by another adviser, that 
     could have no material affiliation with and receive no fees 
     or other compensation in connection with the security or 
     other property,
       ``(B) the fiduciary adviser provides appropriate 
     disclosure, in connection with the sale, acquisition, or 
     holding of the security or other property, in accordance with 
     all applicable securities laws,
       ``(C) the sale, acquisition, or holding occurs solely at 
     the direction of the recipient of the advice,
       ``(D) the compensation received by the fiduciary adviser 
     and affiliates thereof in connection with the sale, 
     acquisition, or holding of the security or other property is 
     reasonable, and
       ``(E) the terms of the sale, acquisition, or holding of the 
     security or other property are at least as favorable to the 
     plan as an arm's length transaction would be.
       ``(2) Standards for presentation of information.--
       ``(A) In general.--The notification required to be provided 
     to participants and beneficiaries under paragraph (1)(A) 
     shall be written in a clear and conspicuous manner and in a 
     manner calculated to be understood by the average plan 
     participant and shall be sufficiently accurate and 
     comprehensive to reasonably apprise such participants and 
     beneficiaries of the information required to be provided in 
     the notification.
       ``(B) Model form for disclosure of fees and other 
     compensation.--The Secretary shall issue a model form for the 
     disclosure of fees and other compensation required in 
     paragraph (1)(A)(i) which meets the requirements of 
     subparagraph (A).
       ``(3) Exemption conditioned on making required information 
     available annually, on request, and in the event of material 
     change.--The requirements of paragraph (1)(A) shall be deemed 
     not to have been met in connection with the initial or any 
     subsequent provision of advice described in paragraph (1) to 
     the plan, participant, or beneficiary if, at any time during 
     the provision of advisory services to the plan, participant, 
     or beneficiary, the fiduciary adviser fails to maintain the 
     information described in clauses (i) through (iv) of 
     subparagraph (A) in currently accurate form and in the manner 
     described in paragraph (2) or fails--
       ``(A) to provide, without charge, such currently accurate 
     information to the recipient of the advice no less than 
     annually,
       ``(B) to make such currently accurate information 
     available, upon request and without charge, to the recipient 
     of the advice, or
       ``(C) in the event of a material change to the information 
     described in clauses (i) through (iv) of paragraph (1)(A), to 
     provide, without charge, such currently accurate information 
     to the recipient of the advice at a time reasonably 
     contemporaneous to the material change in information.
       ``(4) Maintenance for 6 years of evidence of compliance.--A 
     fiduciary adviser referred to in paragraph (1) who has 
     provided advice referred to in such paragraph shall, for a 
     period of not less than 6 years after the provision of the 
     advice, maintain any records necessary for determining 
     whether the requirements of the preceding provisions of this 
     subsection and of subsection (b)(14) have been met. A 
     transaction prohibited under section 406 shall not be 
     considered to have occurred solely because the records are 
     lost or destroyed prior to the end of the 6-year period due 
     to circumstances beyond the control of the fiduciary adviser.
       ``(5) Exemption for plan sponsor and certain other 
     fiduciaries.--
       ``(A) In general.--Subject to subparagraph (B), a plan 
     sponsor or other person who is a fiduciary (other than a 
     fiduciary adviser) shall not be treated as failing to meet 
     the requirements of this part solely by reason of the 
     provision of investment advice referred to in section 
     3(21)(A)(ii) (or solely by reason of contracting for or 
     otherwise arranging for the provision of the advice), if--
       ``(i) the advice is provided by a fiduciary adviser 
     pursuant to an arrangement between the plan sponsor or other 
     fiduciary and the fiduciary adviser for the provision by the 
     fiduciary adviser of investment advice referred to in such 
     section,
       ``(ii) the terms of the arrangement require compliance by 
     the fiduciary adviser with the requirements of this 
     subsection, and
       ``(iii) the terms of the arrangement include a written 
     acknowledgment by the fiduciary adviser that the fiduciary 
     adviser is a fiduciary of the plan with respect to the 
     provision of the advice.
       ``(B) Continued duty of prudent selection of adviser and 
     periodic review.--Nothing in subparagraph (A) shall be 
     construed to exempt a plan sponsor or other person who is a 
     fiduciary from any requirement of this part for the prudent 
     selection and periodic review of a fiduciary adviser with 
     whom the plan sponsor or other person enters into an 
     arrangement for the provision of advice referred to in 
     section 3(21)(A)(ii). The plan sponsor or other person who is 
     a fiduciary has no duty under this part to monitor the 
     specific investment advice given by the fiduciary adviser to 
     any particular recipient of the advice.
       ``(C) Availability of plan assets for payment for advice.--
     Nothing in this part shall be construed to preclude the use 
     of plan assets to pay for reasonable expenses in providing 
     investment advice referred to in section 3(21)(A)(ii).
       ``(6) Definitions.--For purposes of this subsection and 
     subsection (b)(14)--
       ``(A) Fiduciary adviser.--The term `fiduciary adviser' 
     means, with respect to a plan, a person who is a fiduciary of 
     the plan by reason of the provision of investment advice by 
     the person to the plan or to a participant or beneficiary and 
     who is--
       ``(i) registered as an investment adviser under the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) or 
     under the laws of the State in which the fiduciary maintains 
     its principal office and place of business,
       ``(ii) a bank or similar financial institution referred to 
     in section 408(b)(4) or a savings association (as defined in 
     section 3(b)(1) of the Federal Deposit Insurance Act (12 
     U.S.C. 1813(b)(1))), but only if the advice is provided 
     through a trust department of the bank or similar financial 
     institution or savings association which is subject to 
     periodic examination and review by Federal or State banking 
     authorities,
       ``(iii) an insurance company qualified to do business under 
     the laws of a State,
       ``(iv) a person registered as a broker or dealer under the 
     Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
       ``(v) an affiliate of a person described in any of clauses 
     (i) through (iv), or
       ``(vi) an employee, agent, or registered representative of 
     a person described in any of clauses (i) through (v) who 
     satisfies the requirements of applicable insurance, banking, 
     and securities laws relating to the provision of the advice.
       ``(B) Affiliate.--The term `affiliate' of another entity 
     means an affiliated person of the entity (as defined in 
     section 2(a)(3) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-2(a)(3))).
       ``(C) Registered representative.--The term `registered 
     representative' of another entity means a person described in 
     section 3(a)(18) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78c(a)(18)) (substituting the entity for the broker or 
     dealer referred to in such section) or a person described in 
     section 202(a)(17) of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-2(a)(17)) (substituting the entity for the 
     investment adviser referred to in such section).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to advice referred to in section 
     3(21)(A)(ii) of the Employee Retirement Income Security Act 
     of 1974 provided on or after January 1, 2006.

[[Page 28591]]



     SEC. 602. AMENDMENTS TO INTERNAL REVENUE CODE OF 1986 
                   PROVIDING PROHIBITED TRANSACTION EXEMPTION FOR 
                   PROVISION OF INVESTMENT ADVICE.

       (a) Exemption From Prohibited Transactions.--Subsection (d) 
     of section 4975 of the Internal Revenue Code of 1986 
     (relating to exemptions from tax on prohibited transactions) 
     is amended--
       (1) in paragraph (14), by striking ``or'' at the end;
       (2) in paragraph (15), by striking the period at the end 
     and inserting ``; or''; and
       (3) by adding at the end the following new paragraph:
       ``(16) any transaction described in subsection (f)(7)(A) in 
     connection with the provision of investment advice described 
     in subsection (e)(3)(B)(i), in any case in which--
       ``(A) the investment of assets of the plan is subject to 
     the direction of plan participants or beneficiaries,
       ``(B) the advice is provided to the plan or a participant 
     or beneficiary of the plan by a fiduciary adviser in 
     connection with any sale, acquisition, or holding of a 
     security or other property for purposes of investment of plan 
     assets, and
       ``(C) the requirements of subsection (f)(7)(B) are met in 
     connection with the provision of the advice.''.
       (b) Allowed Transactions and Requirements.--Subsection (f) 
     of such section 4975 (relating to other definitions and 
     special rules) is amended by adding at the end the following 
     new paragraph:
       ``(7) Provisions relating to investment advice provided by 
     fiduciary advisers.--
       ``(A) Transactions allowable in connection with investment 
     advice provided by fiduciary advisers.--The transactions 
     referred to in subsection (d)(16), in connection with the 
     provision of investment advice by a fiduciary adviser, are 
     the following:
       ``(i) the provision of the advice to the plan, participant, 
     or beneficiary;
       ``(ii) the sale, acquisition, or holding of a security or 
     other property (including any lending of money or other 
     extension of credit associated with the sale, acquisition, or 
     holding of a security or other property) pursuant to the 
     advice; and
       ``(iii) the direct or indirect receipt of fees or other 
     compensation by the fiduciary adviser or an affiliate thereof 
     (or any employee, agent, or registered representative of the 
     fiduciary adviser or affiliate) in connection with the 
     provision of the advice or in connection with a sale, 
     acquisition, or holding of a security or other property 
     pursuant to the advice.
       ``(B) Requirements relating to provision of investment 
     advice by fiduciary advisers.--The requirements of this 
     subparagraph (referred to in subsection (d)(16)(C)) are met 
     in connection with the provision of investment advice 
     referred to in subsection (e)(3)(B), provided to a plan or a 
     participant or beneficiary of a plan by a fiduciary adviser 
     with respect to the plan in connection with any sale, 
     acquisition, or holding of a security or other property for 
     purposes of investment of amounts held by the plan, if--
       ``(i) in the case of the initial provision of the advice 
     with regard to the security or other property by the 
     fiduciary adviser to the plan, participant, or beneficiary, 
     the fiduciary adviser provides to the recipient of the 
     advice, at a time reasonably contemporaneous with the initial 
     provision of the advice, a written notification (which may 
     consist of notification by means of electronic 
     communication)--

       ``(I) of all fees or other compensation relating to the 
     advice that the fiduciary adviser or any affiliate thereof is 
     to receive (including compensation provided by any third 
     party) in connection with the provision of the advice or in 
     connection with the sale, acquisition, or holding of the 
     security or other property,
       ``(II) of any material affiliation or contractual 
     relationship of the fiduciary adviser or affiliates thereof 
     in the security or other property,
       ``(III) of any limitation placed on the scope of the 
     investment advice to be provided by the fiduciary adviser 
     with respect to any such sale, acquisition, or holding of a 
     security or other property,
       ``(IV) of the types of services provided by the fiduciary 
     adviser in connection with the provision of investment advice 
     by the fiduciary adviser,
       ``(V) that the adviser is acting as a fiduciary of the plan 
     in connection with the provision of the advice, and
       ``(VI) that a recipient of the advice may separately 
     arrange for the provision of advice by another adviser, that 
     could have no material affiliation with and receive no fees 
     or other compensation in connection with the security or 
     other property,

       ``(ii) the fiduciary adviser provides appropriate 
     disclosure, in connection with the sale, acquisition, or 
     holding of the security or other property, in accordance with 
     all applicable securities laws,
       ``(iii) the sale, acquisition, or holding occurs solely at 
     the direction of the recipient of the advice,
       ``(iv) the compensation received by the fiduciary adviser 
     and affiliates thereof in connection with the sale, 
     acquisition, or holding of the security or other property is 
     reasonable, and
       ``(v) the terms of the sale, acquisition, or holding of the 
     security or other property are at least as favorable to the 
     plan as an arm's length transaction would be.
       ``(C) Standards for presentation of information.--The 
     notification required to be provided to participants and 
     beneficiaries under subparagraph (B)(i) shall be written in a 
     clear and conspicuous manner and in a manner calculated to be 
     understood by the average plan participant and shall be 
     sufficiently accurate and comprehensive to reasonably apprise 
     such participants and beneficiaries of the information 
     required to be provided in the notification.
       ``(D) Exemption conditioned on making required information 
     available annually, on request, and in the event of material 
     change.--The requirements of subparagraph (B)(i) shall be 
     deemed not to have been met in connection with the initial or 
     any subsequent provision of advice described in subparagraph 
     (B) to the plan, participant, or beneficiary if, at any time 
     during the provision of advisory services to the plan, 
     participant, or beneficiary, the fiduciary adviser fails to 
     maintain the information described in subclauses (I) through 
     (IV) of subparagraph (B)(i) in currently accurate form and in 
     the manner required by subparagraph (C), or fails--
       ``(i) to provide, without charge, such currently accurate 
     information to the recipient of the advice no less than 
     annually,
       ``(ii) to make such currently accurate information 
     available, upon request and without charge, to the recipient 
     of the advice, or
       ``(iii) in the event of a material change to the 
     information described in subclauses (I) through (IV) of 
     subparagraph (B)(i), to provide, without charge, such 
     currently accurate information to the recipient of the advice 
     at a time reasonably contemporaneous to the material change 
     in information.
       ``(E) Maintenance for 6 years of evidence of compliance.--A 
     fiduciary adviser referred to in subparagraph (B) who has 
     provided advice referred to in such subparagraph shall, for a 
     period of not less than 6 years after the provision of the 
     advice, maintain any records necessary for determining 
     whether the requirements of the preceding provisions of this 
     paragraph and of subsection (d)(16) have been met. A 
     transaction prohibited under subsection (c)(1) shall not be 
     considered to have occurred solely because the records are 
     lost or destroyed prior to the end of the 6-year period due 
     to circumstances beyond the control of the fiduciary adviser.
       ``(F) Exemption for plan sponsor and certain other 
     fiduciaries.--A plan sponsor or other person who is a 
     fiduciary (other than a fiduciary adviser) shall not be 
     treated as failing to meet the requirements of this section 
     solely by reason of the provision of investment advice 
     referred to in subsection (e)(3)(B) (or solely by reason of 
     contracting for or otherwise arranging for the provision of 
     the advice), if--
       ``(i) the advice is provided by a fiduciary adviser 
     pursuant to an arrangement between the plan sponsor or other 
     fiduciary and the fiduciary adviser for the provision by the 
     fiduciary adviser of investment advice referred to in such 
     section,
       ``(ii) the terms of the arrangement require compliance by 
     the fiduciary adviser with the requirements of this 
     paragraph,
       ``(iii) the terms of the arrangement include a written 
     acknowledgment by the fiduciary adviser that the fiduciary 
     adviser is a fiduciary of the plan with respect to the 
     provision of the advice, and
       ``(iv) the requirements of part 4 of subtitle B of title I 
     of the Employee Retirement Income Security Act of 1974 are 
     met in connection with the provision of such advice.
       ``(G) Definitions.--For purposes of this paragraph and 
     subsection (d)(16)--
       ``(i) Fiduciary adviser.--The term `fiduciary adviser' 
     means, with respect to a plan, a person who is a fiduciary of 
     the plan by reason of the provision of investment advice by 
     the person to the plan or to a participant or beneficiary and 
     who is--

       ``(I) registered as an investment adviser under the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) or 
     under the laws of the State in which the fiduciary maintains 
     its principal office and place of business,
       ``(II) a bank or similar financial institution referred to 
     in subsection (d)(4) or a savings association (as defined in 
     section 3(b)(1) of the Federal Deposit Insurance Act (12 
     U.S.C. 1813(b)(1))), but only if the advice is provided 
     through a trust department of the bank or similar financial 
     institution or savings association which is subject to 
     periodic examination and review by Federal or State banking 
     authorities,
       ``(III) an insurance company qualified to do business under 
     the laws of a State,
       ``(IV) a person registered as a broker or dealer under the 
     Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
       ``(V) an affiliate of a person described in any of 
     subclauses (I) through (IV), or
       ``(VI) an employee, agent, or registered representative of 
     a person described in any of subclauses (I) through (V) who 
     satisfies the requirements of applicable insurance, banking, 
     and securities laws relating to the provision of the advice.

       ``(ii) Affiliate.--The term `affiliate' of another entity 
     means an affiliated person of

[[Page 28592]]

     the entity (as defined in section 2(a)(3) of the Investment 
     Company Act of 1940 (15 U.S.C. 80a-2(a)(3))).
       ``(iii) Registered representative.--The term `registered 
     representative' of another entity means a person described in 
     section 3(a)(18) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78c(a)(18)) (substituting the entity for the broker or 
     dealer referred to in such section) or a person described in 
     section 202(a)(17) of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-2(a)(17)) (substituting the entity for the 
     investment adviser referred to in such section).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to advice referred to in section 
     4975(c)(3)(B) of the Internal Revenue Code of 1986 provided 
     on or after January 1, 2006.

                    TITLE VII--DEDUCTION LIMITATIONS

     SEC. 701. INCREASE IN DEDUCTION LIMITS.

       (a) Increase in Deduction Limit for Single-Employer 
     Plans.--Section 404 of the Internal Revenue Code of 1986 
     (relating to deduction for contributions of an employer to an 
     employees' trust or annuity plan and compensation under a 
     deferred payment plan) is amended--
       (1) in subsection (a)(1)(A), by inserting ``in the case of 
     a defined benefit plan other than a multiemployer plan, in an 
     amount determined under subsection (o), and in the case of 
     any other plan'' after ``section 501(a),'', and
       (2) by inserting at the end the following new subsection:
       ``(o) Deduction Limit for Single-Employer Plans.--For 
     purposes of subsection (a)(1)(A)--
       ``(1) In general.--In the case of a defined benefit plan to 
     which subsection (a)(1)(A) applies (other than a 
     multiemployer plan), the amount determined under this 
     subsection for any taxable year shall be equal to the amount 
     determined under paragraph (2) with respect to each plan year 
     ending with or within the taxable year.
       ``(2) Determination of amount.--The amount determined under 
     this paragraph for any plan year shall be equal to the excess 
     (if any) of--
       ``(A) the greater of--
       ``(i) the sum of--

       ``(I) 150 percent of the funding target applicable to the 
     plan for such plan year, determined under section 430(e), 
     plus
       ``(II) the target normal cost applicable to the plan for 
     such plan year, determined under section 430(b), or

       ``(ii) in the case of a plan that is not in an at-risk 
     status (as determined under 430(g)), the sum of--

       ``(I) the funding target which would be applicable to the 
     plan for such plan year if such plan were in an at-risk 
     status, determined under section 430(e) (with regard to 
     section 430(g)), plus
       ``(II) the target normal cost which would be applicable to 
     the plan for such plan year if such plan were in an at-risk 
     status, determined under section 430(b) (with regard to 
     section 430(g)), over

       ``(B) the value of the plan assets (determined under 
     section 430(e) as of the valuation date of the plan).
       ``(3) Special rule for terminating plans.--In the case of a 
     plan which, subject to section 4041 of the Employee 
     Retirement Income Security Act of 1974, terminates during the 
     plan year, the amount determined under paragraph (2) shall 
     not be less than the amount required to make the plan 
     sufficient for benefit liabilities (within the meaning of 
     section 4041(d) of such Act).
       ``(4) Definitions.--Any term used in this subsection which 
     is also used in section 430 shall have the same meaning given 
     such term by section 430.''.
       (b) Increase in Deduction Limit for Multiemployer Plans.--
     Section 404(a)(1)(D) of such Code is amended to read as 
     follows:
       ``(D) Amount determined on basis of unfunded current 
     liability.--
       ``(i) In general.--In the case of a defined benefit plan 
     which is a multiemployer plan, except as provided in 
     regulations, the maximum amount deductible under the 
     limitations of this paragraph shall not be less than the 
     unfunded current liability of the plan.
       ``(ii) Unfunded current liability.--For purposes of clause 
     (i), the term `unfunded current liability' means the excess 
     (if any) of--

       ``(I) 140 percent of the current liability of the plan 
     determined under section 431(c)(6)(C), over
       ``(II) the value of the plan's assets determined under 
     section 431(c)(2).''.

       (c) Technical and Conforming Amendments.--
       (1) The last sentence of section 404(a)(1)(A) of such Code 
     is amended by striking ``section 412'' each place it appears 
     and inserting ``section 431''.
       (2) Section 404(a)(1)(B) of such Code is amended--
       (A) by striking ``In the case of a plan'' and inserting 
     ``In the case of a multiemployer plan'',
       (B) by striking ``section 412(c)(7)'' each place it appears 
     and inserting ``section 431(c)(6)'',
       (C) by striking ``section 412(c)(7)(B)'' and inserting 
     ``section 431(c)(6)(A)(ii)'',
       (D) by striking ``section 412(c)(7)(A)'' and inserting 
     ``section 431(c)(6)(A)(i)'', and
       (E) by striking ``section 412'' and inserting ``section 
     431''.
       (3) Section 404(a)(1) of such Code is amended by striking 
     subparagraph (F).
       (4) Section 404(a)(7) of such Code is amended--
       (A) in subparagraph (A)(ii), by striking ``for the plan 
     year'' and all that follows and inserting ``which are 
     multiemployer plans for the plan year which ends with or 
     within such taxable year (or for any prior plan year) and the 
     maximum amount of employer contributions allowable under 
     subsection (o) with respect to any such defined benefit plans 
     which are not multiemployer plans for the plan year.'',
       (B) by striking ``section 412(l)'' in the last sentence of 
     subparagraph (A) and inserting ``paragraph (1)(D)(ii)'', and
       (C) by striking subparagraph (D) and inserting:
       ``(D) Insurance contract plans.--For purposes of this 
     paragraph, a plan described in section 412(d)(3) shall be 
     treated as a defined benefit plan.''.
       (5) Section 404A(g)(3)(A) of such Code is amended by 
     striking ``paragraphs (3) and (7) of section 412(c)'' and 
     inserting ``sections 430(d)(1) and 431(c) (3) and (6)''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to contributions for taxable years beginning 
     after 2005.

     SEC. 702. UPDATING DEDUCTION RULES FOR COMBINATION OF PLANS.

       (a) In General.--Subparagraph (C) of section 404(a)(7) 
     (relating to limitation on deductions where combination of 
     defined contribution plan and defined benefit plan) is 
     amended by adding after clause (ii) the following new clause:
       ``(iii) Limitation.--In the case of employer contributions 
     to 1 or more defined contribution plans, this paragraph shall 
     only apply to the extent that such contributions exceed 6 
     percent of the compensation otherwise paid or accrued during 
     the taxable year to the beneficiaries under such plans. For 
     purposes of this clause, amounts carried over from preceding 
     taxable years under subparagraph (B) shall be treated as 
     employer contributions to 1 or more defined contributions to 
     the extent attributable to employer contributions to such 
     plans in such preceding taxable years.''.
       (b) Conforming Amendments.--Subparagraph (A) of section 
     4972(c)(6) of such Code (relating to nondeductible 
     contributions) is amended to read as follows:
       ``(A) so much of the contributions to 1 or more defined 
     contribution plans which are not deductible when contributed 
     solely because of section 404(a)(7) as does not exceed the 
     amount of contributions described in section 401(m)(4)(A), 
     or''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to contributions for taxable years beginning 
     after December 31, 2005.

  The SPEAKER pro tempore. In lieu of the amendments recommended by the 
Committees on Education and the Workforce and Ways and Means printed in 
the bill, the amendment in the nature of a substitute printed in part A 
of House Report 109-346 is adopted.
  The text of the amendment in the nature of a substitute is as 
follows:

                               H.R. 2830

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Pension 
     Protection Act of 2005''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title and table of contents.

 TITLE I--REFORM OF FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT 
                             PENSION PLANS

 Subtitle A--Amendments to Employee Retirement Income Security Act of 
                                  1974

Sec. 101. Minimum funding standards.
Sec. 102. Funding rules for single-employer defined benefit pension 
              plans.
Sec. 103. Benefit limitations under single-employer plans.
Sec. 104. Technical and conforming amendments.

        Subtitle B--Amendments to Internal Revenue Code of 1986

Sec. 111. Minimum funding standards.
Sec. 112. Funding rules for single-employer defined benefit pension 
              plans.
Sec. 113. Benefit limitations under single-employer plans.
Sec. 114. Technical and conforming amendments.

                      Subtitle C--Other Provisions

Sec. 121. Modification of transition rule to pension funding 
              requirements.
Sec. 122. Treatment of nonqualified deferred compensation plans when 
              employer defined benefit plan in at-risk status.

    TITLE II--FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS

 Subtitle A--Amendments to Employee Retirement Income Security Act of 
                                  1974

Sec. 201. Funding rules for multiemployer defined benefit plans.

[[Page 28593]]

Sec. 202. Additional funding rules for multiemployer plans in 
              endangered or critical status.
Sec. 203. Measures to forestall insolvency of multiemployer plans.
Sec. 204. Withdrawal liability reforms.
Sec. 205. Removal of restrictions with respect to procedures applicable 
              to disputes involving withdrawal liability.

        Subtitle B--Amendments to Internal Revenue Code of 1986

Sec. 211. Funding rules for multiemployer defined benefit plans.
Sec. 212. Additional funding rules for multiemployer plans in 
              endangered or critical status.
Sec. 213. Measures to forestall insolvency of multiemployer plans.

                      TITLE III--OTHER PROVISIONS

Sec. 301. Interest rate for 2006 funding requirements.
Sec. 302. Interest rate assumption for determination of lump sum 
              distributions.
Sec. 303. Interest rate assumption for applying benefit limitations to 
              lump sum distributions.
Sec. 304. Distributions during working retirement.
Sec. 305. Other amendments relating to prohibited transactions.
Sec. 306. Correction period for certain transactions involving 
              securities and commodities.
Sec. 307. Recovery by reimbursement or subrogation with respect to 
              provided benefits.
Sec. 308. Exercise of control over plan assets in connection with 
              qualified changes in investment options.
Sec. 309. Clarification of fiduciary rules.
Sec. 310. Government Accountability Office pension funding report.

          TITLE IV--IMPROVEMENTS IN PBGC GUARANTEE PROVISIONS

Sec. 401. Increases in PBGC premiums.

                          TITLE V--DISCLOSURE

Sec. 501. Defined benefit plan funding notices.
Sec. 502. Additional disclosure requirements.
Sec. 503. Section 4010 filings with the PBGC.

                      TITLE VI--INVESTMENT ADVICE

Sec. 601. Amendments to Employee Retirement Income Security Act of 1974 
              providing prohibited transaction exemption for provision 
              of investment advice.
Sec. 602. Amendments to Internal Revenue Code of 1986 providing 
              prohibited transaction exemption for provision of 
              investment advice.

                  TITLE VII--BENEFIT ACCRUAL STANDARDS

Sec. 701. Benefit accrual standards.

                   TITLE VIII--DEDUCTION LIMITATIONS

Sec. 801. Increase in deduction limits.
Sec. 802. Updating deduction rules for combination of plans.

 TITLE IX--ENHANCED RETIREMENTS SAVINGS AND DEFINED CONTRIBUTION PLANS

Sec. 901. Pensions and individual retirement arrangement provisions of 
              Economic Growth and Tax Relief Reconciliation Act of 2001 
              made permanent.
Sec. 902. Saver's credit.
Sec. 903. Increasing participation through automatic contribution 
              arrangements.
Sec. 904. Penalty-free withdrawals from retirement plans for 
              individuals called to active duty for at least 179 days.
Sec. 905. Waiver of 10 percent early withdrawal penalty tax on certain 
              distributions of pension plans for public safety 
              employees.
Sec. 906. Combat zone compensation taken into account for purposes of 
              determining limitation and deductibility of contributions 
              to individual retirement plans.
Sec. 907. Direct payment of tax refunds to individual retirement plans.
Sec. 908. IRA eligibility for the disabled.
Sec. 909. Allow rollovers by nonspouse beneficiaries of certain 
              retirement plan distributions.

        TITLE X--PROVISIONS TO ENHANCE HEALTH CARE AFFORDABILITY

Sec. 1001. Treatment of annuity and life insurance contracts with a 
              long-term care insurance feature.
Sec. 1002. Disposition of unused health and dependent care benefits in 
              cafeteria plans and flexible spending arrangements.
Sec. 1003. Distributions from governmental retirement plans for health 
              and long-term care insurance for public safety officers.

                      TITLE XI--GENERAL PROVISIONS

Sec. 1101. Provisions relating to plan amendments.

 TITLE I--REFORM OF FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT 
                             PENSION PLANS

 Subtitle A--Amendments to Employee Retirement Income Security Act of 
                                  1974

     SEC. 101. MINIMUM FUNDING STANDARDS.

       (a) Repeal of Existing Funding Rules.--Sections 302 through 
     308 of the Employee Retirement Income Security Act of 1974 
     (29 U.S.C. 1082 through 1086) are repealed.
       (b) New Minimum Funding Standards.--Part 3 of subtitle B of 
     title I of such Act (as amended by subsection (a)) is amended 
     further by inserting after section 301 the following new 
     section:


                      ``Minimum funding standards

       ``Sec. 302. (a) Requirement to Meet Minimum Funding 
     Standard.--
       ``(1) In general.--A plan to which this part applies shall 
     satisfy the minimum funding standard applicable to the plan 
     for any plan year.
       ``(2) Minimum funding standard.--For purposes of paragraph 
     (1), a plan shall be treated as satisfying the minimum 
     funding standard for a plan year if--
       ``(A) in the case of a defined benefit plan which is a 
     single-employer plan, the employer makes contributions to or 
     under the plan for the plan year which, in the aggregate, are 
     not less than the minimum required contribution determined 
     under section 303 for the plan for the plan year,
       ``(B) in the case of a money purchase plan which is a 
     single-employer plan, the employer makes contributions to or 
     under the plan for the plan year which are required under the 
     terms of the plan, and
       ``(C) in the case of a multiemployer plan, the employers 
     make contributions to or under the plan for any plan year 
     which, in the aggregate, are sufficient to ensure that the 
     plan does not have an accumulated funding deficiency under 
     section 304 as of the end of the plan year.
       ``(b) Liability for Contributions.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     amount of any contribution required by this section 
     (including any required installments under paragraphs (3) and 
     (4) of section 303(j)) shall be paid by the employer 
     responsible for making contributions to or under the plan.
       ``(2) Joint and several liability where employer member of 
     controlled group.--In the case of a single-employer plan, if 
     the employer referred to in paragraph (1) is a member of a 
     controlled group, each member of such group shall be jointly 
     and severally liable for payment of such contributions.
       ``(c) Variance From Minimum Funding Standards.--
       ``(1) Waiver in case of business hardship.--
       ``(A) In general.--If--
       ``(i) an employer is (or in the case of a multiemployer 
     plan, 10 percent or more of the number of employers 
     contributing to or under the plan is) unable to satisfy the 
     minimum funding standard for a plan year without temporary 
     substantial business hardship (substantial business hardship 
     in the case of a multiemployer plan), and
       ``(ii) application of the standard would be adverse to the 
     interests of plan participants in the aggregate,
     the Secretary of the Treasury may, subject to subparagraph 
     (C), waive the requirements of subsection (a) for such year 
     with respect to all or any portion of the minimum funding 
     standard. The Secretary of the Treasury shall not waive the 
     minimum funding standard with respect to a plan for more than 
     3 of any 15 (5 of any 15 in the case of a multiemployer plan) 
     consecutive plan years.
       ``(B) Effects of waiver.--If a waiver is granted under 
     subparagraph (A) for any plan year--
       ``(i) in the case of a single-employer plan, the minimum 
     required contribution under section 303 for the plan year 
     shall be reduced by the amount of the waived funding 
     deficiency and such amount shall be amortized as required 
     under section 303(e), and
       ``(ii) in the case of a multiemployer plan, the funding 
     standard account shall be credited under section 304(b)(3)(C) 
     with the amount of the waived funding deficiency and such 
     amount shall be amortized as required under section 
     304(b)(2)(C).
       ``(C) Waiver of amortized portion not allowed.--The 
     Secretary of the Treasury may not waive under subparagraph 
     (A) any portion of the minimum funding standard under 
     subsection (a) for a plan year which is attributable to any 
     waived funding deficiency for any preceding plan year.
       ``(2) Determination of business hardship.--For purposes of 
     this subsection, the factors taken into account in 
     determining temporary substantial business hardship 
     (substantial business hardship in the case of a multiemployer 
     plan) shall include (but shall not be limited to) whether or 
     not--
       ``(A) the employer is operating at an economic loss,
       ``(B) there is substantial unemployment or underemployment 
     in the trade or business and in the industry concerned,
       ``(C) the sales and profits of the industry concerned are 
     depressed or declining, and
       ``(D) it is reasonable to expect that the plan will be 
     continued only if the waiver is granted.
       ``(3) Waived funding deficiency.--For purposes of this 
     part, the term `waived funding deficiency' means the portion 
     of the minimum funding standard under subsection (a) 
     (determined without regard to the waiver) for a plan year 
     waived by the Secretary of the Treasury and not satisfied by 
     employer contributions.

[[Page 28594]]

       ``(4) Security for waivers for single-employer plans, 
     consultations.--
       ``(A) Security may be required.--
       ``(i) In general.--Except as provided in subparagraph (C), 
     the Secretary of the Treasury may require an employer 
     maintaining a defined benefit plan which is a single-employer 
     plan (within the meaning of section 4001(a)(15)) to provide 
     security to such plan as a condition for granting or 
     modifying a waiver under paragraph (1).
       ``(ii)  special rules.--Any security provided under clause 
     (i) may be perfected and enforced only by the Pension Benefit 
     Guaranty Corporation, or at the direction of the Corporation, 
     by a contributing sponsor (within the meaning of section 
     4001(a)(13)), or a member of such sponsor's controlled group 
     (within the meaning of section 4001(a)(14)).
       ``(B) Consultation with the pension benefit guaranty 
     corporation.--Except as provided in subparagraph (C), the 
     Secretary of the Treasury shall, before granting or modifying 
     a waiver under this subsection with respect to a plan 
     described in subparagraph (A)(i)--
       ``(i) provide the Pension Benefit Guaranty Corporation 
     with--

       ``(I) notice of the completed application for any waiver or 
     modification, and
       ``(II) an opportunity to comment on such application within 
     30 days after receipt of such notice, and

       ``(ii) consider--

       ``(I) any comments of the Corporation under clause (i)(II), 
     and
       ``(II) any views of any employee organization (within the 
     meaning of section 3(4)) representing participants in the 
     plan which are submitted in writing to the Secretary of the 
     Treasury in connection with such application.

     Information provided to the Corporation under this 
     subparagraph shall be considered tax return information and 
     subject to the safeguarding and reporting requirements of 
     section 6103(p) of the Internal Revenue Code of 1986.
       ``(C) Exception for certain waivers.--
       ``(i) In general.--The preceding provisions of this 
     paragraph shall not apply to any plan with respect to which 
     the sum of--

       ``(I) the aggregate unpaid minimum required contribution 
     for the plan year and all preceding plan years, and
       ``(II) the present value of all waiver amortization 
     installments determined for the plan year and succeeding plan 
     years under section 303(e)(2),

     is less than $1,000,000.
       ``(ii) Treatment of waivers for which applications are 
     pending.--The amount described in clause (i)(I) shall include 
     any increase in such amount which would result if all 
     applications for waivers of the minimum funding standard 
     under this subsection which are pending with respect to such 
     plan were denied.
       ``(iii) Unpaid minimum required contribution.--For purposes 
     of this subparagraph--

       ``(I) In general.--The term `unpaid minimum required 
     contribution' means, with respect to any plan year, any 
     minimum required contribution under section 303 for the plan 
     year which is not paid on or before the due date (as 
     determined under section 303(j)(1)) for the plan year.
       ``(II) Ordering rule.--For purposes of subclause (I), any 
     payment to or under a plan for any plan year shall be 
     allocated first to unpaid minimum required contributions for 
     all preceding plan years on a first-in, first-out basis and 
     then to the minimum required contribution under section 303 
     for the plan year.

       ``(5) Special rules for single-employer plans.--
       ``(A) Application must be submitted before date 2\1/2\ 
     months after close of year.--In the case of a single-employer 
     plan, no waiver may be granted under this subsection with 
     respect to any plan for any plan year unless an application 
     therefor is submitted to the Secretary of the Treasury not 
     later than the 15th day of the 3rd month beginning after the 
     close of such plan year.
       ``(B) Special rule if employer is member of controlled 
     group.--In the case of a single-employer plan, if an employer 
     is a member of a controlled group, the temporary substantial 
     business hardship requirements of paragraph (1) shall be 
     treated as met only if such requirements are met--
       ``(i) with respect to such employer, and
       ``(ii) with respect to the controlled group of which such 
     employer is a member (determined by treating all members of 
     such group as a single employer).
     The Secretary of the Treasury may provide that an analysis of 
     a trade or business or industry of a member need not be 
     conducted if such Secretary determines such analysis is not 
     necessary because the taking into account of such member 
     would not significantly affect the determination under this 
     paragraph.
       ``(6) Advance notice.--
       ``(A) In general.--The Secretary of the Treasury shall, 
     before granting a waiver under this subsection, require each 
     applicant to provide evidence satisfactory to such Secretary 
     that the applicant has provided notice of the filing of the 
     application for such waiver to to each affected party (as 
     defined in section 4001(a)(21)). Such notice shall include a 
     description of the extent to which the plan is funded for 
     benefits which are guaranteed under title IV and for benefit 
     liabilities.
       ``(B) Consideration of relevant information.--The Secretary 
     of the Treasury shall consider any relevant information 
     provided by a person to whom notice was given under 
     subparagraph (A).
       ``(7) Restriction on plan amendments.--
       ``(A) In general.--No amendment of a plan which increases 
     the liabilities of the plan by reason of any increase in 
     benefits, any change in the accrual of benefits, or any 
     change in the rate at which benefits become nonforfeitable 
     under the plan shall be adopted if a waiver under this 
     subsection or an extension of time under section 304(d) is in 
     effect with respect to the plan, or if a plan amendment 
     described in subsection (d)(2) has been made at any time in 
     the preceding 12 months (24 months in the case of a 
     multiemployer plan). If a plan is amended in violation of the 
     preceding sentence, any such waiver, or extension of time, 
     shall not apply to any plan year ending on or after the date 
     on which such amendment is adopted.
       ``(B) Exception.--Paragraph (1) shall not apply to any plan 
     amendment which--
       ``(i) the Secretary of the Treasury determines to be 
     reasonable and which provides for only de minimis increases 
     in the liabilities of the plan,
       ``(ii) only repeals an amendment described in subsection 
     (d)(2), or
       ``(iii) is required as a condition of qualification under 
     part I of subchapter D of chapter 1 of the Internal Revenue 
     Code of 1986.
       ``(8) Cross reference.--For corresponding duties of the 
     Secretary of the Treasury with regard to implementation of 
     the Internal Revenue Code of 1986, see section 412(c) of such 
     Code.
       ``(d) Miscellaneous Rules.--
       ``(1) Change in method or year.--If the funding method, the 
     valuation date, or a plan year for a plan is changed, the 
     change shall take effect only if approved by the Secretary of 
     the Treasury.
       ``(2) Certain retroactive plan amendments.--For purposes of 
     this section, any amendment applying to a plan year which--
       ``(A) is adopted after the close of such plan year but no 
     later than 2\1/2\ months after the close of the plan year 
     (or, in the case of a multiemployer plan, no later than 2 
     years after the close of such plan year),
       ``(B) does not reduce the accrued benefit of any 
     participant determined as of the beginning of the first plan 
     year to which the amendment applies, and
       ``(C) does not reduce the accrued benefit of any 
     participant determined as of the time of adoption except to 
     the extent required by the circumstances,

     shall, at the election of the plan administrator, be deemed 
     to have been made on the first day of such plan year. No 
     amendment described in this paragraph which reduces the 
     accrued benefits of any participant shall take effect unless 
     the plan administrator files a notice with the Secretary of 
     the Treasury notifying him of such amendment and such 
     Secretary has approved such amendment, or within 90 days 
     after the date on which such notice was filed, failed to 
     disapprove such amendment. No amendment described in this 
     subsection shall be approved by the Secretary of the Treasury 
     unless such Secretary determines that such amendment is 
     necessary because of a substantial business hardship (as 
     determined under subsection (c)(2)) and that a waiver under 
     subsection (c) (or, in the case of a multiemployer plan, any 
     extension of the amortization period under section 304(d)) is 
     unavailable or inadequate.
       ``(3) Controlled group.--For purposes of this section, the 
     term `controlled group' means any group treated as a single 
     employer under subsection (b), (c), (m), or (o) of section 
     414 of the Internal Revenue Code of 1986.''.
       (c) Clerical Amendment.--The table of contents in section 1 
     of such Act is amended by striking the items relating to 
     sections 302 through 308 and inserting the following new 
     item:

``Sec. 302. Minimum funding standards.''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after 2006.

     SEC. 102. FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT 
                   PENSION PLANS.

       (a) In General.--Part 3 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974 (as amended 
     by section 101 of this Act) is amended further by inserting 
     after section 302 the following new section:


``Minimum funding standards for single-employer defined benefit pension 
                                 plans

       ``Sec. 303. (a) Minimum Required Contribution.--For 
     purposes of this section and section 302(a)(2)(A), except as 
     provided in subsection (f), the term `minimum required 
     contribution' means, with respect to any plan year of a 
     single-employer plan--
       ``(1) in any case in which the value of plan assets of the 
     plan (as reduced under subsection (f)(4)(B)) is less than the 
     funding target of the plan for the plan year, the sum of--
       ``(A) the target normal cost of the plan for the plan year,
       ``(B) the shortfall amortization charge (if any) for the 
     plan for the plan year determined under subsection (c), and

[[Page 28595]]

       ``(C) the waiver amortization charge (if any) for the plan 
     for the plan year as determined under subsection (e);
       ``(2) in any case in which the value of plan assets of the 
     plan (as reduced under subsection (f)(4)(B)) exceeds the 
     funding target of the plan for the plan year, the target 
     normal cost of the plan for the plan year reduced by such 
     excess; or
       ``(3) in any other case, the target normal cost of the plan 
     for the plan year.
       ``(b) Target Normal Cost.--For purposes of this section, 
     except as provided in subsection (i)(2) with respect to plans 
     in at-risk status, the term `target normal cost' means, for 
     any plan year, the present value of all benefits which are 
     expected to accrue or to be earned under the plan during the 
     plan year. For purposes of this subsection, if any benefit 
     attributable to services performed in a preceding plan year 
     is increased by reason of any increase in compensation during 
     the current plan year, the increase in such benefit shall be 
     treated as having accrued during the current plan year.
       ``(c) Shortfall Amortization Charge.--
       ``(1) In general.--For purposes of this section, the 
     shortfall amortization charge for a plan for any plan year is 
     the aggregate total of the shortfall amortization 
     installments for such plan year with respect to the shortfall 
     amortization bases for such plan year and each of the 6 
     preceding plan years.
       ``(2) Shortfall amortization installment.--The plan sponsor 
     shall determine, with respect to the shortfall amortization 
     base of the plan for any plan year, the amounts necessary to 
     amortize such shortfall amortization base, in level annual 
     installments over a period of 7 plan years beginning with 
     such plan year. For purposes of paragraph (1), the annual 
     installment of such amortization for each plan year in such 
     7-plan-year period is the shortfall amortization installment 
     for such plan year with respect to such shortfall 
     amortization base. In determining any shortfall amortization 
     installment under this paragraph, the plan sponsor shall use 
     the segment rates determined under subparagraph (C) of 
     subsection (h)(2), applied under rules similar to the rules 
     of subparagraph (B) of subsection (h)(2).
       ``(3) Shortfall amortization base.--For purposes of this 
     section, the shortfall amortization base of a plan for a plan 
     year is the excess (if any) of--
       ``(A) the funding shortfall of such plan for such plan 
     year, over
       ``(B) the sum of--
       ``(i) the present value (determined using the segment rates 
     determined under subparagraph (C) of subsection (h)(2), 
     applied under rules similar to the rules of subparagraph (B) 
     of subsection (h)(2)) of the aggregate total of the shortfall 
     amortization installments, for such plan year and the 5 
     succeeding plan years, which have been determined with 
     respect to the shortfall amortization bases of the plan for 
     each of the 6 plan years preceding such plan year, and
       ``(ii) the present value (as so determined) of the 
     aggregate total of the waiver amortization installments for 
     such plan year and the 5 succeeding plan years, which have 
     been determined with respect to the waiver amortization bases 
     of the plan for each of the 5 plan years preceding such plan 
     year.
       ``(4) Funding shortfall.--For purposes of this section, the 
     funding shortfall of a plan for any plan year is the excess 
     (if any) of--
       ``(A) the funding target of the plan for the plan year, 
     over
       ``(B) the value of plan assets of the plan (as reduced 
     under subsection (f)(4)(B)) for the plan year which are held 
     by the plan on the valuation date.
       ``(5) Exemption from new shortfall amortization base.--
       ``(A) In general.--In any case in which the value of plan 
     assets of the plan (as reduced under subsection (f)(4)(A)) is 
     equal to or greater than the funding target of the plan for 
     the plan year, the shortfall amortization base of the plan 
     for such plan year shall be zero.
       ``(B) Transition rule.--
       ``(i) In general.--In the case of a non-deficit reduction 
     plan, subparagraph (A) shall be applied to plan years 
     beginning after 2006 and before 2011 by substituting, for the 
     funding target of the plan for the plan year, the applicable 
     percentage of such funding target determined under the 
     following table:


 
 ``In the case of a plan year beginning in    The applicable percentage
              calendar year:                             is:
 
2007......................................  92 percent
2008......................................  94 percent
2009......................................  96 percent
2010......................................  98 percent.
 

       ``(ii) Limitation.--Clause (i) shall not apply with respect 
     to any plan year after 2007 unless the ratio (expressed as a 
     percentage) which--

       ``(I) the value of plan assets for each preceding plan year 
     after 2006 (as reduced under subsection (f)(4)(A)), bears to
       ``(II) the funding target of the plan for such preceding 
     plan year (determined without regard to subsection (i)(1)),

     is not less than the applicable percentage with respect to 
     such preceding plan determined under clause (i).
       ``(iii) Non-deficit reduction plan.--For purposes of clause 
     (i), the term `non-deficit reduction plan' means any plan--

       ``(I) to which this part (as in effect on the day before 
     the date of the enactment of the Pension Protection Act of 
     2005) applied for the plan year beginning in 2006, and
       ``(II) to which section 302(d) (as so in effect) did not 
     apply for such plan year.

       ``(6) Early deemed amortization upon attainment of funding 
     target.--In any case in which the funding shortfall of a plan 
     for a plan year is zero, for purposes of determining the 
     shortfall amortization charge for such plan year and 
     succeeding plan years, the shortfall amortization bases for 
     all preceding plan years (and all shortfall amortization 
     installments determined with respect to such bases) shall be 
     reduced to zero.
       ``(d) Rules Relating to Funding Target.--For purposes of 
     this section--
       ``(1) Funding target.--Except as provided in subsection 
     (i)(1) with respect to plans in at-risk status, the funding 
     target of a plan for a plan year is the present value of all 
     liabilities to participants and their beneficiaries under the 
     plan for the plan year.
       ``(2) Funding target attainment percentage.--The `funding 
     target attainment percentage' of a plan for a plan year is 
     the ratio (expressed as a percentage) which--
       ``(A) the value of plan assets for the plan year (as 
     reduced under subsection (f)(4)(B)), bears to
       ``(B) the funding target of the plan for the plan year 
     (determined without regard to subsection (i)(1)).
       ``(e) Waiver Amortization Charge.--
       ``(1) Determination of waiver amortization charge.--The 
     waiver amortization charge (if any) for a plan for any plan 
     year is the aggregate total of the waiver amortization 
     installments for such plan year with respect to the waiver 
     amortization bases for each of the 5 preceding plan years.
       ``(2) Waiver amortization installment.--The plan sponsor 
     shall determine, with respect to the waiver amortization base 
     of the plan for any plan year, the amounts necessary to 
     amortize such waiver amortization base, in level annual 
     installments over a period of 5 plan years beginning with the 
     succeeding plan year. For purposes of paragraph (1), the 
     annual installment of such amortization for each plan year in 
     such 5-plan year period is the waiver amortization 
     installment for such plan year with respect to such waiver 
     amortization base.
       ``(3) Interest rate.--In determining any waiver 
     amortization installment under this subsection, the plan 
     sponsor shall use the segment rates determined under 
     subparagraph (C) of subsection (h)(2), applied under rules 
     similar to the rules of subparagraph (B) of subsection 
     (h)(2).
       ``(4) Waiver amortization base.--The waiver amortization 
     base of a plan for a plan year is the amount of the waived 
     funding deficiency (if any) for such plan year under section 
     302(c).
       ``(5) Early deemed amortization upon attainment of funding 
     target.--In any case in which the funding shortfall of a plan 
     for a plan year is zero, for purposes of determining the 
     waiver amortization charge for such plan year and succeeding 
     plan years, the waiver amortization base for all preceding 
     plan years shall be reduced to zero.
       ``(f) Reduction of Minimum Required Contribution by Pre-
     Funding Balance and Funding Standard Carryover Balance.--
       ``(1) Election to maintain balances.--
       ``(A) Pre-funding balance.--The plan sponsor of a single-
     employer plan may elect to maintain a pre-funding balance.
       ``(B) Funding standard carryover balance.--
       ``(i) In general.--In the case of a single-employer plan 
     described in clause (ii), the plan sponsor may elect to 
     maintain a funding standard carryover balance, until such 
     balance is reduced to zero.
       ``(ii) Plans maintaining funding standard account in 
     2006.--A plan is described in this clause if the plan--

       ``(I) was in effect for a plan year beginning in 2006, and
       ``(II) had a positive balance in the funding standard 
     account under section 302(b) as in effect for such plan year 
     and determined as of the end of such plan year.

       ``(2) Application of balances.--A pre-funding balance and a 
     funding standard carryover balance maintained pursuant to 
     this paragraph--
       ``(A) shall be available for crediting against the minimum 
     required contribution, pursuant to an election under 
     paragraph (3),
       ``(B) shall be applied as a reduction in the amount treated 
     as the value of plan assets for purposes of this section, to 
     the extent provided in paragraph (4), and
       ``(C) may be reduced at any time, pursuant to an election 
     under paragraph (5).
       ``(3) Election to apply balances against minimum required 
     contribution.--
       ``(A) In general.--Except as provided in subparagraphs (B) 
     and (C), in the case of any plan year in which the plan 
     sponsor elects to credit against the minimum required 
     contribution for the current plan year all or a portion of 
     the pre-funding balance or the funding standard carryover 
     balance for the current plan year (not in excess of such 
     minimum required contribution), the minimum required 
     contribution for the plan year shall be reduced by the amount 
     so credited by the

[[Page 28596]]

     plan sponsor. For purposes of the preceding sentence, the 
     minimum required contribution shall be determined after 
     taking into account any waiver under section 302(c).
       ``(B) Coordination with funding standard carryover 
     balance.--To the extent that any plan has a funding standard 
     carryover balance greater than zero, no amount of the pre-
     funding balance of such plan may be credited under this 
     paragraph in reducing the minimum required contribution.
       ``(C) Limitation for underfunded plans.--The preceding 
     provisions of this paragraph shall not apply for any plan 
     year if the ratio (expressed as a percentage) which--
       ``(i) the value of plan assets for the preceding plan year 
     (as reduced under paragraph (4)(C)), bears to
       ``(ii) the funding target of the plan for the preceding 
     plan year (determined without regard to subsection (i)(1)),
     is less than 80 percent.
       ``(4) Effect of balances on amounts treated as value of 
     plan assets.--In the case of any plan maintaining a pre-
     funding balance or a funding standard carryover balance 
     pursuant to this subsection, the amount treated as the value 
     of plan assets shall be deemed to be such amount, reduced as 
     provided in the following subparagraphs:
       ``(A) Applicability of shortfall amortization base.--For 
     purposes of subsection (c)(5), the value of plan assets is 
     deemed to be such amount, reduced by the amount of the pre-
     funding balance, but only if an election under paragraph (2) 
     applying any portion of the pre-funding balance in reducing 
     the minimum required contribution is in effect for the plan 
     year.
       ``(B) Determination of excess assets, funding shortfall, 
     and funding target attainment percentage.--
       ``(i) In general.--For purposes of subsections (a), 
     (c)(4)(B), and (d)(2)(A), the value of plan assets is deemed 
     to be such amount, reduced by the amount of the pre-funding 
     balance and the funding standard carryover balance.
       ``(ii) Special rule for certain binding agreements with 
     pbgc.--For purposes of subsection (c)(4)(B), the value of 
     plan assets shall not be deemed to be reduced for a plan year 
     by the amount of the specified balance if, with respect to 
     such balance, there is in effect for a plan year a binding 
     written agreement with the Pension Benefit Guaranty 
     Corporation which provides that such balance is not available 
     to reduce the minimum required contribution for the plan 
     year. For purposes of the preceding sentence, the term 
     `specified balance' means the pre-funding balance or the 
     funding standard carryover balance, as the case may be.
       ``(C) Availability of balances in plan year for crediting 
     against minimum required contribution.--For purposes of 
     paragraph (3)(C)(i) of this subsection, the value of plan 
     assets is deemed to be such amount, reduced by the amount of 
     the pre-funding balance.
       ``(5) Election to reduce balance prior to determinations of 
     value of plan assets and crediting against minimum required 
     contribution.--
       ``(A) In general.--The plan sponsor may elect to reduce by 
     any amount the balance of the pre-funding balance and the 
     funding standard carryover balance for any plan year (but not 
     below zero). Such reduction shall be effective prior to any 
     determination of the value of plan assets for such plan year 
     under this section and application of the balance in reducing 
     the minimum required contribution for such plan for such plan 
     year pursuant to an election under paragraph (2).
       ``(B) Coordination between pre-funding balance and funding 
     standard carryover balance.--To the extent that any plan has 
     a funding standard carryover balance greater than zero, no 
     election may be made under subparagraph (A) with respect to 
     the pre-funding balance.
       ``(6) Pre-funding balance.--
       ``(A) In general.--A pre-funding balance maintained by a 
     plan shall consist of a beginning balance of zero, increased 
     and decreased to the extent provided in subparagraphs (B) and 
     (C), and adjusted further as provided in paragraph (8).
       ``(B) Increases.--As of the valuation date for each plan 
     year beginning after 2007, the pre-funding balance of a plan 
     shall be increased by the amount elected by the plan sponsor 
     for the plan year. Such amount shall not exceed the excess 
     (if any) of--
       ``(i) the aggregate total of employer contributions to the 
     plan for the preceding plan year, over
       ``(ii) the minimum required contribution for such preceding 
     plan year (increased by interest on any portion of such 
     minimum required contribution remaining unpaid as of the 
     valuation date for the current plan year, at the effective 
     interest rate for the plan for the preceding plan year, for 
     the period beginning with the first day of such preceding 
     plan year and ending on the date that payment of such portion 
     is made).
       ``(C) Decreases.--As of the valuation date for each plan 
     year after 2007, the pre-funding balance of a plan shall be 
     decreased (but not below zero) by the sum of--
       ``(i) the amount of such balance credited under paragraph 
     (2) (if any) in reducing the minimum required contribution of 
     the plan for the preceding plan year, and
       ``(ii) any reduction in such balance elected under 
     paragraph (5).
       ``(7) Funding standard carryover balance.--
       ``(A) In general.--A funding standard carryover balance 
     maintained by a plan shall consist of a beginning balance 
     determined under subparagraph (B), decreased to the extent 
     provided in subparagraph (C), and adjusted further as 
     provided in paragraph (8).
       ``(B) Beginning balance.--The beginning balance of the 
     funding standard carryover balance shall be the positive 
     balance described in paragraph (1)(B)(ii)(II).
       ``(C) Decreases.--As of the valuation date for each plan 
     year after 2007, the funding standard carryover balance of a 
     plan shall be decreased (but not below zero) by the sum of--
       ``(i) the amount of such balance credited under paragraph 
     (2) (if any) in reducing the minimum required contribution of 
     the plan for the preceding plan year, and
       ``(ii) any reduction in such balance elected under 
     paragraph (5).
       ``(8) Adjustments to balances.--In determining the pre-
     funding balance or the funding standard carryover balance of 
     a plan as of the valuation date (before applying any increase 
     or decrease under paragraph (6) or (7)), the plan sponsor 
     shall, in accordance with regulations which shall be 
     prescribed by the Secretary of the Treasury, adjust such 
     balance so as to reflect the rate of net gain or loss 
     (determined, notwithstanding subsection (g)(3), on the basis 
     of fair market value) experienced by all plan assets for the 
     period beginning with the valuation date for the preceding 
     plan year and ending with the date preceding the valuation 
     date for the current plan year, properly taking into account, 
     in accordance with such regulations, all contributions, 
     distributions, and other plan payments made during such 
     period.
       ``(9) Elections.--Elections under this subsection shall be 
     made at such times, and in such form and manner, as shall be 
     prescribed in regulations of the Secretary of the Treasury.
       ``(g) Valuation of Plan Assets and Liabilities.--
       ``(1) Timing of determinations.--Except as otherwise 
     provided under this subsection, all determinations under this 
     section for a plan year shall be made as of the valuation 
     date of the plan for such plan year.
       ``(2) Valuation date.--For purposes of this section--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the valuation date of a plan for any plan year shall be the 
     first day of the plan year.
       ``(B) Exception for small plans.--If, on each day during 
     the preceding plan year, a plan had 500 or fewer 
     participants, the plan may designate any day during the plan 
     year as its valuation date for such plan year and succeeding 
     plan years. For purposes of this subparagraph, all defined 
     benefit plans which are single-employer plans and are 
     maintained by the same employer (or any member of such 
     employer's controlled group) shall be treated as 1 plan, but 
     only participants with respect to such employer or member 
     shall be taken into account.
       ``(C) Application of certain rules in determination of plan 
     size.--For purposes of this paragraph--
       ``(i) Plans not in existence in preceding year.--In the 
     case of the first plan year of any plan, subparagraph (B) 
     shall apply to such plan by taking into account the number of 
     participants that the plan is reasonably expected to have on 
     days during such first plan year.
       ``(ii) Predecessors.--Any reference in subparagraph (B) to 
     an employer shall include a reference to any predecessor of 
     such employer.
       ``(3) Authorization of use of actuarial value.--For 
     purposes of this section, the value of plan 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, except that--
       ``(A) any such method providing for averaging of fair 
     market values may not provide for averaging of such values 
     over more than the 36-month period ending with the month 
     which includes the valuation date, and
       ``(B) any such method may not result in a determination of 
     the value of plan assets which, at any time, is lower than 90 
     percent or greater than 110 percent of the fair market value 
     of such assets at such time.
       ``(4) Accounting for contribution receipts.--For purposes 
     of this section--
       ``(A) Contributions for prior plan years taken into 
     account.--For purposes of determining the value of plan 
     assets for any current plan year, in any case in which a 
     contribution properly allocable to amounts owed for a 
     preceding plan year is made on or after the valuation date of 
     the plan for such current plan year, such contribution shall 
     be taken into account, except that any such contribution made 
     during any such current plan year beginning after 2007 shall 
     be taken into account only in an amount equal to its present 
     value (determined using the effective rate of interest for 
     the plan for the preceding plan year) as of the valuation 
     date of the plan for such current plan year.

[[Page 28597]]

       ``(B) Contributions for current plan year disregarded.--For 
     purposes of determining the value of plan assets for any 
     current plan year, contributions which are properly allocable 
     to amounts owed for such plan year shall not be taken into 
     account, and, in the case of any such contribution made 
     before the valuation date of the plan for such plan year, 
     such value of plan assets shall be reduced for interest on 
     such amount determined using the effective rate of interest 
     of the plan for the current plan year for the period 
     beginning when such payment was made and ending on the 
     valuation date of the plan.
       ``(5) Accounting for plan liabilities.--For purposes of 
     this section--
       ``(A) Liabilities taken into account for current plan 
     year.--In determining the value of liabilities under a plan 
     for a plan year, liabilities shall be taken into account to 
     the extent attributable to benefits (including any early 
     retirement or similar benefit) accrued or earned as of the 
     beginning of the plan year.
       ``(B) Accruals during current plan year disregarded.--For 
     purposes of subparagraph (A), benefits accrued or earned 
     during such plan year shall not be taken into account, 
     irrespective of whether the valuation date of the plan for 
     such plan year is later than the first day of such plan year.
       ``(h) Actuarial Assumptions and Methods.--
       ``(1) In general.--Subject to this subsection, the 
     determination of any present value or other computation under 
     this section shall be made on the basis of actuarial 
     assumptions and methods--
       ``(A) each of which is reasonable (taking into account the 
     experience of the plan and reasonable expectations), and
       ``(B) which, in combination, offer the actuary's best 
     estimate of anticipated experience under the plan.
       ``(2) Interest rates.--
       ``(A) Effective interest rate.--For purposes of this 
     section, the term `effective interest rate' means, with 
     respect to any plan for any plan year, the single rate of 
     interest which, if used to determine the present value of the 
     plan's liabilities referred to in subsection (d)(1), would 
     result in an amount equal to the funding target of the plan 
     for such plan year.
       ``(B) Interest rates for determining funding target.--For 
     purposes of determining the funding target of a plan for any 
     plan year, the interest rate used in determining the present 
     value of the liabilities of the plan shall be--
       ``(i) in the case of liabilities reasonably determined to 
     be payable during the 5-year period beginning on the first 
     day of the plan year, the first segment rate with respect to 
     the applicable month,
       ``(ii) in the case of liabilities reasonably determined to 
     be payable during the 15-year period beginning at the end of 
     the period described in clause (i), the second segment rate 
     with respect to the applicable month, and
       ``(iii) in the case of liabilities reasonably determined to 
     be payable after the period described in clause (ii), the 
     third segment rate with respect to the applicable month.
       ``(C) Segment rates.--For purposes of this paragraph--
       ``(i) First segment rate.--The term `first segment rate' 
     means, with respect to any month, the single rate of interest 
     which shall be determined by the Secretary of the Treasury 
     for such month on the basis of the corporate bond yield curve 
     for such month, taking into account only that portion of such 
     yield curve which is based on bonds maturing during the 5-
     year period commencing with such month.
       ``(ii) Second segment rate.--The term `second segment rate' 
     means, with respect to any month, the single rate of interest 
     which shall be determined by the Secretary of the Treasury 
     for such month on the basis of the corporate bond yield curve 
     for such month, taking into account only that portion of such 
     yield curve which is based on bonds maturing during the 15-
     year period beginning at the end of the period described in 
     clause (i).
       ``(iii) Third segment rate.--The term `third segment rate' 
     means, with respect to any month, the single rate of interest 
     which shall be determined by the Secretary of the Treasury 
     for such month on the basis of the corporate bond yield curve 
     for such month, taking into account only that portion of such 
     yield curve which is based on bonds maturing during periods 
     beginning after the period described in clause (ii).
       ``(D) Corporate bond yield curve.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `corporate bond yield curve' 
     means, with respect to any month, a yield curve which is 
     prescribed by the Secretary of the Treasury for such month 
     and which reflects a 3-year weighted average of yields on 
     investment grade corporate bonds with varying maturities.
       ``(ii) 3-year weighted average.--The term `3-year weighted 
     average' means an average determined by using a methodology 
     under which the most recent year is weighted 50 percent, the 
     year preceding such year is weighted 35 percent, and the 
     second year preceding such year is weighted 15 percent.
       ``(E) Applicable month.--For purposes of this paragraph, 
     the term `applicable month' means, with respect to any plan 
     for any plan year, the month which includes the valuation 
     date of such plan for such plan year or, at the election of 
     the plan sponsor, any of the 4 months which precede such 
     month. Any election made under this subparagraph shall apply 
     to the plan year for which the election is made and all 
     succeeding plan years, unless the election is revoked with 
     the consent of the Secretary of the Treasury.
       ``(F) Publication requirements.--The Secretary of the 
     Treasury shall publish for each month the corporate bond 
     yield curve (and the corporate bond yield curve reflecting 
     the modification described in section 205(g)(3)(B)(iii)(I)) 
     for such month and each of the rates determined under 
     subparagraph (B) for such month. The Secretary of the 
     Treasury shall also publish a description of the methodology 
     used to determine such yield curve and such rates which is 
     sufficiently detailed to enable plans to make reasonable 
     projections regarding the yield curve and such rates for 
     future months based on the plan's projection of future 
     interest rates.
       ``(G) Transition rule.--
       ``(i) In general.--Notwithstanding the preceding provisions 
     of this paragraph, for plan years beginning in 2007 or 2008, 
     the first, second, or third segment rate for a plan with 
     respect to any month shall be equal to the sum of--

       ``(I) the product of such rate for such month determined 
     without regard to this subparagraph, multiplied by the 
     applicable percentage, and
       ``(II) the product of the rate determined under the rules 
     of section 302(b)(5)(B)(ii)(II) (as in effect for plan years 
     beginning in 2006), multiplied by a percentage equal to 100 
     percent minus the applicable percentage.

       ``(ii) Applicable percentage.--For purposes of clause (i), 
     the applicable percentage is 33\1/3\ percent for plan years 
     beginning in 2007 and 66\2/3\ percent for plan years 
     beginning in 2008.
       ``(iii) New plans ineligible.--Clause (i) shall not apply 
     to any plan if the first plan year of the plan begins after 
     December 31, 2006.
       ``(3) Mortality table.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the mortality table used in determining any present value or 
     making any computation under this section shall be the RP-
     2000 Combined Mortality Table using Scale AA published by the 
     Society of Actuaries (as in effect on the date of the 
     enactment of the Pension Protection Act of 2005), projected 
     as of the plan's valuation date.
       ``(B) Substitute mortality table.--
       ``(i) In general.--Upon request by the plan sponsor and 
     approval by the Secretary of the Treasury for a period not to 
     exceed 10 years, a mortality table which meets the 
     requirements of clause (ii) shall be used in determining any 
     present value or making any computation under this section. A 
     mortality table described in this clause shall cease to be in 
     effect if the plan actuary determines at any time that such 
     table does not meet the requirements of subclauses (I) and 
     (II) of clause (ii).
       ``(ii) Requirements.--A mortality table meets the 
     requirements of this clause if the Secretary of the Treasury 
     determines that--

       ``(I) such table reflects the actual experience of the 
     pension plan and projected trends in such experience, and
       ``(II) such table is significantly different from the table 
     described in subparagraph (A).

       ``(iii) Deadline for disposition of application.--Any 
     mortality table submitted to the Secretary of the Treasury 
     for approval under this subparagraph shall be treated as in 
     effect for the succeeding plan year unless such Secretary, 
     during the 180-day period beginning on the date of such 
     submission, disapproves of such table and provides the 
     reasons that such table fails to meet the requirements of 
     clause (ii).
       ``(C) Transition rule.--Under regulations of the Secretary 
     of the Treasury, any difference in present value resulting 
     from the difference in the assumptions as set forth in the 
     mortality table specified in subparagraph (A) and the 
     assumptions as set forth in the mortality table described in 
     section 302(d)(7)(C)(ii) (as in effect for plan years 
     beginning in 2006) shall be phased in ratably over the first 
     period of 5 plan years beginning in or after 2007 so as to be 
     fully effective for the fifth plan year. The preceding 
     sentence shall not apply to any plan if the first plan year 
     of the plan begins after December 31, 2006.
       ``(4) Probability of benefit payments in the form of lump 
     sums or other optional forms.--For purposes of determining 
     any present value or making any computation under this 
     section, there shall be taken into account--
       ``(A) the probability that future benefit payments under 
     the plan will be made in the form of optional forms of 
     benefits provided under the plan (including lump sum 
     distributions, determined on the basis of the plan's 
     experience and other related assumptions), and
       ``(B) any difference in the present value of such future 
     benefit payments resulting from the use of actuarial 
     assumptions, in determining benefit payments in any such 
     optional form of benefits, which are different from those 
     specified in this subsection.
       ``(5) Approval of large changes in actuarial assumptions.--
       ``(A) In general.--No actuarial assumption used to 
     determine the funding target for a

[[Page 28598]]

     plan to which this paragraph applies may be changed without 
     the approval of the Secretary of the Treasury.
       ``(B) Plans to which paragraph applies.--This paragraph 
     shall apply to a plan only if--
       ``(i) the plan is a single-employer plan to which title IV 
     applies,
       ``(ii) the aggregate unfunded vested benefits as of the 
     close of the preceding plan year (as determined under section 
     4006(a)(3)(E)(iii)) of such plan and all other plans 
     maintained by the contributing sponsors (as defined in 
     section 4001(a)(13)) and members of such sponsors' controlled 
     groups (as defined in section 4001(a)(14)) which are covered 
     by title IV (disregarding plans with no unfunded vested 
     benefits) exceed $50,000,000, and
       ``(iii) the change in assumptions (determined after taking 
     into account any changes in interest rate and mortality 
     table) results in a decrease in the funding shortfall of the 
     plan for the current plan year that exceeds $50,000,000, or 
     that exceeds $5,000,000 and that is 5 percent or more of the 
     funding target of the plan before such change.
       ``(i) Special Rules for at-Risk Plans.--
       ``(1) Funding target for plans in at-risk status.--
       ``(A) In general.--In any case in which a plan is in at-
     risk status for a plan year, the funding target of the plan 
     for the plan year is the sum of--
       ``(i) the present value of all liabilities to participants 
     and their beneficiaries under the plan for the plan year, as 
     determined by using, in addition to the actuarial assumptions 
     described in subsection (h), the supplemental actuarial 
     assumptions described in subparagraph (B), plus
       ``(ii) a loading factor determined under subparagraph (C).
       ``(B) Supplemental actuarial assumptions.--The actuarial 
     assumptions used in determining the valuation of the funding 
     target shall include, in addition to the actuarial 
     assumptions described in subsection (h), an assumption that 
     all participants will elect benefits at such times and in 
     such forms as will result in the highest present value of 
     liabilities under subparagraph (A)(i).
       ``(C) Loading factor.--The loading factor applied with 
     respect to a plan under this paragraph for any plan year is 
     the sum of--
       ``(i) $700, times the number of participants in the plan, 
     plus
       ``(ii) 4 percent of the funding target (determined without 
     regard to this paragraph) of the plan for the plan year.
       ``(2) Target normal cost of at-risk plans.--In any case in 
     which a plan is in at-risk status for a plan year, the target 
     normal cost of the plan for such plan year shall be the sum 
     of--
       ``(A) the present value of all benefits which are expected 
     to accrue or be earned under the plan during the plan year, 
     determined under the actuarial assumptions used under 
     paragraph (1), plus
       ``(B) the loading factor under paragraph (1)(C), excluding 
     the portion of the loading factor described in paragraph 
     (1)(C)(i).
       ``(3) Determination of at-risk status.--For purposes of 
     this subsection, a plan is in `at-risk status' for a plan 
     year if the funding target attainment percentage of the plan 
     for the preceding plan year was less than 60 percent.
       ``(4) Transition between applicable funding targets and 
     between applicable target normal costs.--
       ``(A) In general.--In any case in which a plan which is in 
     at-risk status for a plan year has been in such status for a 
     consecutive period of fewer than 5 plan years, the applicable 
     amount of the funding target and of the target normal cost 
     shall be, in lieu of the amount determined without regard to 
     this paragraph, the sum of--
       ``(i) the amount determined under this section without 
     regard to this subsection, plus
       ``(ii) the transition percentage for such plan year of the 
     excess of the amount determined under this subsection 
     (without regard to this paragraph) over the amount determined 
     under this section without regard to this subsection.
       ``(B) Transition percentage.--For purposes of this 
     paragraph, the `transition percentage' for a plan year is the 
     product derived by multiplying--
       ``(i) 20 percent, by
       ``(ii) the number of plan years during the period described 
     in subparagraph (A).
       ``(j) Payment of Minimum Required Contributions.--
       ``(1) In general.--For purposes of this section, the due 
     date for any payment of any minimum required contribution for 
     any plan year shall be 8\1/2\ months after the close of the 
     plan year.
       ``(2) Interest.--Any payment required under paragraph (1) 
     for a plan year that is made on a date other than the 
     valuation date for such plan year shall be adjusted for 
     interest accruing for the period between the valuation date 
     and the payment date, at the effective rate of interest for 
     the plan for such plan year.
       ``(3) Accelerated quarterly contribution schedule for 
     underfunded plans.--
       ``(A) Interest penalty for failure to meet accelerated 
     quarterly payment schedule.--In any case in which the plan 
     has a funding shortfall for the preceding plan year, if the 
     required installment is not paid in full, then the minimum 
     required contribution for the plan year (as increased under 
     paragraph (2)) shall be further increased by an amount equal 
     to the interest on the amount of the underpayment for the 
     period of the underpayment, using an interest rate equal to 
     the excess of--
       ``(i) 175 percent of the Federal mid-term rate (as in 
     effect under section 1274 for the 1st month of such plan 
     year), over
       ``(ii) the effective rate of interest for the plan for the 
     plan year.
       ``(B) Amount of underpayment, period of underpayment.--For 
     purposes of subparagraph (A)--
       ``(i) Amount.--The amount of the underpayment shall be the 
     excess of--

       ``(I) the required installment, over
       ``(II) the amount (if any) of the installment contributed 
     to or under the plan on or before the due date for the 
     installment.

       ``(ii) Period of underpayment.--The period for which any 
     interest is charged under this paragraph with respect to any 
     portion of the underpayment shall run from the due date for 
     the installment to the date on which such portion is 
     contributed to or under the plan.
       ``(iii) Order of crediting contributions.--For purposes of 
     clause (i)(II), contributions shall be credited against 
     unpaid required installments in the order in which such 
     installments are required to be paid.
       ``(C) Number of required installments; due dates.--For 
     purposes of this paragraph--
       ``(i) Payable in 4 installments.--There shall be 4 required 
     installments for each plan year.
       ``(ii) Time for payment of installments.--The due dates for 
     required installments are set forth in the following table:


 
  `In the case of the following required
               installment:                       The due date is:
 
1st.......................................  April 15
2nd.......................................  July 15
3rd.......................................  October 15
4th.......................................  January 15 of the following
                                             year
 

       ``(D) Amount of required installment.--For purposes of this 
     paragraph--
       ``(i) In general.--The amount of any required installment 
     shall be 25 percent of the required annual payment.
       ``(ii) Required annual payment.--For purposes of clause 
     (i), the term `required annual payment' means the lesser of--

       ``(I) 90 percent of the minimum required contribution 
     (without regard to any waiver under section 302(c)) to the 
     plan for the plan year under this section, or
       ``(II) in the case of a plan year beginning after 2007, 100 
     percent of the minimum required contribution (without regard 
     to any waiver under section 302(c)) to the plan for the 
     preceding plan year.

     Subclause (II) shall not apply if the preceding plan year 
     referred to in such clause was not a year of 12 months.
       ``(E) Fiscal years and short years.--
       ``(i) Fiscal years.--In applying this paragraph to a plan 
     year beginning on any date other than January 1, there shall 
     be substituted for the months specified in this paragraph, 
     the months which correspond thereto.
       ``(ii) Short plan year.--This subparagraph shall be applied 
     to plan years of less than 12 months in accordance with 
     regulations prescribed by the Secretary of the Treasury.
       ``(4) Liquidity requirement in connection with quarterly 
     contributions.--
       ``(A) In general.--A plan to which this paragraph applies 
     shall be treated as failing to pay the full amount of any 
     required installment under paragraph (3) to the extent that 
     the value of the liquid assets paid in such installment is 
     less than the liquidity shortfall (whether or not such 
     liquidity shortfall exceeds the amount of such installment 
     required to be paid but for this paragraph).
       ``(B) Plans to which paragraph applies.--This paragraph 
     shall apply to a plan (other than a plan that would be 
     described in subsection (f)(2)(B) if `100' were substituted 
     for `500' therein) which--
       ``(i) is required to pay installments under paragraph (3) 
     for a plan year, and
       ``(ii) has a liquidity shortfall for any quarter during 
     such plan year.
       ``(C) Period of underpayment.--For purposes of paragraph 
     (3)(A), any portion of an installment that is treated as not 
     paid under subparagraph (A) shall continue to be treated as 
     unpaid until the close of the quarter in which the due date 
     for such installment occurs.
       ``(D) Limitation on increase.--If the amount of any 
     required installment is increased by reason of subparagraph 
     (A), in no event shall such increase exceed the amount which, 
     when added to prior installments for the plan year, is 
     necessary to increase the funding target attainment 
     percentage of the plan for the plan year (taking into account 
     the expected increase in funding target due to benefits 
     accruing or earned during the plan year) to 100 percent.
       ``(E) Definitions.--For purposes of this subparagraph:
       ``(i) Liquidity shortfall.--The term `liquidity shortfall' 
     means, with respect to any required installment, an amount 
     equal to the

[[Page 28599]]

     excess (as of the last day of the quarter for which such 
     installment is made) of--

       ``(I) the base amount with respect to such quarter, over
       ``(II) the value (as of such last day) of the plan's liquid 
     assets.

       ``(ii) Base amount.--

       ``(I) In general.--The term `base amount' means, with 
     respect to any quarter, an amount equal to 3 times the sum of 
     the adjusted disbursements from the plan for the 12 months 
     ending on the last day of such quarter.
       ``(II) Special rule.--If the amount determined under 
     subclause (I) exceeds an amount equal to 2 times the sum of 
     the adjusted disbursements from the plan for the 36 months 
     ending on the last day of the quarter and an enrolled actuary 
     certifies to the satisfaction of the Secretary of the 
     Treasury that such excess is the result of nonrecurring 
     circumstances, the base amount with respect to such quarter 
     shall be determined without regard to amounts related to 
     those nonrecurring circumstances.

       ``(iii) Disbursements from the plan.--The term 
     `disbursements from the plan' means all disbursements from 
     the trust, including purchases of annuities, payments of 
     single sums and other benefits, and administrative expenses.
       ``(iv) Adjusted disbursements.--The term `adjusted 
     disbursements' means disbursements from the plan reduced by 
     the product of--

       ``(I) the plan's funding target attainment percentage for 
     the plan year, and
       ``(II) the sum of the purchases of annuities, payments of 
     single sums, and such other disbursements as the Secretary of 
     the Treasury shall provide in regulations.

       ``(v) Liquid assets.--The term `liquid assets' means cash, 
     marketable securities, and such other assets as specified by 
     the Secretary of the Treasury in regulations.
       ``(vi) Quarter.--The term `quarter' means, with respect to 
     any required installment, the 3-month period preceding the 
     month in which the due date for such installment occurs.
       ``(F) Regulations.--The Secretary of the Treasury may 
     prescribe such regulations as are necessary to carry out this 
     paragraph.
       ``(k) Imposition of Lien Where Failure to Make Required 
     Contributions.--
       ``(1) In general.--In the case of a plan to which this 
     subsection applies (as provided under paragraph (2)), if--
       ``(A) any person fails to make a contribution payment 
     required by section 302 and this section before the due date 
     for such payment, and
       ``(B) the unpaid balance of such payment (including 
     interest), when added to the aggregate unpaid balance of all 
     preceding such payments for which payment was not made before 
     the due date (including interest), exceeds $1,000,000,

     then there shall be a lien in favor of the plan in the amount 
     determined under paragraph (3) upon all property and rights 
     to property, whether real or personal, belonging to such 
     person and any other person who is a member of the same 
     controlled group of which such person is a member.
       ``(2) Plans to which subsection applies.--This subsection 
     shall apply to a single-employer plan for any plan year for 
     which the funding target attainment percentage (as defined in 
     subsection (d)(2)) of such plan is less than 100 percent. 
     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 Pension Protection Act of 2005).
       ``(3) Amount of lien.--For purposes of paragraph (1), the 
     amount of the lien shall be equal to the aggregate unpaid 
     balance of contribution payments required under this section 
     and section 302 for which payment has not been made before 
     the due date.
       ``(4) Notice of failure; lien.--
       ``(A) Notice of failure.--A person committing a failure 
     described in paragraph (1) shall notify the Pension Benefit 
     Guaranty Corporation of such failure within 10 days of the 
     due date for the required contribution payment.
       ``(B) Period of lien.--The lien imposed by paragraph (1) 
     shall arise on the due date for the required contribution 
     payment and shall continue until the last day of the first 
     plan year in which the plan ceases to be described in 
     paragraph (1)(B). Such lien shall continue to run without 
     regard to whether such plan continues to be described in 
     paragraph (2) during the period referred to in the preceding 
     sentence.
       ``(C) Certain rules to apply.--Any amount with respect to 
     which a lien is imposed under paragraph (1) shall be treated 
     as taxes due and owing the United States and rules similar to 
     the rules of subsections (c), (d), and (e) of section 4068 
     shall apply with respect to a lien imposed by subsection (a) 
     and the amount with respect to such lien.
       ``(5) Enforcement.--Any lien created under paragraph (1) 
     may be perfected and enforced only by the Pension Benefit 
     Guaranty Corporation, or at the direction of the Pension 
     Benefit Guaranty Corporation, by the contributing sponsor (or 
     any member of the controlled group of the contributing 
     sponsor).
       ``(6) Definitions.--For purposes of this subsection--
       ``(A) Contribution payment.--The term `contribution 
     payment' means, in connection with a plan, a contribution 
     payment required to be made to the plan, including any 
     required installment under paragraphs (3) and (4) of 
     subsection (i).
       ``(B) Due date; required installment.--The terms `due date' 
     and `required installment' have the meanings given such terms 
     by subsection (j), except that in the case of a payment other 
     than a required installment, the due date shall be the date 
     such payment is required to be made under section 303.
       ``(C) Controlled group.--The term `controlled group' means 
     any group treated as a single employer under subsections (b), 
     (c), (m), and (o) of section 414 of the Internal Revenue Code 
     of 1986.
       ``(l) Qualified Transfers to Health Benefit Accounts.--In 
     the case of a qualified transfer (as defined in section 420 
     of the Internal Revenue Code of 1986), any assets so 
     transferred shall not, for purposes of this section, be 
     treated as assets in the plan.''.
       (b) Clerical Amendment.--The table of sections in section 1 
     of such Act (as amended by section 101) is amended by 
     inserting after the item relating to section 302 the 
     following new item:

``Sec. 303. Minimum funding standards for single-employer defined 
              benefit pension plans.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to plan years beginning after 2006.

     SEC. 103. BENEFIT LIMITATIONS UNDER SINGLE-EMPLOYER PLANS.

       (a) Prohibition of Shutdown Benefits and Other 
     Unpredictable Contingent Event Benefits Under Single-Employer 
     Plans.--Section 206 of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1056) is amended by adding at 
     the end the following new subsection:
       ``(g) Funding-Based Limitation on Shutdown Benefits and 
     Other Unpredictable Contingent Event Benefits Under Single-
     Employer Plans.--
       ``(1) In general.--No defined benefit plan which is a 
     single-employer plan may provide benefits to which 
     participants are entitled solely by reason of the occurrence 
     of a plant shutdown or any other unpredictable contingent 
     event occurring during any plan year if the funding target 
     attainment percentage as of the valuation date of the plan 
     for such plan year--
       ``(A) is less than 80 percent, or
       ``(B) would be less than 80 percent taking into account 
     such occurrence.
       ``(2) Exemption.--Paragraph (1) shall cease to apply with 
     respect to any plan year, effective as of the first date of 
     the plan year, upon payment by the plan sponsor of a 
     contribution (in addition to any minimum required 
     contribution under section 303) equal to--
       ``(A) in the case of paragraph (1)(A), the amount of the 
     increase in the funding target of the plan (under section 
     303) for the plan year attributable to the occurrence 
     referred to in paragraph (1), and
       ``(B) in the case of paragraph (1)(B), the amount 
     sufficient to result in a funding target attainment 
     percentage of 80 percent.
     Rules similar to the rules of subsection (h)(6) shall apply 
     for purposes of this paragraph.
       ``(3) Unpredictable contingent event.--For purposes of this 
     subsection, the term `unpredictable contingent event' means 
     an event other than--
       ``(A) attainment of any age, performance of any service, 
     receipt or derivation of any compensation, or the occurrence 
     of death or disability, or
       ``(B) an event which is reasonably and reliably predictable 
     (as determined by the Secretary of the Treasury).
       ``(4) New plans.--Paragraph (1) shall not apply to a plan 
     for the first 5 plan years of the plan. For purposes of this 
     subsection, the reference in this subsection to a plan shall 
     include a reference to any predecessor plan.
       ``(5) Deemed reduction of funding balances.--A rule similar 
     to the rule of subsection (h)(8) shall apply for purposes of 
     this subsection.''.
       (b) Other Limits on Benefits and Benefit Accruals.--
       (1) In general.--Section 206 of such Act (as amended by 
     subsection (a)) is amended further by adding at the end the 
     following new subsection:
       ``(h) Funding-Based Limits on Benefits and Benefit Accruals 
     Under Single-Employer Plans.--
       ``(1) Limitations on plan amendments increasing liability 
     for benefits.--
       ``(A) In general.--No amendment to a defined benefit plan 
     which is a single-employer plan which has the effect of 
     increasing liabilities of the plan by reason of increases in 
     benefits, establishment of new benefits, changing the rate of 
     benefit accrual, or changing the rate at which benefits 
     become nonforfeitable to the plan may take effect during any 
     plan year if the funding target attainment percentage as of 
     the valuation date of the plan for such plan year is--
       ``(i) less than 80 percent, or
       ``(ii) would be less than 80 percent taking into account 
     such amendment.

     For purposes of this subparagraph, any increase in benefits 
     under the plan by reason of

[[Page 28600]]

     an increase in the benefit rate provided under the plan or on 
     the basis of an increase in compensation shall be treated as 
     effected by plan amendment.
       ``(B) Exemption.--Subparagraph (A) shall cease to apply 
     with respect to any plan year, effective as of the first date 
     of the plan year (or if later, the effective date of the 
     amendment), upon payment by the plan sponsor of a 
     contribution (in addition to any minimum required 
     contribution under section 303) equal to--
       ``(i) in the case of subparagraph (A)(i), the amount of the 
     increase in the funding target of the plan (under section 
     303) for the plan year attributable to the amendment, and
       ``(ii) in the case of subparagraph (A)(ii), the amount 
     sufficient to result in a funding target attainment 
     percentage of 80 percent.
       ``(2) Funding-based limitation on certain forms of 
     distribution.--
       ``(A) In general.--A defined benefit plan which is a 
     single-employer plan shall provide that, in any case in which 
     the plan's funding target attainment percentage as of the 
     valuation date of the plan for a plan year is less than 80 
     percent, the plan may not after such date pay any prohibited 
     payment (as defined in section 206(e)).
       ``(B) Exception.--Subparagraph (A) shall not apply to any 
     plan for any plan year if the terms of such plan (as in 
     effect for the period beginning on June 29, 2005, and ending 
     with such plan year) provide for no benefit accruals with 
     respect to any participant during such period.
       ``(3) Limitations on benefit accruals for plans with severe 
     funding shortfalls.--A defined benefit plan which is a 
     single-employer plan shall provide that, in any case in which 
     the plan's funding target attainment percentage as of the 
     valuation date of the plan for a plan year is less than 60 
     percent, all future benefit accruals under the plan shall 
     cease as of such date.
       ``(4) New plans.--Paragraphs (1) and (3) shall not apply to 
     a plan for the first 5 plan years of the plan. For purposes 
     of this subsection, the reference in this subsection to a 
     plan shall include a reference to any predecessor plan.
       ``(5) Presumed underfunding for purposes of benefit 
     limitations based on prior year's funding status.--
       ``(A) Presumption of continued underfunding.--In any case 
     in which a benefit limitation under paragraph (1), (2), or 
     (3) has been applied to a plan with respect to the plan year 
     preceding the current plan year, the funding target 
     attainment percentage of the plan as of the valuation date of 
     the plan for the current plan year shall be presumed to be 
     equal to the funding target attainment percentage of the plan 
     as of the valuation date of the plan for the preceding plan 
     year until the enrolled actuary of the plan certifies the 
     actual funding target attainment percentage of the plan as of 
     the valuation date of the plan for the current plan year.
       ``(B) Presumption of underfunding after 10th month.--In any 
     case in which no such certification is made with respect to 
     the plan before the first day of the 10th month of the 
     current plan year, for purposes of paragraphs (1), (2), and 
     (3), the plan's funding target attainment percentage shall be 
     conclusively presumed to be less than 60 percent as of the 
     first day of such 10th month, and such day shall be deemed, 
     for purposes of such subsections, to be the valuation date of 
     the plan for the current plan year.
       ``(C) Presumption of underfunding after 4th month for 
     nearly underfunded plans.--In any case in which--
       ``(i) a benefit limitation under paragraph (1), (2), or (3) 
     did not apply to a plan with respect to the plan year 
     preceding the current plan year, but the funding target 
     attainment percentage of the plan for such preceding plan 
     year was not more than 10 percentage points greater than the 
     percentage which would have caused such subsection to apply 
     to the plan with respect to such preceding plan year, and
       ``(ii) as of the first day of the 4th month of the current 
     plan year, the enrolled actuary of the plan has not certified 
     the actual funding target attainment percentage of the plan 
     as of the valuation date of the plan for the current plan 
     year,

     until the enrolled actuary so certifies, such first day shall 
     be deemed, for purposes of such subsection, to be the 
     valuation date of the plan for the current plan year and the 
     funding target attainment percentage of the plan as of such 
     first day shall, for purposes of such paragraph, be presumed 
     to be equal to 10 percentage points less than the funding 
     target attainment percentage of the plan as of the valuation 
     date of the plan for such preceding plan year.
       ``(6) Restoration by plan amendment of benefits or benefit 
     accrual.--In any case in which a prohibition under paragraph 
     (2) of a payment described in paragraph (2)(A) or a cessation 
     of benefit accruals under paragraph (3) is applied to a plan 
     with respect to any plan year and such prohibition or 
     cessation, as the case may be, ceases to apply to any 
     subsequent plan year, the plan may provide for the resumption 
     of such benefit payment or such benefit accrual only by means 
     of the adoption of a plan amendment after the valuation date 
     of the plan for such subsequent plan year. The preceding 
     sentence shall not apply to a prohibition or cessation 
     required by reason of paragraph (5).
       ``(7) Funding target attainment percentage.--
       ``(A) In general.--For purposes of this subsection, the 
     term `funding target attainment percentage' means, with 
     respect to any plan for any plan year, the ratio (expressed 
     as a percentage) which--
       ``(i) the value of plan assets for the plan year (as 
     determined under section 303(g)) reduced by the pre-funding 
     balance and the funding standard carryover balance (within 
     the meaning of section 303(f)), bears to
       ``(ii) the funding target of the plan for the plan year (as 
     determined under section 303(d)(1), but without regard to 
     section 303(i)(1)).
       ``(B) Application to plans which are fully funded without 
     regard to reductions for funding balances.--
       ``(i) In general.--In the case of a plan for any plan year, 
     if the funding target attainment percentage is 100 percent or 
     more (determined without regard to this subparagraph and 
     without regard to the reduction under subparagraph (A)(i) for 
     the pre-funding balance and the funding standard carryover 
     balance), subparagraph (A) shall be applied without regard to 
     such reduction.
       ``(ii) Transition rule.--Clause (i) shall be applied to 
     plan years beginning after 2006 and before 2011 by 
     substituting for `100 percent' the applicable percentage 
     determined in accordance with the following table:


------------------------------------------------------------------------
 ``In the case of a plan year beginning in    The applicable percentage
              calendar year:                             is:
------------------------------------------------------------------------
2007......................................  92 percent
2008......................................  94 percent
2009......................................  96 percent
2010......................................  98 percent.
------------------------------------------------------------------------

       ``(iii) Limitation.--Clause (ii) shall not apply with 
     respect to any plan year after 2007 unless the funding target 
     attainment percentage (determined without regard to this 
     subparagraph and without regard to the reduction under 
     subparagraph (A)(i) for the pre-funding balance and the 
     funding standard carryover balance) of the plan for each 
     preceding plan year after 2006 was not less than the 
     applicable percentage with respect to such preceding plan 
     year determined under clause (ii).
       ``(8) Deemed reduction of funding balances.--In the case of 
     a plan maintained pursuant to 1 or more collective bargaining 
     agreements between employee representatives and 1 or more 
     employers--
       ``(A) In general.--In any case in which a benefit 
     limitation under paragraph (1), (2), or (3) would (but for 
     this paragraph and determined without regard to paragraph 
     (1)(B)) apply to such plan for the plan year, the plan 
     sponsor of such plan shall be treated for purposes of this 
     Act as having made an election under section 303(f)(5) to 
     reduce the balance of the pre-funding balance and the funding 
     standard carryover balance for the plan year (in a manner 
     consistent with the requirements of section 303(f)(5)(B)) by 
     such amount as is necessary for such benefit limitation to 
     not apply to the plan for such plan year.
       ``(B) Exception for insufficient funding balances.--
     Subparagraph (A) shall not apply with respect to a benefit 
     limitation for any plan year if the application of 
     subparagraph (A) would not result in the benefit limitation 
     not applying for such plan year.''.
       (2) Notice requirement.--
       (A) In general.--Section 101 of such Act (29 U.S.C. 1021) 
     is amended--
       (i) by redesignating subsection (j) as subsection (k); and
       (ii) by inserting after subsection (i) the following new 
     subsection:
       ``(j) Notice of Funding-Based Limitation on Certain Forms 
     of Distribution.--The plan administrator of a defined benefit 
     plan which is a single-employer plan shall provide a written 
     notice to plan participants and beneficiaries within 30 days 
     after the plan has become subject to the restriction 
     described in section 206(h)(2) or at such other time as may 
     be determined by the Secretary.''.
       (B) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C. 
     1132(c)(4)) is amended by striking ``section 
     302(b)(7)(F)(vi)'' and inserting ``sections 101(j) and 
     302(b)(7)(F)(vi)''.
       (c) Effective Date.--
       (1) Shutdown benefits.--Except as provided in paragraph 
     (3), the amendments made by subsection (a) shall apply with 
     respect to plant shutdowns, or other unpredictable contingent 
     events, occurring after 2006.
       (2) Other benefits.--Except as provided in paragraph (3), 
     the amendments made by subsection (b) shall apply with 
     respect to plan years beginning after 2006.
       (3) Collective bargaining exception.--In the case of a plan 
     maintained pursuant to 1 or more collective bargaining 
     agreements between employee representatives and 1 or more 
     employers ratified before the date of the enactment of this 
     Act, the amendments made by this subsection shall not apply 
     to plan years beginning before the earlier of--
       (A) the later of--
       (i) the date on which the last collective bargaining 
     agreement relating to the plan terminates (determined without 
     regard to any extension thereof agreed to after the date of 
     the enactment of this Act), or

[[Page 28601]]

       (ii) the first day of the first plan year to which the 
     amendments made by this subsection would (but for this 
     subparagraph) apply, or
       (B) January 1, 2009.

     For purposes of clause (i), any plan amendment made pursuant 
     to a collective bargaining agreement relating to the plan 
     which amends the plan solely to conform to any requirement 
     added by this subsection shall not be treated as a 
     termination of such collective bargaining agreement.
       (d) Special Rule for 2007.--For purposes of applying 
     paragraph (5) of section 206(h) of such Act (as added by this 
     section) to current plan years (within the meaning of such 
     paragraph) beginning in 2007, the modified funded current 
     liability percentage of the plan for the preceding year shall 
     be substituted for the funding target attainment percentage 
     of the plan for the preceding year. For purposes of the 
     preceding sentence, the term ``modified funded current 
     liability percentage'' means the funded current liability 
     percentage (as defined in section 302(l)(8) of such Act), 
     reduced as described in subparagraph (E) thereof in the case 
     of a plan with a funded current liability percentage (as so 
     defined and before such reduction) which is less than 100 
     percent.

     SEC. 104. TECHNICAL AND CONFORMING AMENDMENTS.

       (a) Miscellaneous Amendments to Title I.--Subtitle B of 
     title I of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1021 et seq.) is amended--
       (1) in section 101(d)(3), by striking ``section 302(e)'' 
     and inserting ``section 303(j)'';
       (2) in section 101(f)(2)(B), by striking clause (i) and 
     inserting the following:
       ``(i) a statement as to whether--

       ``(I) in the case of a defined benefit plan which is a 
     single-employer plan, the plan's funding target attainment 
     percentage (as defined in section 303(d)(2)), or
       ``(II) in the case of a defined benefit plan which is a 
     multiemployer plan, the plan's funded percentage (as defined 
     in section 305(d)(2)),

     is at least 100 percent (and, if not, the actual 
     percentage);'';
       (3) in section 103(d)(8)(B), by striking ``the requirements 
     of section 302(c)(3)'' and inserting ``the applicable 
     requirements of sections 303(h) and 304(c)(3)'';
       (4) in section 103(d), by striking paragraph (11) and 
     inserting the following:
       ``(11) If the current value of the assets of the plan is 
     less than 70 percent of--
       ``(A) in the case of a defined benefit plan which is a 
     single-employer plan, the funding target (as defined in 
     section 303(d)(1)) of the plan, or
       ``(B) in the case of a defined benefit plan which is a 
     multiemployer plan, the current liability (as defined in 
     section 304(c)(6)(D)) under the plan,

     the percentage which such value is of the amount described in 
     subparagraph (A) or (B).'';
       (5) in section 203(a)(3)(C), by striking ``section 
     302(c)(8)'' and inserting ``section 302(d)(2)'';
       (6) in section 204(g)(1), by striking ``section 302(c)(8)'' 
     and inserting ``section 302(d)(2)'';
       (7) in section 204(i)(2)(B), by striking ``section 
     302(c)(8)'' and inserting ``section 302(d)(2)'';
       (8) in section 204(i)(3), by striking ``funded current 
     liability percentage (within the meaning of section 302(d)(8) 
     of this Act)'' and inserting ``funding target attainment 
     percentage (as defined in section 303(d)(2))'';
       (9) in section 204(i)(4), by striking ``section 
     302(c)(11)(A), without regard to section 302(c)(11)(B)'' and 
     inserting ``section 302(b)(1), without regard to section 
     302(b)(2)'';
       (10) in section 206(e)(1), by striking ``section 302(d)'' 
     and inserting ``section 303(j)(4)'', and by striking 
     ``section 302(e)(5)'' and inserting ``section 
     303(j)(4)(E)(i)'';
       (11) in section 206(e)(3), by striking ``section 302(e) by 
     reason of paragraph (5)(A) thereof'' and inserting ``section 
     303(j)(3) by reason of section 303(j)(4)(A)''; and
       (12) in sections 101(e)(3), 403(c)(1), and 408(b)(13), by 
     striking ``American Jobs Creation Act of 2004'' and inserting 
     ``Pension Protection Act of 2005''.
       (b) Miscellaneous Amendments to Title IV.--Title IV of such 
     Act is amended--
       (1) in section 4001(a)(13) (29 U.S.C. 1301(a)(13)), by 
     striking ``302(c)(11)(A)'' and inserting ``302(b)(1)'', by 
     striking ``412(c)(11)(A)'' and inserting ``412(b)(1)'', by 
     striking ``302(c)(11)(B)'' and inserting ``302(b)(2)'', and 
     by striking ``412(c)(11)(B)'' and inserting ``412(b)(2)'';
       (2) in section 4003(e)(1) (29 U.S.C. 1303(e)(1)), by 
     striking ``302(f)(1)(A) and (B)'' and inserting 
     ``303(k)(1)(A) and (B)'', and by striking ``412(n)(1)(A) and 
     (B)'' and inserting ``430(k)(1)(A) and (B)'';
       (3) in section 4010(b)(2) (29 U.S.C. 1310(b)(2)), by 
     striking ``302(f)(1)(A) and (B)'' and inserting 
     ``303(k)(1)(A) and (B)'', and by striking ``412(n)(1)(A) and 
     (B)'' and inserting ``430(k)(1)(A) and (B)'';
       (4) in section 4011(b) (29 U.S.C. 1311(b)), by striking 
     ``to which'' and all that follows and inserting ``for any 
     plan year for which the plan's funding target attainment 
     percentage (as defined in section 303(d)(2)) is at least 90 
     percent.'';
       (5) in section 4062(c)(1) (29 U.S.C. 1362(c)(1)), by 
     striking paragraphs (1), (2), and (3) and inserting the 
     following:
       ``(1)(A) in the case of a single-employer plan, the sum of 
     the shortfall amortization charge (within the meaning of 
     section 303(c)(1) of this Act and 430(c)(1) of the Internal 
     Revenue Code of 1986) with respect to the plan (if any) for 
     the plan year in which the termination date occurs, plus the 
     aggregate total of shortfall amortization installments (if 
     any) determined for succeeding plan years under section 
     303(c)(2) of this Act and section 430(c)(2) of such Code 
     (which, for purposes of this subparagraph, shall include any 
     increase in such sum which would result if all applications 
     for waivers of the minimum funding standard under section 
     302(c) of this Act and section 412(c) of such Code which are 
     pending with respect to such plan were denied and if no 
     additional contributions (other than those already made by 
     the termination date) were made for the plan year in which 
     the termination date occurs or for any previous plan year), 
     or
       ``(B) in the case of a multiemployer plan, the outstanding 
     balance of the accumulated funding deficiencies (within the 
     meaning of section 304(a)(2) of this Act and section 431(a) 
     of the Internal Revenue Code of 1986) of the plan (if any) 
     (which, for purposes of this subparagraph, shall include the 
     amount of any increase in such accumulated funding 
     deficiencies of the plan which would result if all pending 
     applications for waivers of the minimum funding standard 
     under section 302(c) of this Act or section 412(c) of such 
     Code and for extensions of the amortization period under 
     section 304(d) of this Act or section 431(d) of such Code 
     with respect to such plan were denied and if no additional 
     contributions (other than those already made by the 
     termination date) were made for the plan year in which the 
     termination date occurs or for any previous plan year),
       ``(2)(A) in the case of a single-employer plan, the sum of 
     the waiver amortization charge (within the meaning of section 
     303(e)(1) of this Act and 430(j)(2) of the Internal Revenue 
     Code of 1986) with respect to the plan (if any) for the plan 
     year in which the termination date occurs, plus the aggregate 
     total of waiver amortization installments (if any) determined 
     for succeeding plan years under section 303(e)(2) of this Act 
     and section 430(j)(3) of such Code, or
       ``(B) in the case of a multiemployer plan, the outstanding 
     balance of the amount of waived funding deficiencies of the 
     plan waived before such date under section 302(c) of this Act 
     or section 412(c) of such Code (if any), and
       ``(3) in the case of a multiemployer plan, the outstanding 
     balance of the amount of decreases in the minimum funding 
     standard allowed before such date under section 304(d) of 
     this Act or section 431(d) of such Code (if any);'';
       (6) in section 4071 (29 U.S.C. 1371), by striking 
     ``302(f)(4)'' and inserting ``303(k)(4)'';
       (7) in section 4243(a)(1)(B) (29 U.S.C. 1423(a)(1)(B)), by 
     striking ``302(a)'' and inserting ``304(a)'', and, in clause 
     (i), by striking ``302(a)'' and inserting ``304(a)'';
       (8) in section 4243(f)(1) (29 U.S.C. 1423(f)(1)), by 
     striking ``303(a)'' and inserting ``302(c)'';
       (9) in section 4243(f)(2) (29 U.S.C. 1423(f)(2)), by 
     striking ``303(c)'' and inserting ``302(c)(3)''; and
       (10) in section 4243(g) (29 U.S.C. 1423(g)), by striking 
     ``302(c)(3)'' and inserting ``304(c)(3)''.
       (c) Amendments to Reorganization Plan No. 4 of 1978.--
     Section 106(b)(ii) of Reorganization Plan No. 4 of 1978 
     (ratified and affirmed as law by Public Law 98-532 (98 Stat. 
     2705)) is amended by striking ``302(c)(8)'' and inserting 
     ``302(d)(2)'', by striking ``304(a) and (b)(2)(A)'' and 
     inserting ``304(d)(1), (d)(2), and (e)(2)(A)'', and by 
     striking ``412(c)(8), (e), and (f)(2)(A)'' and inserting 
     ``412(d)(2) and 431(d)(1), (d)(2), and (e)(2)(A)''.
       (d) Repeal of Expired Authority for Temporary Variances.--
       (1) In general.--Section 207 of such Act (29 U.S.C. 1057) 
     is repealed.
       (2) Conforming amendment.--The table of contents in section 
     1 of such Act is amended by striking the item relating to 
     section 207.
       (e) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after 2006.

        Subtitle B--Amendments to Internal Revenue Code of 1986

     SEC. 111. MINIMUM FUNDING STANDARDS.

       (a) New Minimum Funding Standards.--Section 412 of the 
     Internal Revenue Code of 1986 (relating to minimum funding 
     standards) is amended to read as follows:

     ``SEC. 412. MINIMUM FUNDING STANDARDS.

       ``(a) Requirement to Meet Minimum Funding Standard.--
       ``(1) In general.--A plan to which this section applies 
     shall satisfy the minimum funding standard applicable to the 
     plan for any plan year.
       ``(2) Minimum funding standard.--For purposes of paragraph 
     (1), a plan shall be treated as satisfying the minimum 
     funding standard for a plan year if--
       ``(A) in the case of a defined benefit plan which is not a 
     multiemployer plan, the employer makes contributions to or 
     under the plan for the plan year which, in the aggregate, are 
     not less than the minimum required contribution determined 
     under section 430 for the plan for the plan year,

[[Page 28602]]

       ``(B) in the case of a money purchase plan which is not a 
     multiemployer plan, the employer makes contributions to or 
     under the plan for the plan year which are required under the 
     terms of the plan, and
       ``(C) in the case of a multiemployer plan, the employers 
     make contributions to or under the plan for any plan year 
     which, in the aggregate, are sufficient to ensure that the 
     plan does not have an accumulated funding deficiency under 
     section 431 as of the end of the plan year.
       ``(b) Liability for Contributions.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     amount of any contribution required by this section 
     (including any required installments under paragraphs (3) and 
     (4) of section 430(j)) shall be paid by the employer 
     responsible for making contributions to or under the plan.
       ``(2) Joint and several liability where employer member of 
     controlled group.--In the case of a defined benefit plan 
     which is not a multiemployer plan, if the employer referred 
     to in paragraph (1) is a member of a controlled group, each 
     member of such group shall be jointly and severally liable 
     for payment of such contributions.
       ``(c) Variance From Minimum Funding Standards.--
       ``(1) Waiver in case of business hardship.--
       ``(A) In general.--If--
       ``(i) an employer is (or in the case of a multiemployer 
     plan, 10 percent or more of the number of employers 
     contributing to or under the plan is) unable to satisfy the 
     minimum funding standard for a plan year without temporary 
     substantial business hardship (substantial business hardship 
     in the case of a multiemployer plan), and
       ``(ii) application of the standard would be adverse to the 
     interests of plan participants in the aggregate,

     the Secretary may, subject to subparagraph (C), waive the 
     requirements of subsection (a) for such year with respect to 
     all or any portion of the minimum funding standard. The 
     Secretary shall not waive the minimum funding standard with 
     respect to a plan for more than 3 of any 15 (5 of any 15 in 
     the case of a multiemployer plan) consecutive plan years.
       ``(B) Effects of waiver.--If a waiver is granted under 
     subparagraph (A) for any plan year--
       ``(i) in the case of a defined benefit plan which is not a 
     multiemployer plan, the minimum required contribution under 
     section 430 for the plan year shall be reduced by the amount 
     of the waived funding deficiency and such amount shall be 
     amortized as required under section 430(e), and
       ``(ii) in the case of a multiemployer plan, the funding 
     standard account shall be credited under section 431(b)(3)(C) 
     with the amount of the waived funding deficiency and such 
     amount shall be amortized as required under section 
     431(b)(2)(C).
       ``(C) Waiver of amortized portion not allowed.--The 
     Secretary may not waive under subparagraph (A) any portion of 
     the minimum funding standard under subsection (a) for a plan 
     year which is attributable to any waived funding deficiency 
     for any preceding plan year.
       ``(2) Determination of business hardship.--For purposes of 
     this subsection, the factors taken into account in 
     determining temporary substantial business hardship 
     (substantial business hardship in the case of a multiemployer 
     plan) shall include (but shall not be limited to) whether or 
     not--
       ``(A) the employer is operating at an economic loss,
       ``(B) there is substantial unemployment or underemployment 
     in the trade or business and in the industry concerned,
       ``(C) the sales and profits of the industry concerned are 
     depressed or declining, and
       ``(D) it is reasonable to expect that the plan will be 
     continued only if the waiver is granted.
       ``(3) Waived funding deficiency.--For purposes of this 
     section and part III of this subchapter, the term `waived 
     funding deficiency' means the portion of the minimum funding 
     standard under subsection (a) (determined without regard to 
     the waiver) for a plan year waived by the Secretary and not 
     satisfied by employer contributions.
       ``(4) Security for waivers for single-employer plans, 
     consultations.--
       ``(A) Security may be required.--
       ``(i) In general.--Except as provided in subparagraph (C), 
     the Secretary may require an employer maintaining a defined 
     benefit plan which is a single-employer plan (within the 
     meaning of section 4001(a)(15) of the Employee Retirement 
     Income Security Act of 1974) to provide security to such plan 
     as a condition for granting or modifying a waiver under 
     paragraph (1).
       ``(ii)  special rules.--Any security provided under clause 
     (i) may be perfected and enforced only by the Pension Benefit 
     Guaranty Corporation, or at the direction of the Corporation, 
     by a contributing sponsor (within the meaning of section 
     4001(a)(13) of the Employee Retirement Income Security Act of 
     1974), or a member of such sponsor's controlled group (within 
     the meaning of section 4001(a)(14) of such Act).
       ``(B) Consultation with the pension benefit guaranty 
     corporation.--Except as provided in subparagraph (C), the 
     Secretary shall, before granting or modifying a waiver under 
     this subsection with respect to a plan described in 
     subparagraph (A)(i)--
       ``(i) provide the Pension Benefit Guaranty Corporation 
     with--

       ``(I) notice of the completed application for any waiver or 
     modification, and
       ``(II) an opportunity to comment on such application within 
     30 days after receipt of such notice, and

       ``(ii) consider--

       ``(I) any comments of the Corporation under clause (i)(II), 
     and
       ``(II) any views of any employee organization (within the 
     meaning of section 3(4) of the Employee Retirement Income 
     Security Act of 1974) representing participants in the plan 
     which are submitted in writing to the Secretary in connection 
     with such application.

     Information provided to the Corporation under this 
     subparagraph shall be considered tax return information and 
     subject to the safeguarding and reporting requirements of 
     section 6103(p).
       ``(C) Exception for certain waivers.--
       ``(i) In general.--The preceding provisions of this 
     paragraph shall not apply to any plan with respect to which 
     the sum of--

       ``(I) the aggregate unpaid minimum required contribution 
     (within the meaning of section 4971(c)(4)) for the plan year 
     and all preceding plan years, and
       ``(II) the present value of all waiver amortization 
     installments determined for the plan year and succeeding plan 
     years under section 430(e)(2),

     is less than $1,000,000.
       ``(ii) Treatment of waivers for which applications are 
     pending.--The amount described in clause (i)(I) shall include 
     any increase in such amount which would result if all 
     applications for waivers of the minimum funding standard 
     under this subsection which are pending with respect to such 
     plan were denied.
       ``(5) Special rules for single-employer plans.--
       ``(A) Application must be submitted before date 2\1/2\ 
     months after close of year.--In the case of a defined benefit 
     plan which is not a multiemployer plan, no waiver may be 
     granted under this subsection with respect to any plan for 
     any plan year unless an application therefor is submitted to 
     the Secretary not later than the 15th day of the 3rd month 
     beginning after the close of such plan year.
       ``(B) Special rule if employer is member of controlled 
     group.--In the case of a defined benefit plan which is not a 
     multiemployer plan, if an employer is a member of a 
     controlled group, the temporary substantial business hardship 
     requirements of paragraph (1) shall be treated as met only if 
     such requirements are met--
       ``(i) with respect to such employer, and
       ``(ii) with respect to the controlled group of which such 
     employer is a member (determined by treating all members of 
     such group as a single employer).

     The Secretary may provide that an analysis of a trade or 
     business or industry of a member need not be conducted if the 
     Secretary determines such analysis is not necessary because 
     the taking into account of such member would not 
     significantly affect the determination under this paragraph.
       ``(6) Advance notice.--
       ``(A) In general.--The Secretary shall, before granting a 
     waiver under this subsection, require each applicant to 
     provide evidence satisfactory to the Secretary that the 
     applicant has provided notice of the filing of the 
     application for such waiver to to each affected party (as 
     defined in section 4001(a)(21) of the Employee Retirement 
     Income Security Act of 1974). Such notice shall include a 
     description of the extent to which the plan is funded for 
     benefits which are guaranteed under title IV of the Employee 
     Retirement Income Security Act of 1974 and for benefit 
     liabilities.
       ``(B) Consideration of relevant information.--The Secretary 
     shall consider any relevant information provided by a person 
     to whom notice was given under subparagraph (A).
       ``(7) Restriction on plan amendments.--
       ``(A) In general.--No amendment of a plan which increases 
     the liabilities of the plan by reason of any increase in 
     benefits, any change in the accrual of benefits, or any 
     change in the rate at which benefits become nonforfeitable 
     under the plan shall be adopted if a waiver under this 
     subsection or an extension of time under section 431(d) is in 
     effect with respect to the plan, or if a plan amendment 
     described in subsection (d)(2) has been made at any time in 
     the preceding 12 months (24 months in the case of a 
     multiemployer plan). If a plan is amended in violation of the 
     preceding sentence, any such waiver, or extension of time, 
     shall not apply to any plan year ending on or after the date 
     on which such amendment is adopted.
       ``(B) Exception.--Paragraph (1) shall not apply to any plan 
     amendment which--
       ``(i) the Secretary determines to be reasonable and which 
     provides for only de minimis increases in the liabilities of 
     the plan,
       ``(ii) only repeals an amendment described in subsection 
     (d)(2), or

[[Page 28603]]

       ``(iii) is required as a condition of qualification under 
     part I of subchapter D, of chapter 1.
       ``(d) Miscellaneous Rules.--
       ``(1) Change in method or year.--If the funding method, the 
     valuation date, or a plan year for a plan is changed, the 
     change shall take effect only if approved by the Secretary.
       ``(2) Certain retroactive plan amendments.--For purposes of 
     this section, any amendment applying to a plan year which--
       ``(A) is adopted after the close of such plan year but no 
     later than 2\1/2\ months after the close of the plan year 
     (or, in the case of a multiemployer plan, no later than 2 
     years after the close of such plan year),
       ``(B) does not reduce the accrued benefit of any 
     participant determined as of the beginning of the first plan 
     year to which the amendment applies, and
       ``(C) does not reduce the accrued benefit of any 
     participant determined as of the time of adoption except to 
     the extent required by the circumstances,
     shall, at the election of the plan administrator, be deemed 
     to have been made on the first day of such plan year. No 
     amendment described in this paragraph which reduces the 
     accrued benefits of any participant shall take effect unless 
     the plan administrator files a notice with the Secretary 
     notifying him of such amendment and the Secretary has 
     approved such amendment, or within 90 days after the date on 
     which such notice was filed, failed to disapprove such 
     amendment. No amendment described in this subsection shall be 
     approved by the Secretary unless the Secretary determines 
     that such amendment is necessary because of a substantial 
     business hardship (as determined under subsection (c)(2)) and 
     that a waiver under subsection (c) (or, in the case of a 
     multiemployer plan, any extension of the amortization period 
     under section 431(d)) is unavailable or inadequate.
       ``(3) Controlled group.--For purposes of this section, the 
     term `controlled group' means any group treated as a single 
     employer under subsection (b), (c), (m), or (o) of section 
     414.
       ``(e) Plans to Which Section Applies.--
       ``(1) In general.--Except as provided in paragraph (2), 
     this section applies to a plan if, for any plan year 
     beginning after December 31, 2006--
       ``(A) such plan included a trust which qualified (or was 
     determined by the Secretary to have qualified) under section 
     401(a), or
       ``(B) such plan satisfied (or was determined by the 
     Secretary to have satisfied) the requirements of section 
     403(a).
       ``(2) Exceptions.--This section shall not apply to--
       ``(A) any profit-sharing or stock bonus plan,
       ``(B) any insurance contract plan described in paragraph 
     (3),
       ``(C) any governmental plan (within the meaning of section 
     414(d)),
       ``(D) any church plan (within the meaning of section 
     414(e)) with respect to which the election provided by 
     section 410(d) has not been made,
       ``(E) any plan which has not, at any time after September 
     2, 1974, provided for employer contributions, or
       ``(F) any plan established and maintained by a society, 
     order, or association described in section 501(c)(8) or (9), 
     if no part of the contributions to or under such plan are 
     made by employers of participants in such plan.
     No plan described in subparagraph (C), (D), or (F) shall be 
     treated as a qualified plan for purposes of section 401(a) 
     unless such plan meets the requirements of section 401(a)(7) 
     as in effect on September 1, 1974.
       ``(3) Certain insurance contract plans.--A plan is 
     described in this paragraph if--
       ``(A) the plan is funded exclusively by the purchase of 
     individual insurance contracts,
       ``(B) such contracts provide for level annual premium 
     payments to be paid extending not later than the retirement 
     age for each individual participating in the plan, and 
     commencing with the date the individual became a participant 
     in the plan (or, in the case of an increase in benefits, 
     commencing at the time such increase becomes effective),
       ``(C) benefits provided by the plan are equal to the 
     benefits provided under each contract at normal retirement 
     age under the plan and are guaranteed by an insurance carrier 
     (licensed under the laws of a State to do business with the 
     plan) to the extent premiums have been paid,
       ``(D) premiums payable for the plan year, and all prior 
     plan years, under such contracts have been paid before lapse 
     or there is reinstatement of the policy,
       ``(E) no rights under such contracts have been subject to a 
     security interest at any time during the plan year, and
       ``(F) no policy loans are outstanding at any time during 
     the plan year.

     A plan funded exclusively by the purchase of group insurance 
     contracts which is determined under regulations prescribed by 
     the Secretary to have the same characteristics as contracts 
     described in the preceding sentence shall be treated as a 
     plan described in this paragraph.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2006.

     SEC. 112. FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT 
                   PENSION PLANS.

       (a) In General.--Subchapter D of chapter 1 of the Internal 
     Revenue Code of 1986 (relating to deferred compensation, 
     etc.) is amended by adding at the end the following new part:

   ``PART III--MINIMUM FUNDING STANDARDS FOR SINGLE-EMPLOYER DEFINED 
                         BENEFIT PENSION PLANS

     ``SEC. 430. MINIMUM FUNDING STANDARDS FOR SINGLE-EMPLOYER 
                   DEFINED BENEFIT PENSION PLANS.

       ``(a) Minimum Required Contribution.--For purposes of this 
     section and section 412(a)(2)(A), except as provided in 
     subsection (f), the term `minimum required contribution' 
     means, with respect to any plan year of a defined benefit 
     plan which is not a multiemployer plan--
       ``(1) in any case in which the value of plan assets of the 
     plan (as reduced under subsection (f)(4)(B)) is less than the 
     funding target of the plan for the plan year, the sum of--
       ``(A) the target normal cost of the plan for the plan year,
       ``(B) the shortfall amortization charge (if any) for the 
     plan for the plan year determined under subsection (c), and
       ``(C) the waiver amortization charge (if any) for the plan 
     for the plan year as determined under subsection (e);
       ``(2) in any case in which the value of plan assets of the 
     plan (as reduced under subsection (f)(4)(B)) exceeds the 
     funding target of the plan for the plan year, the target 
     normal cost of the plan for the plan year reduced by such 
     excess; or
       ``(3) in any other case, the target normal cost of the plan 
     for the plan year.
       ``(b) Target Normal Cost.--For purposes of this section, 
     except as provided in subsection (i)(2) with respect to plans 
     in at-risk status, the term `target normal cost' means, for 
     any plan year, the present value of all benefits which are 
     expected to accrue or to be earned under the plan during the 
     plan year. For purposes of this subsection, if any benefit 
     attributable to services performed in a preceding plan year 
     is increased by reason of any increase in compensation during 
     the current plan year, the increase in such benefit shall be 
     treated as having accrued during the current plan year.
       ``(c) Shortfall Amortization Charge.--
       ``(1) In general.--For purposes of this section, the 
     shortfall amortization charge for a plan for any plan year is 
     the aggregate total of the shortfall amortization 
     installments for such plan year with respect to the shortfall 
     amortization bases for such plan year and each of the 6 
     preceding plan years.
       ``(2) Shortfall amortization installment.--The plan sponsor 
     shall determine, with respect to the shortfall amortization 
     base of the plan for any plan year, the amounts necessary to 
     amortize such shortfall amortization base, in level annual 
     installments over a period of 7 plan years beginning with 
     such plan year. For purposes of paragraph (1), the annual 
     installment of such amortization for each plan year in such 
     7-plan-year period is the shortfall amortization installment 
     for such plan year with respect to such shortfall 
     amortization base. In determining any shortfall amortization 
     installment under this paragraph, the plan sponsor shall use 
     the segment rates determined under subparagraph (C) of 
     subsection (h)(2), applied under rules similar to the rules 
     of subparagraph (B) of subsection (h)(2).
       ``(3) Shortfall amortization base.--For purposes of this 
     section, the shortfall amortization base of a plan for a plan 
     year is the excess (if any) of--
       ``(A) the funding shortfall of such plan for such plan 
     year, over
       ``(B) the sum of--
       ``(i) the present value (determined using the segment rates 
     determined under subparagraph (C) of subsection (h)(2), 
     applied under rules similar to the rules of subparagraph (B) 
     of subsection (h)(2)) of the aggregate total of the shortfall 
     amortization installments, for such plan year and the 5 
     succeeding plan years, which have been determined with 
     respect to the shortfall amortization bases of the plan for 
     each of the 6 plan years preceding such plan year, and
       ``(ii) the present value (as so determined) of the 
     aggregate total of the waiver amortization installments for 
     such plan year and the 5 succeeding plan years, which have 
     been determined with respect to the waiver amortization bases 
     of the plan for each of the 5 plan years preceding such plan 
     year.
       ``(4) Funding shortfall.--For purposes of this section, the 
     funding shortfall of a plan for any plan year is the excess 
     (if any) of--
       ``(A) the funding target of the plan for the plan year, 
     over
       ``(B) the value of plan assets of the plan (as reduced 
     under subsection (f)(4)(B)) for the plan year which are held 
     by the plan on the valuation date.
       ``(5) Exemption from new shortfall amortization base.--
       ``(A) In general.--In any case in which the value of plan 
     assets of the plan (as reduced under subsection (f)(4)(A)) is 
     equal to or greater than the funding target of the plan for 
     the plan year, the shortfall amortization base of the plan 
     for such plan year shall be zero.
       ``(B) Transition rule.--
       ``(i) In general.--In the case of a non-deficit reduction 
     plan, subparagraph (A) shall

[[Page 28604]]

     be applied to plan years beginning after 2006 and before 2011 
     by substituting, for the funding target of the plan for the 
     plan year, the applicable percentage of such funding target 
     determined under the following table:

 
 ``In the case of a plan year beginning in    The applicable percentage
              calendar year:                             is:
 
  2007....................................  92 percent
  2008....................................  94 percent
  2009....................................  96 percent
  2010....................................  98 percent.
 

       ``(ii) Limitation.--Clause (i) shall not apply with respect 
     to any plan year after 2007 unless the ratio (expressed as a 
     percentage) which--

       ``(I) the value of plan assets for each preceding plan year 
     after 2006 (as reduced under subsection (f)(4)(A)), bears to
       ``(II) the funding target of the plan for such preceding 
     plan year (determined without regard to subsection (i)(1)),

     is not less than the applicable percentage with respect to 
     such preceding plan determined under clause (i).
       ``(iii) Non-deficit reduction plan.--For purposes of clause 
     (i), the term `non-deficit reduction plan' means any plan--

       ``(I) to which this part (as in effect on the day before 
     the date of the enactment of the Pension Protection Act of 
     2005) applied for the plan year beginning in 2006, and
       ``(II) to which section 412(d) (as so in effect) did not 
     apply for such plan year.

       ``(6) Early deemed amortization upon attainment of funding 
     target.--In any case in which the funding shortfall of a plan 
     for a plan year is zero, for purposes of determining the 
     shortfall amortization charge for such plan year and 
     succeeding plan years, the shortfall amortization bases for 
     all preceding plan years (and all shortfall amortization 
     installments determined with respect to such bases) shall be 
     reduced to zero.
       ``(d) Rules Relating to Funding Target.--For purposes of 
     this section--
       ``(1) Funding target.--Except as provided in subsection 
     (i)(1) with respect to plans in at-risk status, the funding 
     target of a plan for a plan year is the present value of all 
     liabilities to participants and their beneficiaries under the 
     plan for the plan year.
       ``(2) Funding target attainment percentage.--The `funding 
     target attainment percentage' of a plan for a plan year is 
     the ratio (expressed as a percentage) which--
       ``(A) the value of plan assets for the plan year (as 
     reduced under subsection (f)(4)(B)), bears to
       ``(B) the funding target of the plan for the plan year 
     (determined without regard to subsection (i)(1)).
       ``(e) Waiver Amortization Charge.--
       ``(1) Determination of waiver amortization charge.--The 
     waiver amortization charge (if any) for a plan for any plan 
     year is the aggregate total of the waiver amortization 
     installments for such plan year with respect to the waiver 
     amortization bases for each of the 5 preceding plan years.
       ``(2) Waiver amortization installment.--The plan sponsor 
     shall determine, with respect to the waiver amortization base 
     of the plan for any plan year, the amounts necessary to 
     amortize such waiver amortization base, in level annual 
     installments over a period of 5 plan years beginning with the 
     succeeding plan year. For purposes of paragraph (1), the 
     annual installment of such amortization for each plan year in 
     such 5-plan year period is the waiver amortization 
     installment for such plan year with respect to such waiver 
     amortization base.
       ``(3) Interest rate.--In determining any waiver 
     amortization installment under this subsection, the plan 
     sponsor shall use the segment rates determined under 
     subparagraph (C) of subsection (h)(2), applied under rules 
     similar to the rules of subparagraph (B) of subsection 
     (h)(2).
       ``(4) Waiver amortization base.--The waiver amortization 
     base of a plan for a plan year is the amount of the waived 
     funding deficiency (if any) for such plan year under section 
     412(c).
       ``(5) Early deemed amortization upon attainment of funding 
     target.--In any case in which the funding shortfall of a plan 
     for a plan year is zero, for purposes of determining the 
     waiver amortization charge for such plan year and succeeding 
     plan years, the waiver amortization base for all preceding 
     plan years shall be reduced to zero.
       ``(f) Reduction of Minimum Required Contribution by Pre-
     Funding Balance and Funding Standard Carryover Balance.--
       ``(1) Election to maintain balances.--
       ``(A) Pre-funding balance.--The plan sponsor of a defined 
     benefit plan which is not a multiemployer plan may elect to 
     maintain a pre-funding balance.
       ``(B) Funding standard carryover balance.--
       ``(i) In general.--In the case of a defined benefit plan 
     (other than a multiemployer plan) described in clause (ii), 
     the plan sponsor may elect to maintain a funding standard 
     carryover balance, until such balance is reduced to zero.
       ``(ii) Plans maintaining funding standard account in 
     2006.--A plan is described in this clause if the plan--

       ``(I) was in effect for a plan year beginning in 2006, and
       ``(II) had a positive balance in the funding standard 
     account under section 412(b) as in effect for such plan year 
     and determined as of the end of such plan year.

       ``(2) Application of balances.--A pre-funding balance and a 
     funding standard carryover balance maintained pursuant to 
     this paragraph--
       ``(A) shall be available for crediting against the minimum 
     required contribution, pursuant to an election under 
     paragraph (3),
       ``(B) shall be applied as a reduction in the amount treated 
     as the value of plan assets for purposes of this section, to 
     the extent provided in paragraph (4), and
       ``(C) may be reduced at any time, pursuant to an election 
     under paragraph (5).
       ``(3) Election to apply balances against minimum required 
     contribution.--
       ``(A) In general.--Except as provided in subparagraphs (B) 
     and (C), in the case of any plan year in which the plan 
     sponsor elects to credit against the minimum required 
     contribution for the current plan year all or a portion of 
     the pre-funding balance or the funding standard carryover 
     balance for the current plan year (not in excess of such 
     minimum required contribution), the minimum required 
     contribution for the plan year shall be reduced by the amount 
     so credited by the plan sponsor. For purposes of the 
     preceding sentence, the minimum required contribution shall 
     be determined after taking into account any waiver under 
     section 412(c).
       ``(B) Coordination with funding standard carryover 
     balance.--To the extent that any plan has a funding standard 
     carryover balance greater than zero, no amount of the pre-
     funding balance of such plan may be credited under this 
     paragraph in reducing the minimum required contribution.
       ``(C) Limitation for underfunded plans.--The preceding 
     provisions of this paragraph shall not apply for any plan 
     year if the ratio (expressed as a percentage) which--
       ``(i) the value of plan assets for the preceding plan year 
     (as reduced under paragraph (4)(C)), bears to
       ``(ii) the funding target of the plan for the preceding 
     plan year (determined without regard to subsection (i)(1)),
     is less than 80 percent.
       ``(4) Effect of balances on amounts treated as value of 
     plan assets.--In the case of any plan maintaining a pre-
     funding balance or a funding standard carryover balance 
     pursuant to this subsection, the amount treated as the value 
     of plan assets shall be deemed to be such amount, reduced as 
     provided in the following subparagraphs:
       ``(A) Applicability of shortfall amortization base.--For 
     purposes of subsection (c)(5), the value of plan assets is 
     deemed to be such amount, reduced by the amount of the pre-
     funding balance, but only if an election under paragraph (2) 
     applying any portion of the pre-funding balance in reducing 
     the minimum required contribution is in effect for the plan 
     year.
       ``(B) Determination of excess assets, funding shortfall, 
     and funding target attainment percentage.--
       ``(i) In general.--For purposes of subsections (a), 
     (c)(4)(B), and (d)(2)(A), the value of plan assets is deemed 
     to be such amount, reduced by the amount of the pre-funding 
     balance and the funding standard carryover balance.
       ``(ii) Special rule for certain binding agreements with 
     pbgc.--For purposes of subsection (c)(4)(B), the value of 
     plan assets shall not be deemed to be reduced for a plan year 
     by the amount of the specified balance if, with respect to 
     such balance, there is in effect for a plan year a binding 
     written agreement with the Pension Benefit Guaranty 
     Corporation which provides that such balance is not available 
     to reduce the minimum required contribution for the plan 
     year. For purposes of the preceding sentence, the term 
     `specified balance' means the pre-funding balance or the 
     funding standard carryover balance, as the case may be.
       ``(C) Availability of balances in plan year for crediting 
     against minimum required contribution.--For purposes of 
     paragraph (3)(C)(i) of this subsection, the value of plan 
     assets is deemed to be such amount, reduced by the amount of 
     the pre-funding balance.
       ``(5) Election to reduce balance prior to determinations of 
     value of plan assets and crediting against minimum required 
     contribution.--
       ``(A) In general.--The plan sponsor may elect to reduce by 
     any amount the balance of the pre-funding balance and the 
     funding standard carryover balance for any plan year (but not 
     below zero). Such reduction shall be effective prior to any 
     determination of the value of plan assets for such plan year 
     under this section and application of the balance in reducing 
     the minimum required contribution for such plan for such plan 
     year pursuant to an election under paragraph (2).
       ``(B) Coordination between pre-funding balance and funding 
     standard carryover balance.--To the extent that any plan has 
     a funding standard carryover balance greater than zero, no 
     election may be made under subparagraph (A) with respect to 
     the pre-funding balance.
       ``(6) Pre-funding balance.--

[[Page 28605]]

       ``(A) In general.--A pre-funding balance maintained by a 
     plan shall consist of a beginning balance of zero, increased 
     and decreased to the extent provided in subparagraphs (B) and 
     (C), and adjusted further as provided in paragraph (8).
       ``(B) Increases.--As of the valuation date for each plan 
     year beginning after 2007, the pre-funding balance of a plan 
     shall be increased by the amount elected by the plan sponsor 
     for the plan year. Such amount shall not exceed the excess 
     (if any) of--
       ``(i) the aggregate total of employer contributions to the 
     plan for the preceding plan year, over
       ``(ii) the minimum required contribution for such preceding 
     plan year (increased by interest on any portion of such 
     minimum required contribution remaining unpaid as of the 
     valuation date for the current plan year, at the effective 
     interest rate for the plan for the preceding plan year, for 
     the period beginning with the first day of such preceding 
     plan year and ending on the date that payment of such portion 
     is made).
       ``(C) Decreases.--As of the valuation date for each plan 
     year after 2007, the pre-funding balance of a plan shall be 
     decreased (but not below zero) by the sum of--
       ``(i) the amount of such balance credited under paragraph 
     (2) (if any) in reducing the minimum required contribution of 
     the plan for the preceding plan year, and
       ``(ii) any reduction in such balance elected under 
     paragraph (5).
       ``(7) Funding standard carryover balance.--
       ``(A) In general.--A funding standard carryover balance 
     maintained by a plan shall consist of a beginning balance 
     determined under subparagraph (B), decreased to the extent 
     provided in subparagraph (C), and adjusted further as 
     provided in paragraph (8).
       ``(B) Beginning balance.--The beginning balance of the 
     funding standard carryover balance shall be the positive 
     balance described in paragraph (1)(B)(ii)(II).
       ``(C) Decreases.--As of the valuation date for each plan 
     year after 2007, the funding standard carryover balance of a 
     plan shall be decreased (but not below zero) by the sum of--
       ``(i) the amount of such balance credited under paragraph 
     (2) (if any) in reducing the minimum required contribution of 
     the plan for the preceding plan year, and
       ``(ii) any reduction in such balance elected under 
     paragraph (5).
       ``(8) Adjustments to balances.--In determining the pre-
     funding balance or the funding standard carryover balance of 
     a plan as of the valuation date (before applying any increase 
     or decrease under paragraph (6) or (7)), the plan sponsor 
     shall, in accordance with regulations which shall be 
     prescribed by the Secretary, adjust such balance so as to 
     reflect the rate of net gain or loss (determined, 
     notwithstanding subsection (g)(3), on the basis of fair 
     market value) experienced by all plan assets for the period 
     beginning with the valuation date for the preceding plan year 
     and ending with the date preceding the valuation date for the 
     current plan year, properly taking into account, in 
     accordance with such regulations, all contributions, 
     distributions, and other plan payments made during such 
     period.
       ``(9) Elections.--Elections under this subsection shall be 
     made at such times, and in such form and manner, as shall be 
     prescribed in regulations of the Secretary.
       ``(g) Valuation of Plan Assets and Liabilities.--
       ``(1) Timing of determinations.--Except as otherwise 
     provided under this subsection, all determinations under this 
     section for a plan year shall be made as of the valuation 
     date of the plan for such plan year.
       ``(2) Valuation date.--For purposes of this section--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the valuation date of a plan for any plan year shall be the 
     first day of the plan year.
       ``(B) Exception for small plans.--If, on each day during 
     the preceding plan year, a plan had 500 or fewer 
     participants, the plan may designate any day during the plan 
     year as its valuation date for such plan year and succeeding 
     plan years. For purposes of this subparagraph, all defined 
     benefit plans (other than multiemployer plans) maintained by 
     the same employer (or any member of such employer's 
     controlled group) shall be treated as 1 plan, but only 
     participants with respect to such employer or member shall be 
     taken into account.
       ``(C) Application of certain rules in determination of plan 
     size.--For purposes of this paragraph--
       ``(i) Plans not in existence in preceding year.--In the 
     case of the first plan year of any plan, subparagraph (B) 
     shall apply to such plan by taking into account the number of 
     participants that the plan is reasonably expected to have on 
     days during such first plan year.
       ``(ii) Predecessors.--Any reference in subparagraph (B) to 
     an employer shall include a reference to any predecessor of 
     such employer.
       ``(3) Authorization of use of actuarial value.--For 
     purposes of this section, the value of plan 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, except that--
       ``(A) any such method providing for averaging of fair 
     market values may not provide for averaging of such values 
     over more than the 36-month period ending with the month 
     which includes the valuation date, and
       ``(B) any such method may not result in a determination of 
     the value of plan assets which, at any time, is lower than 90 
     percent or greater than 110 percent of the fair market value 
     of such assets at such time.
       ``(4) Accounting for contribution receipts.--For purposes 
     of this section--
       ``(A) Contributions for prior plan years taken into 
     account.--For purposes of determining the value of plan 
     assets for any current plan year, in any case in which a 
     contribution properly allocable to amounts owed for a 
     preceding plan year is made on or after the valuation date of 
     the plan for such current plan year, such contribution shall 
     be taken into account, except that any such contribution made 
     during any such current plan year beginning after 2007 shall 
     be taken into account only in an amount equal to its present 
     value (determined using the effective rate of interest for 
     the plan for the preceding plan year) as of the valuation 
     date of the plan for such current plan year.
       ``(B) Contributions for current plan year disregarded.--For 
     purposes of determining the value of plan assets for any 
     current plan year, contributions which are properly allocable 
     to amounts owed for such plan year shall not be taken into 
     account, and, in the case of any such contribution made 
     before the valuation date of the plan for such plan year, 
     such value of plan assets shall be reduced for interest on 
     such amount determined using the effective rate of interest 
     of the plan for the current plan year for the period 
     beginning when such payment was made and ending on the 
     valuation date of the plan.
       ``(5) Accounting for plan liabilities.--For purposes of 
     this section--
       ``(A) Liabilities taken into account for current plan 
     year.--In determining the value of liabilities under a plan 
     for a plan year, liabilities shall be taken into account to 
     the extent attributable to benefits (including any early 
     retirement or similar benefit) accrued or earned as of the 
     beginning of the plan year.
       ``(B) Accruals during current plan year disregarded.--For 
     purposes of subparagraph (A), benefits accrued or earned 
     during such plan year shall not be taken into account, 
     irrespective of whether the valuation date of the plan for 
     such plan year is later than the first day of such plan year.
       ``(h) Actuarial Assumptions and Methods.--
       ``(1) In general.--Subject to this subsection, the 
     determination of any present value or other computation under 
     this section shall be made on the basis of actuarial 
     assumptions and methods--
       ``(A) each of which is reasonable (taking into account the 
     experience of the plan and reasonable expectations), and
       ``(B) which, in combination, offer the actuary's best 
     estimate of anticipated experience under the plan.
       ``(2) Interest rates.--
       ``(A) Effective interest rate.--For purposes of this 
     section, the term `effective interest rate' means, with 
     respect to any plan for any plan year, the single rate of 
     interest which, if used to determine the present value of the 
     plan's liabilities referred to in subsection (d)(1), would 
     result in an amount equal to the funding target of the plan 
     for such plan year.
       ``(B) Interest rates for determining funding target.--For 
     purposes of determining the funding target of a plan for any 
     plan year, the interest rate used in determining the present 
     value of the liabilities of the plan shall be--
       ``(i) in the case of liabilities reasonably determined to 
     be payable during the 5-year period beginning on the first 
     day of the plan year, the first segment rate with respect to 
     the applicable month,
       ``(ii) in the case of liabilities reasonably determined to 
     be payable during the 15-year period beginning at the end of 
     the period described in clause (i), the second segment rate 
     with respect to the applicable month, and
       ``(iii) in the case of liabilities reasonably determined to 
     be payable after the period described in clause (ii), the 
     third segment rate with respect to the applicable month.
       ``(C) Segment rates.--For purposes of this paragraph--
       ``(i) First segment rate.--The term `first segment rate' 
     means, with respect to any month, the single rate of interest 
     which shall be determined by the Secretary for such month on 
     the basis of the corporate bond yield curve for such month, 
     taking into account only that portion of such yield curve 
     which is based on bonds maturing during the 5-year period 
     commencing with such month.
       ``(ii) Second segment rate.--The term `second segment rate' 
     means, with respect to any month, the single rate of interest 
     which shall be determined by the Secretary for such month on 
     the basis of the corporate bond yield curve for such month, 
     taking into account only that portion of such yield curve 
     which is based on bonds maturing during the 15-year period 
     beginning at the end of the period described in clause (i).
       ``(iii) Third segment rate.--The term `third segment rate' 
     means, with respect to

[[Page 28606]]

     any month, the single rate of interest which shall be 
     determined by the Secretary for such month on the basis of 
     the corporate bond yield curve for such month, taking into 
     account only that portion of such yield curve which is based 
     on bonds maturing during periods beginning after the period 
     described in clause (ii).
       ``(D) Corporate bond yield curve.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `corporate bond yield curve' 
     means, with respect to any month, a yield curve which is 
     prescribed by the Secretary for such month and which reflects 
     a 3-year weighted average of yields on investment grade 
     corporate bonds with varying maturities.
       ``(ii) 3-year weighted average.--The term `3-year weighted 
     average' means an average determined by using a methodology 
     under which the most recent year is weighted 50 percent, the 
     year preceding such year is weighted 35 percent, and the 
     second year preceding such year is weighted 15 percent.
       ``(E) Applicable month.--For purposes of this paragraph, 
     the term `applicable month' means, with respect to any plan 
     for any plan year, the month which includes the valuation 
     date of such plan for such plan year or, at the election of 
     the plan sponsor, any of the 4 months which precede such 
     month. Any election made under this subparagraph shall apply 
     to the plan year for which the election is made and all 
     succeeding plan years, unless the election is revoked with 
     the consent of the Secretary.
       ``(F) Publication requirements.--The Secretary shall 
     publish for each month the corporate bond yield curve (and 
     the corporate bond yield curve reflecting the modification 
     described in section 417(e)(3)(D)(i) for such month and each 
     of the rates determined under subparagraph (B) for such 
     month. The Secretary shall also publish a description of the 
     methodology used to determine such yield curve and such rates 
     which is sufficiently detailed to enable plans to make 
     reasonable projections regarding the yield curve and such 
     rates for future months based on the plan's projection of 
     future interest rates.
       ``(G) Transition rule.--
       ``(i) In general.--Notwithstanding the preceding provisions 
     of this paragraph, for plan years beginning in 2007 or 2008, 
     the first, second, or third segment rate for a plan with 
     respect to any month shall be equal to the sum of--

       ``(I) the product of such rate for such month determined 
     without regard to this subparagraph, multiplied by the 
     applicable percentage, and
       ``(II) the product of the rate determined under the rules 
     of section 412(b)(5)(B)(ii)(II) (as in effect for plan years 
     beginning in 2006), multiplied by a percentage equal to 100 
     percent minus the applicable percentage.

       ``(ii) Applicable percentage.--For purposes of clause (i), 
     the applicable percentage is 33\1/3\ percent for plan years 
     beginning in 2007 and 66\2/3\ percent for plan years 
     beginning in 2008.
       ``(iii) New plans ineligible.--Clause (i) shall not apply 
     to any plan if the first plan year of the plan begins after 
     December 31, 2006.
       ``(3) Mortality table.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the mortality table used in determining any present value or 
     making any computation under this section shall be the RP-
     2000 Combined Mortality Table using Scale AA published by the 
     Society of Actuaries (as in effect on the date of the 
     enactment of the Pension Protection Act of 2005), projected 
     as of the plan's valuation date.
       ``(B) Substitute mortality table.--
       ``(i) In general.--Upon request by the plan sponsor and 
     approval by the Secretary for a period not to exceed 10 
     years, a mortality table which meets the requirements of 
     clause (ii) shall be used in determining any present value or 
     making any computation under this section. A mortality table 
     described in this clause shall cease to be in effect if the 
     plan actuary determines at any time that such table does not 
     meet the requirements of subclauses (I) and (II) of clause 
     (ii).
       ``(ii) Requirements.--A mortality table meets the 
     requirements of this clause if the Secretary determines 
     that--

       ``(I) such table reflects the actual experience of the 
     pension plan and projected trends in such experience, and
       ``(II) such table is significantly different from the table 
     described in subparagraph (A).

       ``(iii) Deadline for disposition of application.--Any 
     mortality table submitted to the Secretary for approval under 
     this subparagraph shall be treated as in effect for the 
     succeeding plan year unless the Secretary, during the 180-day 
     period beginning on the date of such submission, disapproves 
     of such table and provides the reasons that such table fails 
     to meet the requirements of clause (ii).
       ``(C) Transition rule.--Under regulations of the Secretary, 
     any difference in present value resulting from the difference 
     in the assumptions as set forth in the mortality table 
     specified in subparagraph (A) and the assumptions as set 
     forth in the mortality table described in section 
     412(l)(7)(C)(ii) (as in effect for plan years beginning in 
     2006) shall be phased in ratably over the first period of 5 
     plan years beginning in or after 2007 so as to be fully 
     effective for the fifth plan year. The preceding sentence 
     shall not apply to any plan if the first plan year of the 
     plan begins after December 31, 2006.
       ``(4) Probability of benefit payments in the form of lump 
     sums or other optional forms.--For purposes of determining 
     any present value or making any computation under this 
     section, there shall be taken into account--
       ``(A) the probability that future benefit payments under 
     the plan will be made in the form of optional forms of 
     benefits provided under the plan (including lump sum 
     distributions, determined on the basis of the plan's 
     experience and other related assumptions), and
       ``(B) any difference in the present value of such future 
     benefit payments resulting from the use of actuarial 
     assumptions, in determining benefit payments in any such 
     optional form of benefits, which are different from those 
     specified in this subsection.
       ``(5) Approval of large changes in actuarial assumptions.--
       ``(A) In general.--No actuarial assumption used to 
     determine the funding target for a plan to which this 
     paragraph applies may be changed without the approval of the 
     Secretary.
       ``(B) Plans to which paragraph applies.--This paragraph 
     shall apply to a plan only if--
       ``(i) the plan is a defined benefit plan (other than a 
     multiemployer plan) to which title IV of the Employee 
     Retirement Income Security Act of 1974 applies,
       ``(ii) the aggregate unfunded vested benefits as of the 
     close of the preceding plan year (as determined under section 
     4006(a)(3)(E)(iii) of the Employee Retirement Income Security 
     Act of 1974) of such plan and all other plans maintained by 
     the contributing sponsors (as defined in section 4001(a)(13) 
     of such Act) and members of such sponsors' controlled groups 
     (as defined in section 4001(a)(14) of such Act) which are 
     covered by title IV (disregarding plans with no unfunded 
     vested benefits) exceed $50,000,000, and
       ``(iii) the change in assumptions (determined after taking 
     into account any changes in interest rate and mortality 
     table) results in a decrease in the funding shortfall of the 
     plan for the current plan year that exceeds $50,000,000, or 
     that exceeds $5,000,000 and that is 5 percent or more of the 
     funding target of the plan before such change.
       ``(i) Special Rules for at-Risk Plans.--
       ``(1) Funding target for plans in at-risk status.--
       ``(A) In general.--In any case in which a plan is in at-
     risk status for a plan year, the funding target of the plan 
     for the plan year is the sum of--
       ``(i) the present value of all liabilities to participants 
     and their beneficiaries under the plan for the plan year, as 
     determined by using, in addition to the actuarial assumptions 
     described in subsection (h), the supplemental actuarial 
     assumptions described in subparagraph (B), plus
       ``(ii) a loading factor determined under subparagraph (C).
       ``(B) Supplemental actuarial assumptions.--The actuarial 
     assumptions used in determining the valuation of the funding 
     target shall include, in addition to the actuarial 
     assumptions described in subsection (h), an assumption that 
     all participants will elect benefits at such times and in 
     such forms as will result in the highest present value of 
     liabilities under subparagraph (A)(i).
       ``(C) Loading factor.--The loading factor applied with 
     respect to a plan under this paragraph for any plan year is 
     the sum of--
       ``(i) $700, times the number of participants in the plan, 
     plus
       ``(ii) 4 percent of the funding target (determined without 
     regard to this paragraph) of the plan for the plan year.
       ``(2) Target normal cost of at-risk plans.--In any case in 
     which a plan is in at-risk status for a plan year, the target 
     normal cost of the plan for such plan year shall be the sum 
     of--
       ``(A) the present value of all benefits which are expected 
     to accrue or be earned under the plan during the plan year, 
     determined under the actuarial assumptions used under 
     paragraph (1), plus
       ``(B) the loading factor under paragraph (1)(C), excluding 
     the portion of the loading factor described in paragraph 
     (1)(C)(i).
       ``(3) Determination of at-risk status.--For purposes of 
     this subsection, a plan is in `at-risk status' for a plan 
     year if the funding target attainment percentage of the plan 
     for the preceding plan year was less than 60 percent.
       ``(4) Transition between applicable funding targets and 
     between applicable target normal costs.--
       ``(A) In general.--In any case in which a plan which is in 
     at-risk status for a plan year has been in such status for a 
     consecutive period of fewer than 5 plan years, the applicable 
     amount of the funding target and of the target normal cost 
     shall be, in lieu of the amount determined without regard to 
     this paragraph, the sum of--
       ``(i) the amount determined under this section without 
     regard to this subsection, plus
       ``(ii) the transition percentage for such plan year of the 
     excess of the amount determined under this subsection 
     (without regard to this paragraph) over the amount determined 
     under this section without regard to this subsection.

[[Page 28607]]

       ``(B) Transition percentage.--For purposes of this 
     paragraph, the `transition percentage' for a plan year is the 
     product derived by multiplying--
       ``(i) 20 percent, by
       ``(ii) the number of plan years during the period described 
     in subparagraph (A).
       ``(j) Payment of Minimum Required Contributions.--
       ``(1) In general.--For purposes of this section, the due 
     date for any payment of any minimum required contribution for 
     any plan year shall be 8\1/2\ months after the close of the 
     plan year.
       ``(2) Interest.--Any payment required under paragraph (1) 
     for a plan year that is made on a date other than the 
     valuation date for such plan year shall be adjusted for 
     interest accruing for the period between the valuation date 
     and the payment date, at the effective rate of interest for 
     the plan for such plan year.
       ``(3) Accelerated quarterly contribution schedule for 
     underfunded plans.--
       ``(A) Interest penalty for failure to meet accelerated 
     quarterly payment schedule.--In any case in which the plan 
     has a funding shortfall for the preceding plan year, if the 
     required installment is not paid in full, then the minimum 
     required contribution for the plan year (as increased under 
     paragraph (2)) shall be further increased by an amount equal 
     to the interest on the amount of the underpayment for the 
     period of the underpayment, using an interest rate equal to 
     the excess of--
       ``(i) 175 percent of the Federal mid-term rate (as in 
     effect under section 1274 for the 1st month of such plan 
     year), over
       ``(ii) the effective rate of interest for the plan for the 
     plan year.
       ``(B) Amount of underpayment, period of underpayment.--For 
     purposes of subparagraph (A)--
       ``(i) Amount.--The amount of the underpayment shall be the 
     excess of--

       ``(I) the required installment, over
       ``(II) the amount (if any) of the installment contributed 
     to or under the plan on or before the due date for the 
     installment.

       ``(ii) Period of underpayment.--The period for which any 
     interest is charged under this paragraph with respect to any 
     portion of the underpayment shall run from the due date for 
     the installment to the date on which such portion is 
     contributed to or under the plan.
       ``(iii) Order of crediting contributions.--For purposes of 
     clause (i)(II), contributions shall be credited against 
     unpaid required installments in the order in which such 
     installments are required to be paid.
       ``(C) Number of required installments; due dates.--For 
     purposes of this paragraph--
       ``(i) Payable in 4 installments.--There shall be 4 required 
     installments for each plan year.
       ``(ii) Time for payment of installments.--The due dates for 
     required installments are set forth in the following table:

 
  ``In the case of the following required
               installment:                       The due date is:
 
  1st.....................................  April 15
  2nd.....................................  July 15
  3rd.....................................  October 15
  4th.....................................  January 15 of the following
                                             year
 

       ``(D) Amount of required installment.--For purposes of this 
     paragraph--
       ``(i) In general.--The amount of any required installment 
     shall be 25 percent of the required annual payment.
       ``(ii) Required annual payment.--For purposes of clause 
     (i), the term `required annual payment' means the lesser of--

       ``(I) 90 percent of the minimum required contribution 
     (without regard to any waiver under section 412(c)) to the 
     plan for the plan year under this section, or
       ``(II) in the case of a plan year beginning after 2007, 100 
     percent of the minimum required contribution (without regard 
     to any waiver under section 412(c)) to the plan for the 
     preceding plan year.

     Subclause (II) shall not apply if the preceding plan year 
     referred to in such clause was not a year of 12 months.
       ``(E) Fiscal years and short years.--
       ``(i) Fiscal years.--In applying this paragraph to a plan 
     year beginning on any date other than January 1, there shall 
     be substituted for the months specified in this paragraph, 
     the months which correspond thereto.
       ``(ii) Short plan year.--This subparagraph shall be applied 
     to plan years of less than 12 months in accordance with 
     regulations prescribed by the Secretary.
       ``(4) Liquidity requirement in connection with quarterly 
     contributions.--
       ``(A) In general.--A plan to which this paragraph applies 
     shall be treated as failing to pay the full amount of any 
     required installment under paragraph (3) to the extent that 
     the value of the liquid assets paid in such installment is 
     less than the liquidity shortfall (whether or not such 
     liquidity shortfall exceeds the amount of such installment 
     required to be paid but for this paragraph).
       ``(B) Plans to which paragraph applies.--This paragraph 
     shall apply to a plan (other than a plan that would be 
     described in subsection (f)(2)(B) if `100' were substituted 
     for `500' therein) which--
       ``(i) is required to pay installments under paragraph (3) 
     for a plan year, and
       ``(ii) has a liquidity shortfall for any quarter during 
     such plan year.
       ``(C) Period of underpayment.--For purposes of paragraph 
     (3)(A), any portion of an installment that is treated as not 
     paid under subparagraph (A) shall continue to be treated as 
     unpaid until the close of the quarter in which the due date 
     for such installment occurs.
       ``(D) Limitation on increase.--If the amount of any 
     required installment is increased by reason of subparagraph 
     (A), in no event shall such increase exceed the amount which, 
     when added to prior installments for the plan year, is 
     necessary to increase the funding target attainment 
     percentage of the plan for the plan year (taking into account 
     the expected increase in funding target due to benefits 
     accruing or earned during the plan year) to 100 percent.
       ``(E) Definitions.--For purposes of this subparagraph:
       ``(i) Liquidity shortfall.--The term `liquidity shortfall' 
     means, with respect to any required installment, an amount 
     equal to the excess (as of the last day of the quarter for 
     which such installment is made) of--

       ``(I) the base amount with respect to such quarter, over
       ``(II) the value (as of such last day) of the plan's liquid 
     assets.

       ``(ii) Base amount.--

       ``(I) In general.--The term `base amount' means, with 
     respect to any quarter, an amount equal to 3 times the sum of 
     the adjusted disbursements from the plan for the 12 months 
     ending on the last day of such quarter.
       ``(II) Special rule.--If the amount determined under 
     subclause (I) exceeds an amount equal to 2 times the sum of 
     the adjusted disbursements from the plan for the 36 months 
     ending on the last day of the quarter and an enrolled actuary 
     certifies to the satisfaction of the Secretary that such 
     excess is the result of nonrecurring circumstances, the base 
     amount with respect to such quarter shall be determined 
     without regard to amounts related to those nonrecurring 
     circumstances.

       ``(iii) Disbursements from the plan.--The term 
     `disbursements from the plan' means all disbursements from 
     the trust, including purchases of annuities, payments of 
     single sums and other benefits, and administrative expenses.
       ``(iv) Adjusted disbursements.--The term `adjusted 
     disbursements' means disbursements from the plan reduced by 
     the product of--

       ``(I) the plan's funding target attainment percentage for 
     the plan year, and
       ``(II) the sum of the purchases of annuities, payments of 
     single sums, and such other disbursements as the Secretary 
     shall provide in regulations.

       ``(v) Liquid assets.--The term `liquid assets' means cash, 
     marketable securities, and such other assets as specified by 
     the Secretary in regulations.
       ``(vi) Quarter.--The term `quarter' means, with respect to 
     any required installment, the 3-month period preceding the 
     month in which the due date for such installment occurs.
       ``(F) Regulations.--The Secretary may prescribe such 
     regulations as are necessary to carry out this paragraph.
       ``(k) Imposition of Lien Where Failure to Make Required 
     Contributions.--
       ``(1) In general.--In the case of a plan to which this 
     subsection applies, if--
       ``(A) any person fails to make a contribution payment 
     required by section 412 and this section before the due date 
     for such payment, and
       ``(B) the unpaid balance of such payment (including 
     interest), when added to the aggregate unpaid balance of all 
     preceding such payments for which payment was not made before 
     the due date (including interest), exceeds $1,000,000,
     then there shall be a lien in favor of the plan in the amount 
     determined under paragraph (3) upon all property and rights 
     to property, whether real or personal, belonging to such 
     person and any other person who is a member of the same 
     controlled group of which such person is a member.
       ``(2) Plans to which subsection applies.--This subsection 
     shall apply to a defined benefit plan (other than a 
     multiemployer plan) for any plan year for which the funding 
     target attainment percentage (as defined in subsection 
     (d)(2)) of such plan is less than 100 percent. 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 Pension Protection Act of 2005).
       ``(3) Amount of lien.--For purposes of paragraph (1), the 
     amount of the lien shall be equal to the aggregate unpaid 
     balance of contribution payments required under this section 
     and section 412 for which payment has not been made before 
     the due date.
       ``(4) Notice of failure; lien.--
       ``(A) Notice of failure.--A person committing a failure 
     described in paragraph (1) shall notify the Pension Benefit 
     Guaranty Corporation of such failure within 10 days of the 
     due date for the required contribution payment.
       ``(B) Period of lien.--The lien imposed by paragraph (1) 
     shall arise on the due date for

[[Page 28608]]

     the required contribution payment and shall continue until 
     the last day of the first plan year in which the plan ceases 
     to be described in paragraph (1)(B). Such lien shall continue 
     to run without regard to whether such plan continues to be 
     described in paragraph (2) during the period referred to in 
     the preceding sentence.
       ``(C) Certain rules to apply.--Any amount with respect to 
     which a lien is imposed under paragraph (1) shall be treated 
     as taxes due and owing the United States and rules similar to 
     the rules of subsections (c), (d), and (e) of section 4068 of 
     the Employee Retirement Income Security Act of 1974 shall 
     apply with respect to a lien imposed by subsection (a) and 
     the amount with respect to such lien.
       ``(5) Enforcement.--Any lien created under paragraph (1) 
     may be perfected and enforced only by the Pension Benefit 
     Guaranty Corporation, or at the direction of the Pension 
     Benefit Guaranty Corporation, by the contributing sponsor (or 
     any member of the controlled group of the contributing 
     sponsor).
       ``(6) Definitions.--For purposes of this subsection--
       ``(A) Contribution payment.--The term `contribution 
     payment' means, in connection with a plan, a contribution 
     payment required to be made to the plan, including any 
     required installment under paragraphs (3) and (4) of 
     subsection (i).
       ``(B) Due date; required installment.--The terms `due date' 
     and `required installment' have the meanings given such terms 
     by subsection (j), except that in the case of a payment other 
     than a required installment, the due date shall be the date 
     such payment is required to be made under section 430.
       ``(C) Controlled group.--The term `controlled group' means 
     any group treated as a single employer under subsections (b), 
     (c), (m), and (o) of section 414.
       ``(l) Qualified Transfers to Health Benefit Accounts.--In 
     the case of a qualified transfer (as defined in section 420), 
     any assets so transferred shall not, for purposes of this 
     section, be treated as assets in the plan.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply with respect to plan years beginning after 
     December 31, 2006.

     SEC. 113. BENEFIT LIMITATIONS UNDER SINGLE-EMPLOYER PLANS.

       (a) Prohibition of Shutdown Benefits and Other 
     Unpredictable Contingent Event Benefits Under Single-Employer 
     Plans.--
       (1) In general.--Part III of subchapter D of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to deferred 
     compensation, etc.) is amended--
       (A) by striking the heading and inserting the following:

  ``PART III--RULES RELATING TO MINIMUM FUNDING STANDARDS AND BENEFIT 
                              LIMITATIONS

``Subpart A. Minimum funding standards for pension plans.
``Subpart B. Benefit limitations under single-employer plans.

        ``Subpart A--Minimum Funding Standards for Pension Plans

``Sec. 430. Minimum funding standards for single-employer defined 
              benefit pension plans.'', and
       (B) by adding at the end the following new subpart:

      ``Subpart B--Benefit Limitations Under Single-employer Plans

``Sec. 436. Funding-based limitation on shutdown benefits and other 
              unpredictable contingent event benefits under single-
              employer plans.

     ``SEC. 436. FUNDING-BASED LIMITATION ON SHUTDOWN BENEFITS AND 
                   OTHER UNPREDICTABLE CONTINGENT EVENT BENEFITS 
                   UNDER SINGLE-EMPLOYER PLANS.

       ``(a) In General.--No defined benefit plan (other than a 
     multiemployer plan) may provide benefits to which 
     participants are entitled solely by reason of the occurrence 
     of a plant shutdown or any other unpredictable contingent 
     event occurring during any plan year if the funding target 
     attainment percentage as of the valuation date of the plan 
     for such plan year--
       ``(1) is less than 80 percent, or
       ``(2) would be less than 80 percent taking into account 
     such occurrence.
       ``(b) Exemption.--Subsection (a) shall cease to apply with 
     respect to any plan year, effective as of the first date of 
     the plan year, upon payment by the plan sponsor of a 
     contribution (in addition to any minimum required 
     contribution under section 430) equal to--
       ``(1) in the case of subsection (a)(1), the amount of the 
     increase in the funding target of the plan (under section 
     430) for the plan year attributable to the occurrence 
     referred to in subsection (a), and
       ``(2) in the case of subsection (a)(2), the amount 
     sufficient to result in a funding target attainment 
     percentage of 80 percent.
     Rules similar to the rules of section 437(f) shall apply for 
     purposes of this subsection.
       ``(c) Unpredictable Contingent Event.--For purposes of this 
     section, the term `unpredictable contingent event' means an 
     event other than--
       ``(1) attainment of any age, performance of any service, 
     receipt or derivation of any compensation, or the occurrence 
     of death or disability, or
       ``(2) an event which is reasonably and reliably predictable 
     (as determined by the Secretary).
       ``(d) New Plans.--Subsection (a) shall not apply to a plan 
     for the first 5 plan years of the plan. For purposes of this 
     subsection, the reference in this subsection to a plan shall 
     include a reference to any predecessor plan.
       ``(e) Deemed Reduction of Funding Balances.--A rule similar 
     to the rule of section 437(h) shall apply for purposes of 
     this section.''.
       (2) Clerical amendment.--The table of parts for suchapter D 
     of chapter 1 of the Internal Revenue Code of 1986 is amended 
     by adding at the end the following new item:

  ``Part III_Rules Relating to Minimum Funding Standards and Benefit 
                             Limitations''.

       (b) Other Limits on Benefits and Benefit Accruals.--
       (1) In general.--Subpart B of part III of subchapter D of 
     chapter 1 of such Code is amended by adding at the end the 
     following:

     ``SEC. 437. FUNDING-BASED LIMITS ON BENEFITS AND BENEFIT 
                   ACCRUALS UNDER SINGLE-EMPLOYER PLANS.

       ``(a) Limitations on Plan Amendments Increasing Liability 
     for Benefits.--
       ``(1) In general.--No amendment to a defined benefit plan 
     (other than a multiemployer plan) which has the effect of 
     increasing liabilities of the plan by reason of increases in 
     benefits, establishment of new benefits, changing the rate of 
     benefit accrual, or changing the rate at which benefits 
     become nonforfeitable to the plan may take effect during any 
     plan year if the funding target attainment percentage as of 
     the valuation date of the plan for such plan year is--
       ``(A) less than 80 percent, or
       ``(B) would be less than 80 percent taking into account 
     such amendment.

     For purposes of this paragraph, any increase in benefits 
     under the plan by reason of an increase in the benefit rate 
     provided under the plan or on the basis of an increase in 
     compensation shall be treated as effected by plan amendment.
       ``(2) Exemption.--Paragraph (1) shall cease to apply with 
     respect to any plan year, effective as of the first date of 
     the plan year (or if later, the effective date of the 
     amendment), upon payment by the plan sponsor of a 
     contribution (in addition to any minimum required 
     contribution under section 430) equal to--
       ``(A) in the case of paragraph (1)(A), the amount of the 
     increase in the funding target of the plan (under section 
     430) for the plan year attributable to the amendment, and
       ``(B) in the case of paragraph (1)(B), the amount 
     sufficient to result in a funding target attainment 
     percentage of 80 percent.
       ``(b) Funding-Based Limitation on Certain Forms of 
     Distribution.--
       ``(1) In general.--A defined benefit plan (other than a 
     multiemployer plan) shall provide that, in any case in which 
     the plan's funding target attainment percentage as of the 
     valuation date of the plan for a plan year is less than 80 
     percent, the plan may not after such date pay any payment 
     described in section 401(a)(32)(B).
       ``(2) Exception.--Paragraph (1) shall not apply to any plan 
     for any plan year if the terms of such plan (as in effect for 
     the period beginning on June 29, 2005, and ending with such 
     plan year) provide for no benefit accruals with respect to 
     any participant during such period.
       ``(c) Limitations on Benefit Accruals for Plans With Severe 
     Funding Shortfalls.--A defined benefit plan (other than a 
     multiemployer plan) shall provide that, in any case in which 
     the plan's funding target attainment percentage as of the 
     valuation date of the plan for a plan year is less than 60 
     percent, all future benefit accruals under the plan shall 
     cease as of such date.
       ``(d) New Plans.--Subsections (a) and (c) shall not apply 
     to a plan for the first 5 plan years of the plan. For 
     purposes of this subsection, the reference in this subsection 
     to a plan shall include a reference to any predecessor plan.
       ``(e) Presumed Underfunding for Purposes of Benefit 
     Limitations Based on Prior Year's Funding Status.--
       ``(1) Presumption of continued underfunding.--In any case 
     in which a benefit limitation under subsection (a), (b), or 
     (c) has been applied to a plan with respect to the plan year 
     preceding the current plan year, the funding target 
     attainment percentage of the plan as of the valuation date of 
     the plan for the current plan year shall be presumed to be 
     equal to the funding target attainment percentage of the plan 
     as of the valuation date of the plan for the preceding plan 
     year until the enrolled actuary of the plan certifies the 
     actual funding target attainment percentage of the plan as of 
     the valuation date of the plan for the current plan year.
       ``(2) Presumption of underfunding after 10th month.--In any 
     case in which no such certification is made with respect to 
     the plan before the first day of the 10th month of the

[[Page 28609]]

     current plan year, for purposes of subsections (a), (b), and 
     (c), the plan's funding target attainment percentage shall be 
     conclusively presumed to be less than 60 percent as of the 
     first day of such 10th month, and such day shall be deemed, 
     for purposes of such subsections, to be the valuation date of 
     the plan for the current plan year.
       ``(3) Presumption of underfunding after 4th month for 
     nearly underfunded plans.--In any case in which--
       ``(A) a benefit limitation under subsection (a), (b), or 
     (c) did not apply to a plan with respect to the plan year 
     preceding the current plan year, but the funding target 
     attainment percentage of the plan for such preceding plan 
     year was not more than 10 percentage points greater than the 
     percentage which would have caused such subsection to apply 
     to the plan with respect to such preceding plan year, and
       ``(B) as of the first day of the 4th month of the current 
     plan year, the enrolled actuary of the plan has not certified 
     the actual funding target attainment percentage of the plan 
     as of the valuation date of the plan for the current plan 
     year,

     until the enrolled actuary so certifies, such first day shall 
     be deemed, for purposes of such subsection, to be the 
     valuation date of the plan for the current plan year and the 
     funding target attainment percentage of the plan as of such 
     first day shall, for purposes of such subsection, be presumed 
     to be equal to 10 percentage points less than the funding 
     target attainment percentage of the plan as of the valuation 
     date of the plan for such preceding plan year.
       ``(f) Restoration by Plan Amendment of Benefits or Benefit 
     Accrual.--In any case in which a prohibition under subsection 
     (b) of a payment described in subsection (b)(1) or a 
     cessation of benefit accruals under subsection (c) is applied 
     to a plan with respect to any plan year and such prohibition 
     or cessation, as the case may be, ceases to apply to any 
     subsequent plan year, the plan may provide for the resumption 
     of such benefit payment or such benefit accrual only by means 
     of the adoption of a plan amendment after the valuation date 
     of the plan for such subsequent plan year. The preceding 
     sentence shall not apply to a prohibition or cessation 
     required by reason of subsection (e).
       ``(g) Funding Target Attainment Percentage.--
       ``(1) In general.--For purposes of this section, the term 
     `funding target attainment percentage' means, with respect to 
     any plan for any plan year, the ratio (expressed as a 
     percentage) which--
       ``(A) the value of plan assets for the plan year (as 
     determined under section 430(g)) reduced by the pre-funding 
     balance and the funding standard carryover balance (within 
     the meaning of section 430(f)), bears to
       ``(B) the funding target of the plan for the plan year (as 
     determined under section 430(d)(1), but without regard to 
     section 430(i)(1)).
       ``(2) Application to plans which are fully funded without 
     regard to reductions for funding balances.--
       ``(A) In general.--In the case of a plan for any plan year, 
     if the funding target attainment percentage is 100 percent or 
     more (determined without regard to this subparagraph and 
     without regard to the reduction under paragraph (1)(A) for 
     the pre-funding balance and the funding standard carryover 
     balance), paragraph (1) shall be applied without regard to 
     such reduction.
       ``(B) Transition rule.--Subparagraph (A) shall be applied 
     to plan years beginning after 2006 and before 2011 by 
     substituting for `100 percent' the applicable percentage 
     determined in accordance with the following table:

 
 ``In the case of a plan year beginning in    The applicable percentage
              calendar year:                             is:
 
2007......................................  92 percent
2008......................................  94 percent
2009......................................  96 percent
2010......................................  98 percent.
 

       ``(C) Limitation.--Subparagraph (B) shall not apply with 
     respect to any plan year after 2007 unless the funding target 
     attainment percentage (determined without regard to this 
     paragraph and without regard to the reduction under paragraph 
     (1)(A) for the pre-funding balance and the funding standard 
     carryover balance) of the plan for each preceding plan year 
     after 2006 was not less than the applicable percentage with 
     respect to such preceding plan year determined under 
     subparagraph (B).
       ``(h) Deemed Reduction of Funding Balances.--In the case of 
     a plan maintained pursuant to 1 or more collective bargaining 
     agreements between employee representatives and 1 or more 
     employers--
       ``(1) In general.--In any case in which a benefit 
     limitation under subsection (a), (b), or (c) would (but for 
     this subsection and determined without regard to subsection 
     (a)(2)) apply to such plan for the plan year, the plan 
     sponsor of such plan shall be treated for purposes of this 
     title as having made an election under section 430(f)(5) to 
     reduce the balance of the pre-funding balance and the funding 
     standard carryover balance for the plan year (in a manner 
     consistent with the requirements of section 430(f)(5)(B)) by 
     such amount as is necessary for such benefit limitation to 
     not apply to the plan for such plan year.
       ``(2) Exception for insufficient funding balances.--
     Paragraph (1) shall not apply with respect to a benefit 
     limitation for any plan year if the application of paragraph 
     (1) would not result in the benefit limitation not applying 
     for such plan year.''.
       (2) Clerical amendment.--The table of sections for such 
     subpart is amended by adding at the end the following new 
     item:

``Sec. 437. Funding-based limits on benefits and benefit accruals under 
              single-employer plans.''.
       (c) Effective Date.--
       (1) Shutdown benefits.--Except as provided in paragraph 
     (3), the amendments made by subsection (a) shall apply with 
     respect to plant shutdowns, or other unpredictable contingent 
     events, occurring after December 31, 2006.
       (2) Other benefits.--Except as provided in paragraph (3), 
     the amendments made by subsection (b) shall apply with 
     respect to plan years beginning after December 31, 2006.
       (3) Collective bargaining exception.--In the case of a plan 
     maintained pursuant to 1 or more collective bargaining 
     agreements between employee representatives and 1 or more 
     employers ratified before the date of the enactment of this 
     Act, the amendments made by this subsection shall not apply 
     to plan years beginning before the earlier of--
       (A) the later of--
       (i) the date on which the last collective bargaining 
     agreement relating to the plan terminates (determined without 
     regard to any extension thereof agreed to after the date of 
     the enactment of this Act), or
       (ii) the first day of the first plan year to which the 
     amendments made by this subsection would (but for this 
     subparagraph) apply, or
       (B) January 1, 2009.

     For purposes of clause (i), any plan amendment made pursuant 
     to a collective bargaining agreement relating to the plan 
     which amends the plan solely to conform to any requirement 
     added by this subsection shall not be treated as a 
     termination of such collective bargaining agreement.
       (d) Special Rule for 2007.--For purposes of applying 
     subsection (e) of section 437 of such Code (as added by this 
     section) to current plan years (within the meaning of such 
     subsection) beginning in 2007, the modified funded current 
     liability percentage of the plan for the preceding year shall 
     be substituted for the funding target attainment percentage 
     of the plan for the preceding year. For purposes of the 
     preceding sentence, the term ``modified funded current 
     liability percentage'' means the funded current liability 
     percentage (as defined in section 412(l)(8) of such Code), 
     reduced as described in subparagraph (E) thereof in the case 
     of a plan with a funded current liability percentage (as so 
     defined and before such reduction) which is less than 100 
     percent.

     SEC. 114. TECHNICAL AND CONFORMING AMENDMENTS.

       (a) Amendments Related to Qualification Requirements.--
       (1) Section 401(a)(29) of the Internal Revenue Code of 1986 
     is amended to read as follows:
       ``(29) Benefit limitations on plans in at-risk status.--In 
     the case of a defined benefit plan (other than a 
     multiemployer plan) to which the requirements of section 412 
     apply, the trust of which the plan is a part shall not 
     constitute a qualified trust under this subsection unless the 
     plan meets the requirements of sections 436 and 437.''.
       (2) Section 401(a)(32) of such Code is amended--
       (A) in subparagraph (A), by striking ``412(m)(5)'' each 
     place it appears and inserting ``430(j)(4)'', and
       (B) in subparagraph (C), by striking ``section 412(m) by 
     reason of paragraph (5)(A) thereof'' and inserting ``section 
     430(j)(3) by reason of section 430(j)(4)(A)''.
       (3) Section 401(a)(33) of such Code is amended--
       (A) in subparagraph (B)(i), by striking ``funded current 
     liability percentage (as defined in section 412(l)(8))'' and 
     inserting ``funding target attainment percentage (as defined 
     in section 430(d)(2))'',
       (B) in subparagraph (B)(iii), by striking ``subsection 
     412(c)(8)'' and inserting ``section 412(d)(2)'', and
       (C) in subparagraph (D), by striking ``section 412(c)(11) 
     (without regard to subparagraph (B) thereof)'' and inserting 
     ``section 412(b) (without regard to paragraph (2) thereof)''.
       (b) Vesting Rules.--Section 411 of such Code is amended--
       (1) by striking ``section 412(c)(8)'' in subsection 
     (a)(3)(C) and inserting ``section 412(d)(2)'',
       (2) in subsection (b)(1)(F)--
       (A) by striking ``paragraphs (2) and (3) of section 
     412(i)'' in clause (ii) and inserting ``subparagraphs (B) and 
     (C) of section 412(e)(3)'', and
       (B) by striking ``paragraphs (4), (5), and (6) of section 
     412(i)'' and inserting ``subparagraphs (D), (E), and (F) of 
     section 412(e)(3)'', and
       (3) by striking ``section 412(c)(8)'' in subsection 
     (d)(6)(A) and inserting ``section 412(d)(2)''.
       (c) Mergers and Consolidations of Plans.--Subclause (I) of 
     section

[[Page 28610]]

     414(l)(2)(B)(i) of such Code is amended to read as follows:

       ``(I) the amount determined under section 431(c)(6)(A)(i) 
     in the case of a multiemployer plan (and the sum of the 
     target liability amount and target normal cost determined 
     under section 430 in the case of any other plan), over''.

       (d) Transfer of Excess Pension Assets to Retiree Health 
     Accounts.--
       (1) Section 420(e)(2) of such Code is amended to read as 
     follows:
       ``(2) Excess pension assets.--The term `excess pension 
     assets' means the excess (if any) of--
       ``(A) the lesser of--
       ``(i) the fair market value of the plan's assets (reduced 
     by the pre-funding balance and the funding standard carryover 
     balance, as determined under section 430(f)), or
       ``(ii) the value of plan assets as determined under section 
     430(g)(3) (reduced by the pre-funding balance and the funding 
     standard carryover balance, as determined under section 
     430(f)), over
       ``(B) 125 percent of the sum of the target liability amount 
     and the target normal cost determined under section 430 for 
     such plan year.''.
       (2) Section 420(e)(4) of such Code is amended to read as 
     follows:
       ``(4) Coordination with section 430.--In the case of a 
     qualified transfer, any assets so transferred shall not, for 
     purposes of this section, be treated as assets in the 
     plan.''.
       (e) Excise Taxes.--
       (1) In general.--Subsections (a) and (b) of section 4971 of 
     such Code are amended to read as follows:
       ``(a) Initial Tax.--If at any time during any taxable year 
     an employer maintains a plan to which section 412 applies, 
     there is hereby imposed for the taxable year a tax equal to--
       ``(1) in the case of a defined benefit plan which is not a 
     multiemployer plan, 10 percent of the aggregate unpaid 
     minimum required contributions for all plan years remaining 
     unpaid as of the end of any plan year ending with or within 
     the taxable year, and
       ``(2) in the case of a multiemployer plan, 5 percent of the 
     accumulated funding deficiency determined under section 431 
     as of the end of any plan year ending with or within the 
     taxable year.
       ``(b) Additional Tax.--If--
       ``(1) a tax is imposed under subsection (a)(1) on any 
     unpaid required minimum contribution and such amount remains 
     unpaid as of the close of the taxable period, or
       ``(2) a tax is imposed under subsection (a)(2) on any 
     accumulated funding deficiency and the accumulated funding 
     deficiency is not corrected within the taxable period,

     there is hereby imposed a tax equal to 100 percent of the 
     unpaid minimum required contribution or accumulated funding 
     deficiency, whichever is applicable, to the extent not so 
     paid or corrected.''.
       (2) Section 4971(c) of such Code is amended--
       (A) by striking ``the last two sentences of section 
     412(a)'' in paragraph (1) and inserting ``section 431'', and
       (B) by adding at the end the following new paragraph:
       ``(4) Unpaid minimum required contribution.--
       ``(A) In general.--The term `unpaid minimum required 
     contribution' means, with respect to any plan year, any 
     minimum required contribution under section 430 for the plan 
     year which is not paid on or before the due date (as 
     determined under section 430(j)(1)) for the plan year.
       ``(B) Ordering rule.--Any payment to or under a plan for 
     any plan year shall be allocated first to unpaid minimum 
     required contributions for all preceding plan years in the 
     order in which such contributions became due and then to the 
     minimum required contribution under section 430 for the plan 
     year.''.
       (3) Section 4971(e)(1) of such Code is amended by striking 
     ``section 412(b)(3)(A)'' and inserting ``section 412(a)(2)''.
       (4) Section 4971(f)(1) of such Code is amended--
       (A) by striking ``section 412(m)(5)'' and inserting 
     ``section 430(j)(4)'', and
       (B) by striking ``section 412(m)'' and inserting ``section 
     430(j)(3)''.
       (5) Section 4972(c)(7) of such Code is amended by striking 
     ``except to the extent that such contributions exceed the 
     full-funding limitation (as defined in section 412(c)(7), 
     determined without regard to subparagraph (A)(i)(I) 
     thereof)'' and inserting ``except, in the case of a 
     multiemployer plan, to the extent that such contributions 
     exceed the full-funding limitation (as defined in section 
     431(c)(6))''.
       (f) Reporting Requirements.--Section 6059(b) of such Code 
     is amended--
       (1) by striking ``the accumulated funding deficiency (as 
     defined in section 412(a))'' in paragraph (2) and inserting 
     ``the minimum required contribution determined under section 
     430, or the accumulated funding deficiency determined under 
     section 431,'', and
       (2) by striking paragraph (3)(B) and inserting:
       ``(B) the requirements for reasonable actuarial assumptions 
     under section 430(h)(1) or 431(c)(3), whichever are 
     applicable, have been complied with,''.
       (g) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2006.

                      Subtitle C--Other Provisions

     SEC. 121. MODIFICATION OF TRANSITION RULE TO PENSION FUNDING 
                   REQUIREMENTS.

       (a) In General.--In the case of a plan that--
       (1) was not required to pay a variable rate premium for the 
     plan year beginning in 1996,
       (2) has not, in any plan year beginning after 1995, merged 
     with another plan (other than a plan sponsored by an employer 
     that was in 1996 within the controlled group of the plan 
     sponsor); and
       (3) is sponsored by a company that is engaged primarily in 
     the interurban or interstate passenger bus service,

     the rules described in subsection (b) shall apply for any 
     plan year beginning after December 31, 2006.
       (b) Modified Rules.--The rules described in this subsection 
     are as follows:
       (1) For purposes of section 430(j)(3) of the Internal 
     Revenue Code of 1986 and section 303(j)(3) of the Employee 
     Retirement Income Security Act of 1974, the plan shall be 
     treated as not having a funding shortfall for any plan year.
       (2) For purposes of--
       (A) determining unfunded vested benefits under section 
     4006(a)(3)(E)(iii) of such Act, and
       (B) determining any present value or making any computation 
     under section 412 of such Code or section 302 of such Act,
     the mortality table shall be the mortality table used by the 
     plan.
       (3) Section 430(c)(5)(B) of such Code and section 
     303(c)(5)(B) of such Act (relating to phase-in of funding 
     target for exemption from new shortfall amortization base) 
     shall each be applied by substituting ``2012'' for ``2011'' 
     therein and by substituting for the table therein the 
     following:

 
------------------------------------------------------------------------
    In the case of a plan year beginning in           The applicable
                 calendar year:                       percentage is:
------------------------------------------------------------------------
2007...........................................               90 percent
2008...........................................               92 percent
2009...........................................               94 percent
2010...........................................               96 percent
2011...........................................              98 percent.
------------------------------------------------------------------------

       (c) Definitions.--Any term used in this section which is 
     also used in section 430 of such Code or section 303 of such 
     Act shall have the meaning provided such term in such 
     section. If the same term has a different meaning in such 
     Code and such Act, such term shall, for purposes of this 
     section, have the meaning provided by such Code when applied 
     with respect to such Code and the meaning provided by such 
     Act when applied with respect to such Act.
       (d) Special Rule for 2006.--
       (1)  in general.--Section 769(c)(3) of the Retirement 
     Protection Act of 1994, as added by section 201 of the 
     Pension Funding Equity Act of 2004, is amended by striking 
     ``and 2005'' and inserting ``, 2005, and 2006''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to plan years beginning after December 31, 2005.
       (e) Conforming Amendment.--
       (1) Section 769 of the Retirement Protection Act of 1994 is 
     amended by striking subsection (c).
       (2) The amendment made by paragraph (1) shall take effect 
     on December 31, 2006, and shall apply to plan years beginning 
     after such date.

     SEC. 122. TREATMENT OF NONQUALIFIED DEFERRED COMPENSATION 
                   PLANS WHEN EMPLOYER DEFINED BENEFIT PLAN IN AT-
                   RISK STATUS.

       (a) In General.--Subsection (b) of section 409A of the 
     Internal Revenue Code of 1986 (providing rules relating to 
     funding) is amended by redesignating paragraphs (3) and (4) 
     as paragraphs (4) and (5), respectively, and by inserting 
     after paragraph (2) the following new paragraph:
       ``(3) Employer's defined benefit plan in at-risk status.--
     If--
       ``(A) during any period in which a defined benefit plan to 
     which section 412 applies is in an at-risk status (as defined 
     in section 430(i)(3)), assets are set aside (directly or 
     indirectly) in a trust (or other arrangement determined by 
     the Secretary), or transferred to such a trust or other 
     arrangement, for purposes of paying deferred compensation 
     under a nonqualified deferred compensation plan of the 
     employer maintaining the defined benefit plan, or
       ``(B) a nonqualified deferred compensation plan of the 
     employer provides that assets will become restricted to the 
     provision of benefits under the plan in connection with such 
     at-risk status (or other similar financial measure determined 
     by the Secretary) of the defined benefit plan, or assets are 
     so restricted,

     such assets shall for purposes of section 83 be treated as 
     property transferred in connection with the performance of 
     services whether or not such assets are available to satisfy 
     claims of general creditors. Subparagraph (A) shall not apply 
     with respect to any assets which are so set aside before the 
     defined benefit plan is in at-risk status.''.
       (b) Conforming Amendments.--Paragraphs (4) and (5) of 
     section 409A(b) of such Code, as

[[Page 28611]]

     redesignated by subsection (a) of this subsection, are each 
     amended by striking ``paragraph (1) or (2)'' each place it 
     appears and inserting ``paragraph (1), (2), or (3)''.
       (c)  Effective Date.--The amendments made by this section 
     shall apply to transfers or reservations of assets after 
     December 31, 2005.
       (d) Special Rule for 2006.--For purposes of determining if 
     a plan is in at-risk status (within the meaning of section 
     409A of such Code, as added by this section) for any plan 
     year beginning in 2006, such section shall be applied by 
     substituting the plan's modified funded current liability 
     percentage for the plan's funding target attainment 
     percentage. For purposes of the preceding sentence, the term 
     ``modified funded current liability percentage'' means the 
     funded current liability percentage (as defined in section 
     412(l)(8) of such Code), reduced as described in subparagraph 
     (E) thereof.

    TITLE II--FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS

 Subtitle A--Amendments to Employee Retirement Income Security Act of 
                                  1974

     SEC. 201. FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT 
                   PLANS.

       (a) In General.--Part 3 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974 (as amended 
     by section 102) is amended further by inserting after section 
     303 the following new section:


          ``Minimum funding standards for multiemployer plans

       ``Sec. 304. (a) In General.--For purposes of section 302, 
     the accumulated funding deficiency of a multiemployer plan 
     for any plan year is--
       ``(1) except as provided in paragraph (2), the amount, 
     determined as of the end of the plan year, equal to the 
     excess (if any) of the total charges to the funding standard 
     account of the plan for all plan years (beginning with the 
     first plan year for which this part applies to the plan) over 
     the total credits to such account for such years, and
       ``(2) if the multiemployer plan is in reorganization for 
     any plan year, the accumulated funding deficiency of the plan 
     determined under section 4243.
       ``(b) Funding Standard Account.--
       ``(1) Account required.--Each multiemployer plan to which 
     this part applies shall establish and maintain a funding 
     standard account. Such account shall be credited and charged 
     solely as provided in this section.
       ``(2) Charges to account.--For a plan year, the funding 
     standard account shall be charged with the sum of--
       ``(A) the normal cost of the plan for the plan year,
       ``(B) the amounts necessary to amortize in equal annual 
     installments (until fully amortized)--
       ``(i) in the case of a plan 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 this part 
     applies, over a period of 40 plan years,
       ``(ii) in the case of a plan which comes into existence 
     after January 1, 1974, the unfunded past service liability 
     under the plan on the first day of the first plan year to 
     which this part applies, over a period of 15 plan years,
       ``(iii) separately, with respect to each plan year, the net 
     increase (if any) in unfunded past service liability under 
     the plan arising from plan amendments adopted in such year, 
     over a period of 15 plan years,
       ``(iv) separately, with respect to each plan year, the net 
     experience loss (if any) under the plan, over a period of 15 
     plan years, and
       ``(v) separately, with respect to each plan year, the net 
     loss (if any) resulting from changes in actuarial assumptions 
     used under the plan, over a period of 15 plan years,
       ``(C) the amount necessary to amortize each waived funding 
     deficiency (within the meaning of section 302(c)(3)) for each 
     prior plan year in equal annual installments (until fully 
     amortized) over a period of 15 plan years,
       ``(D) the amount necessary to amortize in equal annual 
     installments (until fully amortized) over a period of 5 plan 
     years any amount credited to the funding standard account 
     under section 302(b)(3)(D) (as in effect on the day before 
     the date of the enactment of the Pension Protection Act of 
     2005), and
       ``(E) the amount necessary to amortize in equal annual 
     installments (until fully amortized) over a period of 20 
     years the contributions which would be required to be made 
     under the plan but for the provisions of section 
     302(c)(7)(A)(i)(I) (as in effect on the day before the date 
     of the enactment of the Pension Protection Act of 2005).
       ``(3) Credits to account.--For a plan year, the funding 
     standard account shall be credited with the sum of--
       ``(A) the amount considered contributed by the employer to 
     or under the plan for the plan year,
       ``(B) the amount necessary to amortize in equal annual 
     installments (until fully amortized)--
       ``(i) separately, with respect to each plan year, the net 
     decrease (if any) in unfunded past service liability under 
     the plan arising from plan amendments adopted in such year, 
     over a period of 15 plan years,
       ``(ii) separately, with respect to each plan year, the net 
     experience gain (if any) under the plan, over a period of 15 
     plan years, and
       ``(iii) separately, with respect to each plan year, the net 
     gain (if any) resulting from changes in actuarial assumptions 
     used under the plan, over a period of 15 plan years,
       ``(C) the amount of the waived funding deficiency (within 
     the meaning of section 302(c)(3)) for the plan year, and
       ``(D) in the case of a plan year for which the accumulated 
     funding deficiency is determined under the funding standard 
     account if such plan year follows a plan year for which such 
     deficiency was determined under the alternative minimum 
     funding standard under section 305 (as in effect on the day 
     before the date of the enactment of the Pension Protection 
     Act of 2005), the excess (if any) of any debit balance in the 
     funding standard account (determined without regard to this 
     subparagraph) over any debit balance in the alternative 
     minimum funding standard account.
       ``(4) Special rules for certain pre-2007 amortizations.--
       ``(A) In general.--In the case of any amount amortized 
     under section 302(b) (as in effect on the day before the date 
     of the enactment of the Pension Protection Act of 2005) over 
     any period beginning with a plan year beginning before 2007, 
     in lieu of the amortization described in paragraphs (2)(B) 
     and (3)(B), such amount shall continue to be amortized under 
     such section as so in effect.
       ``(B) Interest rate.--For purposes of amortizations under 
     section 302(b) (as in effect on the day before the date of 
     the enactment of the Pension Protection Act of 2005), in the 
     case of any waiver under section 303 (as so in effect) or 
     extension under section 304 (as so in effect) with respect to 
     which application has been made before June 30, 2005, the 
     interest rate under section 303(a)(2) (as so in effect) or 
     section 304(a) (as so in effect), as the case may be, shall 
     apply.
       ``(5) Combining and offsetting amounts to be amortized.--
     Under regulations prescribed by the Secretary of the 
     Treasury, amounts required to be amortized under paragraph 
     (2) or paragraph (3), as the case may be--
       ``(A) may be combined into one amount under such paragraph 
     to be amortized over a period determined on the basis of the 
     remaining amortization period for all items entering into 
     such combined amount, and
       ``(B) may be offset against amounts required to be 
     amortized under the other such paragraph, with the resulting 
     amount to be amortized over a period determined on the basis 
     of the remaining amortization periods for all items entering 
     into whichever of the two amounts being offset is the 
     greater.
       ``(6) Interest.--Except as provided in subsection (c)(9), 
     the funding standard account (and items therein) shall be 
     charged or credited (as determined under regulations 
     prescribed by the Secretary of the Treasury) with interest at 
     the appropriate rate consistent with the rate or rates of 
     interest used under the plan to determine costs.
       ``(7) Certain amortization charges and credits.--In the 
     case of a plan which, immediately before the date of the 
     enactment of the Multiemployer Pension Plan Amendments Act of 
     1980, was a multiemployer plan (within the meaning of section 
     3(37) as in effect immediately before such date)--
       ``(A) any amount described in paragraph (2)(B)(ii), 
     (2)(B)(iii), or (3)(B)(i) of this subsection which arose in a 
     plan year beginning before such date shall be amortized in 
     equal annual installments (until fully amortized) over 40 
     plan years, beginning with the plan year in which the amount 
     arose,
       ``(B) any amount described in paragraph (2)(B)(iv) or 
     (3)(B)(ii) of this subsection which arose in a plan year 
     beginning before such date shall be amortized in equal annual 
     installments (until fully amortized) over 20 plan years, 
     beginning with the plan year in which the amount arose,
       ``(C) any change in past service liability which arises 
     during the period of 3 plan years beginning on or after such 
     date, and results from a plan amendment adopted before such 
     date, shall be amortized in equal annual installments (until 
     fully amortized) over 40 plan years, beginning with the plan 
     year in which the change arises, and
       ``(D) any change in past service liability which arises 
     during the period of 2 plan years beginning on or after such 
     date, and results from the changing of a group of 
     participants from one benefit level to another benefit level 
     under a schedule of plan benefits which--
       ``(i) was adopted before such date, and
       ``(ii) was effective for any plan participant before the 
     beginning of the first plan year beginning on or after such 
     date,
     shall be amortized in equal annual installments (until fully 
     amortized) over 40 plan years, beginning with the plan year 
     in which the change arises.
       ``(8) Special rules relating to charges and credits to 
     funding standard account.--For purposes of this section--
       ``(A) Withdrawal liability.--Any amount received by a 
     multiemployer plan in payment of all or part of an employer's 
     withdrawal liability under part 1 of subtitle E of title IV 
     shall be considered an amount contributed by the employer to 
     or under the plan. The Secretary of the Treasury may 
     prescribe by regulation additional charges and credits to a 
     multiemployer plan's funding standard account to the extent 
     necessary to prevent withdrawal liability payments

[[Page 28612]]

     from being unduly reflected as advance funding for plan 
     liabilities.
       ``(B) Adjustments when a multiemployer plan leaves 
     reorganization.--If a multiemployer plan is not in 
     reorganization in the plan year but was in reorganization in 
     the immediately preceding plan year, any balance in the 
     funding standard account at the close of such immediately 
     preceding plan year--
       ``(i) shall be eliminated by an offsetting credit or charge 
     (as the case may be), but
       ``(ii) shall be taken into account in subsequent plan years 
     by being amortized in equal annual installments (until fully 
     amortized) over 30 plan years.
     The preceding sentence shall not apply to the extent of any 
     accumulated funding deficiency under section 4243(a) as of 
     the end of the last plan year that the plan was in 
     reorganization.
       ``(C) Plan payments to supplemental program or withdrawal 
     liability payment fund.--Any amount paid by a plan during a 
     plan year to the Pension Benefit Guaranty Corporation 
     pursuant to section 4222 of this Act or to a fund exempt 
     under section 501(c)(22) of the Internal Revenue Code of 1986 
     pursuant to section 4223 of this Act shall reduce the amount 
     of contributions considered received by the plan for the plan 
     year.
       ``(D) Interim withdrawal liability payments.--Any amount 
     paid by an employer pending a final determination of the 
     employer's withdrawal liability under part 1 of subtitle E of 
     title IV and subsequently refunded to the employer by the 
     plan shall be charged to the funding standard account in 
     accordance with regulations prescribed by the Secretary of 
     the Treasury.
       ``(E) Election for deferral of charge for portion of net 
     experience loss.--If an election is in effect under section 
     302(b)(7)(F) (as in effect on the day before the date of the 
     enactment of the Pension Protection Act of 2005) for any plan 
     year, the funding standard account shall be charged in the 
     plan year to which the portion of the net experience loss 
     deferred by such election was deferred with the amount so 
     deferred (and paragraph (2)(B)(iv) shall not apply to the 
     amount so charged).
       ``(F) Financial assistance.--Any amount of any financial 
     assistance from the Pension Benefit Guaranty Corporation to 
     any plan, and any repayment of such amount, shall be taken 
     into account under this section and section 302 in such 
     manner as is determined by the Secretary of the Treasury.
       ``(G) Short-term benefits.--To the extent that any plan 
     amendment increases the unfunded past service liability under 
     the plan by reason of an increase in benefits which are 
     payable under the plan during a period that does not exceed 
     14 years, paragraph (2)(B)(iii) shall be applied separately 
     with respect to such increase in unfunded past service 
     liability by substituting the number of years of the period 
     during which such benefits are payable for `15'.
       ``(c) Additional Rules.--
       ``(1) Determinations to be made under funding method.--For 
     purposes of this 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) Election with respect to bonds.--The value of a bond 
     or other evidence of indebtedness which is not in default as 
     to principal or interest may, at the election of the plan 
     administrator, be determined on an amortized basis running 
     from initial cost at purchase to par value at maturity or 
     earliest call date. Any election under this subparagraph 
     shall be made at such time and in such manner as the 
     Secretary of the Treasury shall by regulations provide, shall 
     apply to all such evidences of indebtedness, and may be 
     revoked only with the consent of such Secretary.
       ``(3) Actuarial assumptions must be reasonable.--For 
     purposes of this section, all costs, liabilities, rates of 
     interest, and other factors under the plan shall be 
     determined on the basis of actuarial assumptions and 
     methods--
       ``(A) each of which is reasonable (taking into account the 
     experience of the plan and reasonable expectations), and
       ``(B) which, in combination, offer the actuary's best 
     estimate of anticipated experience under the plan.
       ``(4) Treatment of certain changes as experience gain or 
     loss.--For purposes of this section, if--
       ``(A) a change in benefits under the Social Security Act or 
     in other retirement benefits created under Federal or State 
     law, or
       ``(B) a change in the definition of the term `wages' under 
     section 3121 of the Internal Revenue Code of 1986, or a 
     change in the amount of such wages taken into account under 
     regulations prescribed for purposes of section 401(a)(5) of 
     such Code,
     results in an increase or decrease in accrued liability under 
     a plan, such increase or decrease shall be treated as an 
     experience loss or gain.
       ``(5) Full funding.--If, as of the close of a plan year, a 
     plan would (without regard to this paragraph) have an 
     accumulated funding deficiency in excess of the full funding 
     limitation--
       ``(A) the funding standard account shall be credited with 
     the amount of such excess, and
       ``(B) all amounts described in subparagraphs (B), (C), and 
     (D) of subsection (b)(2) and subparagraph (B) of subsection 
     (b)(3) which are required to be amortized shall be considered 
     fully amortized for purposes of such subparagraphs.
       ``(6) Full-funding limitation.--
       ``(A) In general.--For purposes of paragraph (5), the term 
     `full-funding limitation' means the excess (if any) of--
       ``(i) the accrued liability (including normal cost) under 
     the plan (determined under the entry age normal funding 
     method if such accrued liability cannot be directly 
     calculated under the funding method used for the plan), over
       ``(ii) the lesser of--

       ``(I) the fair market value of the plan's assets, or
       ``(II) the value of such assets determined under paragraph 
     (2).

       ``(B) Minimum amount.--
       ``(i) In general.--In no event shall the full-funding 
     limitation determined under subparagraph (A) be less than the 
     excess (if any) of--

       ``(I) 90 percent of the current liability of the plan 
     (including the expected increase in current liability due to 
     benefits accruing during the plan year), over
       ``(II) the value of the plan's assets determined under 
     paragraph (2).

       ``(ii) Assets.--For purposes of clause (i), assets shall 
     not be reduced by any credit balance in the funding standard 
     account.
       ``(C) Full funding limitation.--For purposes of this 
     paragraph, unless otherwise provided by the plan, the accrued 
     liability under a multiemployer plan shall not include 
     benefits which are not nonforfeitable under the plan after 
     the termination of the plan (taking into consideration 
     section 411(d)(3) of the Internal Revenue Code of 1986).
       ``(D) Current liability.--For purposes of this paragraph--
       ``(i) In general.--The term `current liability' means all 
     liabilities to employees and their beneficiaries under the 
     plan.
       ``(ii) Treatment of unpredictable contingent event 
     benefits.--For purposes of clause (i), any benefit contingent 
     on an event other than--

       ``(I) age, service, compensation, death, or disability, or
       ``(II) an event which is reasonably and reliably 
     predictable (as determined by the Secretary of the Treasury),

     shall not be taken into account until the event on which the 
     benefit is contingent occurs.
       ``(iii) Interest rate used.--The rate of interest used to 
     determine current liability under this paragraph shall be the 
     rate of interest determined under subparagraph (E).
       ``(iv) Mortality tables.--

       ``(I) Commissioners' standard table.--In the case of plan 
     years beginning before the first plan year to which the first 
     tables prescribed under subclause (II) apply, the mortality 
     table used in determining current liability under this 
     paragraph shall be the table prescribed by the Secretary of 
     the Treasury which is based on the prevailing commissioners' 
     standard table (described in section 807(d)(5)(A) of the 
     Internal Revenue Code of 1986) used to determine reserves for 
     group annuity contracts issued on January 1, 1993.
       ``(II) Secretarial authority.--The Secretary of the 
     Treasury may by regulation prescribe for plan years beginning 
     after December 31, 1999, mortality tables to be used in 
     determining current liability under this subsection. Such 
     tables shall be based upon the actual experience of pension 
     plans and projected trends in such experience. In prescribing 
     such tables, such Secretary shall take into account results 
     of available independent studies of mortality of individuals 
     covered by pension plans.

       ``(v) Separate mortality tables for the disabled.--
     Notwithstanding clause (iv)--

       ``(I) In general.--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 clause (iv)) to determine current liability 
     under this subsection for individuals who are entitled to 
     benefits under the plan on account of disability. Such 
     Secretary shall establish separate tables for individuals 
     whose disabilities occur in plan years beginning before 
     January 1, 1995, and for individuals whose disabilities occur 
     in plan years beginning on or after such date.
       ``(II) Special rule for disabilities occurring after 
     1994.--In the case of disabilities occurring in plan years 
     beginning after December 31, 1994, the tables under subclause 
     (I) shall apply only with respect to individuals described in 
     such subclause who are disabled within the meaning of title 
     II of the Social Security Act and the regulations thereunder.

[[Page 28613]]

       ``(vi) Periodic review.--The Secretary of the Treasury 
     shall periodically (at least every 5 years) review any tables 
     in effect under this subparagraph and shall, to the extent 
     such Secretary determines necessary, by regulation update the 
     tables to reflect the actual experience of pension plans and 
     projected trends in such experience.
       ``(E) Required change of interest rate.--For purposes of 
     determining a plan's current liability for purposes of this 
     paragraph--
       ``(i) In general.--If any rate of interest used under the 
     plan under subsection (b)(6) to determine cost is not within 
     the permissible range, the plan shall establish a new rate of 
     interest within the permissible range.
       ``(ii) Permissible range.--For purposes of this 
     subparagraph--

       ``(I) In general.--Except as provided in subclause (II), 
     the term `permissible range' means a rate of interest which 
     is not more than 5 percent above, and not more than 10 
     percent below, the weighted average of the rates of interest 
     on 30-year Treasury securities during the 4-year period 
     ending on the last day before the beginning of the plan year.
       ``(II) Secretarial authority.--If the Secretary of the 
     Treasury finds that the lowest rate of interest permissible 
     under subclause (I) is unreasonably high, such Secretary may 
     prescribe a lower rate of interest, except that such rate may 
     not be less than 80 percent of the average rate determined 
     under such subclause.

       ``(iii) Assumptions.--Notwithstanding paragraph (3)(A), the 
     interest rate used under the plan shall be--

       ``(I) determined without taking into account the experience 
     of the plan and reasonable expectations, but
       ``(II) consistent with the assumptions which reflect the 
     purchase rates which would be used by insurance companies to 
     satisfy the liabilities under the plan.

       ``(7) Annual valuation.--
       ``(A) In general.--For purposes of this section, a 
     determination of experience gains and losses and a valuation 
     of the plan's liability shall be made not less frequently 
     than once every year, except that such determination shall be 
     made more frequently to the extent required in particular 
     cases under regulations prescribed by the Secretary of the 
     Treasury.
       ``(B) Valuation date.--
       ``(i) Current year.--Except as provided in clause (ii), the 
     valuation referred to in subparagraph (A) shall be made as of 
     a date within the plan year to which the valuation refers or 
     within one month prior to the beginning of such year.
       ``(ii) Use of prior year valuation.--The valuation referred 
     to in subparagraph (A) may be made as of a date within the 
     plan year prior to the year to which the valuation refers if, 
     as of such date, the value of the assets of the plan are not 
     less than 100 percent of the plan's current liability (as 
     defined in paragraph (6)(D) without regard to clause (iv) 
     thereof).
       ``(iii) Adjustments.--Information under clause (ii) shall, 
     in accordance with regulations, be actuarially adjusted to 
     reflect significant differences in participants.
       ``(iv) Limitation.--A change in funding method to use a 
     prior year valuation, as provided in clause (ii), may not be 
     made unless as of the valuation date within the prior plan 
     year, the value of the assets of the plan are not less than 
     125 percent of the plan's current liability (as defined in 
     paragraph (6)(D) without regard to clause (iv) thereof).
       ``(8) Time when certain contributions deemed made.--For 
     purposes of this section, any contributions for a plan year 
     made by an employer after the last day of such plan year, but 
     not later than two and one-half months after such day, shall 
     be deemed to have been made on such last day. For purposes of 
     this subparagraph, such two and one-half month period may be 
     extended for not more than six months under regulations 
     prescribed by the Secretary of the Treasury.
       ``(9) Interest rule for waivers and extensions.--The 
     interest rate applicable for any plan year for purposes of 
     computing the amortization charge described in subsection 
     (b)(2)(C) and in connection with an extension granted under 
     subsection (d) shall be the greater of--
       ``(A) 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
       ``(B) the rate of interest used under the plan for 
     determining costs.
       ``(d) Extension of Amortization Periods for Multiemployer 
     Plans.--In the case of a multiemployer plan--
       ``(1) Extension.--The period of years required to amortize 
     any unfunded liability (described in any clause of subsection 
     (b)(2)(B)) of any multiemployer plan shall be extended by the 
     Secretary of the Treasury for a period of time (not in excess 
     of 5 years) if it is demonstrated to such Secretary that--
       ``(A) absent the extension, the plan would have an 
     accumulated funding deficiency in any of the next 10 plan 
     years,
       ``(B) the plan sponsor has adopted a plan to improve the 
     plan's funding status, and
       ``(C) taking into account the extension, the plan is 
     projected to have sufficient assets to timely pay its 
     expected benefit liabilities and other anticipated 
     expenditures.
       ``(2) Additional extension.--The period of years required 
     to amortize any unfunded liability (described in any clause 
     of subsection (b)(2)(B)) of any multiemployer plan may be 
     extended (in addition to any extension under paragraph (1)) 
     by the Secretary of the Treasury for a period of time (not in 
     excess of 5 years) if such Secretary determines that such 
     extension would carry out the purposes of this Act and would 
     provide adequate protection for participants under the plan 
     and their beneficiaries and if such Secretary determines that 
     the failure to permit such extension would--
       ``(A) result in--
       ``(i) a substantial risk to the voluntary continuation of 
     the plan, or
       ``(ii) a substantial curtailment of pension benefit levels 
     or employee compensation, and
       ``(B) be adverse to the interests of plan participants in 
     the aggregate.
       ``(3) Advance notice.--
       ``(A) In general.--The Secretary of the Treasury shall, 
     before granting an extension under this section, require each 
     applicant to provide evidence satisfactory to such Secretary 
     that the applicant has provided notice of the filing of the 
     application for such extension to each affected party (as 
     defined in section 4001(a)(21)) with respect to the affected 
     plan. Such notice shall include a description of the extent 
     to which the plan is funded for benefits which are guaranteed 
     under title IV and for benefit liabilities.
       ``(B) Consideration of relevant information.--The Secretary 
     of the Treasury shall consider any relevant information 
     provided by a person to whom notice was given under paragraph 
     (1).''.
       (b) Conforming Amendments.--
       (1) Section 301 of such Act (29 U.S.C. 1081) is amended by 
     striking subsection (d).
       (2) The table of contents in section 1 of such Act (as 
     amended by section 102 of this Act) is amended further by 
     inserting after the item relating to section 303 the 
     following new item:

``Sec. 304. Minimum funding standards for multiemployer plans.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2006.

     SEC. 202. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS IN 
                   ENDANGERED OR CRITICAL STATUS.

       (a) In General.--Part 3 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974 (as amended 
     by the preceding provisions of this Act) is amended further 
     by inserting after section 304 the following new section:


``Additional funding rules for multiemployer plans in endangered status 
                           or critical status

       ``Sec. 305. (a) Annual Certification by Plan Actuary.--
       ``(1) In general.--During the 90-day period beginning on 
     first day of each plan year of a multiemployer plan, the plan 
     actuary shall certify to the Secretary of the Treasury 
     whether or not the plan is in endangered status for such plan 
     year and whether or not the plan is in critical status for 
     such plan year.
       ``(2) Actuarial projections of assets and liabilities.--
       ``(A) In general.--In making the determinations under 
     paragraph (1), the plan actuary shall make projections under 
     subsections (b)(2) and (c)(2) for the current and succeeding 
     plan years, using reasonable actuarial assumptions and 
     methods, of the current value of the assets of the plan and 
     the present value of all liabilities to participants and 
     beneficiaries under the plan for the current plan year as of 
     the beginning of such year, as based on the actuarial 
     statement prepared for the preceding plan year under section 
     103(d).
       ``(B) Determinations of future contributions.--Any such 
     actuarial projection of plan assets shall assume--
       ``(i) reasonably anticipated employer and employee 
     contributions for the current and succeeding plan years, 
     assuming that the terms of the one or more collective 
     bargaining agreements pursuant to which the plan is 
     maintained for the current plan year continue in effect for 
     succeeding plan years, or
       ``(ii) that employer and employee contributions for the 
     most recent plan year will continue indefinitely, but only if 
     the plan actuary determines there have been no significant 
     demographic changes that would make continued application of 
     such terms unreasonable.
       ``(3) Presumed status in absence of timely actuarial 
     certification.--If certification under this subsection is not 
     made before the end of the 90-day period specified in 
     paragraph (1), the plan shall be presumed to be in critical 
     status for such plan year until such time as the plan actuary 
     makes a contrary certification.
       ``(4) Notice.--In any case in which a multiemployer plan is 
     certified to be in endangered status under paragraph (1) or 
     enters into critical status, the plan sponsor shall, not 
     later than 30 days after the date of the certification or 
     entry, provide notification of the endangered or critical 
     status to the participants and beneficiaries, the bargaining 
     parties, the Pension Benefit Guaranty Corporation, the 
     Secretary of the Treasury, and the Secretary of Labor.
       ``(b) Funding Rules for Multiemployer Plans in Endangered 
     Status.--

[[Page 28614]]

       ``(1) In general.--In any case in which a multiemployer 
     plan is in endangered status for a plan year and no funding 
     improvement plan under this subsection with respect to such 
     multiemployer plan is in effect for the plan year, the plan 
     sponsor shall, in accordance with this subsection, amend the 
     multiemployer plan to include a funding improvement plan upon 
     approval thereof by the bargaining parties under this 
     subsection. The amendment shall be adopted not later than 240 
     days after the date on which the plan is certified to be in 
     endangered status under subsection (a)(1).
       ``(2) Endangered status.--A multiemployer plan is in 
     endangered status for a plan year if, as determined by the 
     plan actuary under subsection (a)--
       ``(A) the plan's funded percentage for such plan year is 
     less than 80 percent, or
       ``(B) the plan has an accumulated funding deficiency for 
     such plan year under section 304 or is projected to have such 
     an accumulated funding deficiency for any of the 6 succeeding 
     plan years, taking into account any extension of amortization 
     periods under section 304(d).
       ``(3) Funding improvement plan.--
       ``(A) Benchmarks.--A funding improvement plan shall consist 
     of amendments to the plan formulated to provide, under 
     reasonable actuarial assumptions, for the attainment, during 
     the funding improvement period under the funding improvement 
     plan, of the following benchmarks:
       ``(i) Increase in funded percentage.--An increase in the 
     plan's funded percentage such that--

       ``(I) the difference between 100 percent and the plan's 
     funded percentage for the last year of the funding 
     improvement period, is not more than
       ``(II) \2/3\ of the difference between 100 percent and the 
     plan's funded percentage for the first year of the funding 
     improvement period.

       ``(ii) Avoidance of accumulated funding deficiencies.--No 
     accumulated funding deficiency for any plan year during the 
     funding improvement period (taking into account any extension 
     of amortization periods under section 304(d)).
       ``(B) Funding improvement period.--The funding improvement 
     period for any funding improvement plan adopted pursuant to 
     this subsection is the 10-year period beginning on the 
     earlier of--
       ``(i) the second anniversary of the date of the adoption of 
     the funding improvement plan, or
       ``(ii) the first day of the first plan year of the 
     multiemployer plan following the plan year in which occurs 
     the first date after the day of the certification as of which 
     collective bargaining agreements covering on the day of such 
     certification at least 75 percent of active participants in 
     such multiemployer plan have expired.
       ``(C) Special rules for certain seriously underfunded 
     plans.--
       ``(i) In the case of a plan in which the funded percentage 
     of a plan for the plan year is 70 percent or less, 
     subparagraph (A)(i)(II) shall be applied by substituting `\4/
     5\' for `\2/3\' and subparagraph (B) shall be applied by 
     substituting `the 15-year period' for `the 10-year period'.
       ``(ii) In the case of a plan in which the funded percentage 
     of a plan for the plan year is more than 70 percent but less 
     than 80 percent, and--

       ``(I) the plan actuary certifies within 30 days after 
     certification under subsection (a)(1) that the plan is not 
     able to attain the increase described in subparagraph (A)(i) 
     over the period described in subparagraph (B), and
       ``(II) the plan year is prior to the day described in 
     subparagraph (B)(ii),

     subparagraph (A)(i)(II) shall be applied by substituting `\4/
     5\' for `\2/3\' and subparagraph (B) shall be applied by 
     substituting `the 15-year period' for `the 10-year period'.
       ``(iii) For any plan year following the year described in 
     clause (ii)(II), subparagraph (A)(i)(II) and subparagraph (B) 
     shall apply, except that for each plan year ending after such 
     date for which the plan actuary certifies (at the time of the 
     annual certification under subsection (a)(1) for such plan 
     year) that the plan is not able to attain the increase 
     described in subparagraph (A)(i) over the period described in 
     subparagraph (B), subparagraph (B) shall be applied by 
     substituting `the 15-year period' for `the 10-year period'.
       ``(D) Reporting.--A summary of any funding improvement plan 
     or modification thereto adopted during any plan year, 
     together with annual updates regarding the funding ratio of 
     the plan, shall be included in the annual report for such 
     plan year under section 104(a) and in the summary annual 
     report described in section 104(b)(3).
       ``(4) Development of funding improvement plan.--
       ``(A) Actions by plan sponsor pending approval.--Pending 
     the approval of a funding improvement plan under this 
     paragraph, the plan sponsor shall take all reasonable 
     actions, consistent with the terms of the plan and applicable 
     law, necessary to ensure--
       ``(i) an increase in the plan's funded percentage, and
       ``(ii) postponement of an accumulated funding deficiency 
     for at least 1 additional plan year.
     Such actions include applications for extensions of 
     amortization periods under section 304(d), use of the 
     shortfall funding method in making funding standard account 
     computations, amendments to the plan's benefit structure, 
     reductions in future benefit accruals, and other reasonable 
     actions consistent with the terms of the plan and applicable 
     law.
       ``(B) Recommendations by plan sponsor.--
       ``(i) In general.--During the period of 90 days following 
     the date on which a multiemployer plan is certified to be in 
     endangered status, the plan sponsor shall develop and provide 
     to the bargaining parties alternative proposals for revised 
     benefit structures, contribution structures, or both, which, 
     if adopted as amendments to the plan, may be reasonably 
     expected to meet the benchmarks described in paragraph 
     (3)(A). Such proposals shall include--

       ``(I) at least one proposal for reductions in the amount of 
     future benefit accruals necessary to achieve the benchmarks, 
     assuming no amendments increasing contributions under the 
     plan (other than amendments increasing contributions 
     necessary to achieve the benchmarks after amendments have 
     reduced future benefit accruals to the maximum extent 
     permitted by law), and
       ``(II) at least one proposal for increases in contributions 
     under the plan necessary to achieve the benchmarks, assuming 
     no amendments reducing future benefit accruals under the 
     plan.

       ``(ii) Requests by bargaining parties.--Upon the request of 
     any bargaining party who--

       ``(I) employs at least 5 percent of the active 
     participants, or
       ``(II) represents as an employee organization, for purposes 
     of collective bargaining, at least 5 percent of the active 
     participants,

     the plan sponsor shall provide all such parties information 
     as to other combinations of increases in contributions and 
     reductions in future benefit accruals which would result in 
     achieving the benchmarks.
       ``(iii) Other information.--The plan sponsor may, as it 
     deems appropriate, prepare and provide the bargaining parties 
     with additional information relating to contribution 
     structures or benefit structures or other information 
     relevant to the funding improvement plan.
       ``(5) Maintenance of contributions pending approval of 
     funding improvement plan.--Pending approval of a funding 
     improvement plan by the bargaining parties with respect to a 
     multiemployer plan, the multiemployer plan may not be amended 
     so as to provide--
       ``(A) a reduction in the level of contributions for 
     participants who are not in pay status,
       ``(B) a suspension of contributions with respect to any 
     period of service, or
       ``(C) any new direct or indirect exclusion of younger or 
     newly hired employees from plan participation.
       ``(6) Benefit restrictions pending approval of funding 
     improvement plan.--Pending approval of a funding improvement 
     plan by the bargaining parties with respect to a 
     multiemployer plan--
       ``(A) Restrictions on lump sum and similar distributions.--
     In any case in which the present value of a participant's 
     accrued benefit under the plan exceeds $5,000, such benefit 
     may not be distributed as an immediate distribution or in any 
     other accelerated form.
       ``(B) Prohibition on benefit increases.--
       ``(i) In general.--No amendment of the plan which increases 
     the liabilities of the plan by reason of any increase in 
     benefits, any change in the accrual of benefits, or any 
     change in the rate at which benefits become nonforfeitable 
     under the plan may be adopted.
       ``(ii) Exception.--Clause (i) shall not apply to any plan 
     amendment which is required as a condition of qualification 
     under part I of subchapter D of chapter 1 of subtitle A of 
     the Internal Revenue Code of 1986.
       ``(7) Default critical status if no funding improvement 
     plan adopted.--If no plan amendment adopting a funding 
     improvement plan has been adopted by the end of the 240-day 
     period referred to in subsection (b)(1), the plan enters into 
     critical status as of the first day of the succeeding plan 
     year.
       ``(8) Restrictions upon approval of funding improvement 
     plan.--Upon adoption of a funding improvement plan with 
     respect to a multiemployer plan, the plan may not be 
     amended--
       ``(A) so as to be inconsistent with the funding improvement 
     plan, or
       ``(B) so as to increase future benefit accruals, unless the 
     plan actuary certifies in advance that, after taking into 
     account the proposed increase, the plan is reasonably 
     expected to meet the the benchmarks described in paragraph 
     (3)(A).
       ``(c) Funding Rules for Multiemployer Plans in Critical 
     Status.--
       ``(1) In general.--In any case in which a multiemployer 
     plan is in critical status for a plan year as described in 
     paragraph (2) (or otherwise enters into critical status under 
     this section) and no rehabilitation plan under this 
     subsection with respect to such multiemployer plan is in 
     effect for the plan

[[Page 28615]]

     year, the plan sponsor shall, in accordance with this 
     subsection, amend the multiemployer plan to include a 
     rehabilitation plan under this subsection. The amendment 
     shall be adopted not later than 240 days after the date on 
     which the plan enters into critical status.
       ``(2) Critical status.--A multiemployer plan is in critical 
     status for a plan year if--
       ``(A) the plan is in endangered status for the preceding 
     plan year and the requirements of subsection (b)(1) were not 
     met with respect to the plan for such preceding plan year, or
       ``(B) as determined by the plan actuary under subsection 
     (a), the plan is described in paragraph (3).
       ``(3) Criticality description.--For purposes of paragraph 
     (2)(B), a plan is described in this paragraph if the plan is 
     described in at least one of the following subparagraphs:
       ``(A) A plan is described in this subparagraph if, as of 
     the beginning of the current plan year--
       ``(i) the funded percentage of the plan is less than 65 
     percent, and
       ``(ii) the sum of--

       ``(I) the market value of plan assets, plus
       ``(II) the present value of the reasonably anticipated 
     employer and employee contributions for the current plan year 
     and each of the 6 succeeding plan years, assuming that the 
     terms of the one or more collective bargaining agreements 
     pursuant to which the plan is maintained for the current plan 
     year continue in effect for succeeding plan years,

     is less than the present value of all nonforfeitable benefits 
     for all participants and beneficiaries projected to be 
     payable under the plan during the current plan year and each 
     of the 6 succeeding plan years (plus administrative expenses 
     for such plan years).
       ``(B) A plan is described in this subparagraph if, as of 
     the beginning of the current plan year, the sum of--
       ``(i) the market value of plan assets, plus
       ``(ii) the present value of the reasonably anticipated 
     employer and employee contributions for the current plan year 
     and each of the 4 succeeding plan years, assuming that the 
     terms of the one or more collective bargaining agreements 
     pursuant to which the plan is maintained for the current plan 
     year remain in effect for succeeding plan years,
     is less than the present value of all nonforfeitable benefits 
     for all participants and beneficiaries projected to be 
     payable under the plan during the current plan year and each 
     of the 4 succeeding plan years (plus administrative expenses 
     for such plan years).
       ``(C) A plan is described in this subparagraph if--
       ``(i) as of the beginning of the current plan year, the 
     funded percentage of the plan is less than 65 percent, and
       ``(ii) the plan has an accumulated funding deficiency for 
     the current plan year or is projected to have an accumulated 
     funding deficiency for any of the 4 succeeding plan years, 
     not taking into account any extension of amortization periods 
     under section 304(d).
       ``(D) A plan is described in this subparagraph if--
       ``(i)(I) the plan's normal cost for the current plan year, 
     plus interest (determined at the rate used for determining 
     cost under the plan) for the current plan year on the amount 
     of unfunded benefit liabilities under the plan as of the last 
     date of the preceding plan year, exceeds
       ``(II) the present value, as of the beginning of the 
     current plan year, of the reasonably anticipated employer and 
     employee contributions for the current plan year,
       ``(ii) the present value, as of the beginning of the 
     current plan year, of nonforfeitable benefits of inactive 
     participants is greater than the present value, as of the 
     beginning of the current plan year, of nonforfeitable 
     benefits of active participants, and
       ``(iii) the plan is projected to have an accumulated 
     funding deficiency for the current plan year or any of the 4 
     succeeding plan years, not taking into account any extension 
     of amortization periods under section 304(d).
       ``(E) A plan is described in this subparagraph if--
       ``(i) the funded percentage of the plan is greater than 65 
     percent for the current plan year, and
       ``(ii) the plan is projected to have an accumulated funding 
     deficiency during any of the succeeding 3 plan years, not 
     taking into account any extension of amortization periods 
     under section 304(d).
       ``(4) Rehabilitation plan.--
       ``(A) In general.--A rehabilitation plan shall consist of--
       ``(i) amendments to the plan providing (under reasonable 
     actuarial assumptions) for measures, agreed to by the 
     bargaining parties, to increase contributions, reduce plan 
     expenditures (including plan mergers and consolidations), or 
     reduce future benefit accruals, or to take any combination of 
     such actions, determined necessary to cause the plan to 
     cease, during the rehabilitation period, to be in critical 
     status, or
       ``(ii) reasonable measures to forestall possible insolvency 
     (within the meaning of section 4245) if the plan sponsor 
     determines that, upon exhaustion of all reasonable measures, 
     the plan would not cease during the rehabilitation period to 
     be in critical status.
     A rehabilitation must provide annual standards for meeting 
     the requirements of such rehabilitation plan.
       ``(B) Rehabilitation period.--The rehabilitation period for 
     any rehabilitation plan adopted pursuant to this subsection 
     is the 10-year period beginning on the earlier of--
       ``(i) the second anniversary of the date of the adoption of 
     the rehabilitation plan, or
       ``(ii) the first day of the first plan year of the 
     multiemployer plan following the plan year in which occurs 
     the first date, after the date of the plan's entry into 
     critical status, as of which collective bargaining agreements 
     covering at least 75 percent of active participants in such 
     multiemployer plan (determined as of such date of entry) have 
     expired.
       ``(C) Reporting.--A summary of any rehabilitation plan or 
     modification thereto adopted during any plan year, together 
     with annual updates regarding the funding ratio of the plan, 
     shall be included in the annual report for such plan year 
     under section 104(a) and in the summary annual report 
     described in section 104(b)(3).
       ``(5) Development of rehabilitation plan.--
       ``(A) Proposals by plan sponsor.--
       ``(i) In general.--Within 90 days after the date of entry 
     into critical status (or the date as of which the 
     requirements of subsection (b)(1) are not met with respect to 
     the plan), the plan sponsor shall propose to all bargaining 
     parties a range of alternative schedules of increases in 
     contributions and reductions in future benefit accruals that 
     would serve to carry out a rehabilitation plan under this 
     subsection.
       ``(ii) Proposal assuming no contribution increases.--Such 
     proposals shall include, as one of the proposed schedules, a 
     schedule of those reductions in future benefit accruals that 
     would be necessary to cause the plan to cease to be in 
     critical status if there were no further increases in rates 
     of contribution to the plan.
       ``(iii) Proposal where contributions are necessary.--If the 
     plan sponsor determines that the plan will not cease to be in 
     critical status during the rehabilitation period unless the 
     plan is amended to provide for an increase in contributions, 
     the plan sponsor's proposals shall include a schedule of 
     those increases in contribution rates that would be necessary 
     to cause the plan to cease to be in critical status if future 
     benefit accruals were reduced to the maximum extent permitted 
     by law.
       ``(B) Requests for additional schedules.--Upon the request 
     of any bargaining party who--
       ``(i) employs at least 5 percent of the active 
     participants, or
       ``(ii) represents as an employee organization, for purposes 
     of collective bargaining, at least 5 percent of active 
     participants,
     the plan sponsor shall include among the proposed schedules 
     such schedules of increases in contributions and reductions 
     in future benefit accruals as may be specified by the 
     bargaining parties.
       ``(C) Subsequent amendments.--Upon the adoption of a 
     schedule of increases in contributions or reductions in 
     future benefit accruals as part of the rehabilitation plan, 
     the plan sponsor may amend the plan thereafter to update the 
     schedule to adjust for any experience of the plan contrary to 
     past actuarial assumptions, except that such an amendment may 
     be made not more than once in any 3-year period.
       ``(D) Allocation of reductions in future benefit 
     accruals.--Any schedule containing reductions in future 
     benefit accruals forming a part of a rehabilitation plan 
     shall be applicable with respect to any group of active 
     participants who are employed by any bargaining party (as an 
     employer obligated to contribute under the plan) in 
     proportion to the extent to which increases in contributions 
     under such schedule apply to such bargaining party.
       ``(E) Limitation on reduction in rates of future 
     accruals.--Any schedule proposed under this paragraph shall 
     not reduce the rate of future accruals below the lower of--
       ``(i) a monthly benefit equal to 1 percent of the 
     contributions required to be made with respect to a 
     participant or the equivalent standard accrual rate for a 
     participant or group of participants under the collective 
     bargaining agreements in effect as of the first day of the 
     plan year in which the plan enters critical status, or
       ``(ii) if lower, the accrual rate under the plan on such 
     date.
     The equivalent standard accrual rate shall be determined by 
     the trustees based on the standard or average contribution 
     base units that they determine to be representative for 
     active participants and such other factors as they determine 
     to be relevant.
       ``(F) Protection of restored rates of accrual.--
       ``(i) In general.--Any schedule proposed under this 
     paragraph shall not reduce the rate of future accruals below 
     any restored accrual rate.
       ``(ii) Restored accrual rate.--For purposes of clause (i), 
     the term `restored accrual rate' means a rate of benefit 
     accruals which was reduced and subsequently restored before 
     entry of the plan into critical status.
       ``(6) Maintenance of contributions and restrictions on 
     benefits pending adoption of rehabilitation plan.--The rules 
     of paragraphs (5) and (6) of subsection (b) shall

[[Page 28616]]

     apply for purposes of this subsection by substituting the 
     term `rehabilitation plan' for `funding improvement plan'.
       ``(7) Special rules.--
       ``(A) Automatic employer surcharge.--
       ``(i) 5 percent and 10 percent surcharge.--For the first 
     plan year in which the plan is in critical status, each 
     employer otherwise obligated to make a contribution for that 
     plan year shall be obligated to pay to the plan a surcharge 
     equal to 5 percent of the contribution otherwise required 
     under the respective collective bargaining agreement (or 
     other agreement pursuant to which the employer contributes). 
     For each consecutive plan year thereafter in which the plan 
     is in critical status, the surcharge shall be 10 percent of 
     the contribution otherwise required under the respective 
     collective bargaining agreement (or other agreement pursuant 
     to which the employer contributes).
       ``(ii) Enforcement of surcharge.--The surcharges under 
     clause (i) shall be due and payable on the same schedule as 
     the contributions on which they are based. Any failure to 
     make a surcharge payment shall be treated as a delinquent 
     contribution under section 515 and shall be enforceable as 
     such.
       ``(iii) Surcharge to terminate upon cba renegotiation.--The 
     surcharge under this paragraph shall cease to be effective 
     with respect to employees covered by a collective bargaining 
     agreement, beginning on the date on which that agreement is 
     renegotiated to include--

       ``(I) a schedule of benefits and contributions published by 
     the trustees pursuant to the plan's rehabilitation plan, or
       ``(II) otherwise collectively bargained benefit changes.

       ``(iv) Surcharge not to apply until employer receives 30-
     day notice.--The surcharge under this subparagraph shall not 
     apply to an employer until 30 days after the employer has 
     been notified by the trustees that the plan is in critical 
     status and that the surcharge is in effect.
       ``(v) Surcharge not to generate increased benefit 
     accruals.--Notwithstanding any provision of a plan to the 
     contrary, the amount of any surcharge shall not be the basis 
     for any benefit accruals under the plan.
       ``(B) Benefit adjustments.--
       ``(i) In general.--The trustees shall make appropriate 
     reductions, if any, to adjustable benefits based upon the 
     outcome of collective bargaining over the schedules provided 
     under paragraph (5).
       ``(ii) Retiree protection.--Except as provided in 
     subparagraph (C), the trustees of a plan in critical status 
     may not reduce adjustable benefits of any participant or 
     beneficiary who was in pay status at least one year before 
     the first day of the first plan year in which the plan enters 
     into critical status.
       ``(iii) Trustee flexibility.--The trustees shall include in 
     the schedules provided to the bargaining parties an allowance 
     for funding the benefits of participants with respect to whom 
     contributions are not currently required to be made, and 
     shall reduce their benefits to the extent permitted under 
     this title and considered appropriate based on the plan's 
     then current overall funding status and its future prospects 
     in light of the results of the parties' negotiations.
       ``(C) Adjustable benefit defined.--For purposes of this 
     paragraph, the term `adjustable benefit' means--
       ``(i) benefits, rights, and features, such as post-
     retirement death benefits, 60-month guarantees, disability 
     benefits not yet in pay status, and similar benefits,
       ``(ii) retirement-type subsidies, early retirement 
     benefits, and benefit payment options (other than the 50 
     percent qualified joint-and-survivor benefit and single life 
     annuity), and
       ``(iii) benefit increases that would not be eligible for a 
     guarantee under section 4022A on the first day of the plan 
     year in which the plan enters into critical status because 
     they were adopted, or if later, took effect less than 60 
     months before reorganization.
       ``(D) Normal retirement benefits protected.--Nothing in 
     this paragraph shall be construed to permit a plan to reduce 
     the level of a participant's accrued benefit payable at 
     normal retirement age which is not an adjustable benefit.
       ``(E) Adjustments disregarded in withdrawal liability 
     determination.--
       ``(i) Benefit reductions.--Any benefit reductions under 
     this paragraph shall be disregarded in determining a plan's 
     unfunded vested benefits for purposes of determining an 
     employer's withdrawal liability under section 4201.
       ``(ii) Surcharges.--Any surcharges under this paragraph 
     shall be disregarded in determining an employer's withdrawal 
     liability under section 4211, except for purposes of 
     determining the unfunded vested benefits attributable to an 
     employer or under a modified attributable method adopted with 
     the approval of the Pension Benefit Guaranty Corporation 
     under subsection (c)(5) of that section.
       ``(8) Restrictions upon approval of rehabilitation plan.--
     Upon adoption of a rehabilitation plan with respect to a 
     multiemployer plan, the plan may not be amended--
       ``(A) so as to be inconsistent with the rehabilitation 
     plan, or
       ``(B) so as to increase future benefit accruals, unless the 
     plan actuary certifies in advance that, after taking into 
     account the proposed increase, the plan is reasonably 
     expected to cease to be in critical status.
       ``(9) Implementation of default schedule upon failure to 
     adopt rehabilitation plan.--If the plan is not amended by the 
     end of the 240-day period after entry into critical status to 
     include a rehabilitation plan, the plan sponsor shall amend 
     the plan to implement the schedule required by paragraph 
     (5)(A)(ii).
       ``(10) Deemed withdrawal.--Upon the failure of any employer 
     who has an obligation to contribute under the plan to make 
     contributions in compliance with the schedule adopted under 
     paragraph (4) as part of the rehabilitation plan, the failure 
     of the employer may, at the discretion of the plan sponsor, 
     be treated as a withdrawal by the employer from the plan 
     under section 4203 or a partial withdrawal by the employer 
     under section 4205.
       ``(11) Special rule for plan amendments.--A multiemployer 
     plan in critical status shall not fail to meet the 
     requirements of section 204(g) or section 411(d)(6) of the 
     Internal Revenue Code of 1986 solely by reason of the 
     adoption by the plan of an amendment necessary to meet the 
     requirements of this subsection.
       ``(d) Definitions.--For purposes of this section--
       ``(1) Bargaining party.--The term `bargaining party' means, 
     in connection with a multiemployer plan--
       ``(A) an employer who has an obligation to contribute under 
     the plan, and
       ``(B) an employee organization which, for purposes of 
     collective bargaining, represents plan participants employed 
     by such an employer.
       ``(2) Funded percentage.--The term `funded percentage' 
     means the percentage expressed as a ratio of which--
       ``(A) the numerator of which is the value of the plan's 
     assets, as determined under section 304(c)(2), and
       ``(B) the denominator of which is the accrued liability of 
     the plan.
       ``(3) Accumulated funding deficiency.--The term 
     `accumulated funding deficiency' has the meaning provided 
     such term in section 304(a).
       ``(4) Active participant.--The term `active participant' 
     means, in connection with a multiemployer plan, a participant 
     who is in covered service under the plan.
       ``(5) Inactive participant.--The term `inactive 
     participant' means, in connection with a multiemployer plan, 
     a participant who--
       ``(A) is not in covered service under the plan, and
       ``(B) is in pay status under the plan or has a 
     nonforfeitable right to benefits under the plan.
       ``(6) Pay status.--A person is in `pay status' under a 
     multiemployer plan if--
       ``(A) at any time during the current plan year, such person 
     is a participant or beneficiary under the plan and is paid an 
     early, late, normal, or disability retirement benefit under 
     the plan (or a death benefit under the plan related to a 
     retirement benefit), or
       ``(B) to the extent provided in regulations of the 
     Secretary of the Treasury, such person is entitled to such a 
     benefit under the plan.
       ``(7) Obligation to contribute.--The term `obligation to 
     contribute' has the meaning provided such term under section 
     4212(a).
       ``(8) Entry into critical status.--A plan shall be treated 
     as entering into critical status as of the date that such 
     plan is certified to be in critical status under subsection 
     (a)(1), is presumed to be in critical status under subsection 
     (a)(3), or enters into critical status under subsection 
     (b)(7).''.
       (b) Enforcement.--Section 502 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1132) is amended--
       (1) in subsection (a)(6) by striking ``(6), or (7)'' and 
     inserting ``(6), (7), or (8)'';
       (2) by redesignating subsection (c)(8) as subsection 
     (c)(9); and
       (3) by inserting after subsection (c)(7) the following new 
     paragraph:
       ``(8) The Secretary may assess a civil penalty against--
       ``(A) any person of not more than $1,100 per day for each 
     violation by such person of subsection (a)(1), (b)(1), or 
     (c)(1) of section 305, or
       ``(B) any plan sponsor for failure by the plan sponsor to 
     implement the terms of any funding improvement plan or 
     rehabilitation plan adopted under section 305.''.
       (c) Conforming Amendment.--The table of contents in section 
     1 of such Act (as amended by the preceding provisions of this 
     Act) is amended further by inserting after the item relating 
     to section 304 the following new item:

``Sec. 305. Additional funding rules for multiemployer plans in 
              endangered status or critical status.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply with respect to plan years beginning after 2005.
       (e) Special Rule for 2006.--In the case of any plan year 
     beginning in 2006, any reference in section 305 of the 
     Employee Retirement Income Security Act of 1974 (as added by 
     this section) to section 304 of such Act (as added by this 
     Act) shall be treated as a reference to the corresponding 
     provision of the

[[Page 28617]]

     Employee Retirement Income Security Act of 1974 as in effect 
     for plan years beginning in such year.

     SEC. 203. MEASURES TO FORESTALL INSOLVENCY OF MULTIEMPLOYER 
                   PLANS.

       (a) Advance Determination of Impending Insolvency Over 5 
     Years.--Section 4245(d)(1) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1426(d)(1)) is amended--
       (1) by striking ``3 plan years'' the second place it 
     appears and inserting ``5 plan years''; and
       (2) by adding at the end the following new sentence: ``If 
     the plan sponsor makes such a determination that the plan 
     will be insolvent in any of the next 5 plan years, the plan 
     sponsor shall make the comparison under this paragraph at 
     least annually until the plan sponsor makes a determination 
     that the plan will not be insolvent in any of the next 5 plan 
     years.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply with respect to determinations made in plan years 
     beginning after December 31, 2005.

     SEC. 204. WITHDRAWAL LIABILITY REFORMS.

       (a) Repeal of Limitation on Withdrawal Liability in the 
     Event of Certain Sales of Employer Assets to Unrelated 
     Parties.--
       (1) In general.--Section 4225 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1405) is repealed.
       (2) Conforming amendment.--The table of contents in section 
     1 of such Act is amended by striking the item relating to 
     section 4225.
       (3) Effective date.--The amendments made by this section 
     shall apply with respect to sales occurring on or after 
     January 1, 2006.
       (b) Repeal of Limitation to 20 Annual Payments.--
       (1) In general.--Section 4219(c)(1) of such Act (29 U.S.C. 
     1399(c)(1)) is amended by striking subparagraph (B).
       (2) Effective date.--The amendment made by this section 
     shall apply with respect to withdrawals occurring on or after 
     January 1, 2006.
       (c) Withdrawal Liability Continues If Work Contracted 
     Out.--
       (1) In general.--Clause (i) of section 4205(b)(2)(A) of 
     such Act (29 U.S.C. 1385(b)(2)(A)) is amended by inserting 
     ``or to another party or parties'' after ``to another 
     location''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply with respect to work transferred on or after the 
     date of the enactment of this Act.
       (d) Repeal of Special Rule for Long and Short Haul Trucking 
     Industry.--
       (1) In general.--Subsection (d) of section 4203 of such Act 
     (29 U.S.C. 1383(d)) is repealed.
       (2) Effective date.--The repeal under this subsection shall 
     apply with respect to cessations to have obligations to 
     contribute to multiemployer plans and cessations of covered 
     operations under such plans occurring on or after January 1, 
     2006.
       (e) Application of Forgiveness Rule to Plans Primarily 
     Covering Employees in the Building and Construction.--
       (1) In general.--Section 4210(b) of such Act (29 U.S.C. 
     1390(b)) is amended--
       (A) by striking paragraph (1); and
       (B) by redesignating paragraphs (2) through (4) as 
     paragraphs (1) through (3), respectively.
       (2) Effective date.--The amendments made by this subsection 
     shall apply with respect to plan withdrawals occurring on or 
     after January 1, 2006.

     SEC. 205. REMOVAL OF RESTRICTIONS WITH RESPECT TO PROCEDURES 
                   APPLICABLE TO DISPUTES INVOLVING WITHDRAWAL 
                   LIABILITY.

       (a) In General.--Section 4221(f)(1) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1401(f)(1)) 
     is amended--
       (1) in subparagraph (A) by inserting ``and'' after 
     ``plan,'', and
       (2) by striking subparagraphs (B) and (C) and inserting the 
     following new subparagraph:
       ``(B) such determination is based in whole or in part on a 
     finding by the plan sponsor under section 4212(c) that a 
     principal purpose of any transaction which occurred at least 
     5 years (2 years in the case of a small employer) before the 
     date of the complete or partial withdrawal was to evade or 
     avoid withdrawal liability under this subtitle,''.
       (b) Small Employer.--Paragraph (2) of section 4221(f) of 
     such Act is amended by adding at the end the following new 
     subparagraph:
       ``(C) Small employer.--For purposes of paragraph (1)(B)--
       ``(i) In general.--The term `small employer' means any 
     employer who (as of immediately before the transaction 
     referred to in paragraph (1)(B))--

       ``(I) employs not more than 500 employees, and
       ``(II) is required to make contributions to the plan for 
     not more than 250 employees.

       ``(ii) Controlled group.--Any group treated as a single 
     employer under subsection (b), (c), (m), or (o) of section 
     414 of the Internal Revenue Code of 1986 shall be treated as 
     a single employer for purposes of this subparagraph.''.
       (c) Additional Amendments.--
       (1) Subparagraph (A) of section 4221(f)(2) of such Act (29 
     U.S.C. 1401(f)(2)) is amended by striking ``Notwithstanding'' 
     and inserting ``In the case of a transaction occurring before 
     January 1, 1999, and at least 5 years before the date of the 
     complete or partial withdrawal, notwithstanding''.
       (2) Section 4221(f)(2)(B) of such Act (29 U.S.C. 
     1401(f)(2)(B)) is amended--
       (A) by inserting ``with respect to withdrawal liability 
     payments'' after ``determination'' the first place it 
     appears, and
       (B) by striking ``any'' and inserting ``the''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to any employer that receives a notification 
     under section 4219(b)(1) of the Employee Retirement Income 
     Security Act of 1974 on or after the date of the enactment of 
     this Act.

        Subtitle B--Amendments to Internal Revenue Code of 1986

     SEC. 211. FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT 
                   PLANS.

       (a) In General.--Subpart A of part III of subchapter D of 
     chapter 1 of the Internal Revenue Code of 1986 (added by 
     section 112 of this Act) is amended by adding at the end the 
     following new section:

     ``SEC. 431. MINIMUM FUNDING STANDARDS FOR MULTIEMPLOYER 
                   PLANS.

       ``(a) In General.--For purposes of section 412, the 
     accumulated funding deficiency of a multiemployer plan for 
     any plan year is--
       ``(1) except as provided in paragraph (2), the amount, 
     determined as of the end of the plan year, equal to the 
     excess (if any) of the total charges to the funding standard 
     account of the plan for all plan years (beginning with the 
     first plan year for which section 412 applies to the plan) 
     over the total credits to such account for such years, and
       ``(2) if the multiemployer plan is in reorganization for 
     any plan year, the accumulated funding deficiency of the plan 
     determined under section 418B.
       ``(b) Funding Standard Account.--
       ``(1) Account required.--Each multiemployer plan to which 
     section 412 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, 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 15 plan years,
       ``(iii) separately, with respect to each plan year, the net 
     increase (if any) in unfunded past service liability under 
     the plan arising from plan amendments adopted in such year, 
     over a period of 15 plan years,
       ``(iv) separately, with respect to each plan year, the net 
     experience loss (if any) under the plan, over a period of 15 
     plan years, and
       ``(v) separately, with respect to each plan year, the net 
     loss (if any) resulting from changes in actuarial assumptions 
     used under the plan, over a period of 15 plan years,
       ``(C) the amount necessary to amortize each waived funding 
     deficiency (within the meaning of section 412(c)(3)) for each 
     prior plan year in equal annual installments (until fully 
     amortized) over a period of 15 plan years,
       ``(D) the amount necessary to amortize in equal annual 
     installments (until fully amortized) over a period of 5 plan 
     years any amount credited to the funding standard account 
     under section 412(b)(3)(D) (as in effect on the day before 
     the date of the enactment of the Pension Protection Act of 
     2005), and
       ``(E) the amount necessary to amortize in equal annual 
     installments (until fully amortized) over a period of 20 
     years the contributions which would be required to be made 
     under the plan but for the provisions of section 
     412(c)(7)(A)(i)(I) (as in effect on the day before the date 
     of the enactment of the Pension Protection Act of 2005).
       ``(3) Credits to account.--For a plan year, the funding 
     standard account shall be credited with the sum of--
       ``(A) the amount considered contributed by the employer to 
     or under the plan for the plan year,
       ``(B) the amount necessary to amortize in equal annual 
     installments (until fully amortized)--
       ``(i) separately, with respect to each plan year, the net 
     decrease (if any) in unfunded past service liability under 
     the plan arising from plan amendments adopted in such year, 
     over a period of 15 plan years,
       ``(ii) separately, with respect to each plan year, the net 
     experience gain (if any) under the plan, over a period of 15 
     plan years, and
       ``(iii) separately, with respect to each plan year, the net 
     gain (if any) resulting from changes in actuarial assumptions 
     used under the plan, over a period of 15 plan years,
       ``(C) the amount of the waived funding deficiency (within 
     the meaning of section 412(c)(3)) for the plan year, and

[[Page 28618]]

       ``(D) in the case of a plan year for which the accumulated 
     funding deficiency is determined under the funding standard 
     account if such plan year follows a plan year for which such 
     deficiency was determined under the alternative minimum 
     funding standard under section 412(g) (as in effect on the 
     day before the date of the enactment of the Pension 
     Protection Act of 2005), the excess (if any) of any debit 
     balance in the funding standard account (determined without 
     regard to this subparagraph) over any debit balance in the 
     alternative minimum funding standard account.
       ``(4) Special rules for pre-2007 amortizations.--
       ``(A) In general.--In the case of any amount amortized 
     under section 412(b) (as in effect on the day before the date 
     of the enactment of the Pension Protection Act of 2005) over 
     any period beginning with a plan year beginning before 2007, 
     in lieu of the amortization described in paragraphs (2)(B) 
     and (3)(B), such amount shall continue to be amortized under 
     such section as so in effect.
       ``(B) Interest rate.--For purposes of amortizations under 
     section 412(b) (as in effect on the day before the date of 
     the enactment of the Pension Protection Act of 2005), in the 
     case of any waiver under section 412(d) (as so in effect) or 
     extension under section 412(e) (as so in effect) with respect 
     to which application has been made before June 30, 2005, the 
     interest rate under section 412(d)(1)(A) (as so in effect) or 
     section 412(e) (as so in effect), as the case may be, shall 
     apply.
       ``(5) Combining and offsetting amounts to be amortized.--
     Under regulations prescribed by the Secretary, amounts 
     required to be amortized under paragraph (2) or paragraph 
     (3), as the case may be--
       ``(A) may be combined into one amount under such paragraph 
     to be amortized over a period determined on the basis of the 
     remaining amortization period for all items entering into 
     such combined amount, and
       ``(B) may be offset against amounts required to be 
     amortized under the other such paragraph, with the resulting 
     amount to be amortized over a period determined on the basis 
     of the remaining amortization periods for all items entering 
     into whichever of the two amounts being offset is the 
     greater.
       ``(6) Interest.--Except as provided in subsection (c)(9), 
     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.
       ``(7) Certain amortization charges and credits.--In the 
     case of a plan which, immediately before the date of the 
     enactment of the Multiemployer Pension Plan Amendments Act of 
     1980, was a multiemployer plan (within the meaning of section 
     414(f) as in effect immediately before such date)--
       ``(A) any amount described in paragraph (2)(B)(ii), 
     (2)(B)(iii), or (3)(B)(i) of this subsection which arose in a 
     plan year beginning before such date shall be amortized in 
     equal annual installments (until fully amortized) over 40 
     plan years, beginning with the plan year in which the amount 
     arose,
       ``(B) any amount described in paragraph (2)(B)(iv) or 
     (3)(B)(ii) of this subsection which arose in a plan year 
     beginning before such date shall be amortized in equal annual 
     installments (until fully amortized) over 20 plan years, 
     beginning with the plan year in which the amount arose,
       ``(C) any change in past service liability which arises 
     during the period of 3 plan years beginning on or after such 
     date, and results from a plan amendment adopted before such 
     date, shall be amortized in equal annual installments (until 
     fully amortized) over 40 plan years, beginning with the plan 
     year in which the change arises, and
       ``(D) any change in past service liability which arises 
     during the period of 2 plan years beginning on or after such 
     date, and results from the changing of a group of 
     participants from one benefit level to another benefit level 
     under a schedule of plan benefits which--
       ``(i) was adopted before such date, and
       ``(ii) was effective for any plan participant before the 
     beginning of the first plan year beginning on or after such 
     date,
     shall be amortized in equal annual installments (until fully 
     amortized) over 40 plan years, beginning with the plan year 
     in which the change arises.
       ``(8) Special rules relating to charges and credits to 
     funding standard account.--For purposes of this section--
       ``(A) Withdrawal liability.--Any amount received by a 
     multiemployer plan in payment of all or part of an employer's 
     withdrawal liability under part 1 of subtitle E of title IV 
     of the Employee Retirement Income Security Act of 1974 shall 
     be considered an amount contributed by the employer to or 
     under the plan. The Secretary may prescribe by regulation 
     additional charges and credits to a multiemployer plan's 
     funding standard account to the extent necessary to prevent 
     withdrawal liability payments from being unduly reflected as 
     advance funding for plan liabilities.
       ``(B) Adjustments when a multiemployer plan leaves 
     reorganization.--If a multiemployer plan is not in 
     reorganization in the plan year but was in reorganization in 
     the immediately preceding plan year, any balance in the 
     funding standard account at the close of such immediately 
     preceding plan year--
       ``(i) shall be eliminated by an offsetting credit or charge 
     (as the case may be), but
       ``(ii) shall be taken into account in subsequent plan years 
     by being amortized in equal annual installments (until fully 
     amortized) over 30 plan years.

     The preceding sentence shall not apply to the extent of any 
     accumulated funding deficiency under section 418B(a) as of 
     the end of the last plan year that the plan was in 
     reorganization.
       ``(C) Plan payments to supplemental program or withdrawal 
     liability payment fund.--Any amount paid by a plan during a 
     plan year to the Pension Benefit Guaranty Corporation 
     pursuant to section 4222 of the Employee Retirement Income 
     Security Act of 1974 or to a fund exempt under section 
     501(c)(22) pursuant to section 4223 of such Act shall reduce 
     the amount of contributions considered received by the plan 
     for the plan year.
       ``(D) Interim withdrawal liability payments.--Any amount 
     paid by an employer pending a final determination of the 
     employer's withdrawal liability under part 1 of subtitle E of 
     title IV of such Act and subsequently refunded to the 
     employer by the plan shall be charged to the funding standard 
     account in accordance with regulations prescribed by the 
     Secretary.
       ``(E) Election for deferral of charge for portion of net 
     experience loss.--If an election is in effect under section 
     412(b)(7)(F) (as in effect on the day before the date of the 
     enactment of the Pension Protection Act of 2005) for any plan 
     year, the funding standard account shall be charged in the 
     plan year to which the portion of the net experience loss 
     deferred by such election was deferred with the amount so 
     deferred (and paragraph (2)(B)(iv) shall not apply to the 
     amount so charged).
       ``(F) Financial assistance.--Any amount of any financial 
     assistance from the Pension Benefit Guaranty Corporation to 
     any plan, and any repayment of such amount, shall be taken 
     into account under this section and section 412 in such 
     manner as is determined by the Secretary.
       ``(G) Short-term benefits.--To the extent that any plan 
     amendment increases the unfunded past service liability under 
     the plan by reason of an increase in benefits which are 
     payable under the plan during a period that does not exceed 
     14 years, paragraph (2)(B)(iii) shall be applied separately 
     with respect to such increase in unfunded past service 
     liability by substituting the number of years of the period 
     during which such benefits are payable for `15'.
       ``(c) Additional Rules.--
       ``(1) Determinations to be made under funding method.--For 
     purposes of this 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) Election with respect to bonds.--The value of a bond 
     or other evidence of indebtedness which is not in default as 
     to principal or interest may, at the election of the plan 
     administrator, be determined on an amortized basis running 
     from initial cost at purchase to par value at maturity or 
     earliest call date. Any election under this subparagraph 
     shall be made at such time and in such manner as the 
     Secretary shall by regulations provide, shall apply to all 
     such evidences of indebtedness, and may be revoked only with 
     the consent of the Secretary.
       ``(3) Actuarial assumptions must be reasonable.--For 
     purposes of this section, all costs, liabilities, rates of 
     interest, and other factors under the plan shall be 
     determined on the basis of actuarial assumptions and 
     methods--
       ``(A) each of which is reasonable (taking into account the 
     experience of the plan and reasonable expectations), and
       ``(B) which, in combination, offer the actuary's best 
     estimate of anticipated experience under the plan.
       ``(4) Treatment of certain changes as experience gain or 
     loss.--For purposes of this section, if--
       ``(A) a change in benefits under the Social Security Act or 
     in other retirement benefits created under Federal or State 
     law, or
       ``(B) a change in the definition of the term `wages' under 
     section 3121, or a change in the amount of such wages taken 
     into account under regulations prescribed for purposes of 
     section 401(a)(5),

     results in an increase or decrease in accrued liability under 
     a plan, such increase or decrease shall be treated as an 
     experience loss or gain.
       ``(5) Full funding.--If, as of the close of a plan year, a 
     plan would (without regard to this paragraph) have an 
     accumulated funding deficiency in excess of the full funding 
     limitation--

[[Page 28619]]

       ``(A) the funding standard account shall be credited with 
     the amount of such excess, and
       ``(B) all amounts described in subparagraphs (B), (C), and 
     (D) of subsection (b)(2) and subparagraph (B) of subsection 
     (b)(3) which are required to be amortized shall be considered 
     fully amortized for purposes of such subparagraphs.
       ``(6) Full-funding limitation.--
       ``(A) In general.--For purposes of paragraph (5), the term 
     `full-funding limitation' means the excess (if any) of--
       ``(i) the accrued liability (including normal cost) under 
     the plan (determined under the entry age normal funding 
     method if such accrued liability cannot be directly 
     calculated under the funding method used for the plan), over
       ``(ii) the lesser of--

       ``(I) the fair market value of the plan's assets, or
       ``(II) the value of such assets determined under paragraph 
     (2).

       ``(B) Minimum amount.--
       ``(i) In general.--In no event shall the full-funding 
     limitation determined under subparagraph (A) be less than the 
     excess (if any) of--

       ``(I) 90 percent of the current liability of the plan 
     (including the expected increase in current liability due to 
     benefits accruing during the plan year), over
       ``(II) the value of the plan's assets determined under 
     paragraph (2).

       ``(ii) Assets.--For purposes of clause (i), assets shall 
     not be reduced by any credit balance in the funding standard 
     account.
       ``(C) Full funding limitation.--For purposes of this 
     paragraph, unless otherwise provided by the plan, the accrued 
     liability under a multiemployer plan shall not include 
     benefits which are not nonforfeitable under the plan after 
     the termination of the plan (taking into consideration 
     section 411(d)(3)).
       ``(D) Current liability.--For purposes of this paragraph--
       ``(i) In general.--The term `current liability' means all 
     liabilities to employees and their beneficiaries under the 
     plan.
       ``(ii) Treatment of unpredictable contingent event 
     benefits.--For purposes of clause (i), any benefit contingent 
     on an event other than--

       ``(I) age, service, compensation, death, or disability, or
       ``(II) an event which is reasonably and reliably 
     predictable (as determined by the Secretary),

     shall not be taken into account until the event on which the 
     benefit is contingent occurs.
       ``(iii) Interest rate used.--The rate of interest used to 
     determine current liability under this paragraph shall be the 
     rate of interest determined under subparagraph (E).
       ``(iv) Mortality tables.--

       ``(I) Commissioners' standard table.--In the case of plan 
     years beginning before the first plan year to which the first 
     tables prescribed under subclause (II) apply, the mortality 
     table used in determining current liability under this 
     paragraph shall be the table prescribed by the Secretary 
     which is based on the prevailing commissioners' standard 
     table (described in section 807(d)(5)(A)) used to determine 
     reserves for group annuity contracts issued on January 1, 
     1993.
       ``(II) Secretarial authority.--The Secretary may by 
     regulation prescribe for plan years beginning after December 
     31, 1999, mortality tables to be used in determining current 
     liability under this subsection. Such tables shall be based 
     upon the actual experience of pension plans and projected 
     trends in such experience. In prescribing such tables, the 
     Secretary shall take into account results of available 
     independent studies of mortality of individuals covered by 
     pension plans.

       ``(v) Separate mortality tables for the disabled.--
     Notwithstanding clause (iv)--

       ``(I) In general.--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 clause (iv)) to determine current liability under this 
     subsection for individuals who are entitled to benefits under 
     the plan on account of disability. The Secretary shall 
     establish separate tables for individuals whose disabilities 
     occur in plan years beginning before January 1, 1995, and for 
     individuals whose disabilities occur in plan years beginning 
     on or after such date.
       ``(II) Special rule for disabilities occurring after 
     1994.--In the case of disabilities occurring in plan years 
     beginning after December 31, 1994, the tables under subclause 
     (I) shall apply only with respect to individuals described in 
     such subclause who are disabled within the meaning of title 
     II of the Social Security Act and the regulations thereunder.

       ``(vi) Periodic review.--The Secretary shall periodically 
     (at least every 5 years) review any tables in effect under 
     this subparagraph and shall, to the extent the Secretary 
     determines necessary, by regulation update the tables to 
     reflect the actual experience of pension plans and projected 
     trends in such experience.
       ``(E) Required change of interest rate.--For purposes of 
     determining a plan's current liability for purposes of this 
     paragraph--
       ``(i) In general.--If any rate of interest used under the 
     plan under subsection (b)(6) to determine cost is not within 
     the permissible range, the plan shall establish a new rate of 
     interest within the permissible range.
       ``(ii) Permissible range.--For purposes of this 
     subparagraph--

       ``(I) In general.--Except as provided in subclause (II), 
     the term `permissible range' means a rate of interest which 
     is not more than 5 percent above, and not more than 10 
     percent below, the weighted average of the rates of interest 
     on 30-year Treasury securities during the 4-year period 
     ending on the last day before the beginning of the plan year.
       ``(II) Secretarial authority.--If the Secretary finds that 
     the lowest rate of interest permissible under subclause (I) 
     is unreasonably high, the Secretary may prescribe a lower 
     rate of interest, except that such rate may not be less than 
     80 percent of the average rate determined under such 
     subclause.

       ``(iii) Assumptions.--Notwithstanding paragraph (3)(A), the 
     interest rate used under the plan shall be--

       ``(I) determined without taking into account the experience 
     of the plan and reasonable expectations, but
       ``(II) consistent with the assumptions which reflect the 
     purchase rates which would be used by insurance companies to 
     satisfy the liabilities under the plan.

       ``(7) Annual valuation.--
       ``(A) In general.--For purposes of this section, a 
     determination of experience gains and losses and a valuation 
     of the plan's liability shall be made not less frequently 
     than once every year, except that such determination shall be 
     made more frequently to the extent required in particular 
     cases under regulations prescribed by the Secretary.
       ``(B) Valuation date.--
       ``(i) Current year.--Except as provided in clause (ii), the 
     valuation referred to in subparagraph (A) shall be made as of 
     a date within the plan year to which the valuation refers or 
     within one month prior to the beginning of such year.
       ``(ii) Use of prior year valuation.--The valuation referred 
     to in subparagraph (A) may be made as of a date within the 
     plan year prior to the year to which the valuation refers if, 
     as of such date, the value of the assets of the plan are not 
     less than 100 percent of the plan's current liability (as 
     defined in paragraph (6)(D) without regard to clause (iv) 
     thereof).
       ``(iii) Adjustments.--Information under clause (ii) shall, 
     in accordance with regulations, be actuarially adjusted to 
     reflect significant differences in participants.
       ``(iv) Limitation.--A change in funding method to use a 
     prior year valuation, as provided in clause (ii), may not be 
     made unless as of the valuation date within the prior plan 
     year, the value of the assets of the plan are not less than 
     125 percent of the plan's current liability (as defined in 
     paragraph (6)(D) without regard to clause (iv) thereof).
       ``(8) Time when certain contributions deemed made.--For 
     purposes of this section, any contributions for a plan year 
     made by an employer after the last day of such plan year, but 
     not later than two and one-half months after such day, shall 
     be deemed to have been made on such last day. For purposes of 
     this subparagraph, such two and one-half month period may be 
     extended for not more than six months under regulations 
     prescribed by the Secretary.
       ``(9) Interest rule for waivers and extensions.--The 
     interest rate applicable for any plan year for purposes of 
     computing the amortization charge described in subsection 
     (b)(2)(C) and in connection with an extension granted under 
     subsection (d) shall be the greater of--
       ``(A) 150 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 for 
     determining costs.
       ``(d) Extension of Amortization Periods for Multiemployer 
     Plans.--In the case of a multiemployer plan--
       ``(1) Extension.--The period of years required to amortize 
     any unfunded liability (described in any clause of subsection 
     (b)(2)(B)) of any multiemployer plan shall be extended by the 
     Secretary for a period of time (not in excess of 5 years) if 
     it is demonstrated to the Secretary that--
       ``(A) absent the extension, the plan would have an 
     accumulated funding deficiency in any of the next 10 plan 
     years,
       ``(B) the plan sponsor has adopted a plan to improve the 
     plan's funding status, and
       ``(C) taking into account the extension, the plan is 
     projected to have sufficient assets to timely pay its 
     expected benefit liabilities and other anticipated 
     expenditures.
       ``(2) Additional extension.--The period of years required 
     to amortize any unfunded liability (described in any clause 
     of subsection (b)(2)(B)) of any multiemployer plan may be 
     extended (in addition to any extension under paragraph (1)) 
     by the Secretary for a period of time (not in excess of 5 
     years) if the Secretary determines that such extension would 
     carry out the purposes of the Employee Retirement Income 
     Security Act of 1974 and would provide adequate protection 
     for participants under the plan and their beneficiaries and 
     if the Secretary determines that the failure to permit such 
     extension would--

[[Page 28620]]

       ``(A) result in--
       ``(i) a substantial risk to the voluntary continuation of 
     the plan, or
       ``(ii) a substantial curtailment of pension benefit levels 
     or employee compensation, and
       ``(B) be adverse to the interests of plan participants in 
     the aggregate.
       ``(3) Advance notice.--
       ``(A) In general.--The Secretary shall, before granting an 
     extension under this section, require each applicant to 
     provide evidence satisfactory to the Secretary that the 
     applicant has provided notice of the filing of the 
     application for such extension to each affected party (as 
     defined in section 4001(a)(21) of the Employee Retirement 
     Income Security Act of 1974) with respect to the affected 
     plan. Such notice shall include a description of the extent 
     to which the plan is funded for benefits which are guaranteed 
     under title IV of such Act and for benefit liabilities.
       ``(B) Consideration of relevant information.--The Secretary 
     shall consider any relevant information provided by a person 
     to whom notice was given under paragraph (1).''.
       (b) Conforming Amendments.--
       (1) Section 418(b)(2) of such Code is amended--
       (A) by striking ``section 412(b)(2)'' in subparagraph (A) 
     and inserting ``section 431(b)(2)'', and
       (B) by striking ``section 412(b)(3)(B)'' in subparagraph 
     (B) and inserting ``section 431(b)(3)(B)''.
       (2) Section 418B of such Code is amended--
       (A) by striking ``section 412(b)(2)(A) or (B)'' in 
     subsection (d)(1)(B) and inserting ``section 431(b)(2)(A) or 
     (B)'',
       (B) by striking ``section 412(c)(8)'' in subsection (e) and 
     inserting ``section 412(d)(2)'', and
       (C) by striking ``section 412(c)(3)'' in subsection (g) and 
     inserting ``section 431(c)(3)''.
       (3) Section 418D(a)(2) of such Code is amended--
       (A) by striking ``section 412(c)(8)'' and inserting 
     ``section 412(d)(2)'', and
       (B) by striking ``section 412(c)(10)'' and inserting 
     ``section 431(c)(8)''.
       (c) Clerical Amendment.--The table of sections for subpart 
     A of part III of subchapter D of chapter 1 of such Code is 
     amended by adding after the item relating to section 430 the 
     following new item:

``Sec. 431. Minimum funding standards for multiemployer plans.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2006.

     SEC. 212. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS IN 
                   ENDANGERED OR CRITICAL STATUS.

       (a) In General.--Subpart A of part III of subchapter D of 
     chapter 1 of the Internal Revenue Code of 1986 is amended by 
     inserting after section 431 the following new section:

     ``SEC. 432. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS 
                   IN ENDANGERED STATUS OR CRITICAL STATUS.

       ``(a) Annual Certification by Plan Actuary.--
       ``(1) In general.--During the 90-day period beginning on 
     first day of each plan year of a multiemployer plan, the plan 
     actuary shall certify to the Secretary whether or not the 
     plan is in endangered status for such plan year and whether 
     or not the plan is in critical status for such plan year.
       ``(2) Actuarial projections of assets and liabilities.--
       ``(A) In general.--In making the determinations under 
     paragraph (1), the plan actuary shall make projections under 
     subsections (b)(2) and (c)(2) for the current and succeeding 
     plan years, using reasonable actuarial assumptions and 
     methods, of the current value of the assets of the plan and 
     the present value of all liabilities to participants and 
     beneficiaries under the plan for the current plan year as of 
     the beginning of such year, as based on the actuarial 
     statement prepared for the preceding plan year under section 
     103(d) of the Employee Retirement Income Security Act of 
     1974.
       ``(B) Determinations of future contributions.--Any such 
     actuarial projection of plan assets shall assume--
       ``(i) reasonably anticipated employer and employee 
     contributions for the current and succeeding plan years, 
     assuming that the terms of the one or more collective 
     bargaining agreements pursuant to which the plan is 
     maintained for the current plan year continue in effect for 
     succeeding plan years, or
       ``(ii) that employer and employee contributions for the 
     most recent plan year will continue indefinitely, but only if 
     the plan actuary determines there have been no significant 
     demographic changes that would make continued application of 
     such terms unreasonable.
       ``(3) Presumed status in absence of timely actuarial 
     certification.--If certification under this subsection is not 
     made before the end of the 90-day period specified in 
     paragraph (1), the plan shall be presumed to be in critical 
     status for such plan year until such time as the plan actuary 
     makes a contrary certification.
       ``(4) Notice.--In any case in which a multiemployer plan is 
     certified to be in endangered status under paragraph (1) or 
     enters into critical status, the plan sponsor shall, not 
     later than 30 days after the date of the certification or 
     entry, provide notification of the endangered or critical 
     status to the participants and beneficiaries, the bargaining 
     parties, the Pension Benefit Guaranty Corporation, the 
     Secretary of the Treasury, and the Secretary of Labor.
       ``(b) Funding Rules for Multiemployer Plans in Endangered 
     Status.--
       ``(1) In general.--In any case in which a multiemployer 
     plan is in endangered status for a plan year and no funding 
     improvement plan under this subsection with respect to such 
     multiemployer plan is in effect for the plan year, the plan 
     sponsor shall, in accordance with this subsection, amend the 
     multiemployer plan to include a funding improvement plan upon 
     approval thereof by the bargaining parties under this 
     subsection. The amendment shall be adopted not later than 240 
     days after the date on which the plan is certified to be in 
     endangered status under subsection (a)(1).
       ``(2) Endangered status.--A multiemployer plan is in 
     endangered status for a plan year if, as determined by the 
     plan actuary under subsection (a)--
       ``(A) the plan's funded percentage for such plan year is 
     less than 80 percent, or
       ``(B) the plan has an accumulated funding deficiency for 
     such plan year under section 431 or is projected to have such 
     an accumulated funding deficiency for any of the 6 succeeding 
     plan years, taking into account any extension of amortization 
     periods under section 431(d).
       ``(3) Funding improvement plan.--
       ``(A) Benchmarks.--A funding improvement plan shall consist 
     of amendments to the plan formulated to provide, under 
     reasonable actuarial assumptions, for the attainment, during 
     the funding improvement period under the funding improvement 
     plan, of the following benchmarks:
       ``(i) Increase in funded percentage.--An increase in the 
     plan's funded percentage such that--

       ``(I) the difference between 100 percent and the plan's 
     funded percentage for the last year of the funding 
     improvement period, is not more than
       ``(II) \2/3\ of the difference between 100 percent and the 
     plan's funded percentage for the first year of the funding 
     improvement period.

       ``(ii) Avoidance of accumulated funding deficiencies.--No 
     accumulated funding deficiency for any plan year during the 
     funding improvement period (taking into account any extension 
     of amortization periods under section 431(d)).
       ``(B) Funding improvement period.--The funding improvement 
     period for any funding improvement plan adopted pursuant to 
     this subsection is the 10-year period beginning on the 
     earlier of--
       ``(i) the second anniversary of the date of the adoption of 
     the funding improvement plan, or
       ``(ii) the first day of the first plan year of the 
     multiemployer plan following the plan year in which occurs 
     the first date after the day of the certification as of which 
     collective bargaining agreements covering on the day of such 
     certification at least 75 percent of active participants in 
     such multiemployer plan have expired.
       ``(C) Special rules for certain seriously underfunded 
     plans.--
       ``(i) In the case of a plan in which the funded percentage 
     of a plan for the plan year is 70 percent or less, 
     subparagraph (A)(i)(II) shall be applied by substituting `\4/
     5\' for `\2/3\' and subparagraph (B) shall be applied by 
     substituting `the 15-year period' for `the 10-year period'.
       ``(ii) In the case of a plan in which the funded percentage 
     of a plan for the plan year is more than 70 percent but less 
     than 80 percent, and--

       ``(I) the plan actuary certifies within 30 days after 
     certification under subsection (a)(1) that the plan is not 
     able to attain the increase described in subparagraph (A)(i) 
     over the period described in subparagraph (B), and
       ``(II) the plan year is prior to the day described in 
     subparagraph (B)(ii),

     subparagraph (A)(i)(II) shall be applied by substituting `\4/
     5\' for `\2/3\' and subparagraph (B) shall be applied by 
     substituting `the 15-year period' for `the 10-year period'.
       ``(iii) For any plan year following the year described in 
     clause (ii)(II), subparagraph (A)(i)(II) and subparagraph (B) 
     shall apply, except that for each plan year ending after such 
     date for which the plan actuary certifies (at the time of the 
     annual certification under subsection (a)(1) for such plan 
     year) that the plan is not able to attain the increase 
     described in subparagraph (A)(i) over the period described in 
     subparagraph (B), subparagraph (B) shall be applied by 
     substituting `the 15-year period' for `the 10-year period'.
       ``(D) Reporting.--A summary of any funding improvement plan 
     or modification thereto adopted during any plan year, 
     together with annual updates regarding the funding ratio of 
     the plan, shall be included in the annual report for such 
     plan year under section 104(a) of the Employee Retirement 
     Income Security Act of 1974 and in the summary annual report 
     described in section 104(b)(3) of such Act.
       ``(4) Development of funding improvement plan.--

[[Page 28621]]

       ``(A) Actions by plan sponsor pending approval.--Pending 
     the approval of a funding improvement plan under this 
     paragraph, the plan sponsor shall take all reasonable 
     actions, consistent with the terms of the plan and applicable 
     law, necessary to ensure--
       ``(i) an increase in the plan's funded percentage, and
       ``(ii) postponement of an accumulated funding deficiency 
     for at least 1 additional plan year.
     Such actions include applications for extensions of 
     amortization periods under section 431(d), use of the 
     shortfall funding method in making funding standard account 
     computations, amendments to the plan's benefit structure, 
     reductions in future benefit accruals, and other reasonable 
     actions consistent with the terms of the plan and applicable 
     law.
       ``(B) Recommendations by plan sponsor.--
       ``(i) In general.--During the period of 90 days following 
     the date on which a multiemployer plan is certified to be in 
     endangered status, the plan sponsor shall develop and provide 
     to the bargaining parties alternative proposals for revised 
     benefit structures, contribution structures, or both, which, 
     if adopted as amendments to the plan, may be reasonably 
     expected to meet the benchmarks described in paragraph 
     (3)(A). Such proposals shall include--

       ``(I) at least one proposal for reductions in the amount of 
     future benefit accruals necessary to achieve the benchmarks, 
     assuming no amendments increasing contributions under the 
     plan (other than amendments increasing contributions 
     necessary to achieve the benchmarks after amendments have 
     reduced future benefit accruals to the maximum extent 
     permitted by law), and
       ``(II) at least one proposal for increases in contributions 
     under the plan necessary to achieve the benchmarks, assuming 
     no amendments reducing future benefit accruals under the 
     plan.

       ``(ii) Requests by bargaining parties.--Upon the request of 
     any bargaining party who--

       ``(I) employs at least 5 percent of the active 
     participants, or
       ``(II) represents as an employee organization, for purposes 
     of collective bargaining, at least 5 percent of the active 
     participants,

     the plan sponsor shall provide all such parties information 
     as to other combinations of increases in contributions and 
     reductions in future benefit accruals which would result in 
     achieving the benchmarks.
       ``(iii) Other information.--The plan sponsor may, as it 
     deems appropriate, prepare and provide the bargaining parties 
     with additional information relating to contribution 
     structures or benefit structures or other information 
     relevant to the funding improvement plan.
       ``(5) Maintenance of contributions pending approval of 
     funding improvement plan.--Pending approval of a funding 
     improvement plan by the bargaining parties with respect to a 
     multiemployer plan, the multiemployer plan may not be amended 
     so as to provide--
       ``(A) a reduction in the level of contributions for 
     participants who are not in pay status,
       ``(B) a suspension of contributions with respect to any 
     period of service, or
       ``(C) any new direct or indirect exclusion of younger or 
     newly hired employees from plan participation.
       ``(6) Benefit restrictions pending approval of funding 
     improvement plan.--Pending approval of a funding improvement 
     plan by the bargaining parties with respect to a 
     multiemployer plan--
       ``(A) Restrictions on lump sum and similar distributions.--
     In any case in which the present value of a participant's 
     accrued benefit under the plan exceeds $5,000, such benefit 
     may not be distributed as an immediate distribution or in any 
     other accelerated form.
       ``(B) Prohibition on benefit increases.--
       ``(i) In general.--No amendment of the plan which increases 
     the liabilities of the plan by reason of any increase in 
     benefits, any change in the accrual of benefits, or any 
     change in the rate at which benefits become nonforfeitable 
     under the plan may be adopted.
       ``(ii) Exception.--Clause (i) shall not apply to any plan 
     amendment which is required as a condition of qualification 
     under part I of subchapter D of chapter 1 of subtitle A.
       ``(7) Default critical status if no funding improvement 
     plan adopted.--If no plan amendment adopting a funding 
     improvement plan has been adopted by the end of the 240-day 
     period referred to in subsection (b)(1), the plan enters into 
     critical status as of the first day of the succeeding plan 
     year.
       ``(8) Restrictions upon approval of funding improvement 
     plan.--Upon adoption of a funding improvement plan with 
     respect to a multiemployer plan, the plan may not be 
     amended--
       ``(A) so as to be inconsistent with the funding improvement 
     plan, or
       ``(B) so as to increase future benefit accruals, unless the 
     plan actuary certifies in advance that, after taking into 
     account the proposed increase, the plan is reasonably 
     expected to meet the the benchmarks described in paragraph 
     (3)(A).
       ``(c) Funding Rules for Multiemployer Plans in Critical 
     Status.--
       ``(1) In general.--In any case in which a multiemployer 
     plan is in critical status for a plan year as described in 
     paragraph (2) (or otherwise enters into critical status under 
     this section) and no rehabilitation plan under this 
     subsection with respect to such multiemployer plan is in 
     effect for the plan year, the plan sponsor shall, in 
     accordance with this subsection, amend the multiemployer plan 
     to include a rehabilitation plan under this subsection. The 
     amendment shall be adopted not later than 240 days after the 
     date on which the plan enters into critical status.
       ``(2) Critical status.--A multiemployer plan is in critical 
     status for a plan year if--
       ``(A) the plan is in endangered status for the preceding 
     plan year and the requirements of subsection (b)(1) were not 
     met with respect to the plan for such preceding plan year, or
       ``(B) as determined by the plan actuary under subsection 
     (a), the plan is described in paragraph (3).
       ``(3) Criticality description.--For purposes of paragraph 
     (2)(B), a plan is described in this paragraph if the plan is 
     described in at least one of the following subparagraphs:
       ``(A) A plan is described in this subparagraph if, as of 
     the beginning of the current plan year--
       ``(i) the funded percentage of the plan is less than 65 
     percent, and
       ``(ii) the sum of--

       ``(I) the market value of plan assets, plus
       ``(II) the present value of the reasonably anticipated 
     employer and employee contributions for the current plan year 
     and each of the 6 succeeding plan years, assuming that the 
     terms of the one or more collective bargaining agreements 
     pursuant to which the plan is maintained for the current plan 
     year continue in effect for succeeding plan years,

     is less than the present value of all nonforfeitable benefits 
     for all participants and beneficiaries projected to be 
     payable under the plan during the current plan year and each 
     of the 6 succeeding plan years (plus administrative expenses 
     for such plan years).
       ``(B) A plan is described in this subparagraph if, as of 
     the beginning of the current plan year, the sum of--
       ``(i) the market value of plan assets, plus
       ``(ii) the present value of the reasonably anticipated 
     employer and employee contributions for the current plan year 
     and each of the 4 succeeding plan years, assuming that the 
     terms of the one or more collective bargaining agreements 
     pursuant to which the plan is maintained for the current plan 
     year remain in effect for succeeding plan years,
     is less than the present value of all nonforfeitable benefits 
     for all participants and beneficiaries projected to be 
     payable under the plan during the current plan year and each 
     of the 4 succeeding plan years (plus administrative expenses 
     for such plan years).
       ``(C) A plan is described in this subparagraph if--
       ``(i) as of the beginning of the current plan year, the 
     funded percentage of the plan is less than 65 percent, and
       ``(ii) the plan has an accumulated funding deficiency for 
     the current plan year or is projected to have an accumulated 
     funding deficiency for any of the 4 succeeding plan years, 
     not taking into account any extension of amortization periods 
     under section 431(d).
       ``(D) A plan is described in this subparagraph if--
       ``(i)(I) the plan's normal cost for the current plan year, 
     plus interest (determined at the rate used for determining 
     cost under the plan) for the current plan year on the amount 
     of unfunded benefit liabilities under the plan as of the last 
     date of the preceding plan year, exceeds
       ``(II) the present value, as of the beginning of the 
     current plan year, of the reasonably anticipated employer and 
     employee contributions for the current plan year,
       ``(ii) the present value, as of the beginning of the 
     current plan year, of nonforfeitable benefits of inactive 
     participants is greater than the present value, as of the 
     beginning of the current plan year, of nonforfeitable 
     benefits of active participants, and
       ``(iii) the plan is projected to have an accumulated 
     funding deficiency for the current plan year or any of the 4 
     succeeding plan years, not taking into account any extension 
     of amortization periods under section 431(d).
       ``(E) A plan is described in this subparagraph if--
       ``(i) the funded percentage of the plan is greater than 65 
     percent for the current plan year, and
       ``(ii) the plan is projected to have an accumulated funding 
     deficiency during any of the succeeding 3 plan years, not 
     taking into account any extension of amortization periods 
     under section 431(d).
       ``(4) Rehabilitation plan.--
       ``(A) In general.--A rehabilitation plan shall consist of--
       ``(i) amendments to the plan providing (under reasonable 
     actuarial assumptions) for measures, agreed to by the 
     bargaining parties, to increase contributions, reduce plan 
     expenditures (including plan mergers and consolidations), or 
     reduce future benefit accruals, or to take any combination of 
     such actions, determined necessary to cause the plan to 
     cease, during the rehabilitation period, to be in critical 
     status, or

[[Page 28622]]

       ``(ii) reasonable measures to forestall possible insolvency 
     (within the meaning of section 418E) if the plan sponsor 
     determines that, upon exhaustion of all reasonable measures, 
     the plan would not cease during the rehabilitation period to 
     be in critical status.

     A rehabilitation must provide annual standards for meeting 
     the requirements of such rehabilitation plan.
       ``(B) Rehabilitation period.--The rehabilitation period for 
     any rehabilitation plan adopted pursuant to this subsection 
     is the 10-year period beginning on the earlier of--
       ``(i) the second anniversary of the date of the adoption of 
     the rehabilitation plan, or
       ``(ii) the first day of the first plan year of the 
     multiemployer plan following the plan year in which occurs 
     the first date, after the date of the plan's entry into 
     critical status, as of which collective bargaining agreements 
     covering at least 75 percent of active participants in such 
     multiemployer plan (determined as of such date of entry) have 
     expired.
       ``(C) Reporting.--A summary of any rehabilitation plan or 
     modification thereto adopted during any plan year, together 
     with annual updates regarding the funding ratio of the plan, 
     shall be included in the annual report for such plan year 
     under section 104(a) of the Employee Retirement Income 
     Security Act of 1974 and in the summary annual report 
     described in section 104(b)(3) of such Act.
       ``(5) Development of rehabilitation plan.--
       ``(A) Proposals by plan sponsor.--
       ``(i) In general.--Within 90 days after the date of entry 
     into critical status (or the date as of which the 
     requirements of subsection (b)(1) are not met with respect to 
     the plan), the plan sponsor shall propose to all bargaining 
     parties a range of alternative schedules of increases in 
     contributions and reductions in future benefit accruals that 
     would serve to carry out a rehabilitation plan under this 
     subsection.
       ``(ii) Proposal assuming no contribution increases.--Such 
     proposals shall include, as one of the proposed schedules, a 
     schedule of those reductions in future benefit accruals that 
     would be necessary to cause the plan to cease to be in 
     critical status if there were no further increases in rates 
     of contribution to the plan.
       ``(iii) Proposal where contributions are necessary.--If the 
     plan sponsor determines that the plan will not cease to be in 
     critical status during the rehabilitation period unless the 
     plan is amended to provide for an increase in contributions, 
     the plan sponsor's proposals shall include a schedule of 
     those increases in contribution rates that would be necessary 
     to cause the plan to cease to be in critical status if future 
     benefit accruals were reduced to the maximum extent permitted 
     by law.
       ``(B) Requests for additional schedules.--Upon the request 
     of any bargaining party who--
       ``(i) employs at least 5 percent of the active 
     participants, or
       ``(ii) represents as an employee organization, for purposes 
     of collective bargaining, at least 5 percent of active 
     participants,
     the plan sponsor shall include among the proposed schedules 
     such schedules of increases in contributions and reductions 
     in future benefit accruals as may be specified by the 
     bargaining parties.
       ``(C) Subsequent amendments.--Upon the adoption of a 
     schedule of increases in contributions or reductions in 
     future benefit accruals as part of the rehabilitation plan, 
     the plan sponsor may amend the plan thereafter to update the 
     schedule to adjust for any experience of the plan contrary to 
     past actuarial assumptions, except that such an amendment may 
     be made not more than once in any 3-year period.
       ``(D) Allocation of reductions in future benefit 
     accruals.--Any schedule containing reductions in future 
     benefit accruals forming a part of a rehabilitation plan 
     shall be applicable with respect to any group of active 
     participants who are employed by any bargaining party (as an 
     employer obligated to contribute under the plan) in 
     proportion to the extent to which increases in contributions 
     under such schedule apply to such bargaining party.
       ``(E) Limitation on reduction in rates of future 
     accruals.--Any schedule proposed under this paragraph shall 
     not reduce the rate of future accruals below the lower of--
       ``(i) a monthly benefit equal to 1 percent of the 
     contributions required to be made with respect to a 
     participant or the equivalent standard accrual rate for a 
     participant or group of participants under the collective 
     bargaining agreements in effect as of the first day of the 
     plan year in which the plan enters critical status, or
       ``(ii) if lower, the accrual rate under the plan on such 
     date.

     The equivalent standard accrual rate shall be determined by 
     the trustees based on the standard or average contribution 
     base units that they determine to be representative for 
     active participants and such other factors as they determine 
     to be relevant.
       ``(F) Protection of restored rates of accrual.--
       ``(i) In general.--Any schedule proposed under this 
     paragraph shall not reduce the rate of future accruals below 
     any restored accrual rate.
       ``(ii) Restored accrual rate.--For purposes of clause (i), 
     the term `restored accrual rate' means a rate of benefit 
     accruals which was reduced and subsequently restored before 
     entry of the plan into critical status.
       ``(6) Maintenance of contributions and restrictions on 
     benefits pending adoption of rehabilitation plan.--The rules 
     of paragraphs (5) and (6) of subsection (b) shall apply for 
     purposes of this subsection by substituting the term 
     `rehabilitation plan' for `funding improvement plan'.
       ``(7) Special rules.--
       ``(A) Automatic employer surcharge.--
       ``(i) 5 percent and 10 percent surcharge.--For the first 
     plan year in which the plan is in critical status, each 
     employer otherwise obligated to make a contribution for that 
     plan year shall be obligated to pay to the plan a surcharge 
     equal to 5 percent of the contribution otherwise required 
     under the respective collective bargaining agreement (or 
     other agreement pursuant to which the employer contributes). 
     For each consecutive plan year thereafter in which the plan 
     is in critical status, the surcharge shall be 10 percent of 
     the contribution otherwise required under the respective 
     collective bargaining agreement (or other agreement pursuant 
     to which the employer contributes).
       ``(ii) Enforcement of surcharge.--The surcharges under 
     clause (i) shall be due and payable on the same schedule as 
     the contributions on which they are based. Any failure to 
     make a surcharge payment shall be treated as a delinquent 
     contribution under section 515 of the Employee Retirement 
     Income Security Act of 1974 and shall be enforceable as such.
       ``(iii) Surcharge to terminate upon cba renegotiation.--The 
     surcharge under this paragraph shall cease to be effective 
     with respect to employees covered by a collective bargaining 
     agreement, beginning on the date on which that agreement is 
     renegotiated to include--

       ``(I) a schedule of benefits and contributions published by 
     the trustees pursuant to the plan's rehabilitation plan, or
       ``(II) otherwise collectively bargained benefit changes.

       ``(iv) Surcharge not to apply until employer receives 30-
     day notice.--The surcharge under this subparagraph shall not 
     apply to an employer until 30 days after the employer has 
     been notified by the trustees that the plan is in critical 
     status and that the surcharge is in effect.
       ``(v) Surcharge not to generate increased benefit 
     accruals.--Notwithstanding any provision of a plan to the 
     contrary, the amount of any surcharge shall not be the basis 
     for any benefit accruals under the plan.
       ``(B) Benefit adjustments.--
       ``(i) In general.--The trustees shall make appropriate 
     reductions, if any, to adjustable benefits based upon the 
     outcome of collective bargaining over the schedules provided 
     under paragraph (5).
       ``(ii) Retiree protection.--Except as provided in 
     subparagraph (C), the trustees of a plan in critical status 
     may not reduce adjustable benefits of any participant or 
     beneficiary who was in pay status at least one year before 
     the first day of the first plan year in which the plan enters 
     into critical status.
       ``(iii) Trustee flexibility.--The trustees shall include in 
     the schedules provided to the bargaining parties an allowance 
     for funding the benefits of participants with respect to whom 
     contributions are not currently required to be made, and 
     shall reduce their benefits to the extent permitted under 
     this title and considered appropriate based on the plan's 
     then current overall funding status and its future prospects 
     in light of the results of the parties' negotiations.
       ``(C) Adjustable benefit defined.--For purposes of this 
     paragraph, the term `adjustable benefit' means--
       ``(i) benefits, rights, and features, such as post-
     retirement death benefits, 60-month guarantees, disability 
     benefits not yet in pay status, and similar benefits,
       ``(ii) retirement-type subsidies, early retirement 
     benefits, and benefit payment options (other than the 50 
     percent qualified joint-and-survivor benefit and single life 
     annuity), and
       ``(iii) benefit increases that would not be eligible for a 
     guarantee under section 4022A of the Employee Retirement 
     Income Security Act of 1974 on the first day of the plan year 
     in which the plan enters into critical status because they 
     were adopted, or if later, took effect less than 60 months 
     before reorganization.
       ``(D) Normal retirement benefits protected.--Nothing in 
     this paragraph shall be construed to permit a plan to reduce 
     the level of a participant's accrued benefit payable at 
     normal retirement age which is not an adjustable benefit.
       ``(E) Adjustments disregarded in withdrawal liability 
     determination.--
       ``(i) Benefit reductions.--Any benefit reductions under 
     this paragraph shall be disregarded in determining a plan's 
     unfunded vested benefits for purposes of determining an 
     employer's withdrawal liability under section 4201 of the 
     Employee Retirement Income Security Act of 1974.

[[Page 28623]]

       ``(ii) Surcharges.--Any surcharges under this paragraph 
     shall be disregarded in determining an employer's withdrawal 
     liability under section 4211 of the Employee Retirement 
     Income Security Act of 1974, except for purposes of 
     determining the unfunded vested benefits attributable to an 
     employer or under a modified attributable method adopted with 
     the approval of the Pension Benefit Guaranty Corporation 
     under subsection (c)(5) of that section.
       ``(8) Restrictions upon approval of rehabilitation plan.--
     Upon adoption of a rehabilitation plan with respect to a 
     multiemployer plan, the plan may not be amended--
       ``(A) so as to be inconsistent with the rehabilitation 
     plan, or
       ``(B) so as to increase future benefit accruals, unless the 
     plan actuary certifies in advance that, after taking into 
     account the proposed increase, the plan is reasonably 
     expected to cease to be in critical status.
       ``(9) Implementation of default schedule upon failure to 
     adopt rehabilitation plan.--If the plan is not amended by the 
     end of the 240-day period after entry into critical status to 
     include a rehabilitation plan, the plan sponsor shall amend 
     the plan to implement the schedule required by paragraph 
     (5)(A)(ii).
       ``(10) Deemed withdrawal.--Upon the failure of any employer 
     who has an obligation to contribute under the plan to make 
     contributions in compliance with the schedule adopted under 
     paragraph (4) as part of the rehabilitation plan, the failure 
     of the employer may, at the discretion of the plan sponsor, 
     be treated as a withdrawal by the employer from the plan 
     under section 4203 of the Employee Retirement Income Security 
     Act of 1974 or a partial withdrawal by the employer under 
     section 4205 of such Act.
       ``(11) Special rule for plan amendments.--A multiemployer 
     plan in critical status shall not fail to meet the 
     requirements of section 204(g) of the Employee Retirement 
     Income Security Act of 1974 or section 411(d)(6) solely by 
     reason of the adoption by the plan of an amendment necessary 
     to meet the requirements of this subsection.
       ``(d) Definitions.--For purposes of this section--
       ``(1) Bargaining party.--The term `bargaining party' means, 
     in connection with a multiemployer plan--
       ``(A) an employer who has an obligation to contribute under 
     the plan, and
       ``(B) an employee organization which, for purposes of 
     collective bargaining, represents plan participants employed 
     by such an employer.
       ``(2) Funded percentage.--The term `funded percentage' 
     means the percentage expressed as a ratio of which--
       ``(A) the numerator of which is the value of the plan's 
     assets, as determined under section 431(c)(2), and
       ``(B) the denominator of which is the accrued liability of 
     the plan.
       ``(3) Accumulated funding deficiency.--The term 
     `accumulated funding deficiency' has the meaning provided 
     such term in section 431(a).
       ``(4) Active participant.--The term `active participant' 
     means, in connection with a multiemployer plan, a participant 
     who is in covered service under the plan.
       ``(5) Inactive participant.--The term `inactive 
     participant' means, in connection with a multiemployer plan, 
     a participant who--
       ``(A) is not in covered service under the plan, and
       ``(B) is in pay status under the plan or has a 
     nonforfeitable right to benefits under the plan.
       ``(6) Pay status.--A person is in `pay status' under a 
     multiemployer plan if--
       ``(A) at any time during the current plan year, such person 
     is a participant or beneficiary under the plan and is paid an 
     early, late, normal, or disability retirement benefit under 
     the plan (or a death benefit under the plan related to a 
     retirement benefit), or
       ``(B) to the extent provided in regulations of the 
     Secretary, such person is entitled to such a benefit under 
     the plan.
       ``(7) Obligation to contribute.--The term `obligation to 
     contribute' has the meaning provided such term under section 
     4212(a) of the Employee Retirement Income Security Act of 
     1974.
       ``(8) Entry into critical status.--A plan shall be treated 
     as entering into critical status as of the date that such 
     plan is certified to be in critical status under subsection 
     (a)(1), is presumed to be in critical status under subsection 
     (a)(3), or enters into critical status under subsection 
     (b)(7).''.
       (b) Excise Tax on Failures to Act With Respect to 
     Multiemployer Plans in Critical Status.--Section 4971 of the 
     Internal Revenue Code of 1986 is amended by redesignating 
     subsection (g) as subsection (h) and by inserting after 
     subsection (f) the following:
       ``(g) Multiemployer Plans in Critical Status.--
       ``(1) Substitution of excise tax for initial and additional 
     tax.--In the case of a multiemployer plan to which section 
     432(c) applies for a period, subsections (a) and (b) shall 
     not apply with respect to such period.
       ``(2) Failure to adopt rehabilitation plan.--
       ``(A) In general.--In the case of a multiemployer plan to 
     which section 432(c) applies, there is hereby imposed a tax 
     on the failure of such plan to adopt a rehabilitation plan.
       ``(B) Amount of tax.--The amount of the tax imposed under 
     subparagraph (A) with respect to any plan sponsor shall be 
     the greater of--
       ``(i) the amount of tax imposed under subsection (a) 
     (determined without regard to this subsection), or
       ``(ii) the amount equal to $1,100 multiplied by the number 
     of days in the period beginning on the first day of the 240-
     day period described in section 432(c)(1) and ending on the 
     day on which the rehabilitation plan is adopted.
       ``(C) Liability for tax.--
       ``(i) In general.--The tax imposed by subparagraph (A) 
     shall be paid by each plan sponsor.
       ``(ii) Plan sponsor.--For purposes of clause (i), the term 
     `plan sponsor' in the case of a multiemployer plan means the 
     association, committee, joint board of trustees, or other 
     similar group of representatives of the parties who establish 
     or maintain the plan.
       ``(3) Failure to comply with rehabilitation plan.--
       ``(A) In general.--In the case of a multiemployer plan to 
     which section 432(c) applies, there is hereby imposed a tax 
     on each failure to make a required contribution under the 
     rehabilitation plan within the time required under such plan.
       ``(B) Amount of tax.--The amount of the tax imposed by 
     subparagraph (A) shall be, with respect to each required 
     contribution under the rehabilitation plan, the amount equal 
     to the excess of the amount of such required contribution 
     over the amount contributed.
       ``(C) Liability for tax.--The tax imposed by subparagraph 
     (A) shall be paid by the employer responsible for 
     contributing to or under the rehabilitation plan which fails 
     to make the contribution.
       ``(4) Rehabilitation plan.--For purposes of this 
     subsection, the term `rehabilitation plan' means the plan 
     required to be adopted under section 432(c).''.
       (c) Clerical Amendment.--The table of sections for subpart 
     A of part III of subchapter D of chapter 1 of such Code is 
     amended by adding at the end the following new item:

``Sec. 432. Additional funding rules for multiemployer plans in 
              endangered status or critical status.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply with respect to plan years beginning after 
     December 31, 2005.
       (e) Special Rule for 2006.--In the case of any plan year 
     beginning in 2006, any reference in section 432 of the 
     Internal Revenue Code of 1986 (as added by this section) to 
     section 431 of such Code (as added by this Act) shall be 
     treated as a reference to the corresponding provision of such 
     Code as in effect for plan years beginning in such year.

     SEC. 213. MEASURES TO FORESTALL INSOLVENCY OF MULTIEMPLOYER 
                   PLANS.

       (a) Advance Determination of Impending Insolvency Over 5 
     Years.--Section 418E(d)(1) of the Internal Revenue Code of 
     1986 is amended--
       (1) by striking ``3 plan years'' the second place it 
     appears and inserting ``5 plan years'', and
       (2) by adding at the end the following new sentence: ``If 
     the plan sponsor makes such a determination that the plan 
     will be insolvent in any of the next 5 plan years, the plan 
     sponsor shall make the comparison under this paragraph at 
     least annually until the plan sponsor makes a determination 
     that the plan will not be insolvent in any of the next 5 plan 
     years.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply with respect to determinations made in plan years 
     beginning after December 31, 2005.

                      TITLE III--OTHER PROVISIONS

     SEC. 301. INTEREST RATE FOR 2006 FUNDING REQUIREMENTS.

       (a) Amendments to Employee Retirement Income Security Act 
     of 1974.--
       (1) In general.--Subclause (II) of section 302(b)(5)(B)(ii) 
     of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1082(b)(5)(B)(ii)) is amended--
       (A) by striking ``January 1, 2006'' and inserting ``January 
     1, 2007'', and
       (B) by striking ``and 2005'' in the heading and inserting 
     ``, 2005, and 2006''.
       (2) Current liability.--Subclause (IV) of section 
     302(d)(7)(C)(i) of such Act (29 U.S.C. 1082(d)(7)(C)(i)) is 
     amended--
       (A) by striking ``or 2005'' and inserting ``, 2005, or 
     2006'', and
       (B) by striking ``and 2005'' in the heading and inserting 
     ``, 2005, and 2006''.
       (b) Amendments to Internal Revenue Code of 1986.--
       (1) In general.--Subclause (II) of section 412(b)(5)(B)(ii) 
     of the Internal Revenue Code of 1986 is amended--
       (A) by striking ``January 1, 2006'' and inserting ``January 
     1, 2007'', and
       (B) by striking ``and 2005'' in the heading and inserting 
     ``, 2005, and 2006''.
       (2) Current liability.--Subclause (IV) of section 
     412(l)(7)(C)(i) of such Code is amended--
       (A) by striking ``or 2005'' and inserting ``, 2005, or 
     2006'', and

[[Page 28624]]

       (B) by striking ``and 2005'' in the heading and inserting 
     ``, 2005, and 2006''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2005.

     SEC. 302. INTEREST RATE ASSUMPTION FOR DETERMINATION OF LUMP 
                   SUM DISTRIBUTIONS.

       (a) Amendment to Employee Retirement Income Security Act of 
     1974.--Paragraph (3) of section 205(g) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1055(g)(3)) 
     is amended to read as follows:
       ``(3)(A) For purposes of paragraphs (1) and (2), the 
     present value shall not be less than the present value 
     calculated by using the applicable mortality table and the 
     applicable interest rate.
       ``(B) For purposes of subparagraph (A)--
       ``(i) The term `applicable mortality table' means a 
     mortality table, modified as appropriate by the Secretary of 
     the Treasury, based on the mortality table specified for the 
     plan year under section 303(h)(3).
       ``(ii) The term `applicable interest rate' means the 
     adjusted first, second, and third segment rates applied under 
     rules similar to the rules of section 303(h)(2)(C) for the 
     month before the date of the distribution or such other time 
     as the Secretary of the Treasury may by regulations 
     prescribe.
       ``(iii) For purposes of clause (ii), the adjusted first, 
     second, and third segment rates are the first, second, and 
     third segment rates which would be determined under section 
     303(h)(2)(C) if--
       ``(I) section 303(h)(2)(D)(i) were applied by substituting 
     `the yields' for `a 3-year weighted average of yields',
       ``(II) section 303(h)(2)(G)(i)(II) were applied by 
     substituting `section 205(g)(3)(A)(ii)(II)' for `section 
     302(b)(5)(B)(ii)(II)', and
       ``(III) the applicable percentage under section 
     303(h)(2)(G) were determined in accordance with the following 
     table:


 
 
 
``In the case of plan years beginning in:  The applicable percentage is:
  2007...................................  20 percent
  2008...................................  40 percent
  2009...................................  60 percent
  2010...................................  80 percent.''.
 


       (b) Amendment to Internal Revenue Code of 1986.--Paragraph 
     (3) of section 417(e) of the Internal Revenue Code of 1986 is 
     amended to read as follows:
       ``(3) Determination of present value.--
       ``(A) In general.--For purposes of paragraphs (1) and (2), 
     the present value shall not be less than the present value 
     calculated by using the applicable mortality table and the 
     applicable interest rate.
       ``(B) Applicable mortality table.--For purposes of 
     subparagraph (A), the term `applicable mortality table' means 
     a mortality table, modified as appropriate by the Secretary, 
     based on the mortality table specified for the plan year 
     under section 430(h)(3).
       ``(C) Applicable interest rate.--For purposes of 
     subparagraph (A), the term `applicable interest rate' means 
     the adjusted first, second, and third segment rates applied 
     under rules similar to the rules of section 430(h)(2)(C) for 
     the month before the date of the distribution or such other 
     time as the Secretary may by regulations prescribe.
       ``(D) Applicable segment rates.--For purposes of 
     subparagraph (C), the adjusted first, second, and third 
     segment rates are the first, second, and third segment rates 
     which would be determined under section 430(h)(2)(C) if--
       ``(i) section 430(h)(2)(D)(i) were applied by substituting 
     `the yields' for `a 3-year weighted average of yields',
       ``(ii) section 430(h)(2)(G)(i)(II) were applied by 
     substituting `section 417(e)(3)(A)(ii)(II)' for `section 
     412(b)(5)(B)(ii)(II)', and
       ``(iii) the applicable percentage under section 
     430(h)(2)(G) were determined in accordance with the following 
     table:


 
 
 
``In the case of plan years beginning in:  The applicable percentage is:
  2007...................................  20 percent
  2008...................................  40 percent
  2009...................................  60 percent
  2010...................................  80 percent.''.
 


       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to plan years beginning after 
     December 31, 2006.

     SEC. 303. INTEREST RATE ASSUMPTION FOR APPLYING BENEFIT 
                   LIMITATIONS TO LUMP SUM DISTRIBUTIONS.

       (a) In General.--Clause (ii) of section 415(b)(2)(E) of the 
     Internal Revenue Code of 1986 is amended to read as follows:
       ``(ii) For purposes of adjusting any benefit under 
     subparagraph (B) for any form of benefit subject to section 
     417(e)(3), the interest rate assumption shall not be less 
     than the greater of--

       ``(I) 5.5 percent,
       ``(II) the rate that provides a benefit of not more than 
     105 percent of the benefit that would be provided if the 
     applicable interest rate (as defined in section 417(e)(3)) 
     were the interest rate assumption, or
       ``(III) the rate specified under the plan.''.

       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to distributions made in years beginning after 
     December 31, 2005.

     SEC. 304. DISTRIBUTIONS DURING WORKING RETIREMENT.

       (a) Amendment to the Employee Retirement Income Security 
     Act of 1974.--Subparagraph (A) of section 3(2) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1002(2)) is amended by adding at the end the following new 
     sentence: ``A distribution from a plan, fund, or program 
     shall not be treated as made in a form other than retirement 
     income or as a distribution prior to termination of covered 
     employment solely because such distribution is made to an 
     employee who has attained age 62 and who is not separated 
     from employment at the time of such distribution.''.
       (b) Amendment to the Internal Revenue Code of 1986.--
     Subsection (a) of section 401 of the Internal Revenue Code of 
     1986 is amended by inserting after paragraph (34) the 
     following new paragraph:
       ``(35) Distributions during working retirement.--A trust 
     forming part of a pension plan shall not be treated as 
     failing to constitute a qualified trust under this section 
     solely because a distribution is made from such trust to an 
     employee who has attained age 62 and who is not separated 
     from employment at the time of such distribution.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions in plan years beginning after 
     December 31, 2005.

     SEC. 305. OTHER AMENDMENTS RELATING TO PROHIBITED 
                   TRANSACTIONS.

       (a) Definition of Amount Involved.--Section 502(i) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1132(i)) is amended to read as follows:
       ``(i)(1) In the case of a transaction prohibited by section 
     406 by a party in interest with respect to a plan to which 
     this part applies, the Secretary may assess a civil penalty 
     against such party in interest. Except as provided in 
     paragraph (2), the amount of such penalty may not exceed 5 
     percent of the amount involved in each such transaction for 
     each year or part thereof during which the prohibited 
     transaction continues.
       ``(2) If the transaction is not corrected (in such manner 
     as the Secretary shall prescribe in regulations) within 90 
     days after notice from the Secretary (or such longer period 
     as the Secretary may permit), such penalty may be in an 
     amount not more than 100 percent of the amount involved.
       ``(3) For purposes of paragraph (1)--
       ``(A) Except as provided in subparagraphs (C) and (D), the 
     term `amount involved' means, with respect to a prohibited 
     transaction, the greater of--
       ``(i) the amount of money and the fair market value of the 
     other property given, or
       ``(ii) the amount of money and the fair market value of the 
     other property received.
       ``(B) For purposes of subparagraph (A), fair market value 
     shall be determined as of the date on which the prohibited 
     transaction occurs, except that in the case described in 
     paragraph (2) fair market value shall be the highest fair 
     market value during the period between the date of the 
     transaction and the date of correction.
       ``(C) In the case of services described in subsection 
     (b)(2) or (c)(2) of section 408, the term `amount involved' 
     means only the amount of excess compensation.
       ``(D) In the case of principal transactions prohibited 
     under section 406(a) involving securities or commodities, the 
     term `amount involved' means only the amount received by the 
     disqualified person in excess of the amount such person would 
     have received in an arm's length transaction with an 
     unrelated party as of the same date.
       ``(E) For the purposes of this paragraph--
       ``(i) the term `security' has the meaning given such term 
     by section 475(c)(2) of the Internal Revenue Code of 1986 
     (without regard to subparagraph (F)(iii) and the last 
     sentence thereof), and
       ``(ii) the term `commodity' has the meaning given such term 
     by section 475(e)(2) of such Code (without regard to 
     subparagraph (D)(iii) thereof).''.
       (b) Exemption for Block Trading.--
       (1) Amendments to employee retirement income security act 
     of 1974.--Section 408(b) of such Act (29 U.S.C. 1108(b)), as 
     amended by section 601, is further amended by adding at the 
     end the following new paragraph:
       ``(15)(A) Any transaction involving the purchase or sale of 
     securities between a plan and a party in interest (other than 
     a fiduciary described in section 3(21)(A)(ii)) with respect 
     to a plan if--
       ``(i) the transaction involves a block trade,
       ``(ii) at the time of the transaction, the interest of the 
     plan (together with the interests of any other plans 
     maintained by the same plan sponsor), does not exceed 10 
     percent of the aggregate size of the block trade, and
       ``(iii) the terms of the transaction, including the price, 
     are at least as favorable to the plan as an arm's length 
     transaction.
       ``(B) For purposes of this paragraph, the term `block 
     trade' includes any trade which will be allocated across two 
     or more client accounts of a fiduciary.''.
       (2) Amendments to internal revenue code of 1986.--

[[Page 28625]]

       (A) In general.--Subsection (d) of section 4975 of the 
     Internal Revenue Code of 1986 (relating to exemptions) is 
     amended by striking ``or'' at the end of paragraph (15), by 
     striking the period at the end of paragraph (16) and 
     inserting ``, or'', and by adding at the end the following 
     new paragraph:
       ``(17) any transaction involving the purchase or sale of 
     securities between a plan and a party in interest (other than 
     a fiduciary described in subsection (e)(3)(B)) with respect 
     to a plan if--
       ``(A) the transaction involves a block trade,
       ``(B) at the time of the transaction, the interest of the 
     plan (together with the interests of any other plans 
     maintained by the same plan sponsor), does not exceed 10 
     percent of the aggregate size of the block trade, and
       ``(C) the terms of the transaction, including the price, 
     are at least as favorable to the plan as an arm's length 
     transaction.
       ``(D) For purposes of this paragraph, the term `block 
     trade' includes any trade which will be allocated across two 
     or more client accounts of a fiduciary.''.
       (B) Special rule relating to block trade.--Subsection (f) 
     of section 4975 of such Code (relating to other definitions 
     and special rules) is amended by adding at the end the 
     following new paragraph:
       ``(8) Block trade.--For purposes of subsection (d)(17), the 
     term `block trade' includes any trade which will be allocated 
     across two or more client accounts of a fiduciary.''.
       (c) Bonding Relief.-- Section 412(a) of such Act (29 U.S.C. 
     1112(a)) is amended--
       (1) by redesignating paragraph (2) as paragraph (3);
       (2) by striking ``and'' at the end of paragraph (1); and
       (3) by inserting after paragraph (1) the following new 
     paragraph:
       ``(2) no bond shall be required of an entity which is 
     subject to regulation as a broker or a dealer under section 
     15 of the Securities Exchange Act of 1934 (15 U.S.C. 78a et 
     seq.) or an entity registered under the Investment Advisers 
     Act of 1940 (15 U.S.C. 80b-1 et seq.), including requirements 
     imposed by a self-regulatory organization (within the meaning 
     of section 3(a)(26) of such Act (15 U.S.C. 78c(a)(26)), or 
     any affiliate with respect to which the broker or dealer 
     agrees to be liable to the same extent as if they held the 
     assets directly.''.
       (d) Exemption for Electronic Communication Network.--
       (1) In general.--Section 408(b) of such Act (as amended by 
     subsection (b)) is further amended by adding at the end the 
     following:
       ``(16) Any transaction involving the purchase or sale of 
     securities, or other property (as determined in regulations 
     of the Secretary) between a plan and a fiduciary or a party 
     in interest if--
       ``(A) the transaction is executed through an exchange, 
     electronic communication network, alternative trading system, 
     or similar execution system or trading venue subject to 
     regulation and oversight by--
       ``(i) the applicable Federal regulating entity, or
       ``(ii) such other applicable governmental regulating agency 
     as the Secretary may determine appropriate in the case of any 
     fiduciary or party in interest or class of fiduciaries or 
     parties in interest or any transaction or class of 
     transactions,
       ``(B) neither the execution system nor the parties to the 
     transaction take into account the identity of the parties in 
     the execution of trades,
       ``(C) the transaction is effected pursuant to rules 
     designed to match purchases and sales at the best price 
     available through the execution system,
       ``(D) the price and compensation associated with the 
     purchase and sale are not greater than an arm's length 
     transaction with an unrelated party,
       ``(E) if the fiduciary or party in interest has an 
     ownership interest in the system or venue described in 
     subparagraph (A), the system or venue has been authorized 
     under the plan for transactions described in this paragraph, 
     and
       ``(F) not less than 30 days prior to the initial 
     transaction described in this paragraph executed through any 
     system or venue described in subparagraph (A), the plan 
     administrator is provided written notice of the execution of 
     such transaction through such system or venue.''.
       (2) Effective date.--The amendment made by this subsection 
     shall take effect 30 days after the date of the enactment of 
     this Act.
       (e) Conforming ERISA's Prohibited Transaction Provision to 
     FERSA.--Section 408(b) of such Act (29 U.S.C. 1106), as 
     amended by subsection (d), is further amended by adding at 
     the end the following new paragraph:
       ``(17)(A) transactions described in subparagraphs (A), (B), 
     and (D) of section 406(a)(1) between a plan and a party that 
     is a party in interest (under section 3(14)) solely by reason 
     of providing services, but only if in connection with such 
     transaction the plan receives no less, nor pays no more, than 
     adequate consideration.
       ``(B) For purposes of this paragraph, the term `adequate 
     consideration' means--
       ``(i) in the case of a security for which there is a 
     generally recognized market--
       ``(I) the price of the security prevailing on a national 
     securities exchange which is registered under section 6 of 
     the Securities Exchange Act of 1934, taking into account 
     factors such as the size of the transaction and marketability 
     of the security, or
       ``(II) if the security is not traded on such a national 
     securities exchange, a price not less favorable to the plan 
     than the offering price for the security as established by 
     the current bid and asked prices quoted by persons 
     independent of the issuer and of the party in interest, 
     taking into account factors such as the size of the 
     transaction and marketability of the security, and
       ``(ii) in the case of an asset other than a security for 
     which there is a generally recognized market, the fair market 
     value of the asset as determined in good faith by a fiduciary 
     or fiduciaries in accordance with regulations prescribed by 
     the Secretary.''.
       (f) Relief for Foreign Exchange Transactions.-- Section 
     408(b) of such Act (as amended by the preceding provisions of 
     this section) is further amended by adding at the end the 
     following new paragraph:
       ``(18) Any foreign exchange transactions, between a bank or 
     broker-dealer, or any affiliate of either thereof, and a plan 
     with respect to which the bank or broker-dealer, or any 
     affiliate, is a trustee, custodian, fiduciary, or other party 
     in interest, if--
       ``(A) the transaction is in connection with the purchase or 
     sale of securities,
       ``(B) at the time the foreign exchange transaction is 
     entered into, the terms of the transaction are not less 
     favorable to the plan than the terms generally available in 
     comparable arm's length foreign exchange transactions between 
     unrelated parties, or the terms afforded by the bank or the 
     broker-dealer (or any affiliate thereof) in comparable arm's-
     length foreign exchange transactions involving unrelated 
     parties, and
       ``(C) the exchange rate used by the bank or broker-dealer 
     for a particular foreign exchange transaction may not deviate 
     by more than 3 percent from the interbank bid and asked rates 
     at the time of the transaction as displayed on an independent 
     service that reports rates of exchange in the foreign 
     currency market for such currency.''.
       (g) Definition of Plan Asset Vehicle.--Section 3 of such 
     Act (29 U.S.C. 1002) is amended by adding at the end the 
     following new paragraph:
       ``(42) the term `plan assets' means plan assets as defined 
     by such regulations as the Secretary may prescribe, except 
     that under such regulations the assets of any entity shall 
     not be treated as plan assets if, immediately after the most 
     recent acquisition of any equity interest in the entity, less 
     than 50 percent of the total value of each class of equity 
     interest in the entity is held by employee benefit plan 
     investors. For purposes of determinations pursuant to this 
     paragraph, the value of any equity interest owned by a person 
     (other than such an employee benefit plan) who has 
     discretionary authority or control with respect to the assets 
     of the entity or any person who provides investment advice 
     for a fee (direct or indirect) with respect to such assets, 
     or any affiliate of such a person, shall be disregarded for 
     purposes of calculating the 50 percent threshold. An entity 
     shall be considered to hold plan assets only to the extent of 
     the percentage of the equity interest owned by benefit plan 
     investors. For purposes of this paragraph, the term `benefit 
     plan investor' means an employee benefit plan subject to this 
     part and any plan to which section 4975 of the Internal 
     Revenue Code of 1986 applies.''.

     SEC. 306. CORRECTION PERIOD FOR CERTAIN TRANSACTIONS 
                   INVOLVING SECURITIES AND COMMODITIES.

       (a) Amendment of Employee Retirement Income Security Act of 
     1974.--Section 408(b) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1108(b)), as amended by 
     sections 304 and 601, is further amended by adding at the end 
     the following new paragraph:
       ``(19)(A) Except as provided in subparagraphs (B) and (C), 
     a transaction described in section 406(a) in connection with 
     the acquisition, holding, or disposition of any security or 
     commodity, if the transaction is corrected before the end of 
     the correction period.
       ``(B) Subparagraph (A) does not apply to any transaction 
     between a plan and a plan sponsor or its affiliates that 
     involves the acquisition or sale of an employer security (as 
     defined in section 407(d)(1)) or the acquisition, sale, or 
     lease of employer real property (as defined in section 
     407(d)(2)).
       ``(C) In the case of any fiduciary or other party in 
     interest (or any other person knowingly participating in such 
     transaction), subparagraph (A) does not apply to any 
     transaction if, at the time the transaction occurs, such 
     fiduciary or party in interest (or other person) knew (or 
     reasonably should have known) that the transaction would 
     (without regard to this paragraph) constitute a violation of 
     section 406(a).
       ``(D) For purposes of this paragraph, the term `correction 
     period' means, in connection with a fiduciary or party in 
     interest (or other person knowingly participating in the 
     transaction), the 14-day period beginning on the date on 
     which such fiduciary or party in interest (or other person) 
     discovers, or reasonably should have discovered, that the

[[Page 28626]]

     transaction would (without regard to this paragraph) 
     constitute a violation of section 406(a).
       ``(E) For purposes of this paragraph--
       ``(i) The term `security' has the meaning given such term 
     by section 475(c)(2) of the Internal Revenue Code of 1986 
     (without regard to subparagraph (F)(iii) and the last 
     sentence thereof).
       ``(ii) The term `commodity' has the meaning given such term 
     by section 475(e)(2) of such Code (without regard to 
     subparagraph (D)(iii) thereof).
       ``(iii) The term `correct' means, with respect to a 
     transaction--
       ``(I) to undo the transaction to the extent possible and in 
     any case to make good to the plan or affected account any 
     losses resulting from the transaction, and
       ``(II) to restore to the plan or affected account any 
     profits made through the use of assets of the plan.''.
       (b) Amendment of Internal Revenue Code of 1986.--
       (1) In general.--Subsection (d) of section 4975 of the 
     Internal Revenue Code of 1986 (relating to exemptions), as 
     amended by this Act, is amended by striking ``or'' at the end 
     of paragraph (16), by striking the period at the end of 
     paragraph (17) and inserting ``, or'', and by adding at the 
     end the following new paragraph:
       ``(18) except as provided in subsection (f)(9), a 
     transaction described in subparagraph (A), (B), (C), or (D) 
     of subsection (c)(1) in connection with the acquisition, 
     holding, or disposition of any security or commodity, if the 
     transaction is corrected before the end of the correction 
     period.''.
       (2) Special rules relating to correction period.--
     Subsection (f) of section 4975 of such Code (relating to 
     other definitions and special rules), as amended by this Act, 
     is amended by adding at the end the following new paragraph:
       ``(9) Correction period.--
       ``(A) In general.--For purposes of subsection (d)(18), the 
     term `correction period' means the 14-day period beginning on 
     the date on which the disqualified person discovers, or 
     reasonably should have discovered, that the transaction would 
     (without regard to this paragraph and subsection (d)(18)) 
     constitute a prohibited transaction.
       ``(B) Exceptions.--
       ``(i) Employer securities.--Subsection (d)(18) does not 
     apply to any transaction between a plan and a plan sponsor or 
     its affiliates that involves the acquisition or sale of an 
     employer security (as defined in section 407(d)(1)) or the 
     acquisition, sale, or lease of employer real property (as 
     defined in section 407(d)(2)).
       ``(ii) Knowing prohibited transaction.--In the case of any 
     disqualified person, subsection (d)(18) does not apply to a 
     transaction if, at the time the transaction is entered into, 
     the disqualified person knew (or reasonably should have 
     known) that the transaction would (without regard to this 
     paragraph) constitute a prohibited transaction.
       ``(C) Abatement of tax where there is a correction.--If a 
     transaction is not treated as a prohibited transaction by 
     reason of subsection (d)(18), then no tax under subsection 
     (a) and (b) shall be assessed with respect to such 
     transaction, and if assessed the assessment shall be abated, 
     and if collected shall be credited or refunded as an 
     overpayment.
       ``(D) Definitions.--For purposes of this paragraph and 
     subsection (d)(18)--
       ``(i) Security.--The term `security' has the meaning given 
     such term by section 475(c)(2) (without regard to 
     subparagraph (F)(iii) and the last sentence thereof).
       ``(ii) Commodity.--The term `commodity' has the meaning 
     given such term by section 475(e)(2) (without regard to 
     subparagraph (D)(iii) thereof).
       ``(iii) Correct.--The term `correct' means, with respect to 
     a transaction--

       ``(I) to undo the transaction to the extent possible and in 
     any case to make good to the plan or affected account any 
     losses resulting from the transaction, and
       ``(II) to restore to the plan or affected account any 
     profits made through the use of assets of the plan.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to any transaction which the fiduciary or 
     disqualified person discovers, or reasonably should have 
     discovered, after the date of the enactment of this Act 
     constitutes a prohibited transaction.

     SEC. 307. RECOVERY BY REIMBURSEMENT OR SUBROGATION WITH 
                   RESPECT TO PROVIDED BENEFITS.

       (a) In General.--Section 502(a) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1132(a)) is amended by 
     adding, after and below paragraph (9), the following new 
     sentence:

     ``Actions described under paragraph (3) include an action by 
     a fiduciary for recovery of amounts on behalf of the plan 
     enforcing terms of the plan that provide a right of recovery 
     by reimbursement or subrogation with respect to benefits 
     provided to or for a participant or beneficiary.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on January 1, 2006.

     SEC. 308. EXERCISE OF CONTROL OVER PLAN ASSETS IN CONNECTION 
                   WITH QUALIFIED CHANGES IN INVESTMENT OPTIONS.

       (a) In General.--Section 404(c) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1104(c)) is amended by 
     adding at the end the following new paragraph:
       ``(4)(A) In any case in which a qualified change in 
     investment options occurs in connection with an individual 
     account plan, a participant or beneficiary shall not be 
     treated for purposes of paragraph (1) as not exercising 
     control over the assets in his account in connection with 
     such change if the requirements of subparagraph (C) are met 
     in connection with such change.
       ``(B) For purposes of subparagraph (A), the term `qualified 
     change in investment options' means, in connection with an 
     individual account plan, a change in the investment options 
     offered to the participant or beneficiary under the terms of 
     the plan, under which--
       ``(i) the participant's account is reallocated among one or 
     more new investment options which are offered in lieu of one 
     or more investment options offered immediately prior to the 
     effective date of the change, and
       ``(ii) the characteristics of the new investment options, 
     including characteristics relating to risk and rate of 
     return, are, as of immediately after the change, reasonably 
     similar to those of the existing investment options as of 
     immediately before the change.
       ``(C) The requirements of this subparagraph are met in 
     connection with a qualified change in investment options if--
       ``(i) at least 60 days prior to the effective date of the 
     change, the plan administrator furnishes written notice of 
     the change to the participants and beneficiaries, including 
     information comparing the existing and new investment options 
     and an explanation that, in the absence of affirmative 
     investment instructions from the participant or beneficiary 
     to the contrary, the account of the participant or 
     beneficiary will be invested in the manner described in 
     subparagraph (B),
       ``(ii) the participant has not provided to the plan 
     administrator, in advance of the effective date of the 
     change, affirmative investment instructions contrary to the 
     change, and
       ``(iii) the investments under the plan of the participant 
     or beneficiary as in effect immediately prior to the 
     effective date of the change was the product of the exercise 
     by such participant or beneficiary of control over the assets 
     of the account within the meaning of paragraph (1).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply with respect to changes in investment options 
     taking effect on or after January 1, 2006.

     SEC. 309. CLARIFICATION OF FIDUCIARY RULES.

       Not later than 1 year after the date of the enactment of 
     this Act, the Secretary of Labor shall issue final 
     regulations clarifying that the selection of an annuity 
     contract as an optional form of distribution from an 
     individual account plan to a participant or beneficiary--
       (1) is not subject to the safest available annuity standard 
     under Interpretive Bulletin 95-1 (29 C.F.R. 2509.95-1), and
       (2) is subject to all otherwise applicable fiduciary 
     standards.

     SEC. 310. GOVERNMENT ACCOUNTABILITY OFFICE PENSION FUNDING 
                   REPORT.

       (a) In General.--The Comptroller General of the Government 
     Accountability Office shall transmit to the Congress a 
     pension funding report not later than one year after the date 
     of the enactment of this Act.
       (b) Report Content.--The pension funding report required 
     under subsection (a) shall include an analysis of the 
     feasibility, advantages, and disadvantages of--
       (1) requiring an employee pension benefit plan to insure a 
     portion of such plan's total investments;
       (2) requiring an employee pension benefit plan to adhere to 
     uniform solvency standards set by the Pension Benefit 
     Guaranty Corporation, which are similar to those applied on a 
     State level in the insurance industry; and
       (3) amortizing a single-employer defined benefit pension 
     plan's shortfall amortization base (referred to in section 
     303(c)(3) of the Employee Retirement Income Security Act of 
     1974 (as amended by this Act)) over various periods of not 
     more than 7 years.

          TITLE IV--IMPROVEMENTS IN PBGC GUARANTEE PROVISIONS

     SEC. 401. INCREASES IN PBGC PREMIUMS.

       (a) Flat-Rate Premiums.--Section 4006(a)(3) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)(3)) 
     is amended--
       (1) by striking clause (i) of subparagraph (A) and 
     inserting the following:
       ``(i) in the case of a single-employer plan, an amount 
     equal to--
       ``(I) for plan years beginning after December 31, 1990, and 
     before January 1, 2006, $19, or
       ``(II) for plan years beginning after December 31, 2005, 
     the amount determined under subparagraph (F),

     plus the additional premium (if any) determined under 
     subparagraph (E) for each individual who is a participant in 
     such plan during the plan year;''; and
       (2) by adding at the end the following new subparagraph:
       ``(F)(i) Except as otherwise provided in this subparagraph, 
     for purposes of determining

[[Page 28627]]

     the annual premium rate payable to the corporation by a 
     single-employer plan for basic benefits guaranteed under this 
     title, the amount determined under this subparagraph is the 
     greater of $30 or the adjusted amount determined under clause 
     (ii).
       ``(ii) For plan years beginning after 2006, the adjusted 
     amount determined under this clause is the product derived by 
     multiplying $30 by the ratio of--
       ``(I) the national average wage index (as defined in 
     section 209(k)(1) of the Social Security Act) for the first 
     of the 2 calendar years preceding the calendar year in which 
     the plan year begins, to
       ``(II) the national average wage index (as so defined) for 
     2004,

     with such product, if not a multiple of $1, being rounded to 
     the next higher multiple of $1 where such product is a 
     multiple of $0.50 but not of $1, and to the nearest multiple 
     of $1 in any other case.
       ``(iii) For purposes of determining the annual premium rate 
     payable to the corporation by a single-employer plan for 
     basic benefits guaranteed under this title for any plan year 
     beginning after 2005 and before 2010--
       ``(I) except as provided in subclause (II), the premium 
     amount referred to in subparagraph (A)(i)(II) for any such 
     plan year is the amount set forth in connection with such 
     plan year in the following table:


 
 
 
``If the plan year begins in:              The amount is:
  2006...................................  $21.20
  2007...................................  $23.40
  2008...................................  $25.60
  2009...................................  $27.80; or
 


       ``(II) if the plan's funding target attainment percentage 
     for the plan year preceding the current plan year was less 
     than 80 percent, the premium amount referred to in 
     subparagraph (A)(i)(II) for such current plan year is the 
     amount set forth in connection with such current plan year in 
     the following table:


 
 
 
``If the plan year begins in:              The amount is:
  2006...................................  $22.67
  2007...................................  $26.33
  2008 or 2009...........................  the amount provided under
                                            clause (i).
 


       ``(iv) For purposes of this subparagraph, the term `funding 
     target attainment percentage' has the meaning provided such 
     term in section 303(d)(2).''.
       (b) Premium Rate for Certain Terminated Single-Employer 
     Plans.--Subsection (a) of section 4006 of such Act (29 U.S.C. 
     1306) is amended by adding at the end the following:
       ``(7) Premium Rate for Certain Terminated Single-Employer 
     Plans.--
       ``(A) In general.--If there is a termination of a single-
     employer plan under clause (ii) or (iii) of section 
     4041(c)(2)(B) or section 4042, there shall be payable to the 
     corporation, with respect to each applicable 12-month period, 
     a premium at a rate equal to $1,250 multiplied by the number 
     of individuals who were participants in the plan immediately 
     before the termination date. Such premium shall be in 
     addition to any other premium under this section.
       ``(B) Special rule for plans terminated in bankruptcy 
     reorganization.--If the plan is terminated under 
     4041(c)(2)(B)(ii) or under section 4042 and, as of the 
     termination date, a person who is (as of such date) a 
     contributing sponsor of the plan or a member of such 
     sponsor's controlled group has filed or has had filed against 
     such person a petition seeking reorganization in a case under 
     title 11 of the United States Code, or under any similar law 
     of a State or a political subdivision of a State (or a case 
     described in section 4041(c)(2)(B)(i) filed by or against 
     such person has been converted, as of such date, to such a 
     case in which reorganization is sought), subparagraph (A) 
     shall not apply to such plan until the date of the discharge 
     of such person in such case.
       ``(C) Applicable 12-month period.--For purposes of 
     subparagraph (A)--
       ``(i) In general.--The term `applicable 12-month period' 
     means--
       ``(I) the 12-month period beginning with the first month 
     following the month in which the termination date occurs, and
       ``(II) each of the first two 12-month periods immediately 
     following the period described in subclause (I).
       ``(ii) Plans terminated in bankruptcy reorganization.--In 
     any case in which the requirements of subparagraph (B) are 
     met in connection with the termination of the plan with 
     respect to 1 or more persons described in such subparagraph, 
     the 12-month period described in clause (i)(I) shall be the 
     12-month period beginning with the first month following the 
     month which includes the earliest date as of which each such 
     person is discharged in the case described in such clause in 
     connection with such person.
       ``(D) Coordination with section 4007.--
       ``(i) Notwithstanding section 4007--
       ``(I) premiums under this paragraph shall be due within 30 
     days after the beginning of any applicable 12-month period, 
     and
       ``(II) the designated payor shall be the person who is the 
     contributing sponsor as of immediately before the termination 
     date.
       ``(ii) The fifth sentence of section 4007(a) shall not 
     apply in connection with premiums determined under this 
     paragraph.''.
       (c) Risk-Based Premiums.--
       (1) Extension through 2006.--Section 4006(a)(3)(E)(iii)(V) 
     of such Act is amended by striking ``January 1, 2006'' and 
     inserting ``January 1, 2007''.
       (2) Conforming amendments related to funding rules for 
     single-employer plans.--Section 4006(a)(3)(E) of such Act is 
     amended by striking clauses (iii) and (iv) and inserting the 
     following:
       ``(iii)(I) For purposes of clause (ii), except as provided 
     in subclause (II), the term `unfunded vested benefits' means, 
     for a plan year, the amount which would be the plan's funding 
     shortfall (as defined in section 303(c)(4)), if the value of 
     plan assets of the plan were equal to the fair market value 
     of such assets and only vested benefits were taken into 
     account.
       ``(II) The interest rate used in valuing vested benefits 
     for purposes of subclause (I) shall be equal to the first, 
     second, or third segment rate which would be determined under 
     section 303(h)(2)(C) if section 303(h)(2)(D)(i) were applied 
     by substituting `the yields' for `the 3-year weighted average 
     of yields', as applicable under rules similar to the rules 
     under section 303(h)(2)(B).''.
       (d) Effective Dates.--
       (1) In general.--The amendments made by subsection (a) and 
     (c)(1) shall apply to plan years beginning after December 31, 
     2005.
       (2) Premium rate for certain terminated single-employer 
     plans.--The amendment made by subsection (b) shall apply with 
     respect to cases commenced under title 11, United States 
     Code, or under any similar law of a State or political 
     subdivision of a State after October 26, 2005.
       (3) Conforming amendments related to funding rules for 
     single-employer plans.--The amendments made by subsection 
     (c)(2) shall take effect on December 31, 2006, and shall 
     apply to plan years beginning after such date.

                          TITLE V--DISCLOSURE

     SEC. 501. DEFINED BENEFIT PLAN FUNDING NOTICES.

       (a) Application of Plan Funding Notice Requirements to All 
     Defined Benefit Plans.--Section 101(f) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1021(f)) is 
     amended--
       (1) in the heading, by striking ``Multiemployer'';
       (2) in paragraph (1), by striking ``which is a 
     multiemployer plan''; and
       (3) by striking paragraph (2)(B)(iii) and inserting the 
     following:
       ``(iii)(I) in the case of a single-employer plan, a summary 
     of the rules governing termination of single-employer plans 
     under subtitle C of title IV, or
       ``(II) in the case of a multiemployer plan, a summary of 
     the rules governing insolvent multiemployer plans, including 
     the limitations on benefit payments and any potential benefit 
     reductions and suspensions (and the potential effects of such 
     limitations, reductions, and suspensions on the plan); and''.
       (b) Inclusion of Statement of the Ratio of Inactive 
     Participants to Active Participants.--Section 101(f)(2)(B) of 
     such Act (29 U.S.C. 1021(f)(2)(B)) is amended--
       (1) in clause (iii)(II) (added by subsection (a)(3) of this 
     section), by striking ``and'' at the end;
       (2) in clause (iv), by striking ``apply.'' and inserting 
     ``apply; and''; and
       (3) by adding at the end the following new clause:
       ``(v) a statement of the ratio, as of the end of the plan 
     year to which the notice relates, of--

       ``(I) the number of participants who are not in covered 
     service under the plan and are in pay status under the plan 
     or have a nonforfeitable right to benefits under the plan, to
       ``(II) the number of participants who are in covered 
     service under the plan.''.

       (c) Comparison of Monthly Average of Value of Plan Assets 
     to Projected Current Liabilities.--Section 101(f)(2)(B) of 
     such Act (29 U.S.C. 1021(f)(2)(B)) (as amended by the 
     preceding provisions of this section) is amended further--
       (1) by striking clause (ii) and inserting the following:
       ``(ii) a statement of a reasonable estimate of--

       ``(I) the value of the plan's assets for the plan year to 
     which the notice relates,
       ``(II) projected liabilities of the plan for the plan year 
     to which the notice relates, and
       ``(III) the ratio of the estimated amount determined under 
     subclause (I) to the estimated amount determined under 
     subclause (II);''; and

       (2) by adding at the end (after and below clause (v)) the 
     following:

     ``For purposes of determining a plan's projected liabilities 
     for a plan year under clause (ii)(II), such projected 
     liabilities shall be determined by projecting forward in a 
     reasonable manner to the end of the plan year the liabilities 
     of the plan to participants and

[[Page 28628]]

     beneficiaries as of the first day of the plan year, taking 
     into account any significant events that occur during the 
     plan year and that have a material effect on such 
     liabilities, including any plan amendments in effect for the 
     plan year.''.
       (d) Statement of Plan's Funding Policy and Method of Asset 
     Allocation.--Section 101(f)(2)(B) of such Act (as amended by 
     the preceding provisions of this section) is amended 
     further--
       (1) in clause (iv), by striking ``and'' at the end;
       (2) in clause (v), by striking the period and inserting 
     ``; and''; and
       (3) by inserting after clause (v) the following new clause:
       ``(vi) a statement setting forth the funding policy of the 
     plan and the asset allocation of investments under the plan 
     (expressed as percentages of total assets) as of the end of 
     the plan year to which the notice relates.''.
       (e) Notice of Funding Improvement Plan or Rehabilitation 
     Plan Adopted by Multiemployer Plan.--Section 101(f)(2)(B) of 
     such Act (as amended by the preceding provisions of this 
     section) is amended further--
       (1) in clause (v), by striking ``and'' at the end;
       (2) in clause (vi), by striking the period and inserting 
     ``; and''; and
       (3) by inserting after clause (vi) the following new 
     clause:
       ``(vii) a summary of any funding improvement plan, 
     rehabilitation plan, or modification thereof adopted under 
     section 305 during the plan year to which the notice 
     relates.''.
       (f) Notice Due 90 Days After Plan's Valuation Date.--
       (1) In general.--Section 101(f)(3) of such Act (29 U.S.C. 
     1021(f)(3)) is amended by striking ``two months after the 
     deadline (including extensions) for filing the annual report 
     for the plan year'' and inserting ``90 days after the end of 
     the plan year''.
       (2) Model notice.--Not later than 180 days after the date 
     of the enactment of this Act, the Secretary of Labor shall 
     publish a model version of the notice required by section 
     101(f) of the Employee Retirement Income Security Act of 
     1974.
       (g) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2005.

     SEC. 502. ADDITIONAL DISCLOSURE REQUIREMENTS.

       (a) Additional Annual Reporting Requirements.--Section 103 
     of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1023) is amended--
       (1) in subsection (a)(1)(B), by striking ``subsections (d) 
     and (e)'' and inserting ``subsections (d), (e), and (f)''; 
     and
       (2) by adding at the end the following new subsection:
       ``(f)(1) With respect to any defined benefit plan, an 
     annual report under this section for a plan year shall 
     include the following:
       ``(A) The ratio, as of the end of such plan year, of--
       ``(i) the number of participants who, as of the end of such 
     plan year, are not in covered service under the plan and are 
     in pay status under the plan or have a nonforfeitable right 
     to benefits under the plan, to
       ``(ii) the number of participants who are in covered 
     service under the plan as of the end of such plan year.
       ``(B) In any case in which any liabilities to participants 
     or their beneficiaries under such plan as of the end of such 
     plan year consist (in whole or in part) of liabilities to 
     such participants and beneficiaries borne by 2 or more 
     pension plans as of immediately before such plan year, the 
     funded ratio of each of such 2 or more pension plans as of 
     immediately before such plan year and the funded ratio of the 
     plan with respect to which the annual report is filed as of 
     the end of such plan year.
       ``(C) For purposes of this paragraph, the term `funded 
     ratio' means, in connection with a plan, the percentage 
     which--
       ``(i) the value of the plan's assets is of
       ``(ii) the liabilities to participants and beneficiaries 
     under the plan.
       ``(2) With respect to any defined benefit plan which is a 
     multiemployer plan, an annual report under this section for a 
     plan year shall include the following:
       ``(A) The number of employers obligated to contribute to 
     the plan as of the end of such plan year.
       ``(B) The number of participants under the plan on whose 
     behalf no employer contributions have been made to the plan 
     for such plan year. For purposes of this subparagraph, the 
     term `employer contribution' means, in connection with a 
     participant, a contribution made by an employer as an 
     employer of such participant.''.
       (b) Additional Information in Annual Actuarial Statement 
     Regarding Plan Retirement Projections.--Section 103(d) of 
     such Act (29 U.S.C. 1023(d)) is amended--
       (1) by redesignating paragraphs (12) and (13) as paragraphs 
     (13) and (14), respectively; and
       (2) by inserting after paragraph (11) the following new 
     paragraph:
       ``(12) A statement explaining the actuarial assumptions and 
     methods used in projecting future retirements and forms of 
     benefit distributions under the plan.''.
       (c) Filing After 285 Days After Plan Year Only in Cases of 
     Hardship.--Section 104(a)(1) of such Act (29 U.S.C. 
     1024(a)(1)) is amended by inserting after the first sentence 
     the following new sentence: ``In the case of a pension plan, 
     the Secretary may extend the deadline for filing the annual 
     report for any plan year past 285 days after the close of the 
     plan year only on a case by case basis and only in cases of 
     hardship, in accordance with regulations which shall be 
     prescribed by the Secretary.''.
       (d) Internet Display of Information.--Section 104(b) of 
     such Act (29 U.S.C. 1024(b)) is amended by adding at the end 
     the following:
       ``(5) Identification and basic plan information and 
     actuarial information included in the annual report for any 
     plan year shall be filed with the Secretary in an electronic 
     format which accommodates display on the Internet, in 
     accordance with regulations which shall be prescribed by the 
     Secretary. The Secretary shall provide for display of such 
     information included in the annual report, within 90 days 
     after the date of the filing of the annual report, on a 
     website maintained by the Secretary on the Internet and other 
     appropriate media. Such information shall also be displayed 
     on any website maintained by the plan sponsor (or by the plan 
     administrator on behalf of the plan sponsor) on the Internet, 
     in accordance with regulations which shall be prescribed by 
     the Secretary.''.
       (e) Summary Annual Report Filed Within 15 Days After 
     Deadline for Filing of Annual Report.--Section 104(b)(3) of 
     such Act (29 U.S.C. 1024(b)(3)) is amended--
       (1) by striking ``Within 210 days after the close of the 
     fiscal year of the plan,'' and inserting ``Within 15 business 
     days after the due date under subsection (a)(1) for the 
     filing of the annual report for the fiscal year of the 
     plan,''; and
       (2) by striking ``the latest'' and inserting ``such''.
       (f) Disclosure of Plan Assets and Liabilities in Summary 
     Annual Report.--
       (1) In general.--Section 104(b)(3) of such Act (as amended 
     by subsection (a)) is amended further--
       (A) by inserting ``(A)'' after ``(3)''; and
       (B) by adding at the end the following:
       ``(B) The material provided pursuant to subparagraph (A) to 
     summarize the latest annual report shall be written in a 
     manner calculated to be understood by the average plan 
     participant and shall set forth the total assets and 
     liabilities of the plan for the plan year for which the 
     latest annual report was filed and for each of the 2 
     preceding plan years, as reported in the annual report for 
     each such plan year under this section.''.
       (g) Information Made Available to Participants, 
     Beneficiaries, and Employers With Respect to Multiemployer 
     Plans.--
       (1) In general.--Section 101 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1021) (as amended by 
     section 103(b)(2)(A)) is further amended--
       (A) by redesignating subsection (k) as subsection (l); and
       (B) by inserting after subsection (j) the following new 
     subsection:
       ``(k) Multiemployer Plan Information Made Available on 
     Request.--
       ``(1) In general.--Each administrator of a multiemployer 
     plan shall furnish to any plan participant or beneficiary or 
     any employer having an obligation to contribute to the plan, 
     who so requests in writing--
       ``(A) a copy of any actuarial report received by the plan 
     for any plan year which has been in receipt by the plan for 
     at least 30 days, and
       ``(B) a copy of any financial report prepared for the plan 
     by any plan investment manager or advisor or other person who 
     is a plan fiduciary which has been in receipt by the plan for 
     at least 30 days.
       ``(2) Compliance.--Information required to be provided 
     under paragraph (1) --
       ``(A) shall be provided to the requesting participant, 
     beneficiary, or employer within 30 days after the request in 
     a form and manner prescribed in regulations of the Secretary, 
     and
       ``(B) may be provided in written, electronic, or other 
     appropriate form to the extent such form is reasonably 
     accessible to persons to whom the information is required to 
     be provided.
       ``(3) Limitations.--In no case shall a participant, 
     beneficiary, or employer be entitled under this subsection to 
     receive more than one copy of any report described in 
     paragraph (1) during any one 12-month period. The 
     administrator may make a reasonable charge to cover copying, 
     mailing, and other costs of furnishing copies of information 
     pursuant to paragraph (1). The Secretary may by regulations 
     prescribe the maximum amount which will constitute a 
     reasonable charge under the preceding sentence.''.
       (2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C. 
     1132(c)(4)) (as amended by section 103(b)(2)(B)) is further 
     amended by striking ``sections 101(j) and 302(b)(7)(F)(iv)'' 
     and inserting ``sections 101(j), 101(k), and 
     302(b)(7)(F)(iv)''.
       (3) Regulations.--The Secretary shall prescribe regulations 
     under section 101(k)(2) of the Employee Retirement Income 
     Security Act of 1974 (added by paragraph (1) of this 
     subsection) not later than 90 days after the date of the 
     enactment of this Act.
       (h) Notice of Potential Withdrawal Liability to 
     Multiemployer Plans.--

[[Page 28629]]

       (1) In general.--Section 101 of such Act (as amended by 
     subsection (g) of this section) is further amended--
       (A) by redesignating subsection (l) as subsection (m); and
       (B) by inserting after subsection (k) the following new 
     subsection:
       ``(l) Notice of Potential Withdrawal Liability.--
       ``(1) In general.--The plan sponsor or administrator of a 
     multiemployer plan shall furnish to any employer who has an 
     obligation to contribute under the plan and who so requests 
     in writing notice of--
       ``(A) the amount which would be the amount of such 
     employer's withdrawal liability under part 1 of subtitle E of 
     title IV if such employer withdrew on the last day of the 
     plan year preceding the date of the request, and
       ``(B) the average increase, per participant under the plan, 
     in accrued liabilities under the plan as of the end of such 
     plan year to participants under such plan on whose behalf no 
     employer contributions are payable (or their beneficiaries), 
     which would be attributable to such a withdrawal by such 
     employer.

     For purposes of subparagraph (B), the term `employer 
     contribution' means, in connection with a participant, a 
     contribution made by an employer as an employer of such 
     participant.
       ``(2) Compliance.--Any notice required to be provided under 
     paragraph (1)--
       ``(A) shall be provided to the requesting employer within 
     180 days after the request in a form and manner prescribed in 
     regulations of the Secretary, and
       ``(B) may be provided in written, electronic, or other 
     appropriate form to the extent such form is reasonably 
     accessible to employers to whom the information is required 
     to be provided.
       ``(3) Limitations.--In no case shall an employer be 
     entitled under this subsection to receive more than one 
     notice described in paragraph (1) during any one 12-month 
     period. The person required to provide such notice may make a 
     reasonable charge to cover copying, mailing, and other costs 
     of furnishing such notice pursuant to paragraph (1). The 
     Secretary may by regulations prescribe the maximum amount 
     which will constitute a reasonable charge under the preceding 
     sentence.''.
       (2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C. 
     1132(c)(4)) (as amended by paragraph (1)) is further amended 
     by striking ``sections 101(j), 101(k), and 302(b)(7)(F)(iv)'' 
     and inserting ``sections 101(j), 101(k), 101(l), and 
     302(b)(7)(F)(iv)''.
       (i) Model Form.--Not later than 180 days after the date of 
     the enactment of this Act, the Secretary of Labor shall 
     publish a model form for providing the statements, schedules, 
     and other material required to be provided under section 
     104(b)(3) of the Employee Retirement Income Security Act of 
     1974, as amended by this section.
       (j) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2005.

     SEC. 503. SECTION 4010 FILINGS WITH THE PBGC.

       (a) Change in Criteria for Persons Required to Provide 
     Information to PBGC.--Section 4010(b) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1310(b)) is 
     amended by striking paragraph (1), by redesignating 
     paragraphs (2) and (3) as paragraphs (3) and (4), 
     respectively, and by inserting before paragraph (3) (as so 
     redesignated) the following new paragraphs:
       ``(1) the aggregate funding target attainment percentage of 
     the plan (as defined in subsection (d)(2)) is less than 60 
     percent;
       ``(2)(A) the aggregate funding target attainment percentage 
     of the plan (as defined in subsection (d)(2)) is less than 75 
     percent, and
       ``(B) the plan sponsor is in an industry with respect to 
     which the corporation determines that there is substantial 
     unemployment or underemployment and the sales and profits are 
     depressed or declining;''.
       (b) Notice to Participants and Beneficiaries.--Section 4010 
     of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1310) is amended by adding at the end the following 
     new subsection:
       ``(d) Notice to Participants and Beneficiaries.--
       ``(1) In general.--Not later than 90 days after the 
     submission by any person to the corporation of information or 
     documentary material with respect to any plan pursuant to 
     subsection (a), such person shall provide notice of such 
     submission to each participant and beneficiary under the plan 
     (and under all plans maintained by members of the controlled 
     group of each contributing sponsor of the plan). Such notice 
     shall also set forth--
       ``(A) the number of single-employer plans covered by this 
     title which are in at-risk status and are maintained by 
     contributing sponsors of such plan (and by members of their 
     controlled groups) with respect to which the funding target 
     attainment percentage for the preceding plan year of each 
     plan is less than 60 percent;
       ``(B) the value of the assets of each of the plans 
     described in subparagraph (A) for the plan year, the funding 
     target for each of such plans for the plan year, and the 
     funding target attainment percentage of each of such plans 
     for the plan year; and
       ``(C) taking into account all single-employer plans 
     maintained by the contributing sponsor and the members of its 
     controlled group as of the end of such plan year--
       ``(i) the aggregate total of the values of plan assets of 
     such plans as of the end of such plan year,
       ``(ii) the aggregate total of the funding targets of such 
     plans, as of the end of such plan year, taking into account 
     only benefits to which participants and beneficiaries have a 
     nonforfeitable right, and
       ``(iii) the aggregate funding targets attainment percentage 
     with respect to the contributing sponsor for the preceding 
     plan year.
       ``(2) Definitions.--For purposes of this subsection--
       ``(A) Value of plan assets.--The term `value of plan 
     assets' means the value of plan assets, as determined under 
     section 303(g)(3).
       ``(B) Funding target.--The term `funding target' has the 
     meaning provided under section 303(d)(1).
       ``(C) Funding target attainment percentage.--The term 
     `funding target attainment percentage' has the meaning 
     provided in section 303(d)(2).
       ``(D) Aggregate funding targets attainment percentage.--The 
     term `aggregate funding targets attainment percentage' with 
     respect to a contributing sponsor for a plan year is the 
     percentage, taking into account all plans maintained by the 
     contributing sponsor and the members of its controlled group 
     as of the end of such plan year, which
       ``(i) the aggregate total of the values of plan assets, as 
     of the end of such plan year, of such plans, is of
       ``(ii) the aggregate total of the funding targets of such 
     plans, as of the end of such plan year, taking into account 
     only benefits to which participants and beneficiaries have a 
     nonforfeitable right.
       ``(E) At-risk status.--The term `at-risk status' has the 
     meaning provided in section 303(i)(3).
       ``(3) Compliance.--
       ``(A) In general.--Any notice required to be provided under 
     paragraph (1) may be provided in written, electronic, or 
     other appropriate form to the extent such form is reasonably 
     accessible to individuals to whom the information is required 
     to be provided.
       ``(B) Limitations.--In no case shall a participant or 
     beneficiary be entitled under this subsection to receive more 
     than one notice described in paragraph (1) during any one 12-
     month period. The person required to provide such notice may 
     make a reasonable charge to cover copying, mailing, and other 
     costs of furnishing such notice pursuant to paragraph (1). 
     The corporation may by regulations prescribe the maximum 
     amount which will constitute a reasonable charge under the 
     preceding sentence.
       ``(4) Notice to congress.--Concurrent with the provision of 
     any notice under paragraph (1), such person shall provide 
     such notice to the Committee on Education and the Workforce 
     and the Committee on Ways and Means of the House of 
     Representatives and the Committee on Health, Education, 
     Labor, and Pensions and the Committee on Finance of the 
     Senate, which shall be treated as materials provided in 
     executive session.''.
       (c) Effective Date.--The amendment made by this section 
     shall apply with respect to plan years beginning after 
     December 31, 2006.

                      TITLE VI--INVESTMENT ADVICE

     SEC. 601. AMENDMENTS TO EMPLOYEE RETIREMENT INCOME SECURITY 
                   ACT OF 1974 PROVIDING PROHIBITED TRANSACTION 
                   EXEMPTION FOR PROVISION OF INVESTMENT ADVICE.

       (a) Exemption From Prohibited Transactions.--Section 408(b) 
     of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1108(b)) is amended by adding at the end the following 
     new paragraph:
       ``(14)(A) Any transaction described in subparagraph (B) in 
     connection with the provision of investment advice described 
     in section 3(21)(A)(ii), in any case in which--
       ``(i) the investment of assets of the plan is subject to 
     the direction of plan participants or beneficiaries,
       ``(ii) the advice is provided to the plan or a participant 
     or beneficiary of the plan by a fiduciary adviser in 
     connection with any sale, acquisition, or holding of a 
     security or other property for purposes of investment of plan 
     assets, and
       ``(iii) the requirements of subsection (g) are met in 
     connection with the provision of the advice.
       ``(B) The transactions described in this subparagraph are 
     the following:
       ``(i) the provision of the advice to the plan, participant, 
     or beneficiary;
       ``(ii) the sale, acquisition, or holding of a security or 
     other property (including any lending of money or other 
     extension of credit associated with the sale, acquisition, or 
     holding of a security or other property) pursuant to the 
     advice; and
       ``(iii) the direct or indirect receipt of fees or other 
     compensation by the fiduciary adviser or an affiliate thereof 
     (or any employee, agent, or registered representative of the 
     fiduciary adviser or affiliate) in connection with the 
     provision of the advice or in

[[Page 28630]]

     connection with a sale, acquisition, or holding of a security 
     or other property pursuant to the advice.''.
       (b) Requirements.--Section 408 of such Act is amended 
     further by adding at the end the following new subsection:
       ``(g) Requirements Relating to Provision of Investment 
     Advice by Fiduciary Advisers.--
       ``(1) In general.--The requirements of this subsection are 
     met in connection with the provision of investment advice 
     referred to in section 3(21)(A)(ii), provided to an employee 
     benefit plan or a participant or beneficiary of an employee 
     benefit plan by a fiduciary adviser with respect to the plan 
     in connection with any sale, acquisition, or holding of a 
     security or other property for purposes of investment of 
     amounts held by the plan, if--
       ``(A) in the case of the initial provision of the advice 
     with regard to the security or other property by the 
     fiduciary adviser to the plan, participant, or beneficiary, 
     the fiduciary adviser provides to the recipient of the 
     advice, at a time reasonably contemporaneous with the initial 
     provision of the advice, a written notification (which may 
     consist of notification by means of electronic 
     communication)--
       ``(i) of all fees or other compensation relating to the 
     advice that the fiduciary adviser or any affiliate thereof is 
     to receive (including compensation provided by any third 
     party) in connection with the provision of the advice or in 
     connection with the sale, acquisition, or holding of the 
     security or other property,
       ``(ii) of any material affiliation or contractual 
     relationship of the fiduciary adviser or affiliates thereof 
     in the security or other property,
       ``(iii) of any limitation placed on the scope of the 
     investment advice to be provided by the fiduciary adviser 
     with respect to any such sale, acquisition, or holding of a 
     security or other property,
       ``(iv) of the types of services provided by the fiduciary 
     adviser in connection with the provision of investment advice 
     by the fiduciary adviser,
       ``(v) that the adviser is acting as a fiduciary of the plan 
     in connection with the provision of the advice, and
       ``(vi) that a recipient of the advice may separately 
     arrange for the provision of advice by another adviser, that 
     could have no material affiliation with and receive no fees 
     or other compensation in connection with the security or 
     other property,
       ``(B) the fiduciary adviser provides appropriate 
     disclosure, in connection with the sale, acquisition, or 
     holding of the security or other property, in accordance with 
     all applicable securities laws,
       ``(C) the sale, acquisition, or holding occurs solely at 
     the direction of the recipient of the advice,
       ``(D) the compensation received by the fiduciary adviser 
     and affiliates thereof in connection with the sale, 
     acquisition, or holding of the security or other property is 
     reasonable, and
       ``(E) the terms of the sale, acquisition, or holding of the 
     security or other property are at least as favorable to the 
     plan as an arm's length transaction would be.
       ``(2) Standards for presentation of information.--
       ``(A) In general.--The notification required to be provided 
     to participants and beneficiaries under paragraph (1)(A) 
     shall be written in a clear and conspicuous manner and in a 
     manner calculated to be understood by the average plan 
     participant and shall be sufficiently accurate and 
     comprehensive to reasonably apprise such participants and 
     beneficiaries of the information required to be provided in 
     the notification.
       ``(B) Model form for disclosure of fees and other 
     compensation.--The Secretary shall issue a model form for the 
     disclosure of fees and other compensation required in 
     paragraph (1)(A)(i) which meets the requirements of 
     subparagraph (A).
       ``(3) Exemption conditioned on making required information 
     available annually, on request, and in the event of material 
     change.--The requirements of paragraph (1)(A) shall be deemed 
     not to have been met in connection with the initial or any 
     subsequent provision of advice described in paragraph (1) to 
     the plan, participant, or beneficiary if, at any time during 
     the provision of advisory services to the plan, participant, 
     or beneficiary, the fiduciary adviser fails to maintain the 
     information described in clauses (i) through (iv) of 
     subparagraph (A) in currently accurate form and in the manner 
     described in paragraph (2) or fails--
       ``(A) to provide, without charge, such currently accurate 
     information to the recipient of the advice no less than 
     annually,
       ``(B) to make such currently accurate information 
     available, upon request and without charge, to the recipient 
     of the advice, or
       ``(C) in the event of a material change to the information 
     described in clauses (i) through (iv) of paragraph (1)(A), to 
     provide, without charge, such currently accurate information 
     to the recipient of the advice at a time reasonably 
     contemporaneous to the material change in information.
       ``(4) Maintenance for 6 years of evidence of compliance.--A 
     fiduciary adviser referred to in paragraph (1) who has 
     provided advice referred to in such paragraph shall, for a 
     period of not less than 6 years after the provision of the 
     advice, maintain any records necessary for determining 
     whether the requirements of the preceding provisions of this 
     subsection and of subsection (b)(14) have been met. A 
     transaction prohibited under section 406 shall not be 
     considered to have occurred solely because the records are 
     lost or destroyed prior to the end of the 6-year period due 
     to circumstances beyond the control of the fiduciary adviser.
       ``(5) Exemption for plan sponsor and certain other 
     fiduciaries.--
       ``(A) In general.--Subject to subparagraph (B), a plan 
     sponsor or other person who is a fiduciary (other than a 
     fiduciary adviser) shall not be treated as failing to meet 
     the requirements of this part solely by reason of the 
     provision of investment advice referred to in section 
     3(21)(A)(ii) (or solely by reason of contracting for or 
     otherwise arranging for the provision of the advice), if--
       ``(i) the advice is provided by a fiduciary adviser 
     pursuant to an arrangement between the plan sponsor or other 
     fiduciary and the fiduciary adviser for the provision by the 
     fiduciary adviser of investment advice referred to in such 
     section,
       ``(ii) the terms of the arrangement require compliance by 
     the fiduciary adviser with the requirements of this 
     subsection, and
       ``(iii) the terms of the arrangement include a written 
     acknowledgment by the fiduciary adviser that the fiduciary 
     adviser is a fiduciary of the plan with respect to the 
     provision of the advice.
       ``(B) Continued duty of prudent selection of adviser and 
     periodic review.--Nothing in subparagraph (A) shall be 
     construed to exempt a plan sponsor or other person who is a 
     fiduciary from any requirement of this part for the prudent 
     selection and periodic review of a fiduciary adviser with 
     whom the plan sponsor or other person enters into an 
     arrangement for the provision of advice referred to in 
     section 3(21)(A)(ii). The plan sponsor or other person who is 
     a fiduciary has no duty under this part to monitor the 
     specific investment advice given by the fiduciary adviser to 
     any particular recipient of the advice.
       ``(C) Availability of plan assets for payment for advice.--
     Nothing in this part shall be construed to preclude the use 
     of plan assets to pay for reasonable expenses in providing 
     investment advice referred to in section 3(21)(A)(ii).
       ``(6) Definitions.--For purposes of this subsection and 
     subsection (b)(14)--
       ``(A) Fiduciary adviser.--The term `fiduciary adviser' 
     means, with respect to a plan, a person who is a fiduciary of 
     the plan by reason of the provision of investment advice by 
     the person to the plan or to a participant or beneficiary and 
     who is--
       ``(i) registered as an investment adviser under the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) or 
     under the laws of the State in which the fiduciary maintains 
     its principal office and place of business,
       ``(ii) a bank or similar financial institution referred to 
     in section 408(b)(4) or a savings association (as defined in 
     section 3(b)(1) of the Federal Deposit Insurance Act (12 
     U.S.C. 1813(b)(1))), but only if the advice is provided 
     through a trust department of the bank or similar financial 
     institution or savings association which is subject to 
     periodic examination and review by Federal or State banking 
     authorities,
       ``(iii) an insurance company qualified to do business under 
     the laws of a State,
       ``(iv) a person registered as a broker or dealer under the 
     Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
       ``(v) an affiliate of a person described in any of clauses 
     (i) through (iv), or
       ``(vi) an employee, agent, or registered representative of 
     a person described in any of clauses (i) through (v) who 
     satisfies the requirements of applicable insurance, banking, 
     and securities laws relating to the provision of the advice.
       ``(B) Affiliate.--The term `affiliate' of another entity 
     means an affiliated person of the entity (as defined in 
     section 2(a)(3) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-2(a)(3))).
       ``(C) Registered representative.--The term `registered 
     representative' of another entity means a person described in 
     section 3(a)(18) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78c(a)(18)) (substituting the entity for the broker or 
     dealer referred to in such section) or a person described in 
     section 202(a)(17) of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-2(a)(17)) (substituting the entity for the 
     investment adviser referred to in such section).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to advice referred to in section 
     3(21)(A)(ii) of the Employee Retirement Income Security Act 
     of 1974 provided on or after January 1, 2006.

     SEC. 602. AMENDMENTS TO INTERNAL REVENUE CODE OF 1986 
                   PROVIDING PROHIBITED TRANSACTION EXEMPTION FOR 
                   PROVISION OF INVESTMENT ADVICE.

       (a) Exemption From Prohibited Transactions.--Subsection (d) 
     of section 4975 of the Internal Revenue Code of 1986 
     (relating to exemptions from tax on prohibited transactions), 
     as amended by this Act, is amended--

[[Page 28631]]

       (1) in paragraph (17), by striking ``or'' at the end;
       (2) in paragraph (18), by striking the period at the end 
     and inserting ``; or''; and
       (3) by adding at the end the following new paragraph:
       ``(19) any transaction described in subsection (f)(10)(A) 
     in connection with the provision of investment advice 
     described in subsection (e)(3)(B)(i), in any case in which--
       ``(A) the investment of assets of the plan is subject to 
     the direction of plan participants or beneficiaries,
       ``(B) the advice is provided to the plan or a participant 
     or beneficiary of the plan by a fiduciary adviser in 
     connection with any sale, acquisition, or holding of a 
     security or other property for purposes of investment of plan 
     assets, and
       ``(C) the requirements of subsection (f)(10)(B) are met in 
     connection with the provision of the advice.''.
       (b) Allowed Transactions and Requirements.--Subsection (f) 
     of such section 4975 (relating to other definitions and 
     special rules), as amended by this Act, is amended by adding 
     at the end the following new paragraph:
       ``(10) Provisions relating to investment advice provided by 
     fiduciary advisers.--
       ``(A) Transactions allowable in connection with investment 
     advice provided by fiduciary advisers.--The transactions 
     referred to in subsection (d)(19), in connection with the 
     provision of investment advice by a fiduciary adviser, are 
     the following:
       ``(i) the provision of the advice to the plan, participant, 
     or beneficiary;
       ``(ii) the sale, acquisition, or holding of a security or 
     other property (including any lending of money or other 
     extension of credit associated with the sale, acquisition, or 
     holding of a security or other property) pursuant to the 
     advice; and
       ``(iii) the direct or indirect receipt of fees or other 
     compensation by the fiduciary adviser or an affiliate thereof 
     (or any employee, agent, or registered representative of the 
     fiduciary adviser or affiliate) in connection with the 
     provision of the advice or in connection with a sale, 
     acquisition, or holding of a security or other property 
     pursuant to the advice.
       ``(B) Requirements relating to provision of investment 
     advice by fiduciary advisers.--The requirements of this 
     subparagraph (referred to in subsection (d)(19)(C)) are met 
     in connection with the provision of investment advice 
     referred to in subsection (e)(3)(B), provided to a plan or a 
     participant or beneficiary of a plan by a fiduciary adviser 
     with respect to the plan in connection with any sale, 
     acquisition, or holding of a security or other property for 
     purposes of investment of amounts held by the plan, if--
       ``(i) in the case of the initial provision of the advice 
     with regard to the security or other property by the 
     fiduciary adviser to the plan, participant, or beneficiary, 
     the fiduciary adviser provides to the recipient of the 
     advice, at a time reasonably contemporaneous with the initial 
     provision of the advice, a written notification (which may 
     consist of notification by means of electronic 
     communication)--

       ``(I) of all fees or other compensation relating to the 
     advice that the fiduciary adviser or any affiliate thereof is 
     to receive (including compensation provided by any third 
     party) in connection with the provision of the advice or in 
     connection with the sale, acquisition, or holding of the 
     security or other property,
       ``(II) of any material affiliation or contractual 
     relationship of the fiduciary adviser or affiliates thereof 
     in the security or other property,
       ``(III) of any limitation placed on the scope of the 
     investment advice to be provided by the fiduciary adviser 
     with respect to any such sale, acquisition, or holding of a 
     security or other property,
       ``(IV) of the types of services provided by the fiduciary 
     adviser in connection with the provision of investment advice 
     by the fiduciary adviser,
       ``(V) that the adviser is acting as a fiduciary of the plan 
     in connection with the provision of the advice, and
       ``(VI) that a recipient of the advice may separately 
     arrange for the provision of advice by another adviser, that 
     could have no material affiliation with and receive no fees 
     or other compensation in connection with the security or 
     other property,

       ``(ii) the fiduciary adviser provides appropriate 
     disclosure, in connection with the sale, acquisition, or 
     holding of the security or other property, in accordance with 
     all applicable securities laws,
       ``(iii) the sale, acquisition, or holding occurs solely at 
     the direction of the recipient of the advice,
       ``(iv) the compensation received by the fiduciary adviser 
     and affiliates thereof in connection with the sale, 
     acquisition, or holding of the security or other property is 
     reasonable, and
       ``(v) the terms of the sale, acquisition, or holding of the 
     security or other property are at least as favorable to the 
     plan as an arm's length transaction would be.
       ``(C) Standards for presentation of information.--The 
     notification required to be provided to participants and 
     beneficiaries under subparagraph (B)(i) shall be written in a 
     clear and conspicuous manner and in a manner calculated to be 
     understood by the average plan participant and shall be 
     sufficiently accurate and comprehensive to reasonably apprise 
     such participants and beneficiaries of the information 
     required to be provided in the notification.
       ``(D) Exemption conditioned on making required information 
     available annually, on request, and in the event of material 
     change.--The requirements of subparagraph (B)(i) shall be 
     deemed not to have been met in connection with the initial or 
     any subsequent provision of advice described in subparagraph 
     (B) to the plan, participant, or beneficiary if, at any time 
     during the provision of advisory services to the plan, 
     participant, or beneficiary, the fiduciary adviser fails to 
     maintain the information described in subclauses (I) through 
     (IV) of subparagraph (B)(i) in currently accurate form and in 
     the manner required by subparagraph (C), or fails--
       ``(i) to provide, without charge, such currently accurate 
     information to the recipient of the advice no less than 
     annually,
       ``(ii) to make such currently accurate information 
     available, upon request and without charge, to the recipient 
     of the advice, or
       ``(iii) in the event of a material change to the 
     information described in subclauses (I) through (IV) of 
     subparagraph (B)(i), to provide, without charge, such 
     currently accurate information to the recipient of the advice 
     at a time reasonably contemporaneous to the material change 
     in information.
       ``(E) Maintenance for 6 years of evidence of compliance.--A 
     fiduciary adviser referred to in subparagraph (B) who has 
     provided advice referred to in such subparagraph shall, for a 
     period of not less than 6 years after the provision of the 
     advice, maintain any records necessary for determining 
     whether the requirements of the preceding provisions of this 
     paragraph and of subsection (d)(19) have been met. A 
     transaction prohibited under subsection (c)(1) shall not be 
     considered to have occurred solely because the records are 
     lost or destroyed prior to the end of the 6-year period due 
     to circumstances beyond the control of the fiduciary adviser.
       ``(F) Exemption for plan sponsor and certain other 
     fiduciaries.--A plan sponsor or other person who is a 
     fiduciary (other than a fiduciary adviser) shall not be 
     treated as failing to meet the requirements of this section 
     solely by reason of the provision of investment advice 
     referred to in subsection (e)(3)(B) (or solely by reason of 
     contracting for or otherwise arranging for the provision of 
     the advice), if--
       ``(i) the advice is provided by a fiduciary adviser 
     pursuant to an arrangement between the plan sponsor or other 
     fiduciary and the fiduciary adviser for the provision by the 
     fiduciary adviser of investment advice referred to in such 
     section,
       ``(ii) the terms of the arrangement require compliance by 
     the fiduciary adviser with the requirements of this 
     paragraph,
       ``(iii) the terms of the arrangement include a written 
     acknowledgment by the fiduciary adviser that the fiduciary 
     adviser is a fiduciary of the plan with respect to the 
     provision of the advice, and
       ``(iv) the requirements of part 4 of subtitle B of title I 
     of the Employee Retirement Income Security Act of 1974 are 
     met in connection with the provision of such advice.
       ``(G) Definitions.--For purposes of this paragraph and 
     subsection (d)(19)--
       ``(i) Fiduciary adviser.--The term `fiduciary adviser' 
     means, with respect to a plan, a person who is a fiduciary of 
     the plan by reason of the provision of investment advice by 
     the person to the plan or to a participant or beneficiary and 
     who is--

       ``(I) registered as an investment adviser under the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) or 
     under the laws of the State in which the fiduciary maintains 
     its principal office and place of business,
       ``(II) a bank or similar financial institution referred to 
     in subsection (d)(4) or a savings association (as defined in 
     section 3(b)(1) of the Federal Deposit Insurance Act (12 
     U.S.C. 1813(b)(1))), but only if the advice is provided 
     through a trust department of the bank or similar financial 
     institution or savings association which is subject to 
     periodic examination and review by Federal or State banking 
     authorities,
       ``(III) an insurance company qualified to do business under 
     the laws of a State,
       ``(IV) a person registered as a broker or dealer under the 
     Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
       ``(V) an affiliate of a person described in any of 
     subclauses (I) through (IV), or
       ``(VI) an employee, agent, or registered representative of 
     a person described in any of subclauses (I) through (V) who 
     satisfies the requirements of applicable insurance, banking, 
     and securities laws relating to the provision of the advice.

       ``(ii) Affiliate.--The term `affiliate' of another entity 
     means an affiliated person of the entity (as defined in 
     section 2(a)(3) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-2(a)(3))).
       ``(iii) Registered representative.--The term `registered 
     representative' of another entity means a person described in 
     section 3(a)(18) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78c(a)(18)) (substituting the entity for the broker or 
     dealer referred to in such section) or a person described in 
     section

[[Page 28632]]

     202(a)(17) of the Investment Advisers Act of 1940 (15 U.S.C. 
     80b-2(a)(17)) (substituting the entity for the investment 
     adviser referred to in such section).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to advice referred to in section 
     4975(c)(3)(B) of the Internal Revenue Code of 1986 provided 
     on or after January 1, 2006.

                  TITLE VII--BENEFIT ACCRUAL STANDARDS

     SEC. 701. BENEFIT ACCRUAL STANDARDS.

       (a) Amendments to the Employee Retirement Income Security 
     Act of 1974.--
       (1) Rules relating to reduction in rate of benefit 
     accrual.--Section 204(b)(1)(H) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1054(b)(1)(H)) is 
     amended by adding at the end the following new clauses:
       ``(vii)(I) A plan shall not be treated as failing to meet 
     the requirements of clause (i) if a participant's entire 
     accrued benefit, as determined as of any date under the 
     formula for determining benefits as set forth in the text of 
     the plan documents, would be equal to or greater than that of 
     any similarly situated, younger individual.
       ``(II) For purposes of this clause, an individual is 
     similarly situated to a participant if such individual is 
     identical to such participant in every respect (including 
     period of service, compensation, position, date of hire, work 
     history, and any other respect) except for age.
       ``(III) In determining the entire accrued benefit for 
     purposes of this clause, the subsidized portion of any early 
     retirement benefit (including any early retirement subsidy 
     that is fully or partially included or reflected in an 
     employee's opening balance or other transition benefits) 
     shall be disregarded.
       ``(IV) In determining the entire accrued benefit for 
     purposes of this clause, such benefit may be calculated as 
     the present value of accrued benefits projected to normal 
     retirement age, as an account balance, or as the current 
     value of the accumulated percentage of the employee's final 
     average compensation.
       ``(viii) A plan shall not be treated as failing to meet the 
     requirements of this subparagraph solely because the plan 
     provides allowable offsets against those benefits under the 
     plan which are attributable to employer contributions, based 
     on benefits which are provided under title II of the Social 
     Security Act, under the Railroad Retirement Act of 1974, 
     under another plan described in section 401(a) of the 
     Internal Revenue Code of 1986 maintained by the same 
     employer, under any retirement program for officers or 
     employees of the Federal Government or of the government of 
     any State or political subdivision thereof, or under such 
     other arrangements as the Secretary of the Treasury may 
     provide. For purposes of this clause, allowable offsets based 
     on such benefits consist of offsets equal to all or part of 
     the actual benefit payment amounts, reasonable projections or 
     estimations of such benefit payment amounts, or actuarial 
     equivalents of such actual benefit payment amounts, 
     projections, or estimations (determined on the basis of 
     reasonable actuarial assumptions).
       ``(ix) A plan shall not be treated as failing to meet the 
     requirements of this subparagraph solely because the plan 
     provides a disparity in contributions or benefits with 
     respect to which the requirements of section 401(l) of the 
     Internal Revenue Code of 1986 are met.
       ``(x)(I) A plan shall not be treated as failing to meet the 
     requirements of this subparagraph solely because the plan 
     provides for indexing of accrued benefits under the plan.
       ``(II) Except in the case of any benefit provided in the 
     form of a variable annuity, subclause (I) shall not apply 
     with respect to any indexing which results in an accrued 
     benefit less than the accrued benefit determined without 
     regard to such indexing.
       ``(III) For purposes of this clause, the term `indexing' 
     means, in connection with an accrued benefit, the periodic 
     adjustment of the accrued benefit by means of the application 
     of a recognized investment index or methodology.''.
       (2) Determinations of accrued benefit as balance of benefit 
     account.--Section 203 of such Act (29 U.S.C. 1053) is amended 
     by adding at the end the following new subsection:
       ``(f)(1) A defined benefit plan under which the accrued 
     benefit payable under the plan upon distribution (or any 
     portion thereof) is expressed as the balance of a 
     hypothetical account maintained for the participant shall not 
     be treated as failing to meet the requirements of subsection 
     (a)(2), section 204(c) (but only in the case of a plan which 
     does not provide for employee contributions), or section 
     205(g) solely because of the amount actually made available 
     for such distribution under the terms of the plan, in any 
     case in which the applicable interest rate that would be used 
     under the terms of the plan to project the amount of the 
     participant's account balance to normal retirement age is not 
     greater than a market rate of return.
       ``(2) The Secretary of the Treasury may provide by 
     regulation for rules governing the calculation of a market 
     rate of return for purposes of paragraph (1) and for 
     permissible methods of crediting interest to the account 
     (including fixed or variable interest rates) resulting in 
     effective rates of return meeting the requirements of 
     paragraph (1).''.
       (b) Amendments to the Internal Revenue Code of 1986.--
       (1) Rules relating to reduction in rate of benefit 
     accrual.--Subparagraph (H) of section 411(b)(1) of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following new clauses:
       ``(vi) Comparison to similarly situated younger 
     individual.--

       ``(I) In general.--A plan shall not be treated as failing 
     to meet the requirements of clause (i) if a participant's 
     entire accrued benefit, as determined as of any date under 
     the formula for determining benefits as set forth in the text 
     of the plan documents, would be equal to or greater than that 
     of any similarly situated, younger individual.
       ``(II) Similarly situated.--For purposes of this clause, an 
     individual is similarly situated to a participant if such 
     individual is identical to such participant in every respect 
     (including period of service, compensation, position, date of 
     hire, work history, and any other respect) except for age.
       ``(III) Disregard of subsidized early retirement 
     benefits.--In determining the entire accrued benefit for 
     purposes of this clause, the subsidized portion of any early 
     retirement benefit (including any early retirement subsidy 
     that is fully or partially included or reflected in an 
     employee's opening balance or other transition benefits) 
     shall be disregarded.
       ``(IV) Entire accrued benefit.--In determining the entire 
     accrued benefit for purposes of this clause, such benefit may 
     be calculated as the present value of accrued benefits 
     projected to normal retirement age, as an account balance, or 
     as the current value of the accumulated percentage of the 
     employee's final average compensation.

       ``(vii) Certain offsets permitted.--A plan shall not be 
     treated as failing to meet the requirements of this 
     subparagraph solely because the plan provides allowable 
     offsets against those benefits under the plan which are 
     attributable to employer contributions, based on benefits 
     which are provided under title II of the Social Security Act, 
     under the Railroad Retirement Act of 1974, under another plan 
     described in section 401(a) maintained by the same employer, 
     under any retirement program for officers or employees of the 
     Federal Government or of the government of any State or 
     political subdivision thereof, or under such other 
     arrangements as the Secretary may provide. For purposes of 
     this clause, allowable offsets based on such benefits consist 
     of offsets equal to all or part of the actual benefit payment 
     amounts, reasonable projections or estimations of such 
     benefit payment amounts, or actuarial equivalents of such 
     actual benefit payment amounts, projections, or estimations 
     (determined on the basis of reasonable actuarial 
     assumptions).
       ``(viii) Permitted disparities in plan contributions or 
     benefits.--A plan shall not be treated as failing to meet the 
     requirements of this subparagraph solely because the plan 
     provides a disparity in contributions or benefits with 
     respect to which the requirements of section 401(l) are met.
       ``(ix) Indexing permitted.--

       ``(I) In general.--A plan shall not be treated as failing 
     to meet the requirements of this subparagraph solely because 
     the plan provides for indexing of accrued benefits under the 
     plan.
       ``(II) Protection of economic value.--Except in the case of 
     any benefit provided in the form of a variable annuity, 
     subclause (I) shall not apply with respect to any indexing 
     which results in an accrued benefit less than the accrued 
     benefit determined without regard to such indexing.
       ``(III) Indexing.--For purposes of this clause, the term 
     `indexing' means, in connection with an accrued benefit, the 
     periodic adjustment of the accrued benefit by means of the 
     application of a recognized investment index or 
     methodology.''.

       (2) Determinations of accrued benefit as balance of benefit 
     account.--Subsection (a) of section 411 of such Code is 
     amended by adding at the end the following new paragraph:
       ``(13) Determinations of accrued benefit as balance of 
     benefit account.--
       ``(A) In general.--A defined benefit plan under which the 
     accrued benefit payable under the plan upon distribution (or 
     any portion thereof) is expressed as the balance of a 
     hypothetical account maintained for the participant shall not 
     be treated as failing to meet the requirements of subsection 
     (a)(2), subsection (c) (but only in the case of a plan which 
     does not provide for employee contributions), or section 
     417(e) solely because of the amount actually made available 
     for such distribution under the terms of the plan, in any 
     case in which the applicable interest rate that would be used 
     under the terms of the plan to project the amount of the 
     participant's account balance to normal retirement age is not 
     greater than a market rate of return.
       ``(B) Regulations.--The Secretary may provide by regulation 
     for rules governing the calculation of a market rate of 
     return for purposes of subparagraph (A) and for permissible 
     methods of crediting interest to the account (including fixed 
     or variable interest rates) resulting in effective rates of 
     return meeting the requirements of subparagraph (A).''.

[[Page 28633]]

       (c) Effective Date.--The amendments made by this section 
     shall apply to periods beginning on or after June 29, 2005.

                   TITLE VIII--DEDUCTION LIMITATIONS

     SEC. 801. INCREASE IN DEDUCTION LIMITS.

       (a) Increase in Deduction Limit for Single-Employer 
     Plans.--Section 404 of the Internal Revenue Code of 1986 
     (relating to deduction for contributions of an employer to an 
     employees' trust or annuity plan and compensation under a 
     deferred payment plan) is amended--
       (1) in subsection (a)(1)(A), by inserting ``in the case of 
     a defined benefit plan other than a multiemployer plan, in an 
     amount determined under subsection (o), and in the case of 
     any other plan'' after ``section 501(a),'', and
       (2) by inserting at the end the following new subsection:
       ``(o) Deduction Limit for Single-Employer Plans.--For 
     purposes of subsection (a)(1)(A)--
       ``(1) In general.--In the case of a defined benefit plan to 
     which subsection (a)(1)(A) applies (other than a 
     multiemployer plan), the amount determined under this 
     subsection for any taxable year shall be equal to the amount 
     determined under paragraph (2) with respect to each plan year 
     ending with or within the taxable year.
       ``(2) Determination of amount.--The amount determined under 
     this paragraph for any plan year shall be equal to the excess 
     (if any) of--
       ``(A) the greater of--
       ``(i) the sum of--

       ``(I) 150 percent of the funding target applicable to the 
     plan for such plan year, determined under section 430, plus
       ``(II) the target normal cost applicable to the plan for 
     such plan year, determined under section 430(b), or

       ``(ii) in the case of a plan that is not in an at-risk 
     status (as determined under 430(i)), the sum of--

       ``(I) the funding target which would be applicable to the 
     plan for such plan year if such plan were in an at-risk 
     status, determined under section 430(d) (with regard to 
     section 430(i)), plus
       ``(II) the target normal cost which would be applicable to 
     the plan for such plan year if such plan were in an at-risk 
     status, determined under section 430(d) (with regard to 
     section 430(i)), over

       ``(B) the value of the plan assets (determined under 
     section 430(g)).
       ``(3) Special rule for terminating plans.--In the case of a 
     plan which, subject to section 4041 of the Employee 
     Retirement Income Security Act of 1974, terminates during the 
     plan year, the amount determined under paragraph (2) shall 
     not be less than the amount required to make the plan 
     sufficient for benefit liabilities (within the meaning of 
     section 4041(d) of such Act).
       ``(4) Definitions.--Any term used in this subsection which 
     is also used in section 430 shall have the same meaning given 
     such term by section 430.''.
       (b) Increase in Deduction Limit for Multiemployer Plans.--
     Section 404(a)(1)(D) of such Code is amended to read as 
     follows:
       ``(D) Minimum deduction for multiemployer plans.--In the 
     case of a defined benefit plan which is a multiemployer plan, 
     except as provided in regulations, the maximum amount 
     deductible under the limitations of this paragraph shall not 
     be less than the excess (if any) of--
       ``(i) 140 percent of the current liability of the plan 
     determined under section 431(c)(6)(D), over
       ``(ii) the value of the plan's assets determined under 
     section 431(c)(2).''.
       (c) Technical and Conforming Amendments.--
       (1) The last sentence of section 404(a)(1)(A) of such Code 
     is amended by striking ``section 412'' each place it appears 
     and inserting ``section 431''.
       (2) Section 404(a)(1)(B) of such Code is amended--
       (A) by striking ``In the case of a plan'' and inserting 
     ``In the case of a multiemployer plan'',
       (B) by striking ``section 412(c)(7)'' each place it appears 
     and inserting ``section 431(c)(6)'',
       (C) by striking ``section 412(c)(7)(B)'' and inserting 
     ``section 431(c)(6)(D)'',
       (D) by striking ``section 412(c)(7)(A)'' and inserting 
     ``section 431(c)(6)(A)'', and
       (E) by striking ``section 412'' and inserting ``section 
     431''.
       (3) Section 404(a)(1) of such Code is amended by striking 
     subparagraph (F).
       (4) Section 404(a)(7) of such Code is amended--
       (A) in subparagraph (A)(ii), by striking ``for the plan 
     year'' and all that follows and inserting ``which are 
     multiemployer plans for the plan year which ends with or 
     within such taxable year (or for any prior plan year) and the 
     maximum amount of employer contributions allowable under 
     subsection (o) with respect to any such defined benefit plans 
     which are not multiemployer plans for the plan year.'',
       (B) by striking ``section 412(l)'' in the last sentence of 
     subparagraph (A) and inserting ``paragraph (1)(D)(ii)'', and
       (C) by striking subparagraph (D) and inserting:
       ``(D) Insurance contract plans.--For purposes of this 
     paragraph, a plan described in section 412(e)(3) shall be 
     treated as a defined benefit plan.''.
       (5) Section 404A(g)(3)(A) of such Code is amended by 
     striking ``paragraphs (3) and (7) of section 412(c)'' and 
     inserting ``sections 430(h)(1) and 431(c)(3) and (6)''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to contributions for taxable years beginning 
     after December 31, 2006.

     SEC. 802. UPDATING DEDUCTION RULES FOR COMBINATION OF PLANS.

       (a) In General.--Subparagraph (C) of section 404(a)(7) of 
     the Internal Revenue Code of 1986 (relating to limitation on 
     deductions where combination of defined contribution plan and 
     defined benefit plan) is amended by adding after clause (ii) 
     the following new clause:
       ``(iii) Limitation.--In the case of employer contributions 
     to 1 or more defined contribution plans, this paragraph shall 
     only apply to the extent that such contributions exceed 6 
     percent of the compensation otherwise paid or accrued during 
     the taxable year to the beneficiaries under such plans. For 
     purposes of this clause, amounts carried over from preceding 
     taxable years under subparagraph (B) shall be treated as 
     employer contributions to 1 or more defined contributions to 
     the extent attributable to employer contributions to such 
     plans in such preceding taxable years.''.
       (b) Conforming Amendments.--Subparagraph (A) of section 
     4972(c)(6) of such Code (relating to nondeductible 
     contributions) is amended to read as follows:
       ``(A) so much of the contributions to 1 or more defined 
     contribution plans which are not deductible when contributed 
     solely because of section 404(a)(7) as does not exceed the 
     amount of contributions described in section 401(m)(4)(A), 
     or''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to contributions for taxable years beginning 
     after December 31, 2006.

 TITLE IX--ENHANCED RETIREMENTS SAVINGS AND DEFINED CONTRIBUTION PLANS

     SEC. 901. PENSIONS AND INDIVIDUAL RETIREMENT ARRANGEMENT 
                   PROVISIONS OF ECONOMIC GROWTH AND TAX RELIEF 
                   RECONCILIATION ACT OF 2001 MADE PERMANENT.

       Title IX of the Economic Growth and Tax Relief 
     Reconciliation Act of 2001 shall not apply to the provisions 
     of, and amendments made by, subtitles (A) through (F) of 
     title VI of such Act (relating to pension and individual 
     retirement arrangement provisions).

     SEC. 902. SAVER'S CREDIT.

       (a) Permanency.--Section 25B of the Internal Revenue Code 
     of 1986 (relating to elective deferrals and IRA contributions 
     by certain individuals) is amended by striking subsection 
     (h).
       (b) Voluntary Deposit Into Qualified Account.--
       (1) Section 25B of such Code, as amended by subsection (a), 
     is further amended by adding at the end the following new 
     subsection:
       ``(h) Voluntary Deposit Into Qualified Account.--
       ``(1) In general.--So much of any overpayment under section 
     6401(b) as does not exceed the amount allowed as a tax credit 
     under subsection (a) shall, at the election of the taxpayer, 
     be paid on behalf of the individual taxpayer to an applicable 
     retirement plan designated by the individual, except that in 
     the case of a joint return, each spouse shall be entitled to 
     designate an applicable retirement plan with respect to 
     payments attributable to such spouse.
       ``(2) Applicable retirement plan.--For purposes of this 
     subsection, the term `applicable retirement plan' means any 
     eligible retirement plan (as defined in section 402(c)(8)(B)) 
     that elects to accept deposits under this subsection.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 903. INCREASING PARTICIPATION THROUGH AUTOMATIC 
                   CONTRIBUTION ARRANGEMENTS.

       (a) In General.--Section 401(k) of the Internal Revenue 
     Code of 1986 (relating to cash or deferred arrangement) is 
     amended by adding at the end the following new paragraph:
       ``(13) Alternative method for automatic contribution 
     arrangements to meet nondiscrimination requirements.--
       ``(A) In general.--A qualified automatic contribution 
     arrangement shall be treated as meeting the requirements of 
     paragraph (3)(A)(ii).
       ``(B) Qualified automatic contribution arrangement.--For 
     purposes of this paragraph, the term `qualified automatic 
     contribution arrangement' means any cash or deferred 
     arrangement which meets the requirements of subparagraphs (C) 
     through (F).
       ``(C) Automatic deferral.--
       ``(i) In general.--The requirements of this subparagraph 
     are met if, under the arrangement, each employee eligible to 
     participate in the arrangement is treated as having elected 
     to have the employer make elective contributions in an amount 
     equal to a qualified percentage of compensation.
       ``(ii) Election out.--The election treated as having been 
     made under clause (i) shall cease to apply with respect to 
     any employee

[[Page 28634]]

     if such employee makes an affirmative election--

       ``(I) to not have such contributions made, or
       ``(II) to make elective contributions at a level specified 
     in such affirmative election.

       ``(iii) Qualified percentage.--For purposes of this 
     subparagraph, the term `qualified percentage' means, with 
     respect to any employee, any percentage determined under the 
     arrangement if such percentage is applied uniformly, does not 
     exceed 10 percent, and is at least--

       ``(I) 3 percent during the period ending on the last day of 
     the first plan year which begins after the date on which the 
     first elective contribution described in clause (i) is made 
     with respect to such employee,
       ``(II) 4 percent during the first plan year following the 
     plan year described in subclause (I),
       ``(III) 5 percent during the second plan year following the 
     plan year described in subclause (I), and
       ``(IV) 6 percent during any subsequent plan year.

       ``(iv) Automatic deferral for current employees not 
     required.--Clause (i) shall be applied without taking into 
     account any employee who was eligible to participate in the 
     arrangement (or a predecessor arrangement) immediately before 
     the date on which such arrangement becomes a qualified 
     automatic contribution arrangement (determined after 
     application of this clause).
       ``(D) Participation.--
       ``(i) In general.--An arrangement meets the requirements of 
     this subparagraph for any year if, during the plan year or 
     the preceding plan year, elective contributions are made on 
     behalf of at least 70 percent of the employees eligible to 
     participate in the arrangement other than--

       ``(I) highly compensated employees, and
       ``(II) at the election of the plan administrator, employees 
     described in subparagraph (C)(iv).

       ``(ii) First plan year.--An arrangement (other than a 
     successor arrangement) shall be treated as meeting the 
     requirements of this subparagraph with respect to the first 
     plan year with respect to which such arrangement is a 
     qualified automatic contribution arrangement (determined 
     without regard to this subparagraph).
       ``(E) Matching or nonelective contributions.--
       ``(i) In general.--The requirements of this subparagraph 
     are met if, under the arrangement, the employer--

       ``(I) makes matching contributions on behalf of each 
     employee who is not a highly compensated employee in an 
     amount equal to 50 percent of the elective contributions of 
     the employee to the extent such elective contributions do not 
     exceed 6 percent of compensation, or
       ``(II) is required, without regard to whether the employee 
     makes an elective contribution or employee contribution, to 
     make a contribution to a defined contribution plan on behalf 
     of each employee who is not a highly compensated employee and 
     who is eligible to participate in the arrangement in an 
     amount equal to at least 2 percent of the employee's 
     compensation.

       ``(ii) Application of rules for matching contributions.--
     The rules of clauses (ii) and (iii) of paragraph (12)(B) 
     shall apply for purposes of clause (i)(I).
       ``(iii) Withdrawal and vesting restrictions.--An 
     arrangement shall not be treated as meeting the requirements 
     of clause (i) unless, with respect to employer contributions 
     (including matching contributions) taken into account in 
     determining whether the requirements of clause (i) are met--

       ``(I) any employee who has completed at least 2 years of 
     service (within the meaning of section 411(a)) has a 
     nonforfeitable right to 100 percent of the employee's accrued 
     benefit derived from such employer contributions, and
       ``(II) the requirements of subparagraph (B) of paragraph 
     (2) are met with respect to all such employer contributions.

       ``(iv) Application of certain other rules.--The rules of 
     subparagraphs (E)(ii) and (F) of paragraph (12) shall apply 
     for purposes of subclauses (I) and (II) of clause (i).
       ``(F) Notice requirements.--
       ``(i) In general.--The requirements of this subparagraph 
     are met if, within a reasonable period before each plan year, 
     each employee eligible to participate in the arrangement for 
     such year receives written notice of the employee's rights 
     and obligations under the arrangement which--

       ``(I) is sufficiently accurate and comprehensive to apprise 
     the employee of such rights and obligations, and
       ``(II) is written in a manner calculated to be understood 
     by the average employee to whom the arrangement applies.

       ``(ii) Timing and content requirements.--A notice shall not 
     be treated as meeting the requirements of clause (i) with 
     respect to an employee unless--

       ``(I) the notice explains the employee's right under the 
     arrangement to elect not to have elective contributions made 
     on the employee's behalf (or to elect to have such 
     contributions made at a different percentage),
       ``(II) in the case of an arrangement under which the 
     employee may elect among 2 or more investment options, the 
     notice explains how contributions made under the arrangement 
     will be invested in the absence of any investment election by 
     the employee, and
       ``(III) the employee has a reasonable period of time after 
     receipt of the notice described in subclauses (I) and (II) 
     and before the first elective contribution is made to make 
     either such election.''.

       (b) Matching Contributions.--Section 401(m) of such Code 
     (relating to nondiscrimination test for matching 
     contributions and employee contributions) is amended by 
     redesignating paragraph (12) as paragraph (13) and by 
     inserting after paragraph (11) the following new paragraph:
       ``(12) Alternative method for automatic contribution 
     arrangements.--A defined contribution plan shall be treated 
     as meeting the requirements of paragraph (2) with respect to 
     matching contributions if the plan--
       ``(A) is a qualified automatic contribution arrangement (as 
     defined in subsection (k)(13)), and
       ``(B) meets the requirements of paragraph (11)(B).''.
       (c) Exclusion From Definition of Top-Heavy Plans.--
       (1) Elective contribution rule.--Clause (i) of section 
     416(g)(4)(H) of such Code is amended by inserting ``or 
     401(k)(13)'' after ``section 401(k)(12)''.
       (2) Matching contribution rule.--Clause (ii) of section 
     416(g)(4)(H) of such Code is amended by inserting ``or 
     401(m)(12)'' after ``section 401(m)(11)''.
       (d) Corrective Distributions.--
       (1) In general.--Section 414 of the Internal Revenue Code 
     of 1986 (relating to definitions and special rules) is 
     amended by adding at the end the following new subsection:
       ``(w) Automatic Contribution Arrangements.--
       ``(1) In general.--No tax shall be imposed under section 
     72(t) on a distribution from an applicable employer plan to 
     the employee with respect to whom such contribution relates 
     if such distribution does not exceed the erroneous automatic 
     contribution amount and is made not later than the 1st April 
     15 following the close of the taxable year in which such 
     contribution was made.
       ``(2) Erroneous automatic contribution amount.--For 
     purposes of this subsection--
       ``(A) In general.--The term `erroneous automatic 
     contribution amount' means the lesser of--
       ``(i) the amount of automatic contributions made during the 
     applicable period which the employee elects in a notice to 
     the plan administrator to treat as an erroneous automatic 
     contribution amount for purposes of this subsection, or
       ``(ii) $500.
       ``(B) Automatic contribution.--The term `automatic 
     contribution' means contributions which, under the terms of 
     the plan--
       ``(i) the employee can elect to be made as contributions 
     under the plan on behalf of the employee, or to the employee 
     directly in cash, and
       ``(ii) which are made on behalf of the employee under the 
     plan pursuant to a plan provision treating the employee as 
     having elected to have the employer make such contributions 
     on behalf of the employee until the employee affirmatively 
     elects not to have such contribution made or affirmatively 
     elects to make contributions as a specified level.
       ``(3) Applicable employer plan.--For purposes of this 
     subsection, the term `applicable employer plan'means--
       ``(A) an employees' trust described in section 401(a) which 
     is exempt from tax under section 501(a),
       ``(B) a plan under which amounts are contributed by an 
     individual's employer for an annuity contract described in 
     section 403(b), and
       ``(C) an eligible deferred compensation plan described in 
     section 457(b) which is maintained by an eligible employer 
     described in section 457(e)(1)(A).
       ``(4) Applicable period.--For purposes of this subsection, 
     the term `applicable period' means, with respect to any 
     employee, the three month period that begins on the first 
     date that an automatic contribution described in paragraph 
     (2)(B) is made with respect to such employee.
       ``(5) Special rules.--A distribution described in paragraph 
     (1) (subject to the limitation of paragraph (2))--
       ``(A) shall not be treated as a distribution for purposes 
     of sections 401(k)(2)(B)(i), 403(b)(7), 403(b)(11), and 
     457(d)(1)(A), and
       ``(B) shall not be taken into account for purposes of 
     section 401(k)(3).''.
       (2) Vesting conforming amendments.--
       (A) Section 411(a)(3)(G) of such Code is amended by 
     inserting ``an erroneous automatic contribution under section 
     414(w),'' after ``402(g)(2)(A),''.
       (B) The heading of section 411(a)(3)(G) of such Code is 
     amended by inserting ``or erroneous automatic contribution'' 
     before the period.
       (C) Section 401(k)(8)(E) of such Code is amended by 
     inserting ``an erroneous automatic contribution under section 
     414(w),'' after ``402(g)(2)(A),''.
       (D) The heading of section 401(k)(8)(E) of such Code is 
     amended by inserting ``or erroneous automatic contribution'' 
     before the period.
       (E) Section 203(a)(3)(F) of the Employee Retirement Income 
     Security Act of 1974 (29

[[Page 28635]]

     U.S.C. 1053(a)(3)(F)) is amended by inserting ``an erroneous 
     automatic contribution under section 414(w) of such Code,'' 
     after ``402(g)(2)(A) of such Code,''.
       (e) Control Over Plan Assets Deemed to Have Been Exercised 
     With Respect to Default Investment Arrangements.--Section 
     404(c) of the Employee Retirement Income Security Act of 
     1974, as amended by section 308, is further amended by adding 
     at the end the following new paragraph:
       ``(5)(A) For purposes of paragraph (1), a participant in an 
     individual account plan shall be treated as exercising 
     control over the assets in the account with respect to the 
     amount of contributions made under a default investment 
     arrangement.
       ``(B)(i) For purposes of this paragraph, the term `default 
     investment arrangement' means an arrangement--
       ``(I) which meets the requirements of subparagraph (C),
       ``(II) under which the participant is treated as having 
     elected to have the plan sponsor exercise control over the 
     assets in the participant's account until the participant 
     specifically elects to exercise such control, and
       ``(III) under which assets described in subclause (II) are 
     invested in accordance with regulations prescribed by the 
     Secretary.
       ``(ii) The regulations prescribed pursuant to clause 
     (i)(III) shall provide guidance on the appropriateness of 
     certain investments for designation as default investments 
     under the arrangement, which shall include guidance 
     regarding--
       ``(I) appropriate mixes of default investments and asset 
     classes which the Secretary considers consistent with long-
     term capital appreciation, and
       ``(II) the designation of other default investments.
       ``(C)(i) For purposes of subparagraph (B)(i)(I), an 
     arrangement meets the requirements of this subparagraph for 
     any plan year if, within a reasonable period before such plan 
     year, the plan administrator gives to each participant to 
     whom the arrangement applies for such plan year notice of the 
     participant's rights and obligations under the arrangement 
     which--
       ``(I) is sufficiently accurate and comprehensive to apprise 
     the participant of such rights and obligations, and
       ``(II) is written in a manner calculated to be understood 
     by the average participant to whom the arrangement applies.
       ``(ii) A notice shall not be treated as meeting the 
     requirements of clause (i) with respect to a participant 
     unless--
       ``(I) the notice includes an explanation of the 
     participant's right under the arrangement to specifically 
     elect to exercise control over the assets in the 
     participant's account,
       ``(II) the employee has a reasonable period of time, after 
     receipt of the notice described in subclause (I) and before 
     the assets are first invested, to specifically make such an 
     election, and
       ``(III) the notice explains how contributions made under 
     the arrangement will be invested in the absence of any 
     investment election specifically made by the employee.''.
       (f) Preemption of Conflicting State Regulation.--Section 
     514 of the Employee Retirement Income Security Act of 1974 
     (29 U.S.C. 1144) is amended by adding at the end the 
     following new subsection:
       ``(e)(1) Notwithstanding any other provision of this 
     section, this title shall supersede any law of a State which 
     would directly or indirectly prohibit or restrict the 
     inclusion in any plan of an automatic contribution 
     arrangement. The Secretary may prescribe regulations which 
     would establish minimum standards that such an arrangement 
     would be required to satisfy in order for this subsection to 
     apply in the case of such arrangement.
       ``(2)(A) For purposes of this subsection, the term 
     `automatic contribution arrangement' means an arrangement--
       ``(i) which meets the requirements of paragraph (3),
       ``(ii) under which a participant may elect to have the plan 
     sponsor make payments as contributions under the plan on 
     behalf of the participant, or to the participant directly in 
     cash,
       ``(iii) under which a participant is treated as having 
     elected to have the plan sponsor make such contributions in 
     an amount equal to a uniform percentage of compensation 
     provided under the plan until the participant specifically 
     elects not to have such contributions made (or specifically 
     elects to have such contributions made at a different 
     percentage), and
       ``(iv) under which such contributions are invested in 
     accordance with regulations prescribed by the Secretary.
       ``(B) The regulations prescribed pursuant to subparagraph 
     (A)(iv) shall provide guidance on the appropriateness of 
     certain investments for designation as default investments 
     under the arrangement, which shall include guidance regarding 
     appropriate mixes of default investments and asset classes 
     which the Secretary considers consistent with long-term 
     capital appreciation
       ``(3)(A) For purposes of paragraph (2)(A)(i), an 
     arrangement meets the requirements of this paragraph for any 
     plan year if, within a reasonable period before such plan 
     year, the plan administrator gives to each participant to 
     whom the arrangement applies for such plan year notice of the 
     participant's rights and obligations under the arrangement 
     which--
       ``(i) is sufficiently accurate and comprehensive to apprise 
     the participant of such rights and obligations, and
       ``(ii) is written in a manner calculated to be understood 
     by the average participant to whom the arrangement applies.
       ``(B) A notice shall not be treated as meeting the 
     requirements of subparagraph (A) with respect to a 
     participant unless--
       ``(i) the notice includes an explanation of the 
     participant's right under the arrangement not to have 
     elective contributions made on the participant's behalf (or 
     to elect to have such contributions made at a different 
     percentage),
       ``(ii) the participant has a reasonable period of time, 
     after receipt of the notice described in clause (i) and 
     before the first elective contribution is made, to make such 
     election, and
       ``(iii) the notice explains how contributions made under 
     the arrangement will be invested in the absence of any 
     investment election by the participant.''.
       (g) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2005.

     SEC. 904. PENALTY-FREE WITHDRAWALS FROM RETIREMENT PLANS FOR 
                   INDIVIDUALS CALLED TO ACTIVE DUTY FOR AT LEAST 
                   179 DAYS.

       (a) In General.--Paragraph (2) of section 72(t) of the 
     Internal Revenue Code of 1986 (relating to 10-percent 
     additional tax on early distributions from qualified 
     retirement plans) is amended by adding at the end the 
     following new subparagraph:
       ``(G) Distributions from retirement plans to individuals 
     called to active duty.--
       ``(i) In general.--Any qualified reservist distribution.
       ``(ii) Amount distributed may be repaid.--Any individual 
     who receives a qualified reservist distribution may, at any 
     time during the 2-year period beginning on the day after the 
     end of the active duty period, make one or more contributions 
     to an individual retirement plan of such individual in an 
     aggregate amount not to exceed the amount of such 
     distribution. The dollar limitations otherwise applicable to 
     contributions to individual retirement plans shall not apply 
     to any contribution made pursuant to the preceding sentence. 
     No deduction shall be allowed for any contribution pursuant 
     to this clause.
       ``(iii) Qualified reservist distribution.--For purposes of 
     this subparagraph, the term `qualified reservist 
     distribution' means any distribution to an individual if--

       ``(I) such distribution is from an individual retirement 
     plan, or from amounts attributable to employer contributions 
     made pursuant to elective deferrals described in subparagraph 
     (A) or (C) of section 402(g)(3) or section 
     501(c)(18)(D)(iii),
       ``(II) such individual was (by reason of being a member of 
     a reserve component (as defined in section 101 of title 37, 
     United States Code)), ordered or called to active duty for a 
     period in excess of 179 days or for an indefinite period, and
       ``(III) such distribution is made during the period 
     beginning on the date of such order or call and ending at the 
     close of the active duty period.

       ``(iv) Application of subparagraph.--This subparagraph 
     applies to individuals ordered or called to active duty after 
     September 11, 2001, and before September 12, 2007. In no 
     event shall the 2-year period referred to in clause (ii) end 
     before the date which is 2-years after the date of the 
     enactment of this subparagraph.''.
       (b) Conforming Amendments.--
       (1) Section 401(k)(2)(B)(i) of such Code is amended by 
     striking ``or'' at the end of subclause (III), by striking 
     ``and'' at the end of subclause (IV) and inserting ``or'', 
     and by inserting after subclause (IV) the following new 
     subclause:

       ``(V) in the case of a qualified reservist distribution (as 
     defined in section 72(t)(2)(G)(iii)), the date on which a 
     period referred to in subclause (III) of such section begins, 
     and''.

       (2) Section 403(b)(7)(A)(ii) of such Code is amended by 
     inserting ``(unless such amount is a distribution to which 
     section 72(t)(2)(G) applies)'' after ``distributee''.
       (3) Section 403(b)(11) of such Code is amended by striking 
     ``or'' at the end of subparagraph (A), by striking the period 
     at the end of subparagraph (B) and inserting ``, or'', and by 
     inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) for distributions to which section 72(t)(2)(G) 
     applies.''.
       (c) Effective Date; Waiver of Limitations.--
       (1) Effective date.--The amendment made by this section 
     shall apply to distributions after September 11, 2001.
       (2) Waiver of limitations.--If refund or credit of any 
     overpayment of tax resulting from the amendments made by this 
     section is prevented at any time before the close of the 1-
     year period beginning on the date of the enactment of this 
     Act by the operation of any law or rule of law (including res 
     judicata), such refund or credit may nevertheless be made or 
     allowed if claim therefor is filed before the close of such 
     period.

[[Page 28636]]



     SEC. 905. WAIVER OF 10 PERCENT EARLY WITHDRAWAL PENALTY TAX 
                   ON CERTAIN DISTRIBUTIONS OF PENSION PLANS FOR 
                   PUBLIC SAFETY EMPLOYEES.

       (a) In General.--Section 72(t)(2) of the Internal Revenue 
     Code of 1986 (relating to subsection not to apply to certain 
     distributions), as amended by section 904, is amended by 
     adding at the end the following new subsection:
       ``(H) DROP distributions to qualified public safety 
     employees in governmental plans.--
       ``(i) In general.--Distributions to an individual who is a 
     qualified public safety employee from a governmental plan 
     within the meaning of section 414(d) to the extent such 
     distributions are attributable to a DROP benefit.
       ``(ii) Definitions.--For purposes of this subparagraph--

       ``(I) DROP benefit.--The term `DROP benefit' means a 
     feature of a governmental plan which is a defined benefit 
     plan and under which an employee elects to receive credits to 
     an account (including a notional account) in the plan which 
     are not in excess of the plan benefits (payable in the form 
     of an annuity) that would have been provided if the employee 
     had retired under the plan at a specified earlier retirement 
     date and which are in lieu of increases in the employee's 
     accrued pension benefit based on years of service after the 
     effective date of the DROP election.
       ``(II) Qualified public safety employee.--The term 
     `qualified public safety employee' means any employee of any 
     police department or fire department organized and operated 
     by a State or political subdivision of a State if the 
     employee provides police protection, firefighting services, 
     or emergency medical services for any area within the 
     jurisdiction of such State or political subdivision and if 
     the employee was eligible to retire on or before the date of 
     such election and receive immediate retirement benefits.''.

       (b) Effective Date.--The amendments made by this section 
     shall apply to distributions after the date of the enactment 
     of this Act.

     SEC. 906. COMBAT ZONE COMPENSATION TAKEN INTO ACCOUNT FOR 
                   PURPOSES OF DETERMINING LIMITATION AND 
                   DEDUCTIBILITY OF CONTRIBUTIONS TO INDIVIDUAL 
                   RETIREMENT PLANS.

       (a) In General.--Subsection (f) of section 219 of the 
     Internal Revenue Code of 1986 is amended by redesignating 
     paragraph (7) as paragraph (8) and by inserting after 
     paragraph (6) the following new paragraph:
       ``(7) Special rule for compensation earned by members of 
     the armed forces for service in a combat zone.--For purposes 
     of subsections (b)(1)(B) and (c), the amount of compensation 
     includible in an individual's gross income shall be 
     determined without regard to section 112.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. 907. DIRECT PAYMENT OF TAX REFUNDS TO INDIVIDUAL 
                   RETIREMENT PLANS.

       (a) In General.--The Secretary of the Treasury (or the 
     Secretary's delegate) shall make available a form (or modify 
     existing forms) for use by individuals to direct that a 
     portion of any refund of overpayment of tax imposed by 
     chapter 1 of the Internal Revenue Code of 1986 be paid 
     directly to an individual retirement plan (as defined in 
     section 7701(a)(37) of such Code) of such individual.
       (b) Effective Date.--The form required by subsection (a) 
     shall be made available for taxable years beginning after 
     December 31, 2006.

     SEC. 908. IRA ELIGIBILITY FOR THE DISABLED.

       (a) In General.--Subsection (f) of section 219 of the 
     Internal Revenue Code of 1986 (relating to other definitions 
     and special rules), as amended by this Act, is further 
     amended by redesignating paragraph (8) as paragraph (9) and 
     by inserting after paragraph (7) the following new paragraph:
       ``(8) Special rule for certain disabled individuals.--In 
     the case of an individual--
       ``(A) who is disabled (within the meaning of section 
     72(m)(7)), and
       ``(B) who has not attained the applicable age (as defined 
     in section 401(a)(9)(H)) before the close of the taxable 
     year,

     subparagraph (B) of subsection (b)(1) shall not apply.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. 909. ALLOW ROLLOVERS BY NONSPOUSE BENEFICIARIES OF 
                   CERTAIN RETIREMENT PLAN DISTRIBUTIONS.

       (a) In General.--
       (1) Qualified plans.--Section 402(c) of the Internal 
     Revenue Code of 1986 (relating to rollovers from exempt 
     trusts) is amended by adding at the end the following new 
     paragraph:
       ``(11) Distributions to inherited individual retirement 
     plan of nonspouse beneficiary.--
       ``(A) In general.--If, with respect to any portion of a 
     distribution from an eligible retirement plan of a deceased 
     employee, a direct trustee-to-trustee transfer is made to an 
     individual retirement plan described in clause (i) or (ii) of 
     paragraph (8)(B) established for the purposes of receiving 
     the distribution on behalf of an individual who is a 
     designated beneficiary (as defined by section 401(a)(9)(E)) 
     of the employee and who is not the surviving spouse of the 
     employee--
       ``(i) the transfer shall be treated as an eligible rollover 
     distribution for purposes of this subsection,
       ``(ii) the individual retirement plan shall be treated as 
     an inherited individual retirement account or individual 
     retirement annuity (within the meaning of section 
     408(d)(3)(C)) for purposes of this title, and
       ``(iii) section 401(a)(9)(B) (other than clause (iv) 
     thereof) shall apply to such plan.
       ``(B) Certain trusts treated as beneficiaries.--For 
     purposes of this paragraph, to the extent provided in rules 
     prescribed by the Secretary, a trust maintained for the 
     benefit of one or more designated beneficiaries shall be 
     treated in the same manner as a trust designated 
     beneficiary.''.
       (2) Section 403(a) plans.--Subparagraph (B) of section 
     403(a)(4) of such Code (relating to rollover amounts) is 
     amended by inserting ``and (11)'' after ``(7)''.
       (3) Section 403(b) plans.--Subparagraph (B) of section 
     403(b)(8) of such Code (relating to rollover amounts) is 
     amended by striking ``and (9)'' and inserting ``, (9), and 
     (11)''.
       (4) Section 457 plans.--Subparagraph (B) of section 
     457(e)(16) of such Code (relating to rollover amounts) is 
     amended by striking ``and (9)'' and inserting ``, (9), and 
     (11)''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 2005.

        TITLE X--PROVISIONS TO ENHANCE HEALTH CARE AFFORDABILITY

     SEC. 1001. TREATMENT OF ANNUITY AND LIFE INSURANCE CONTRACTS 
                   WITH A LONG-TERM CARE INSURANCE FEATURE.

       (a) Exclusion From Gross Income.--Subsection (e) of section 
     72 of the Internal Revenue Code of 1986 (relating to amounts 
     not received as annuities) is amended by redesignating 
     paragraph (11) as paragraph (12) and by inserting after 
     paragraph (10) the following new paragraph:
       ``(11) Special rules for certain combination contracts 
     providing long-term care insurance.--Notwithstanding 
     paragraphs (2), (5)(C), and (10), in the case of any charge 
     against the cash value of an annuity contract or the cash 
     surrender value of a life insurance contract made as payment 
     for coverage under a qualified long-term care insurance 
     contract which is part of or a rider on such annuity or life 
     insurance contract--
       ``(A) the investment in the contract shall be reduced (but 
     not below zero) by such charge, and
       ``(B) such charge shall not be includible in gross 
     income.''.
       (b) Tax-Free Exchanges Among Certain Insurance Policies.--
       (1) Annuity contracts can include qualified long-term care 
     insurance riders.--Paragraph (2) of section 1035(b) of such 
     Code is amended by adding at the end the following new 
     sentence: ``For purposes of the preceding sentence, a 
     contract shall not fail to be treated as an annuity contract 
     solely because a qualified long-term care insurance contract 
     is a part of or a rider on such contract.''.
       (2) Life insurance contracts can include qualified long-
     term care insurance riders.--Paragraph (3) of section 1035(b) 
     of such Code is amended by adding at the end the following 
     new sentence: ``For purposes of the preceding sentence, a 
     contract shall not fail to be treated as a life insurance 
     contract solely because a qualified long-term care insurance 
     contract is a part of or a rider on such contract.''.
       (3) Expansion of tax-free exchanges of life insurance, 
     endowment, and annuity contracts for long-term care 
     contracts.--Subsection (a) of section 1035 of such Code 
     (relating to certain exchanges of insurance policies) is 
     amended--
       (A) in paragraph (1) by striking ``contract;'' and 
     inserting ``contract or for a qualified long-term care 
     insurance contract;'',
       (B) in paragraph (2) by striking ``contract;'' and 
     inserting ``contract, or (C) for a qualified long-term care 
     insurance contract;'', and
       (C) in paragraph (3) by striking ``contract.'' and 
     inserting ``contract or for a qualified long-term care 
     insurance contract.''.
       (4) Tax-free exchanges of qualified long-term care 
     insurance contract.--Subsection (a) of section 1035 of such 
     Code (relating to certain exchanges of insurance policies) is 
     amended by striking ``or'' at the end of paragraph (2), by 
     striking the period at the end of paragraph (3) and inserting 
     ``; or'', and by inserting after paragraph (3) the following 
     new paragraph:
       ``(4) a qualified long-term care insurance contract for a 
     qualified long-term care insurance contract.''.
       (c) Treatment of Coverage Provided as Part of a Life 
     Insurance or Annuity Contract.--Subsection (e) of section 
     7702B of such Code (relating to treatment of qualified long-
     term care insurance) is amended to read as follows:
       ``(e) Treatment of Coverage Provided as Part of a Life 
     Insurance or Annuity Contract.--
       ``(1) Coverage treated as contract.--Except as otherwise 
     provided in regulations prescribed by the Secretary, in the 
     case of any long-term care insurance coverage

[[Page 28637]]

     (whether or not qualified) provided by a rider on or as part 
     of a life insurance contract or an annuity contract, this 
     title shall apply as if the portion of the contract providing 
     such coverage is a separate contract.
       ``(2) Denial of deduction under section 213.--No deduction 
     shall be allowed under section 213(a) for any payment made 
     for coverage under a qualified long-term care insurance 
     contract if such payment is made as a charge against the cash 
     value of an annuity contract or the cash surrender value of a 
     life insurance contract.
       ``(3) Application of section 7702.--Section 7702(c)(2) 
     (relating to the guideline premium limitation) shall be 
     applied by increasing the guideline premium limitation with 
     respect to the life insurance contract, as of any date--
       ``(A) by the sum of any charges (but not premium payments) 
     against the life insurance contract's cash surrender value 
     (within the meaning of section 7702(f)(2)(A)) for coverage 
     under the qualified long-term care insurance contract made to 
     that date under the life insurance contract, less
       ``(B) any such charges the imposition of which reduces the 
     premiums paid for the life insurance contract (within the 
     meaning of section 7702(f)(1)).
       ``(4) Portion defined.--For purposes of this subsection, 
     the term `portion' means only the terms and benefits under a 
     life insurance contract or annuity contract that are in 
     addition to the terms and benefits under the contract without 
     regard to long-term care insurance coverage.
       ``(5) Annuity contracts to which paragraph (1) does not 
     apply.--For purposes of this subsection, none of the 
     following shall be treated as an annuity contract:
       ``(A) A trust described in section 401(a) which is exempt 
     from tax under section 501(a).
       ``(B) A contract--
       ``(i) purchased by a trust described in subparagraph (A),
       ``(ii) purchased as part of a plan described in section 
     403(a),
       ``(iii) described in section 403(b),
       ``(iv) provided for employees of a life insurance company 
     under a plan described in section 818(a)(3), or
       ``(v) from an individual retirement account or an 
     individual retirement annuity.
       ``(C) A contract purchased by an employer for the benefit 
     of the employee (or the employee's spouse).

     Any dividend described in section 404(k) which is received by 
     a participant or beneficiary shall, for purposes of this 
     paragraph, be treated as paid under a separate contract to 
     which subparagraph (B)(i) applies.''.
       (d) Information Reporting.--
       (1) Subpart B of part III of subchapter A of chapter 61 of 
     such Code (relating to information concerning transactions 
     with other persons) is amended by adding at the end the 
     following new section:

     ``SEC. 6050U. CHARGES OR PAYMENTS FOR QUALIFIED LONG-TERM 
                   CARE INSURANCE CONTRACTS UNDER COMBINED 
                   ARRANGEMENTS.

       ``(a) Requirement of Reporting.--Any person who makes a 
     charge against the cash value of an annuity contract, or the 
     cash surrender value of a life insurance contract, which is 
     excludible from gross income under section 72(e)(11) shall 
     make a return, according to the forms or regulations 
     prescribed by the Secretary, setting forth--
       ``(1) the amount of the aggregate of such charges against 
     each such contract for the calendar year,
       ``(2) the amount of the reduction in the investment in each 
     such contract by reason of such charges, and
       ``(3) the name, address, and TIN of the individual who is 
     the holder of each such contract.
       ``(b) Statements to Be Furnished to Persons With Respect to 
     Whom Information Is Required.--Every person required to make 
     a return under subsection (a) shall furnish to each 
     individual whose name is required to be set forth in such 
     return a written statement showing--
       ``(1) the name, address, and phone number of the 
     information contact of the person making the payments, and
       ``(2) the information required to be shown on the return 
     with respect to such individual.

     The written statement required under the preceding sentence 
     shall be furnished to the individual on or before January 31 
     of the year following the calendar year for which the return 
     under subsection (a) was required to be made.''.
       (2) Clerical amendment.--The table of sections for subpart 
     B of part III of subchapter A of such chapter 61 of such Code 
     is amended by adding at the end the following new item:

``Sec. 6050U. Charges or payments for qualified long-term care 
              insurance contracts under combined arrangements.''.

       (e) Treatment of Policy Acquisition Expenses.--Subsection 
     (e) of section 848 of such Code (relating to classification 
     of contracts) is amended by adding at the end the following 
     new paragraph:
       ``(6) Treatment of certain qualified long-term care 
     insurance contract arrangements.--An annuity or life 
     insurance contract which includes a qualified long-term care 
     insurance contract as a part of or a rider on such annuity or 
     life insurance contract shall be treated as a specified 
     insurance contract not described in subparagraph (A) or (B) 
     of subsection (c)(1).''.
       (f) Treatment as Qualified Additional Benefit.--
     Subparagraph (A) of section 7702(f)(5) of such Code (relating 
     to qualified additional benefits) is amended by striking 
     ``or'' at the end of clause (iv), by redesignating clause (v) 
     as clause (vi), and by inserting after clause (iv) the 
     following new clause:
       ``(v) qualified long-term care insurance contract which is 
     a part of or a rider on the contract, or''.
       (g) Effective Dates.--
       (1) In general.--Except as provided by paragraph (2), the 
     amendments made by this section shall apply to contracts 
     issued before, on, or after December 31, 2006, but only with 
     respect to periods beginning after such date.
       (2) Subsection (b).--The amendments made by subsection (b) 
     shall apply with respect to exchanges occurring after 
     December 31, 2006.

     SEC. 1002. DISPOSITION OF UNUSED HEALTH AND DEPENDENT CARE 
                   BENEFITS IN CAFETERIA PLANS AND FLEXIBLE 
                   SPENDING ARRANGEMENTS.

       (a) In General.--Section 125 of the Internal Revenue Code 
     of 1986 (relating to cafeteria plans) is amended by 
     redesignating subsections (h) and (i) as subsections (i) and 
     (j), respectively, and by inserting after subsection (g) the 
     following:
       ``(h) Contributions of Certain Unused Health and Dependent 
     Care Benefits.--
       ``(1) In general.--For purposes of this title, a plan or 
     other arrangement shall not fail to be treated as a cafeteria 
     plan solely because under such plan qualified benefits 
     include--
       ``(A) a health flexible spending arrangement under which 
     not more than $500 of unused benefits under such arrangement 
     may be--
       ``(i) carried forward to the succeeding plan year of such 
     health flexible spending arrangement, or
       ``(ii) to the extent permitted by section 106(d), 
     contributed by the employer to a health savings account (as 
     defined in section 223(d)) maintained for the benefit of the 
     employee, and
       ``(B) a dependent care flexible spending arrangement under 
     which not more than $500 of unused benefits under such 
     arrangement may be carried forward to the succeeding plan 
     year of such dependent care flexible spending arrangement.
       ``(2) Health flexible spending arrangement.--For purposes 
     of this subsection, the term `health flexible spending 
     arrangement' means a flexible spending arrangement (as 
     defined in section 106(c)) that is a qualified benefit and 
     only permits reimbursement for expenses for medical care (as 
     defined in section 213(d)(1), without regard to subparagraphs 
     (C) and (D) thereof).
       ``(3) Dependent care flexible spending arrangement.--For 
     purposes of this subsection, the term `dependent care 
     flexible spending arrangement' means a flexible spending 
     arrangement (as defined in section 106(c)) that is a 
     qualified benefit and only permits reimbursement for expenses 
     for dependent care assistance which meets the requirements of 
     section 129(d).
       ``(4) Unused benefits.--For purposes of this subsection, 
     with respect to an employee, the term `unused benefits' means 
     the excess of--
       ``(A) the maximum amount of reimbursement allowable to the 
     employee for a plan year under a health flexible spending 
     arrangement or the dependent care flexible spending 
     arrangement, as the case may be, over
       ``(B) the actual amount of reimbursement for such year 
     under such arrangement.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. 1003. DISTRIBUTIONS FROM GOVERNMENTAL RETIREMENT PLANS 
                   FOR HEALTH AND LONG-TERM CARE INSURANCE FOR 
                   PUBLIC SAFETY OFFICERS.

       (a) In General.--Section 402 of the Internal Revenue Code 
     of 1986 (relating to taxability of beneficiary of employees' 
     trust) is amended by adding at the end the following new 
     subsection:
       ``(l) Distributions From Governmental Plans for Health and 
     Long-Term Care Insurance.--
       ``(1) In general.--In the case of an employee who is an 
     eligible retired public safety officer who makes the election 
     described in paragraph (6) with respect to any taxable year 
     of such employee, gross income of such employee for such 
     taxable year does not include any distribution from an 
     eligible retirement plan to the extent that the aggregate 
     amount of such distributions does not exceed the amount paid 
     by such employee for qualified health insurance premiums of 
     the employee, his spouse, or dependents (as defined in 
     section 152) for such taxable year.
       ``(2) Limitation.--The amount which may be excluded from 
     gross income for the taxable year by reason of paragraph (1) 
     shall not exceed $5,000.
       ``(3) Distributions must otherwise be includible.--

[[Page 28638]]

       ``(A) In general.--An amount shall be treated as a 
     distribution for purposes of paragraph (1) only to the extent 
     that such amount would be includible in gross income without 
     regard to paragraph (1).
       ``(B) Application of section 72.--Notwithstanding section 
     72, in determining the extent to which an amount is treated 
     as a distribution for purposes of subparagraph (A), the 
     aggregate amounts distributed from an eligible retirement 
     plan in a taxable year (up to the amount excluded under 
     paragraph (1)) shall be treated as includible in gross income 
     (without regard to subparagraph (A)) to the extent that such 
     amount does not exceed the aggregate amount which would have 
     been so includible if all amounts distributed from all 
     eligible retirement plans were treated as 1 contract for 
     purposes of determining the inclusion of such distribution 
     under section 72. Proper adjustments shall be made in 
     applying section 72 to other distributions in such taxable 
     year and subsequent taxable years.
       ``(4) Definitions.--For purposes of this subsection--
       ``(A) Eligible retirement plan.--For purposes of paragraph 
     (1), the term `eligible retirement plan' means a governmental 
     plan (within the meaning of section 414(d)) which is 
     described in clause (iii), (iv), (v), or (vi) of subsection 
     (c)(8)(B).
       ``(B) Eligible retired public safety officer.--The term 
     `eligible retired public safety officer' means an individual 
     who, by reason of disability or attainment of normal 
     retirement age, is separated from service as a public safety 
     officer with the employer who maintains the eligible 
     retirement plan from which distributions subject to paragraph 
     (1) are made.
       ``(C) Public safety officer.--The term `public safety 
     officer' shall have the same meaning given such term by 
     section 1204(8)(A) of the Omnibus Crime Control and Safe 
     Streets Act of 1968 (42 U.S.C. 3796b(8)(A)).
       ``(D) Qualified health insurance premiums.--The term 
     `qualified health insurance premiums' means premiums for 
     coverage for the eligible retired public safety officer, his 
     spouse, and dependents, by an accident or health insurance 
     plan or qualified long-term care insurance contract (as 
     defined in section 7702B(b)).
       ``(5) Special rules.--For purposes of this subsection--
       ``(A) Direct payment to insurer required.--Paragraph (1) 
     shall only apply to a distribution if payment of the premiums 
     is made directly to the provider of the accident or health 
     insurance plan or qualified long-term care insurance contract 
     by deduction from a distribution from the eligible retirement 
     plan.
       ``(B) Related plans treated as 1.--All eligible retirement 
     plans of an employer shall be treated as a single plan.
       ``(6) Election described.--
       ``(A) In general.--For purposes of paragraph (1), an 
     election is described in this paragraph if the election is 
     made by an employee after separation from service with 
     respect to amounts not distributed from an eligible 
     retirement plan to have amounts from such plan distributed in 
     order to pay for qualified health insurance premiums.
       ``(B) Special rule.--A plan shall not be treated as 
     violating the requirements of section 401, or as engaging in 
     a prohibited transaction for purposes of section 503(b), 
     merely because it provides for an election with respect to 
     amounts that are otherwise distributable under the plan or 
     merely because of a distribution made pursuant to an election 
     described in subparagraph (A).
       ``(7) Coordination with medical expense deduction.--The 
     amounts excluded from gross income under paragraph (1) shall 
     not be taken into account under section 213.
       ``(8) Coordination with deduction for health insurance 
     costs of self-employed individuals.--The amounts excluded 
     from gross income under paragraph (1) shall not be taken into 
     account under section 162(l).''.
       (b) Conforming Amendments.--
       (1) Section 403(a) of such Code (relating to taxability of 
     beneficiary under a qualified annuity plan) is amended by 
     inserting after paragraph (1) the following new paragraph:
       ``(2) Special rule for health and long-term care 
     insurance.--To the extent provided in section 402(l), 
     paragraph (1) shall not apply to the amount distributed under 
     the contract which is otherwise includible in gross income 
     under this subsection.''.
       (2) Section 403(b) of such Code (relating to taxability of 
     beneficiary under annuity purchased by section 501(c)(3) 
     organization or public school) is amended by inserting after 
     paragraph (1) the following new paragraph:
       ``(2) Special rule for health and long-term care 
     insurance.--To the extent provided in section 402(l), 
     paragraph (1) shall not apply to the amount distributed under 
     the contract which is otherwise includible in gross income 
     under this subsection.''.
       (3) Section 457(a) of such Code (relating to year of 
     inclusion in gross income) is amended by adding at the end 
     the following new paragraph:
       ``(3) Special rule for health and long-term care 
     insurance.--In the case of a plan of an eligible employer 
     described in subsection (e)(1)(A), to the extent provided in 
     section 402(l), paragraph (1) shall not apply to amounts 
     otherwise includible in gross income under this 
     subsection.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions in taxable years beginning after 
     December 31, 2005.

                      TITLE XI--GENERAL PROVISIONS

     SEC. 1101. PROVISIONS RELATING TO PLAN AMENDMENTS.

       (a) In General.--If this section applies to any pension 
     plan or contract amendment--
       (1) such pension plan or contract shall be treated as being 
     operated in accordance with the terms of the plan during the 
     period described in subsection (b)(2)(A), and
       (2) except as provided by the Secretary of the Treasury, 
     such pension plan shall not fail to meet the requirements of 
     section 411(d)(6) of the Internal Revenue Code of 1986 and 
     section 204(g) of the Employee Retirement Income Security Act 
     of 1974 by reason of such amendment.
       (b) Amendments to Which Section Applies.--
       (1) In general.--This section shall apply to any amendment 
     to any pension plan or annuity contract which is made--
       (A) pursuant to any amendment made by this Act or pursuant 
     to any regulation issued by the Secretary of the Treasury or 
     the Secretary of Labor under this Act, and
       (B) on or before the last day of the first plan year 
     beginning on or after January 1, 2008.

     In the case of a governmental plan (as defined in section 
     414(d) of the Internal Revenue Code of 1986), this paragraph 
     shall be applied by substituting ``2010'' for ``2008''.
       (2) Conditions.--This section shall not apply to any 
     amendment unless--
       (A) during the period--
       (i) beginning on the date the legislative or regulatory 
     amendment described in paragraph (1)(A) takes effect (or in 
     the case of a plan or contract amendment not required by such 
     legislative or regulatory amendment, the effective date 
     specified by the plan), and
       (ii) ending on the date described in paragraph (1)(B) (or, 
     if earlier, the date the plan or contract amendment is 
     adopted),

     the plan or contract is operated as if such plan or contract 
     amendment were in effect; and
       (B) such plan or contract amendment applies retroactively 
     for such period.

  The SPEAKER pro tempore. The gentleman from Ohio (Mr. Boehner), the 
gentleman from California (Mr. George Miller), the gentleman from 
Michigan (Mr. Camp), and the gentleman from New York (Mr. Rangel) each 
will control 22\1/2\ minutes.
  The Chair recognizes the gentleman from Ohio.


                             General Leave

  Mr. BOEHNER. Madam Speaker, I ask unanimous consent that all Members 
may have 5 legislative days within which to revise and extend their 
remarks on H.R. 2830.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Ohio?
  There was no objection.
  Mr. BOEHNER. Madam Speaker, I yield myself such time as I may 
consume.
  Madam Speaker, I will put this as bluntly as I can: our Nation's 
pension laws are outdated and broken and placing at risk the retirement 
security of millions of American workers. Today, we have an opportunity 
to change this by voting for the most comprehensive reforms to worker 
pension laws in more than a generation.
  The Pension Protection Act is the outcome of one of the most thorough 
and remarkable legislative processes I have seen during my years in the 
House. On June 4, 2003, the Committee on Education and the Workforce 
held the first of nearly a dozen hearings on traditional pension plans, 
and from these hearings they have covered a broad set of issues, 
ranging from what is broken to who it has impacted to how we should go 
about fixing it. And, today, we stand ready to debate and vote on the 
product of those 30 months of deliberations.
  There are three key strengths of this bill, and I would like to 
highlight each of those for my colleagues. It is a balanced approach, 
it is comprehensive in nature, and it is a benefit to American 
taxpayers.
  First, the bill's greatest strength is its balanced approach to the 
pension crisis that we face. While some are calling for suffocating 
pension funding rules which would place an incredible burden on 
employers who voluntarily offer retirement benefits, our bill makes 
certain not to tighten the rules so much that employers leave the 
defined benefit system altogether.
  While others call for relaxation of pension rules, our bill ensures 
that employers and unions keep their promises

[[Page 28639]]

to workers and retirees who are counting on their pension benefits. In 
short, our bill aims to shore up the traditional defined benefit 
pension system to which we and our parents have grown accustomed so our 
children and grandchildren might have a chance to be part of it as 
well.
  The second major strength of the Pension Protection Act is inherently 
comprehensive in nature. As you can see on the chart that is next to 
me, the measure would ensure that pensions are fully funded to restore 
worker and retiree confidence; it has enhanced disclosure requirements 
so that workers and retirees are no longer kept in the dark about the 
health of their pensions; it would improve the financial condition of 
the Federal agency charged with ensuring some 30,000 private pension 
plans; it would reform outdated laws that deny workers access to 
professional and secure investment advice while providing even more 
workers with 401(k)-type plans; and it would end sweetheart deals like 
those we have seen at some airlines and other corporations that have 
terminated their plans in which executives enjoy a windfall of cash 
while workers and retirees are left wondering about their futures.
  Incidentally, these five reforms are only the tip of the iceberg. 
There is much more that this bill offers to workers and retirees, far 
more than this chart could ever tell us.
  Finally, yet another strength of this measure is its benefit to 
American taxpayers. Each of us remembers all too well the savings & 
loan bailout of more than a decade ago. By enacting the Pension 
Protection Act, we can be more confident that history will not repeat 
itself with regard to our pension system.
  As you can see on this second chart, the Pension Benefit Guaranty 
Corporation, which ensures nearly 30,000 private worker pensions, is in 
dire financial condition. With some $450 billion in pension plan 
underfunding among financially weak companies looming on the horizon, 
the PBGC's debt could balloon even further than its current $23 
billion.
  Even though no taxpayer funds fund the Pension Benefit Guaranty 
Corporation, could American taxpayers be called upon to bail out the 
agency if its financial condition continues to deteriorate? I think so. 
That is why the Pension Protection Act includes responsible increases 
to employer-paid premiums for the first time since 1991, along with 
substantial reforms to place the defined benefit system on more solid 
ground. For taxpayers who may be left holding the bag otherwise, I 
think this is good news.
  Madam Speaker, throughout this process I have made every effort to 
include my colleagues on both sides of the aisle. And even after my 
Democratic friends voted ``present,'' that is right, they did not vote 
``no,'' they voted ``present,'' when our committee approved the bill 
back in June, I was hopeful that they would join us and the ever-
growing coalition of labor and employer groups in support of these 
reforms.
  However, some of my colleagues have offered nothing more than 
rhetoric based on quirky accounting schemes and purposely skewed 
modeling in an effort to characterize the Pension Protection Act in a 
negative manner. I expect these hollow and misleading arguments will 
continue today as they seek to detract from a debate which they have 
largely been absent from for the last 30 months. It is my sincere hope, 
however, that many of my Democrat colleagues will look beyond the 
rhetoric and support these long-overdue reforms. This bill definitely 
deserves bipartisan support.
  Madam Speaker, the Pension Protection Act would not be before us if 
it were not for the work of my friend, the chairman of the Ways and 
Means Committee, Mr. Thomas; the Employer-Employee Relations 
Subcommittee chair and vice chair, Mr. Johnson and Mr. Kline; my friend 
from Ohio, Mr. Tiberi, a committee colleague who worked tirelessly to 
garner support for the bill; and all of the others on my committee and 
throughout the House who understand how imperative it is to reform our 
Nation's outdated pension laws for the benefit of workers, retirees, 
and taxpayers alike. I thank them for their efforts to bring this bill 
to the floor.
  Madam Speaker, I reserve the balance of my time.
  Mr. RANGEL. Madam Speaker, I yield myself such time as I may consume.
  My colleagues, I do not know how the majority gets away with what 
they do. I do not think that their legislative initiatives are just for 
the legislation, but rather to do away with traditions that have 
existed under Democrat administrations.
  If you have an immigration problem, lock up the immigrants and lock 
up the employers. If you have a health problem, then get rid of 
Medicaid and Medicare and let the private sector resolve the problems. 
If you have a prescription drug problem and you want to subsidize that 
and help out the older people, do not let the Federal Government do it. 
Give the money to the private sector; let them compete and let them do 
it. The Social Security system, if people have relied on their 
government when they get older or disabled, do not let the government 
be involved. Get some private accounts and let them do it.
  Now we are talking about how well the economy is doing: plants are 
closing; people are fearful of losing their jobs; pension plans are 
going busted; and, really, people do not feel nearly as good as the 
Republicans and the President think.
  Now we have a bill before us where these pension plans would be a 
heck of a lot better if we did nothing, rather than do the harm that we 
are about to do to them. The demands that are going to be made on 
employers to reach sometimes the increase of 240 percent in making 
contributions to these plans will cause many of them to drop the plan 
and go into bankruptcy. The whole idea of how much revenue we are going 
to lose, some $70 billion, is not even an issue, if at the end of the 
day enough sweetheart nips and tucks were given to a handful of people 
so that we would be assured that the days of defined benefit pensions 
are just about over.
  Some people will have to make political choices today in terms of 
support of this because there are some vested interest people that need 
short-gain satisfaction. But at the end of the day, the same way people 
regret their votes for the Gulf of Tonkin Resolution, they will have to 
come back and ask did they do more damage than good on today. If you 
look at actuaries and people who have studied this, they realize that 
so few pensions are now protected by the PBGC, and in the future many 
less will be protected.
  So, Madam Speaker, these bills are not brought up just to become law. 
Many of the bills that are coming to this floor are brought to see 
which people are going to vote against the title of the bill and pay a 
price for that at the polls, or whether some are secure enough to vote 
against the substance of the bill that in the long term is going to 
adversely affect our workers.
  At this time with the House permission, I would like to turn the 
balance of my time over to Congressman Ben Cardin from Maryland who has 
spent a lot of time on pensions and can share with the House the 
pitfalls that we have in this bill before the House today.
  I yield the balance of my time to Congressman Cardin.
  The SPEAKER pro tempore. Without objection, the gentleman from 
Maryland will control the balance of the time.
  There was no objection.

                              {time}  1330

  Mr. BOEHNER. Madam Speaker, I yield 4 minutes to the gentleman from 
Texas (Mr. Sam Johnson), the chairman of the Employer-Employee 
Subcommittee of the Education and Workforce Committee.
  Mr. SAM JOHNSON of Texas. Madam Speaker, I have the honor of chairing 
a subcommittee that has jurisdiction over pension law and being an 
original sponsor of the Pension Protection Act. As a member of both the 
Committee on Education and the Workforce and the

[[Page 28640]]

Ways and Means Committee, we have been working for the last 2 years to 
get a pension bill to the House floor, and I am proud to rise in strong 
support of the bill.
  The Pension Protection Act is good and it is tough. Our bill makes 
companies put their money behind their promises and keep employees well 
informed on the health of their pension plans.
  While this bill is tough, it does not go overboard with more red tape 
that has almost killed traditional pension plans. Even with all the red 
tape that currently binds up these pension plans, there still are some 
loopholes in current law that have allowed companies to run away from 
their responsibilities and dump pension promises onto the Pension 
Benefit Guaranty Corporation.
  The PBGC says it is $23 billion in the hole, and they say that, with 
expected terminations, they are close to $28 billion. Our bill will 
tighten up pension laws so that companies making promises to employees 
for their retirement security actually put the money behind their 
promises.
  It is a shame our pension laws have allowed those most directly 
affected, workers and retirees, to be left unaware that there may be 
little money behind the promises of a secure retirement. United 
Airlines' pilots' pension plan was only 30 percent funded when it was 
dumped on the government. Those pilots and their families did not know 
how bad the situation was, and they are the ones that are now trying to 
figure out how to live on one-third of what they had planned to 
receive.
  Our bill requires a company to tell their employees if the pension 
plan is less than 80 percent funded. Employees will now push their 
bosses to put money into the plans to match the promises being made. 
This is a really important reform and should not be minimized.
  Also, not to be underestimated is a provision that will allow for a 
phased retirement of older workers. The provision would allow people to 
continue working, but also collect their employer-based pension after 
the age of 62. Current rules prohibit working for the same employer 
while also collecting a pension today. This prohibition simply forces 
many people to change jobs or work for a competitor or stop working 
altogether. My constituents have been really happy to hear about this 
additional way to step lightly into retirement.
  The bill also helps to modernize the pension law on cash balance 
pension plans. This type of pension plan represents the best chance we 
have at maintaining defined benefit plans in the future. Cash balance 
plans are a better fit than traditional plans with today's mobile 
workforce where employees generally do not stay with one employer for 
their entire career. The bill clarifies that in the future these plans 
are not age discriminatory. We need to provide this certainty. In fact, 
we should go further in providing certainty for plans regardless of 
when they were created, but because of litigation we cannot.
  We need to get this bill through the House and on to conference with 
the Senate and quickly enacted early next year. The number of 
traditional pension plans has been declining rapidly. The companies 
dropping these plans are in two groups. The first group is those that 
do not put their money behind their pension promises and turn their 
liabilities over to the government. We have seen that in the steel and 
airline industries.
  The second group is companies that are just sick of the red tape and 
uncertainty of our laws so they decide to stop offering plans 
altogether, like Verizon announced last week.
  In the many hearings on pension issues we have heard over and over 
again that companies need predictability and stability in their plans. 
We need to get this bill enacted so that companies put their money 
behind their promises so they can plan with certainty in the long term. 
Support this bill.
  Mr. CARDIN. Madam Speaker, I yield myself such time as I may consume.
  Madam Speaker, the objective of this legislation should be to 
encourage the retention and expansion of traditional defined benefit 
plans. Traditional defined benefit plans generally offer a guaranteed 
benefit to the worker and, they are generally well managed and 
diversified. The passage of this bill, in my view, will set up a 
conference report that will come back to us that will accelerate the 
termination of well-funded and managed traditional defined benefit 
plans. And I say that for three reasons.
  Three parts of this legislation will adversely affect well-funded and 
managed plans. First, the funding roles are more costly and more 
restrictive. That in and of itself will act as a disincentive for 
continuation of these plans.
  Second, there is a failure to include relief for the airline 
industry, clearly putting pressure on well-funded and managed plans to 
pick up the costs for other industries, questioning whether they should 
stay and provide these plans.
  Third, we continue to allow companies to go into bankruptcy in order 
to dump their costs onto the PBGC, once again affecting those well-
funded plans that are going to be asked to pick up the tab.
  For all these reasons this legislation is likely to accelerate the 
termination of plans that we would want to see continued. The 
termination of these plans will just adversely affect the funding of 
the PBGC, the guaranteed fund, complicating the situation and making it 
worse.
  Madam Speaker, I want to point out that there are provisions in this 
legislation that are very good. The provisions dealing with the defined 
contribution provisions are needed and, as it was pointed out in the 
Ways and Means Committee, contain many of the provisions that were 
worked on through the Portman-Cardin process as well as legislation 
presented by Mr. Emanuel and Mr. Pomeroy. It includes automatic 
enrollment, the split refunds where tax refunds can go partially into 
retirement savings, the extension of the savers credit, the ability for 
individuals to roll over funds and keep them in retirement funds 
longer.
  All of those are positive aspects. However, when you look at this 
bill in balance, we do need to pass legislation; but on balance this 
legislation will cause more harm than good, and I urge my colleagues to 
reject the bill.
  Madam Speaker, I reserve the balance of my time.
  Mr. BOEHNER. Madam Speaker, I yield 2 minutes to the gentleman from 
California (Mr. McKeon), the chairman of the 21st Century 
Competitiveness Subcommittee.
  Mr. McKEON. Madam Speaker, I rise in strong support of H.R. 2830, and 
I thank Chairmen Boehner and Thomas and Johnson for their great work in 
getting us to this point.
  This bill represents a responsible approach that will protect the 
retirement benefits of millions of American workers and help ensure 
that their pension benefits will be there when they retire.
  In recent years, our important retirement security system has come 
under strain from the increased aging of the workforce and from 
dishonest employers who made promises they could not keep. Many workers 
and retirees have been misled into believing that they will have a 
secure retirement only to see their pension plan terminated due to plan 
underfunding.
  This bill includes reforms to ensure employers more accurately 
measure and fund their short-term and long-term pension promises. It 
includes tough new funding requirements to ensure plans are adequately 
and consistently funded, and it provides meaningful disclosure 
provisions about the financial status of pension benefits.
  In addition, this bill is important to protect taxpayers from a 
multibillion dollar bail-out of the Pension Benefit Guaranty 
Corporation. When the PBGC cannot pay benefit for plans where they have 
assumed planned liabilities, taxpayers are on the hook for the 
difference. In fact, in November the Pension Benefit Guaranty 
Corporation reported a long-term liability deficit of $22.8 billion. 
That is billion with a B.
  The Pension Protection Act will reasonably increase employer-paid 
premiums to help shore up the PBGC and protect taxpayers from this 
potentially large liability.

[[Page 28641]]

  This bill contains commonsense reforms that will help protect the 
pensions of millions of Americans; and this bill is supported by a 
broad array of unions, employers, and other organizations. Passage of 
the Pension Protection Act is important to the retirement security of 
millions of Americans, and it is important to help protect taxpayers 
from an expensive bail-out.
  I strongly urge my colleagues to support this bill.
  Mr. GEORGE MILLER of California. Madam Speaker, I yield myself 5 
minutes.
  Madam Speaker, when we are starting to deal with the pension plans 
that protect America's retirements, one of the things we should do is 
to make a decision not to do any harm. But the fact of the matter is 
that this bill makes things worse in many ways for many pensioners in 
this country and many future pensioners.
  First and foremost, we created the Pension Benefit Guaranty 
Corporation to be there to protect some of the retiree benefits of 
people if pension plans went bust or the corporations went bust. We are 
now told that this legislation makes that problem worse.
  The speaker who was just in the well said there was some $23 billion 
in deficit in that plan. And what we now see is a Pension Benefit 
Guaranty Corporation, the Congressional Budget Office tells us that 
this makes it at least $9 billion worse over the next decade. So while 
we narrow the deficit, in fact we see that we increase this agency's 
deficit problems.
  This is an agency that can look out into the future and can see up to 
$100 billion of liabilities possibly coming their way. Maybe some of 
them will not come because of this bill, but many of them will come 
because of this bill, because this bill, in fact, makes it easier, 
makes it easier to terminate plans. It makes it easier to put plans 
into bankruptcy. It certainly does not make it any more difficult to 
put into bankruptcy as we saw with United Airlines.
  So what does that mean? That means that a plan that was designed, an 
insurance policy that was designed for when companies went out of 
business, now companies can take their pension plans, the retirement 
nest eggs of their workers, and put them into bankruptcy, and the 
company can go merrily on its way. I do not choose that term lightly, 
``merrily on its way,'' because after what we saw after years and 
decades of manipulating the pension plans of United Airlines, about not 
being truthful with the employees, not being truthful with the public, 
not being truthful with the shareholders about their liabilities, they 
put them into bankruptcy. Those workers had given back billions of 
dollars in wage concessions, retirement concessions to try to keep that 
airline afloat. They were not able to because they went into 
bankruptcy.
  Yesterday, we learned that the top executives of that corporation 
have now petitioned the court to distribute $235 million in stock to 
those very same executives that ran this corporation into the ground, 
that they are going to get $235 million in stock. The employees who had 
all of the concessions, all of the cutbacks, the employees are going to 
be required to service, maintain, run and staff those airlines, start 
all over, having fallen and been cast to the floor.
  That is what is wrong with this legislation. It treats those in the 
corporate suites entirely differently than it takes care of the workers 
on the shop floor or on the airlines or in the repair facilities. That 
is the problem with it is that we see that this plan simply does not 
provide the kinds of protections necessary, the kinds of protections 
that are necessary for those employees who have worked so terribly long 
for those corporations, who invested their entire lives in these 
corporations.
  Plus the fact that it also makes it, and we are told by a number of 
the employer groups, this is what makes it more likely that the 
companies will terminate their plans, that they will freeze their 
plans. What does that mean? That means a lots of people who may be 50, 
55 years old today, just as we found out with the cash balance plans, 
this makes it easier to do a cash balance, a lot of people who are 
working today are going to find out that they will not have a 
retirement nest egg that they have been planning on. They will not be 
able to carry out the standard of living that they were anticipating to 
provide for their families.

                              {time}  1345

  That is what this legislation does. It makes those kinds of decisions 
much easier, much easier for the companies to do that.
  What does that mean? That means that America is going to end up with 
a poorer retired population than they had before. That means that these 
people are going to have less of the kind of retirement that they had 
anticipated because of the acceleration of the terminations, because of 
the acceleration of the freezing of the plans and because of the ease 
which you can now go and apparently the acceptability in the business 
community of entering bankruptcy.
  We changed the personal bankruptcy laws in this Congress because we 
said people were using it as a convenience. It is interesting now that 
the corporations have decided they will use it as a convenience to 
redesign themselves, to reconfigure themselves, to reinvent themselves. 
If United Airlines is the model, the only losers will be the workers 
and the retirees in those corporations.
  That is what this legislation does not do. It does not really speak 
to trying to make sure that we could do all that we can to secure the 
retirement of current workers and of future retirees.
  I would urge my colleagues to vote against this legislation when we 
get to that vote and understand that we should not be making the 
problems of America's pensioners even worse than they are today.
  Madam Speaker, we are facing a serious pension crisis that has 
already cost employees across the Nation billions of dollars in lost 
benefits--benefits they were told were ironclad. If you calculate just 
the losses employees suffered in the Nation's four largest pension 
terminations it exceeds $6 billion in earned defined benefit promises.
  Let's be clear what is happening to our retirement system--this Enron 
the sequel. This is Enron 2 with a vengeance. This is a national 
disgrace.
  This bill does absolutely nothing about companies who decide to use 
the Federal Government to dump and run on their promises to employees. 
Exploiting loopholes in our pension and bankruptcy laws, clever lawyers 
have turned a Federal agency that was supposed to be a last resort for 
companies that were closing shop, into a dumping ground for companies 
to ditch unwanted promises to reward investors at the expense of 
employees and taxpayers. So powerful is this gaping hole in our pension 
protections, companies can now exact major wage and benefit concession 
by merely threatening to terminate their pension plan.
  Folks, if you want help fast forward to the new Wal-Mart economy--
this is your bill. If you want to further weaken employees' hand in the 
battle for fair wages and benefits, this is your bill. If you want to 
stand by and watch as companies freeze, downgrade or drop their pension 
plans, this is your bill.
  Last summer thousands of United Airline employees--mechanics, flight 
attendants, and pilots--lost billions in irreplaceable pension savings 
that changed their lives forever. These families--denied the courtesy 
of even a single hearing before the Education and Workforce Committee--
participated in an online hearing Democrats sponsored. Over 1,000 
participated in this unique online hearing and their powerful voices 
were heard.
  They wrote to us about the personal and financial devastation 
resulting from the loss of promised benefits, and the lost opportunity 
to earn future benefits. Listen to Kenneth Schmidt, a long-time 
employee of United from Goodyear, AZ, who wrote:

       Dear Congressmen,
       I had worked for United for 38 years when I retired in 
     February of 2003. My job as a mechanic was always a source of 
     pride to me. I worked midnights for many years, with doing so 
     I missed out on many family gatherings, holidays, etc. This 
     was what I chose to do in life, and I did it with no 
     complaints. But, now I am faced with large cuts to my 
     retirement benefits. My retirement should be a time of taking 
     it easy, traveling, and enjoying my ``Golden Years''. If this 
     cut happens both my wife and I will be forced to reenter the 
     work world, probably full time, if our medical insurance is 
     also affected. This is a sad time in this country for all the 
     workers who are relying on a pension to ease their lives, and 
     make this time relaxing, and enjoyable. The stress that is 
     being created

[[Page 28642]]

     by this turn in events is not healthy for anyone. Please try 
     and help all retirees, and future retirees out of this most 
     unfortunate set of troubles.

  Guess what this bill says to Kenneth Schmidt and the millions of 
future Ken Schmidt's who have suffered from broken pension promises: 
Too bad, tough luck. You're on your own.
  How can it be that tens of thousand of United Airlines employees like 
Ken Schmidt lose billions of dollars in promise benefits, and we do 
nothing? For example, we all know that United Airlines was permitted to 
terminate its flight attendants plans without ever having to show it 
was necessary to continue operating the company. The plan was 
terminated despite the testimony of a government hired economist who 
concluded the United plan was affordable and should be continued. This 
bill does nothing for them. The Democratic substitute--denied by the 
Republican leadership--would have restored the United plan until the 
company showed it couldn't afford it.
  This bill does nothing for thousands of pilots whose benefits are cut 
by half or more by the Federal Government when a plan is terminated. 
When a plan is taken over by the PBGC after termination by its sponsor, 
the PBGC is required by law to impose a heavy penalty of those who 
retire at age 60--even airline pilots who are forced to retire at age 
60 under Federal law. Our substitute fixes this injustice and allows 
pilots to get the same maximum PBGC benefit other workers receive.
  H.R. 2830 rejects the Senate bill provisions that provide urgent 
relief to companies like Delta and Northwest airlines so these 
companies don't terminate their plans. Our Democratic substitute 
includes this urgently needed relief.
  If you want to let the hard-earned pensions of airline employees 
across the Nation crumble into a heap of broken promises like United 
and USAirways, this is your bill.
  Mr. Chairman, the sponsors of H.R. 2830 have referred to it as a 
``pension reform bill.'' They say it will reform the Pension Benefits 
Guaranty Corporation that's already $23 billion in the red and going 
up. And they say it will turn around $450 billion in underfunding 
reported by the Nation's pension plans. In truth, this bill not only 
fails to tackle pension reform, it actually hastens the unraveling of 
the PBGC and defined benefit plans. Here is what the Congressional 
Budget Office says about this bill: ``H.R. 2830 would actually increase 
the PBGC's 10 year net costs by $9 billion, or by about 14 percent 
compared to with what it would be under current policy.'' The PBGC 
found the same--that H.R. 2830 would mean billions more red ink to its 
agency over current law.
  How can a bill be reforming a system if it is increasing the PBGC's 
red ink over current law? It can't, and that's why this bill is a sham.
  This bill also repeals two long-standing, bedrock protections for 
employees that, if permitted to pass, will haunt employees for years to 
come.
  First, this bill overrides discrimination laws against older, 
existing workers for cash balance plans without any transition 
protections. It means that older workers will face up to what the GAO 
calculated would be up to a 50 percent cut in their benefits. These 
angry constituents will be calling the offices of Members of Congress 
in droves--just like thousands of IBM employees who spent years seeking 
to rectify deep cuts in pension benefits from a cash balance 
conversion. They will ask why Congress permitted companies to slash 
their benefits with no transition protections, no option to stay in the 
traditional plans, with no legal recourse. Tough luck to them, 
according to H.R. 2830. By contrast, the bipartisan Senate bill has 
significant protections for older workers, but this bill rejects them 
all.
  This bill is also larded up with lots of special interest perks, but 
none as pernicious as the repeal of the longstanding prohibition on 
conflicted investment advice. Federal pension law has always required 
investment advice to employees to be on the level--free from self-
interested, tainted financial advice. No more. This bill gives a 
sweetheart deal to investment houses by allowing them to offer 
conflicted investment advice to employees so long as they disclose to 
them that fix is in. And of course, it ignores years of mutual fund 
financial scandals involving padded fees and commissions, secret market 
timing, late trading, and more uncovered by the SEC, Elliot Spitzer, 
and other State attorneys general.
  Here is what Arthur Levitt, former SEC chairman, says about the 
Boehner/Thomas investment advice provision.

     . . . I have reservations when . . . advice comes from the 
     very same mutual fund company whose products are for sale to 
     a plans participants. One of my bedrock principles of 
     investing is that advice should come from mutual parties with 
     no axe to grind.

  Financial journalist Jane Bryant Quinn and NY Attorney General Elliot 
Spitzer have also expressed strong opposition to this change.
  It's amazing that we don't lift a finger for the Ken Schmidts of the 
world, but we pull out all the stops to reverse a 30-year bedrock 
protection for employees for mutual funds and investment firms' 
lobbyists.
  By contrast, the Senate bill does not include this repeal and goes 
further to actually strengthen the independent advice employees 
receive.
  This bill does nothing to ensure fair treatment between workers and 
executives. Under this bill, if an employer does not fund its pension 
plan above 80 percent, then the workers get punished by benefit limits. 
What's the penalty for the executives who ran the plan down between 60 
percent and 80 percent? Zero? If an employer does not fund above 60 
percent, the bill requires more benefits limits for workers. For 
executives, only a weak provision for new executive compensation, with 
loopholes that allow the companies to promise future golden parachutes.
  This bill doesn't reform our pensions; it actually hastens the 
pension crisis according to two independent Federal agencies. Rather 
than encouraging companies to keep their defined benefit plan in place, 
it encourages companies to freeze, downgrade or drop their pension 
plans altogether. It gives the green light to companies who want to 
dump and run, and opens new loopholes for mutual funds to steer 
employees into investments that feather their own nests at the expense 
of employees. It overrules age discrimination laws to slash the 
pensions of older workers and other existing employees. And it launches 
new, punishing benefit cuts for employees of underfunded pension plans, 
while letting the very executives who ran the company and the pension 
plan into the ground off the hook. And it does nothing to address the 
urgent crisis of our airline companies and employees--where jobs and 
the hard-earned retirement benefits of hundreds of thousands of 
Americans hang in the balance.
  I urge you to oppose this bill.
  Madam Speaker, I reserve the balance of my time.
  Mr. BOEHNER. Madam Speaker, I yield myself 3 minutes, and I yield to 
the gentleman from Georgia (Mr. Price).
  Mr. PRICE of Georgia. Madam Speaker, would the chairman engage in a 
colloquy with me and my colleague, the gentleman from Minnesota (Mr. 
Kline), concerning the difficulties facing the airline industry, 
particularly in terms of assisting airlines and that they fulfill their 
pension promises to their employees?
  Mr. BOEHNER. I will be happy to do so.
  Mr. PRICE of Georiga. As you and I are both aware, the airline 
industry continues to amass losses as the industry strives to become 
more dynamic, both externally and internally. Losses during the last 4 
years have proven that the business model used by legacy carriers is 
outdated but under duress by high-fuel prices and post-9/11 
repercussions.
  A primary component playing into the equation of legacy carrier 
viability is the pension systems currently in place. The current model 
of defined benefit pension plans and the rules associated with it have 
come under scrutiny as two legacy carriers, making up approximately 20 
percent of the domestic airline market, recently terminated their 
employee pension plans.
  There are no winners when airlines default on their pension plans. 
Employees now are planning for a retirement with a fraction of what 
they were originally promised, and further, the Pension Benefit 
Guaranty Corporation, the government agency and guarantor of all 
pension plans, is put more and more into the red, and taxpayers are 
exposed to greater risk. Eventually, the point will be reached when 
taxpayers have to bail out the PBGC if no action is taken.
  With these concerns in mind, I would ask the chairman to agree to 
work with me and the gentleman from Minnesota (Mr. Kline) to develop a 
process, as the Senate has done, to provide airlines with the 
flexibility needed to fund their defined benefit pension systems over a 
long amortization period. I believe it is critical that we join with 
the Senate in this effort and through the conference process to develop 
final legislation that contains industry-specific reform for the 
airlines.

[[Page 28643]]


  Mr. BOEHNER. Madam Speaker, reclaiming my time, let me thank my 
colleague from Georgia for his work on this issue for lo these many 
months. I know that my colleague from Minnesota (Mr. Kline) has similar 
concerns, and I am happy to yield to him.
  Mr. KLINE. Madam Speaker, I thank the chairman for yielding.
  I would like to echo my colleague from Georgia's comments on this 
important subject. I, too, come from a district full of hardworking 
airline employees that have genuine concerns about the future of their 
pension plan. Throughout this process, I have worked to ensure that we 
address this issue in a way that does two critical things: One, make 
sure airlines can continue to afford participation in their defined 
benefits system; two, support the policy priorities of our committee, 
the Education and the Workforce Committee, in our efforts to protect 
employees by making sure the promises they have been made are backed 
with well-funded pension plans.
  Madam Speaker, I commend the chairman for all his work on this bill 
and ask for his continued good efforts on behalf of the airline 
industry as we go forward.
  Mr. BOEHNER. Madam Speaker, reclaiming my time, as has been the case 
all year, the lines of communication between those of us that are 
interested in this, both on and off the committee, and those on the 
other side of the aisle as well, the lines of communication are open 
and will remain open.
  As we move into conference, the process, I remain committed to 
ensuring that the concerns of all stakeholders involved are addressed 
in a bipartisan fashion as we complete action on comprehensive reforms 
in an expeditious manner.
  I remain committed, as I believe both of my colleagues do, that 
airlines do, and that we need to find a solution that will allow 
airlines to maintain their plans and ensure employees of both plans are 
adequately funded.
  Madam Speaker, I reserve the balance of my time.
  Mr. CARDIN. Madam Speaker, I am pleased to yield 3 minutes to the 
gentleman from Washington (Mr. McDermott).
  Mr. McDERMOTT. Madam Speaker, this bill proves that the Republicans 
are not just after poor people. This pension bill boils down to one 
fundamental principle: The Republicans want all Americans, including 
flight attendants and everybody else out there on a pension, to be 
entirely alone, isolated from the strength and compassion of American 
values.
  I am here to say that this pension bill that forces elderly Americans 
into solitary confinement is abusive, irresponsible and morally 
bankrupt. This whole year has been about doing it to people. Get rid of 
Social Security, privatize it, put them on their own. Medicare: 
Privatize it, put them on their own. Now we have the pension bill: 
Privatize it, put them on their own.
  Take away the union benefit, how will they do it? They are going to 
Boeing. They squeeze Boeing tight, and Boeing flips into 401(k), and 
there goes the pension down the drain.
  Now this raises the question, what is wrong with you people? We 
decided a long time ago in this country that there was strength in 
numbers. We had to do things together. That is why Social Security was 
developed. That is why Medicare was developed.
  The Republican vision articulated in this bill is that America is a 
sinking ship, and the shout is for every man and woman, you are on your 
own.
  They call it an ownership society. You will still have a pension; it 
will be a 401(k). But it really is, you are on your own. If you can 
figure out the market, good luck, baby.
  There are not enough lifeboats in the water, and we know that, and 
everybody is jumping off the ship. In 1980, 40 percent of employers 
provided a pension. Today, only 20 percent do. Now, that is a 50 
percent reduction in 20 years, and the pensions that are provided, 
fewer provide a guaranteed benefit than they used to get.
  So what do we have left? The stark fact is that half of America's 
retirees have less than $15,000 income. Imagine living in the United 
States on $15,000 after working for 45 years. Only 50 percent of 
American households have retirement savings at all, but if they do not 
have a benefit from the pension and their Social Security, which has 
not been ripped away from them, they got nothing.
  Now, half of the households who have savings have an average $385 a 
month. So they get their Social Security, $1,800 a month at the 
maximum, and $385, oh, they are living fat on $2,000 a month.
  The people without any savings are disproportionately poor, have 
nothing except Social Security, and the Republicans, as I say, tried to 
take that away earlier in the year. We beat them on that, and we should 
beat them on this.
  This is the definition of financial freedom that Republicans want for 
Americans: They want riskier pensions and no way for anybody to be sure 
of anything. I urge my colleagues to vote no on this.
  Mr. BOEHNER. Madam Speaker, I am pleased to yield 1\1/2\ minutes to 
the gentleman from Louisiana (Mr. Boustany), a member of our committee.
  Mr. BOUSTANY. Madam Speaker, I rise in strong support of this bill.
  This bill strengthens our Nation's retirement system and comes at a 
critical time as economic conditions are requiring companies to 
confront new challenges.
  This legislation provides steps to help employers plan and manage 
finances accurately, to determine pension liabilities and to ensure 
pensions are funded and benefits are paid.
  I want to discuss an important section of the bill regarding multi-
employer pension plans. Under current law, multi-employer pension plans 
are loosely regulated and have few requirements for timely disclosure 
of information.
  For the first time ever, beneficiaries and contributing employers of 
these multi-employer pension plans will have transparent information to 
make accurate funding decisions. The legislation creates a system for 
identifying financially troubled plans and improving their funding 
status.
  Furthermore, new notice and disclosure requirements will provide 
participants with clearer and more specific financial information. 
Workers and retirees must be provided with an annual update on the 
plan's assets, liabilities, financial condition and funding policies. 
Underfunded plans are required to file financial information with the 
PGBC and provide notice to workers and retirees. Existing financial 
disclosure documents are updated to provide more information, 
particularly about plan mergers and actuarial assumptions.
  Multi-employer plans must notify a contributing employer of their 
withdrawal liability upon request.
  Madam Speaker, I urge colleagues to back this bill and take a very 
important opportunity to put employees' pension plans on a solid 
foundation.
  Mr. GEORGE MILLER of California. Madam Speaker, I yield 2 minutes to 
the gentlewoman from California (Ms. Woolsey).
  Ms. WOOLSEY. Madam Speaker, American workers know that a defined 
pension plan is a promise from their employer, a promise that, when 
they retire, they will receive a benefit they can rely on. In fact, 
they have planned their retirement future on that promise. This bill 
allows companies to break that promise. It allows companies to switch 
midstream to cash balance plans, ignoring that promise to their 
workers.
  These workers have trusted that this benefit will be there. It will 
be there at the end of their service to a company. In fact, these 
workers have quite often given up pay raises or other benefits for 
their retirement security. These pension benefits have been earned. 
They have been promised. They must be honored.
  Actually, earlier this year, the Republican majority tried but failed 
to destroy the Social Security system by going back on their promise to 
every American that at a certain age they would receive a defined 
benefit, a benefit they could count on.

[[Page 28644]]

  Americans overwhelmingly stood up to the Republicans and said Social 
Security is ours, you promised it, we rely on it, you cannot have it.
  So the Republican majority could not take Social Security away from 
Americans with privatization. Now, they are trying to pull the rug out 
from under people who have dedicated their lives working hard for their 
companies.
  Madam Speaker, these workers were promised defined retirement 
benefits. They earned those benefits, and this Congress cannot allow 
companies to go back on their word. We must ensure that these 
hardworking Americans get the pension benefits they have been promised 
that they have earned.
  I urge my colleagues to oppose H.R. 2830. Protect American pensions.
  Mr. BOEHNER. Madam Speaker, I yield myself such time as I may 
consume, and I yield to my colleague the gentleman from Ohio (Mr. 
Tiberi).
  Mr. TIBERI. Madam Speaker, I appreciate the chairman rising to engage 
me in a colloquy.
  I would like to thank both you and Chairman Thomas for your work on 
this bill. As you remember, back during the committee, I spoke about 
shutdown benefits and appreciate the work that you and Chairman Thomas 
have done in the last couple of days to deal with stakeholders in that 
industry. However, the language contained in the bill does not quite go 
far enough, I believe, in helping everybody in every industry.
  Mr. Chairman, as I have told you before, my father worked in the 
manufacturing business as an employee for over 20 years. He was a 
member of the steel workers, and one day when I was in high school, he 
came home and was out of a job, which is traumatic enough, but he was 
also out of a pension.
  Today, employers and employer groups can work together to provide 
shutdown benefits to employees and to families, and my hope is that 
your commitment still stands, as it has, that we will work, 
particularly with the steel industry as we have done with the auto 
industry, to make sure that shutdown benefits remain a vital option for 
employers.
  Mr. BOEHNER. Madam Speaker, reclaiming my time, I would say to my 
colleague that I agree with his comments regarding the importance of 
shutdown benefits to workers who may suddenly find that the plant for 
which they have worked, for 20 years in your father's case, happens to 
be closed.
  I think the gentleman knows that I am troubled by the fact that 
shutdown benefits are often paid from a company's pension plan, despite 
the fact that they are not technically retirement benefits in the true 
sense of the word. These benefits resemble severance-type pay benefits, 
and more importantly, these benefits are not funded.
  But I want to make clear, for the benefit of my colleagues, that our 
bill does not prohibit shutdown benefits, as some have suggested.
  Instead, with further modifications that we have made over the last 
few days, it merely requires that shutdown benefits be paid from 
corporate assets and not pension plan assets, if the pension plan is 
funded at below 80 percent. I think this is an important change, and I 
believe it will help restore the financial integrity of this important 
benefit.
  My colleague from Ohio correctly notes that we still have work to do 
on this issue of shutdown benefits, specifically as it relates to the 
steel industry, and as such, I pledge to him and other Members who may 
have an interest in this as well that on this issue we will continue to 
work on this matter throughout this legislative process.

                              {time}  1400

  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to 
the gentleman from New Jersey (Mr. Andrews).
  Mr. ANDREWS. Mr. Speaker, I am going to vote to send this bill along 
to the conference and vote ``yes'' for two reasons: first, I think the 
bill very wisely includes relief for multi-employer plans, an issue 
that many of us have worked on for a very long period of time. These 
are plans run by small businesses who find large contributions to be 
very stifling to their ability to compete. I think this relief is long 
overdue, and it is the principle reason that I will vote to send the 
bill along to conference.
  The second reason is I think conference will finally be the forum 
where some very serious flaws in the bill can be addressed and 
renegotiated. Mr. Miller's substitute, which unfortunately was not made 
in order under this rule, addresses those flaws.
  First of all, the law makes it far too easy for failed pension plans 
to be dumped into the Pension Benefit Guarantee Corporation. Mr. Miller 
and Mr. Rangel had ideas that would preclude that dumping from 
happening. They ought to be adopted.
  Second, I think the law ought to make it clear that there cannot be 
bias or favoritism in favor of highly compensated people at the expense 
of the rank and file. Mr. Rangel and Mr. Miller's substitute 
accomplishes that. The underlying bill does not.
  These and some other issues, I believe, need to be worked out in the 
conference. I think, unfortunately, they should have been worked out on 
this House floor with a proper rule, but with those reservations I will 
vote to send the bill along to conference.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 1 minute to the 
gentleman from Georgia (Mr. Scott).
  Mr. SCOTT of Georgia. Mr. Speaker, I rise to urge my colleagues to 
vote ``yes'' on this important piece of legislation for several 
reasons. Paramount, it will help an industry that badly needs our help 
at a very critical time, and the only way we can help the airline 
industry is to get it into conference. There are a lot of things that 
may be right with this bill, there a lot of things that may be wrong 
with this bill, but the only answer and the logical and most 
responsible thing that we need to do is to vote ``yes'' and send the 
bill to conference, allow the process to work.
  I appreciate Mr. Miller who has worked very diligently with me and 
understands my concerns. I represent an area that has probably more 
airline employees maybe than any other district. I represent Delta 
Airlines. We all know that Delta Airlines is in a bankruptcy fight, 
fighting for its very life; and the two most critical issues that they 
need help on is doing something to lower the high cost of fuel, which 
we have problems with and how we can do it. There are all kinds of 
questions. But there is one thing we can do, and that is to help them 
with relief of their pension plans. So I urge my colleagues to vote 
``yes'' on this important legislation.
  Mr. Speaker, this is a comprehensive pension reform bill that will 
protect workers' retirement incomes, give companies a longer window to 
make underfunded plans whole, and will help protect U.S. taxpayers from 
taking on the liability associated with future plan terminations.
  Now I'm asking your help to help my people in Georgia.
  One area that remains to be addressed in conference are major 
airlines' pension plans. Delta Air Lines employs thousands of men and 
women in my district who rely now or plan to rely in whole or in part 
on retirement benefits provided by Delta.
  Without a change in current law that allows Delta and other air 
carriers that have defined benefit plan obligations, like Northwest, 
Continental and American, to make their pension payments over a longer 
period of time--20 years--it's certainly a possibility that some or all 
of these plans will be terminated, benefits reduced and liability 
shifted to the taxpayer.
  These carriers want to honor their obligations, but need to be 
equipped with the tools to have a fighting chance to do so. And getting 
this pension bill to conference is our only hope.
  Although we are not addressing this specific need today, I strongly 
support continued pursuit in conference of an airline specific 
provision similar to that passed by the Senate, extending the payment 
period for these carriers to 20 years.
  Help us get this bill to conference. Let's help Delta and all the 
airlines who need our help so much.
  I want to thank Chairman Boehner for your hard work in making this 
reform bill a reality, and look forward to working with the conferees.
  Mr. BOEHNER. Mr. Speaker, I reserve the balance of my time.

[[Page 28645]]


  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to 
the gentleman from Vermont (Mr. Sanders).
  Mr. SANDERS. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  Mr. Speaker, I rise in strong opposition to H.R. 2830, the so-called 
Pension Protection Act. It should be pointed out that H.R. 2830 is 
opposed by AARP, by the Pension Rights Center, and pension advocates 
across the country. While I recognize that the Republican leadership 
included some modest provisions to attract some union support, H.R. 
2830 still has a number of provisions that will jeopardize the 
retirement security of millions of American workers.
  Among other harmful provisions, this bill would legalize age 
discrimination in cash balance pension conversions. Year after year, 
Congress has voted against cash balance pension conversions because of 
the harm they have caused older workers.
  Mr. Speaker, we do not tolerate discrimination in this country based 
on race, gender, religion, or disability; and we must not tolerate 
discrimination based on age with regard to pensions.
  Unfortunately, that is exactly what H.R. 2830 does. According to the 
GAO, cash balance conversions without protections slash the pension 
benefits of an average 50-year-old by $238 a month. Younger workers are 
also hurt. As the GAO reported, a typical 30-year-old would see his or 
her pension benefits slashed by $59 a month under a cash balance 
conversion. H.R. 2830 would legitimize these harmful pension cuts by 
legalizing cash balance conversions without requiring employers to 
protect older workers. That is wrong.
  Mr. Speaker, let me read to you what the AARP and the Pension Rights 
Center have to say about this legislation. According to the AARP: ``We 
cannot support legislation that would clarify the legal status of cash 
balance pension plans without providing protections for older, long-
service workers involved in cash balance plan conversions.''
  I urge a ``no'' vote.
  Mr. CARDIN. Mr. Speaker, I am curious: Is the majority on the Ways 
and Means side going to be using their time or not? Does the gentleman 
know?
  Mr. BOEHNER. I assume so.
  Mr. CARDIN. Can I inquire as to the amount of time that remains on 
all sides?
  The SPEAKER pro tempore (Mr. Latham). The gentleman from Maryland has 
13\1/2\ minutes remaining. The gentleman from Ohio has 3\1/2\ minutes. 
The gentleman from California has 11 minutes remaining.
  Mr. CARDIN. The time for the gentleman from Michigan?
  The SPEAKER pro tempore. The gentleman from Michigan still has 22\1/
2\ minutes remaining.
  Mr. CARDIN. Mr. Speaker, I reserve the balance of my time.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 3 minutes to 
the gentleman from Massachusetts (Mr. Tierney).
  Mr. TIERNEY. Mr. Speaker, I thank the gentleman for yielding me this 
time, and I rise today to oppose H.R. 2830, the so-called Pension 
Protection Act, not because the system certainly does not need to be 
reformed, but because I think this particular vehicle, the way it was 
constructed, actually does damage to what used to be our three-legged 
stool of retirement security.
  We used to rely on pensions; personal savings; and, of course, Social 
Security. We spent a great deal of this past year fighting any efforts 
to privatize Social Security and making sure that we had that leg in 
place. This bill does nothing to enhance personal savings, something 
this Congress ought to be taking up and making sure we do enhance.
  With respect to pensions, we are in need of serious reform, but this 
moves us in the wrong direction. We have millions of Americans who have 
worked and tried to put their houses in order, tried to make sure when 
they retired they had a dignified and comfortable living, but this 
situation shows us over and over again that companies are now finding 
it better for themselves financially to go into bankruptcy, capsize 
their pension responsibilities, and then sometimes coming out more 
profitable for the shareholders and for some of the CEOs but not for 
the rank-and-file workers. This is not fair, it is not right, and it 
certainly is not sound policy for this country.
  In too many instances, these companies are defaulting without first 
having made every possible effort to finance these pension plans and 
making them work. Workers on the other hand have had decades of working 
for companies, providing loyal service, the bargain for which was that 
in the end they would have a guaranteed pension. Many of them had 
forgone wages during the course of their 20, 25, 30 years of service. 
CEOs, however, are still getting golden parachutes. They are getting 
the chance to steer their businesses into court to dump the pension 
plans and come out and still get taken care of handsomely; yet workers 
do not.
  The Congressional Budget Office and the Pension Benefit Guaranty 
Corporation both say that this bill will actually add to the Pension 
Benefit Guaranty Corporation's deficit; that the bill could actually 
chase companies out of the defined benefit system and leave workers 
with fewer choices and plans for retirement than they have now.
  This bill does not seem to do anything to discourage the pension plan 
terminations that threaten workers' retirement security, and it does 
not stop companies from dumping plans in bankruptcy.
  In committee, we offered an amendment that would allow the Pension 
Benefit Guaranty Corporation to intervene earlier, to work with 
companies in making sure they first exhausted all their options for 
making sure the plans survived before permitting them to terminate the 
plans and go into bankruptcy. A substitute for this bill would have 
allowed us to present that notion again.
  Unfortunately, our colleagues on the Republican majority saw fit not 
to allow a substitute amendment so that we could not debate this 
proposal. And I suspect we do not see it here today because it would 
have carried. We would have gotten a majority of people in this Chamber 
to understand that everything should be done that is possible to 
prevent a plan from going into bankruptcy before the plan is actually 
terminated.
  Companies should first have to exhaust every single avenue of 
creative financing in order to save and restore pensions before they 
allow bankruptcy filings. The Pension Benefit Guaranty Corporation does 
have expertise it can lend to companies before it gets to that 
situation.
  For those reasons and many others, Mr. Speaker, I urge we vote 
against this bill and hope we get a better vehicle in the future.
  Mr. BOEHNER. Mr. Speaker, I yield myself the balance of my time.
  As I listen to my colleagues on the other side of the aisle, I have 
to tell you that I am confused. Some of them say the rules that we are 
proposing here are too tough and are going to drive employers out of 
the pension business, while we have some of my colleagues on the other 
side of the aisle saying the rules are not tight enough and we are 
going to create more deficits at the Pension Benefit Guaranty 
Corporation. Ladies and gentlemen, I think the bill is just right.
  Yes, these are better rules that will require companies to better 
fund their plans. They certainly are better than current law. But I do 
not believe they go to the point of driving companies out of the 
defined benefit system.
  My good friend from California believes we are going to drive up the 
deficit. Now, if the rules were not strong enough, I would not have had 
virtually every employer in America who has a defined benefit plan 
beating on my office door complaining about the rules we were 
proposing. I would not have had every labor organization talking to me 
about how do we get this right.
  The fact is, if you look at the chart that we have here, plans must 
meet a 100 percent funding target. That is not the law today. If they 
are in the 80-90 percent range, it is good enough. But then as soon as 
the market turns down or the industry has a bump in the road,

[[Page 28646]]

it is not long before they are under 60 and in deep trouble. So 
requiring plans to be 100 percent funded, I think, is a very good idea.
  Having an interest rate that is commensurate with their liabilities 
is something that we have not done ever. We have had one interest rate 
used to calculate the plan's liabilities. Under this modified yield 
curve proposal, they will have three different interest rates to use 
based on the longevity of their workforce, 0-5 years, 5-20, and those 
employees who will retire after 20 years. It will give us a more 
accurate reflection of the true cost of those plans.
  Third, it requires funding shortfalls to be erased over 7 years. We 
want to give companies time to go from the current rules to these more 
responsible rules; and if we do not have a sufficient transition time, 
what is going to happen is that we are going to create real havoc in 
the marketplace.
  Fourth, it restricts unlimited use of credit balances. We all know 
that the current rules about credit balances are, frankly, some of the 
most irresponsible public policy that I have seen. Beginning to 
restrict the use of those credit balances will, in fact, strengthen 
these plans.
  Fifth, it curves benefit increases for underfunded plans. We all know 
there are plans that were underfunded, severely underfunded, and yet 
increasing benefits at the same time. That is not fair to workers who 
are being given promises that someone has no intention of keeping.
  Last, it shores up the finances of the Pension Benefit Guaranty 
Corporation.
  All of these will bring more funding to company pension plans, it 
will bring more funding to the Pension Benefit Guaranty Corporation, 
and put our pension system for American workers on a stronger 
foundation.

                              {time}  1415

  Why else do I think we are just right? I have a long list of business 
organizations that are supporting this bill and a long list of labor 
organizations that are supporting this bill. It is a balanced bill. I 
urge my colleagues to support it.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield myself 3 
minutes.
  Mr. Speaker, when United Airlines announced it was going to go into 
bankruptcy, the Democratic members of the Committee on Education and 
the Workforce planned an e-hearing so those people who were most 
affected by the termination of that plan and the bankruptcy of that 
company would have an opportunity to talk to their representatives in 
Congress. We were not going to have a hearing on this problem, and 
these people could not come to Washington and testify. So we opened up 
the Internet to them, and we received thousands of replies from people 
telling us their life stories. The amazing thing about it was how many 
of these people were using their retirement to care for another member 
of their family. It could be a spouse with an illness, it could be a 
child, a grandchild, and all of a sudden, half of their pensions were 
evaporated into the bankruptcy of United Airlines.
  Mr. Kenneth Schmidt, a long-time employee of United from Goodyear, 
Arizona, wrote, ``Dear Congressman, I had worked at United for 38 years 
when I retired in February of 2003. My job as a mechanic was always a 
source of pride to me. I worked midnights for many years, and in doing 
so, I missed many of my family gatherings and holidays. This was what I 
chose to do in life, and I did it with no complaints. But now I am 
faced with large cuts in my retirement benefits. My retirement should 
be a time for taking it easy, traveling and enjoying my `golden years.' 
If this cut happens, both my wife and I will be forced to reenter the 
work world, probably full time if our medical insurance is also 
affected. This is a sad time in this country for all the workers who 
are relying on a pension to ease their lives and make this time 
relaxing and enjoyable. The stress that is being created by the turn of 
events is not healthy for anyone. Please try and help all retirees and 
future retirees out of this most unfortunate set of troubles.''
  What the problem is is that this legislation does nothing for the 
Kenneth Schmidts of the world, he and his family. It does nothing to 
keep companies from simply making a business decision that they can 
throw the company into bankruptcy, get rid of the retirement and health 
care obligations to retirees and move along. This is not some unusual 
practice to bring shame upon a company. The steel companies did it. The 
airlines have done it. There is a question of whether the automobile 
industry will go this way.
  It is really not completely about their pensions. It is about a 
decision of a business plan. It is about competition and a change in 
the marketplace. But the fact of the matter is that, at the end of the 
day, there is no showing. United did not have to show that for these 
pension plans they would be a solvent company. In fact, the people from 
the PBGC wrote and said that they thought the flight attendant plan 
could be salvaged, and in fact, maybe the others could. But the 
decision was made and they went into bankruptcy without a hearing on 
that issue.
  Companies should have to exhaust all of their attempts to try to save 
the retirement plans of these Americans, these people who have worked 
hard. Remember, these pension plans, they traded pay. They traded 
health care benefits. They traded vacation days for this pension plan. 
That was the agreement and the guarantee. Now, unilaterally, the 
company gets up and walks away from it.
  And to rub salt into their wounds, there were pilots required by the 
laws of this Nation to retire earlier. They take an additional hit on 
their pension because they are early retirees, not because they wanted 
to stop flying but because the law says they have to retire.
  So we have pension plans that could have been salvaged and people who 
are being punished because of the Federal law in terms of their early 
retirements, and this bill does nothing to fix that.
  We do that in our motion to recommit. We address the concerns of the 
flight attendants. We address the concerns of the early retirees, and 
we address the concerns of the airlines, but it does not do that in the 
majority bill because they want to go off and use those people as 
trading chips, the retirement nest eggs of these hardworking Americans, 
in the conference committee. I urge Members to vote against this 
legislation.
  Mr. CAMP of Michigan. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, H.R. 2830, the Pension Protection Act of 2005 
strengthens retirement security for millions of Americans. Current 
pension funding laws and structures are outdated and threaten the 
financial stability of the pension system. In fact, the Pension Benefit 
Guaranty Corporation, PBGC, the government insurer of pension plans, 
estimates that single employer plans are underfunded by up to $450 
billion.
  Furthermore, an increasing number of companies are using the 
bankruptcy system to dump massively underfunded pension plans on the 
PBGC. Since traditional pensions are a critical component of retirement 
security, it is essential to form law that modernizes and strengthens 
funding rules. H.R. 2830 ensures that companies fulfill their pension 
promises to working people. It requires employers to fully fund their 
pension plans and rectify funding shortfalls more quickly. It also 
ensures that employees receive up-to-date and accurate information 
about their pensions and prevents companies from making future promises 
when they cannot even meet current obligations.
  The bill strikes the right balance in ensuring the plans will begin 
to be more appropriately funded while not being so strict that the 
companies providing pension plans are in danger of having to terminate 
them. To that end, H.R. 2830 provides transition relief to employers, 
giving them time and flexibility to get their pension funding in order.
  In addition, the Ways and Means Committee incorporated into this 
package a number of tax incentives to increase retirement savings for 
Americans. Included in H.R. 2830 are provisions to make permanent the 
savers' credit and the increased contribution

[[Page 28647]]

limits for IRAs and other 401(k) plans. The bill also increases savings 
opportunities for our men and women in combat and provides increased 
pension flexibility for public safety officers, including firefighters, 
policemen and emergency medical service employees.
  Furthermore, this bill provides tax benefits to make health care and 
long-term care more affordable. H.R. 2830 makes permanent bipartisan 
pension improvements established in 2001. While pension reform is a 
difficult area to make adjustments, given the unique needs of each 
employer, this legislation is a fair and balanced package that will 
provide economic security for millions of Americans. It has broad 
support for both the employer and labor communities. I urge my 
colleagues to support this bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. GEORGE MILLER of California. Mr. Speaker, I ask unanimous consent 
to yield the balance of my time to the gentleman from Maryland (Mr. 
Cardin) for his control in this debate.
  The SPEAKER pro tempore (Mr. Latham). Is there objection to the 
request of the gentleman from California?
  There was no objection.
  Mr. CARDIN. Mr. Speaker, I yield 3 minutes to the gentleman from 
Michigan (Mr. Levin), the senior Democrat on the Subcommittee for 
Social Security and who understands retirement security.
  Mr. LEVIN. Mr. Speaker, in a few words, what we need to do is to 
reform our pension system but not to undermine it.
  There is a basic issue here, and I hope Members will pay attention to 
it. We have had in this country in the private sector a system of 
guaranteed monthly benefits under defined pension plans in the private 
sector for millions and millions of people. That has been meaningful.
  What I think is going to happen if this bill becomes law and if it 
were to be combined in conference with provisions in the Senate is 
essentially to undermine defined benefit plans and move us towards what 
are called defined contribution plans, so more and more, everybody will 
rely on a 401(k) instead of the guaranteed benefit in the private 
sector. That shift was tried in Social Security by the majority. It 
failed for good reasons, and now I think there is another effort here 
regarding private pension plans to lead to the same result.
  We asked the Bush administration when they testified before Ways and 
Means, tell us the impact on industry of your proposals. They could not 
tell us. If you look at the chief financial officers, 60 percent of 
them who deal with pension plans essentially say that this yield curve 
of the administration, and there is a modified version of it in this 
bill, would lead to benefit cuts and termination of defined benefit 
plans, and that would affect manufacturing as well as other industries.
  I know there have been some efforts to moderate that. Various people 
have scrambled to try to reduce the potential undermining of defined 
benefit plans through this provision on credit balances, but I want 
everybody to know that that is not likely to work out in the main 
because this Republican bill would discourage companies from doing the 
responsible and sensible thing, advance funding their pension plans to 
free up resources in years when they needed to make big expenditures, 
like rolling out a big product line, and penalize those who would do it 
any way, who would advance funds.
  Look, there are some transition rules, but they are not going to 
basically resolve this issue of whether we are going to maintain, 
strengthen defined benefit plans.
  Now, it is said, look to the conference committee. All I can say is, 
look at the history of conference committees in this institution in 
recent years. What is likely to come out is a bill that would make this 
bill even worse, and even if it did not, what we face with this bill is 
this basic question: Do we want to strengthen defined guaranteed 
pension plans and payments, or are we going to move to everybody on 
their own? I think this House should stand up and say, let us stand up 
for a defined benefit system in this country.
  Mr. CAMP of Michigan. Mr. Speaker, I yield 2 minutes to the gentleman 
from Georgia (Mr. Scott).
  Mr. SCOTT of Georgia. Mr. Speaker, I rise again in support of this 
important legislation. I wanted to get down to this, well, to kind of 
deal with some specifics as to why it is important that we move this 
bill on over into conference.
  First of all, this is a comprehensive pension reform bill that will 
protect workers' retirement incomes. It will give companies a longer 
window to make underfunded plans whole, and it will help protect U.S. 
taxpayers from taking on the liability associated with future plan 
terminations.
  As I mentioned before, Delta Airlines employs thousands of men and 
women in my district, and other airlines, in many of your districts 
throughout this country, rely now or plan to rely in whole or in part 
on retirement benefits provided by Delta. Without a change in current 
law, that will allow Delta and other airline carriers that have defined 
benefit plans and obligations, like Northwest, Continental and 
American, to make their pension payments over a longer period of time, 
20 years, then it is a certainty that some or all of these plans will 
be terminated. Benefits will be reduced, and liabilities will be 
shifted to the taxpayer.
  We have an opportunity with this vehicle today to make sure that does 
not happen. We do not need to extend this liability over to the 
taxpayers. These employers and airline carriers want to honor their 
obligations, their pensions, but they need our help. They need to be 
equipped with the tools just to have a fighting chance to do so.
  Mr. Speaker, let us give our airlines this fighting chance. I know 
that is not the main item on the agenda, but this is the only vehicle 
we have that we can use in conference to fix the situation. I urge 
Members to give us a chance so we can help a very important industry.

                              {time}  1430

  Mr. CARDIN. Mr. Speaker, first let me yield myself 30 seconds to 
point out that I wish we did have provisions in this bill to deal with 
the airline industry, because I think we should. The problem is that we 
do not, and we go to conference with a situation where those who have 
well-funded plans are now likely to be asked to pay because of the 
costs of the airline industry. And let me also point out from Mr. 
Boehner's comment about making the PBGC better funded, if we have a lot 
of terminated plans, it is not going to be better funded. And the 
gentleman brags about a permanent yield curve which is unpredictable to 
business. It would be better to have a corporate bond rate, and I am 
sorry that is not in the legislation.
  Mr. Speaker, I yield 2 minutes to the gentleman from Massachusetts 
(Mr. Neal), a senior members of the Ways and Means Committee and one of 
the leading experts on retirement issues.
  Mr. NEAL of Massachusetts. Mr. Speaker, as the consumer listens to 
this debate, one of the things I believe that they want to understand 
is that the advocates of this legislation, they are the ones that, just 
a year ago, were trying to privatize the Social Security system. They 
wanted to privatize the Social Security system. That should not be 
dismissed. So this bill is now shuttled to the floor, barely a word of 
consideration in the Ways and Means Committee, and the Republicans on 
the Rules Committee would not grant us the opportunity to offer an 
alternative.
  Pensions, like Social Security, should be sacred between the employer 
and the employee. There are few things that matter more than long-term 
security and a guaranteed pension.
  Now, let me give you the schedule of the Ways and Means Committee. We 
found days to discuss a free trade agreement with Bahrain, days to hear 
testimony about Bahrain, a country with 700,000 people. And then we 
took months and months and months, as they attempted to privatize 
Social Security. We spent a disproportionate amount of time, after the 
American people said, and the Wall Street Journal poll today, by the 
way, indicates

[[Page 28648]]

quite clearly how they felt about their privatization plan of Social 
Security. Boy, is that clear. I will bet you on the other side 
everybody has read that poll by now. That was a terrible idea, and this 
is a terrible idea.
  So where do we find ourselves? This legislation will do more harm 
than it will do good. The Committee on Investment of Employee Benefit 
Assets, a group that represents chief investment officers from the 
larger corporations in the country, recently conducted their own survey 
and concluded that if this were to pass, 60 percent of those employers 
would either freeze or terminate their pension plans. Everybody knows 
the most robust debate in America next year is going to take place over 
retirement security. Reject this legislation.
  Mr. CAMP of Michigan. Mr. Speaker, I yield myself 30 seconds just to 
say that we had several hearings on this pension bill in the Ways and 
Mean Committee, including the Select Revenue Subcommittee which I 
chair. Let me just say that the PBGC's analysis shows that funding 
contributions to this end up being lower only in the short term; but, 
actually, starting in 2010, contributions to pension plans will 
increase. And that is because the funding reforms in the bill are 
phased in over 5 years.
  Mr. Speaker, I yield 2 minutes to the gentleman from Pennsylvania 
(Mr. English), a member of the Ways and Means Committee.
  Mr. ENGLISH of Pennsylvania. Mr. Speaker, I particularly want to 
commend the Chairs of the Ways and Means and Education and the 
Workforce Committees for putting together a bill which could finally 
fix the antiquated laws that govern pension plans and protect, at the 
same time, the interests of workers, retirees, and taxpayers.
  What comprehensive pension reform must do and what this bill does for 
the first time in a generation is to significantly shore up pension 
funds through tough funding rules, but without pushing employers into 
termination, bankruptcy, and a multibillion dollar taxpayer bail-out of 
the PBGC.
  But this bill goes beyond reforming pension laws. It also embraces 
new tax policies to encourage savings for retirement. First, the bill 
provides for automatic enrollment into 401(k) plans. While defined 
contribution plans such as 401(k)s have seen increases in participation 
since their inception, our national savings rate now is well below 1 
percent.
  A study by the Vanguard Group projected that enacting the automatic 
enrollment provisions in this bill would boost participation to create 
5.5 million new participants in 401(k) plans.
  The bill also provides for split tax refunds, where taxpayers may 
direct all or part of their tax refund to be deposited into an IRA. 
Recently, we became aware of a pilot project that gave a sampling of 
tax filers the opportunity to split their refunds between a savings 
account and a refund check. Participants deposited $583, on average, 47 
percent, of their refunds into savings accounts. Most significantly, 75 
percent of these individuals had no prior savings. These results speak 
for themselves.
  As cochairman of the Savings and Ownership Caucus, I believe that 
reaching out and empowering working families is essential to increasing 
the country's savings rate and ultimately to improve on our trade 
balance, strengthening our economy and providing a growth path for the 
American future. I urge a ``yes'' vote on this pro-worker, pro-retiree, 
pro-savings legislation.
  Mr. CARDIN. Mr. Speaker, I yield 3 minutes to the gentleman from 
North Dakota (Mr. Pomeroy), one of the leaders in the Ways and Means 
Committee on pension issues, the former insurance commissioner from 
North Dakota.
  Mr. POMEROY. Mr. Speaker, there are two major problems with this 
bill. The first is that it costs $70 billion and the costs are not paid 
for, not offset anywhere. It drives the deficit deeper.
  Last week, this Chamber voted to deal with the AMT 1-year fix, $31 
billion. The majority voted to pass a budget reconciliation that added 
another $56 billion in deficit. This adds an additional $70 billion in 
deficit. $177 billion in deeper deficits.
  You know, it is Christmastime. People are thinking what to give their 
children. Well, the majority seems intent on giving them quite a 
present indeed, $177 billion deeper deficit going on top of $8 trillion 
of debt.
  The second aspect of this bill that I want to point out is that it is 
deeply flawed pension policy, and it will cause the cancellation, 
freezing of thousands of plans affecting millions of workers.
  Do not take my word for it. This is the estimate of the chief 
investment officers in an organization known as CIVA. They estimate 
that if this bill passes, 60 percent of the plans will freeze. Frozen 
plans mean frozen benefits. And we do not know, the rest may freeze as 
well. They conclude: ``These proposals would have long-term 
consequences for current and future workers with the potential to 
damage the retirement security of millions of Americans.'' Potential to 
damage the retirement security of millions of Americans.
  We have seen this story before. This is a group that worked for 
months to privatize Social Security, take away that monthly dependable 
income our seniors enjoy. Well, they failed on that one. Now they are 
after pensions, and without question this will dismantle pensions in 
the very same way they tried to dismantle Social Security.
  Now, several groups are for this bill. Why? Well, airlines are so 
desperate for a fix they are arguing for this bill even though it has 
no provisions for airlines. I was stunned when the chairman announced 
in a colloquy his lines of communication are open. Well, Mr. Chairman, 
people have been calling. Airlines have been calling. Hello. Advocates 
for airlines, worrying about their workers have been calling. Hello, 
Northwest Airlines has been calling. Hello. Delta Airlines, calling. 
Hello. No answer. No answer from the majority. And so someone that 
supports an airline urged to vote for this bill when the provision is 
utterly left out, it makes no sense. You do not help airlines with this 
proposal. The Democrats had an alternative that had airline relief in 
it. It was not even allowed for consideration.
  You think you are going to be treated fairly in conference committee. 
The administration opposes airline relief. The chairman has spoken out 
against airline relief. There is nothing in the bill for airline 
relief. They are hoping against hope that something will be done. They 
deserve so much more than that.
  I believe that this bill is deeply flawed pension policy. It will 
hurt workers. Vote ``no.''
  Mr. CAMP of Michigan. Mr. Speaker, I yield 2 minutes to the gentleman 
from Minnesota (Mr. Ramstad), a distinguished member of the Ways and 
Means Committee.
  Mr. RAMSTAD. Mr. Speaker, I strongly support this important 
legislation to address pending funding issues for America's workers, 
and I applaud the work of Chairman Thomas and Chairman Boehner on this 
bill.
  As my friend from North Dakota, on the other side of the aisle, just 
pointed out, relief for the pension plans of America's struggling 
airlines is not in the current House bill. Certainly important to my 
district, but I have been assured, Mr. Speaker, that as this bill moves 
to conference with the Senate version, the special challenges facing 
airlines will be addressed. It is important to the people of my 
district. Northwest Airlines is the largest employer in the Third 
Congressional District of Minnesota, and thousands of Northwest 
employees are counting on Congress to rescue their pension plan. No one 
wants to see another pension plan fail and be turned over to the 
Pension Benefit Guarantee Corporation.
  Northwest Airlines is struggling to emerge from bankruptcy and is 
trying to do the right thing for its employees by maintaining its 
pension plan. So as this bill moves through the process, I agree, we 
must provide relief to this fragile industry. But we must pass this 
bill today to get it to conference so we can take care of the airlines. 
We must act today by passing this bill so employees can get the 
benefits they were promised and so the PBGC and taxpayers will not be 
on the hook. So let

[[Page 28649]]

 us pass this bill, get it to conference, address the airlines' pension 
problems in conference, and get this bill to the President before we go 
home for the holidays.
  Mr. CARDIN. Mr. Speaker, I reserve the balance of my time.
  Mr. CAMP of Michigan. Mr. Speaker, I yield 2 minutes to the gentleman 
from Indiana (Mr. Chocola), a distinguished member of the Ways and 
Means Committee.
  Mr. CHOCOLA. Mr. Speaker, it is because of today's outdated pension 
rules, workers, retirees and taxpayers all stand to lose unless we act 
now to reform our pension system. Under current law, employers have 
been allowed to underestimate their future pension liabilities and to 
make promises they simply cannot keep. The recent example of United 
Airlines underscores the need for reform. United Pilots Plan was 
severely underfunded, yet the company was not required to make cash 
contributions to that plan in 8 years prior to its termination.
  The legislation before us today strikes a careful balance between 
preserving the defined benefit pension system for workers and ensuring 
that employers properly fund their plans. This bill provides workers 
with meaningful disclosure about the status of their pensions, and it 
protects taxpayers from a possible multibillion dollar bail-out of the 
PBGC, which insures the pensions of some 44 million workers.
  But H.R. 2830 contains other important provisions aimed at improving 
the economic security of retired Americans. For example, it provides 
retired firefighters and police officers, who often retire early 
without Medicare coverage, with a tax break on pension withdrawals to 
pay for health insurance premiums. This provision enjoys strong 
bipartisan support and offers a small measure to protect against 
exorbitant health care costs that follow a career spent responding to 
emergencies.
  All together, Mr. Speaker, this bill represents a balanced approach 
to protecting the interest of workers, retirees and taxpayers, and I 
urge my colleagues to support its passage.
  Mr. CAMP of Michigan. Mr. Speaker, I yield 2 minutes to the 
gentlewoman from Michigan (Mrs. Miller).
  Mrs. MILLER of Michigan. Mr. Speaker, when this issue first came to 
the floor, I was very concerned, certainly, about how it dealt with 
some of our manufacturing companies and our workers as well. So many 
people in my district have worked a lifetime to secure a good pension 
to help them in their retirement years. They perform jobs that are 
difficult on them, both physically and mentally; and they have earned 
their pension.
  In Michigan we have so many workers in the airline industry, because, 
of course, Detroit is the hub for Northwest Airlines. But we obviously 
also have a huge number of auto workers because of the Big Three and 
the numerous suppliers to the auto industry that reside there.
  Northwest Airlines supports this legislation, as does Continental 
Airlines, American Airlines, Delta Airlines. So you might think, well, 
it must be bad for the airline workers then, right? But the bill is 
actually supported by the Airline Pilots Association and the 
Association of Flight Attendants. So both management and labor do 
support this bill.
  This bill is also supported by General Motors and even the Delphi 
Corporation. So you might think it might be bad for auto workers, 
right? Well, it is actually also supported by the United Auto Workers 
Union. In fact, it is also supported by the Affiliated Unions of the 
Building and Construction Trades Department of the AFL-CIO, the 
Bricklayers and Allied Craft Workers, the Transport Workers Union, the 
United Brotherhood of Carpenters and Joiners, and the United Food and 
Commercial Workers Union.

                              {time}  1445

  It is also supported by the U.S. Chamber of Commerce and the Business 
Roundtable. Any bill that acquires the support of business and labor 
must be doing something right in today's economy and this climate.
  I think we have crafted an excellent piece of legislation. It does 
what needs to be done: It protects workers pensions. Let us pass this 
legislation. Let us get it into conference with the Senate, and let us 
get on with the job of ensuring that workers are secure in the 
knowledge that the pension that they have worked so hard to get will be 
there when they retire.
  Mr. CARDIN. Mr. Speaker, I yield 1 minute to the gentleman from Texas 
(Mr. Doggett), a distinguished member of the Ways and Means Committee.
  Mr. DOGGETT. Mr. Speaker, in Texas, gray skies could mean a twister, 
a hurricane, or just a lot of rain. To avoid disaster, we want a 
reliable weather forecast. The same when we go to the doctor, a 
diagnosis before taking necessary action. And the same should also be 
true of our economic health.
  Families that work hard to earn a pension depend on it for retirement 
security. But too many suddenly find that their pension funds are 
drained, denying them of the dignified and comfortable retirement for 
which they have worked a lifetime.
  In addition to the many other problems identified here today by my 
Democratic Ways and Means colleagues, this bill lacks a pension 
disclosure requirement that would empower workers to understand just 
how strong or weak their pension plans really are. Having to wait until 
a retirement fund's bankruptcy is announced in the newspaper is a 
little too late for employees to take any remedial action to be able to 
protect themselves.
  Both the Government Accountability Office and the Pension Benefit 
Guaranty Corporation recommend that employees be provided information 
far beyond the provisions of this bill. I think it is important that we 
not leave the employees in the dark with corporate employers blocking 
the light switch.
  A majority of the House voted to allow the Federal Government to comb 
through library records yesterday. Why can employees not be allowed 
full access to their own pension information today?
  Mr. CAMP of Michigan. Mr. Speaker, I yield 2 minutes to the gentleman 
from Delaware (Mr. Castle).
  Mr. CASTLE. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  I would like to offer my support also for the comprehensive pension 
reform legislation that we are now considering. I would also like to 
congratulate and thank Chairman Boehner and Chairman Thomas for their 
hard work in getting us to a point where we can make meaningful and 
necessary reforms to our pension system.
  It has become very clear to us that the laws governing pension plans 
are antiquated. This is evident from recent high-profile bankruptcies, 
pension plan terminations and the Pension Benefit Guaranty 
Corporation's, PBGC, latest report of a $22.8 billion long-term 
deficit. It would be criminal if Congress were to ignore these 
instances and not do something to protect the interests of workers, 
retirees and taxpayers alike.
  As we have all heard here this afternoon, H.R. 2830 will strengthen 
pension plan funding rules, provide workers with meaningful disclosure 
about the health of their pension plans and protect taxpayers from a 
possible multi-billion dollar bailout of the PBGC. I would like to 
highlight a couple of provisions within the bill that I believe are 
also vital to the health of the system.
  First, many workers and retirees in recent years mistakenly believed 
that their pension plans were well funded only to receive a shock when 
the plan was terminated. Without basic information, workers and 
retirees are left without the most basic tool they need to hold their 
employers accountable: complete and accurate information about the true 
funded status of their pension plans. The Pension Protection Act 
ensures workers and retirees are given timely, accurate and 
straightforward information about the health of their plans and thus 
their own financial future. It is my belief that requiring transparency 
is one of the most important things that Congress can do for employees.

[[Page 28650]]

  Second, when pension plans are underfunded and worker retirement 
security is in jeopardy, excessive executive compensation packages can 
add insult to injury by heaping lavish benefits on executives while 
workers and retirees wonder if they will have any retirement benefit at 
all. The Pension Protection Act restricts the funding of such executive 
compensation arrangements if an employer has a severely underfunded 
plan. Moreover, it requires plans that become subject to these 
limitations to notify affected workers and retirees.
  Again, I thank the chairmen for their leadership, and I urge my 
colleagues to support the Pension Protection Act.
  Mr. CAMP of Michigan. Mr. Speaker, I yield 2 minutes to the gentleman 
from Wisconsin (Mr. Ryan), a distinguished member of the Ways and Means 
Committee.
  Mr. RYAN of Wisconsin. Mr. Speaker, I thank the gentleman for 
yielding me this time.
  Mr. Speaker, I cannot think of anything more scary, anything worse 
than working one's lifetime, working hard every day and then seeing 
their pension go before them, seeing their pension get terminated. That 
is the worst possible thing that could happen to a worker and to a 
family.
  We have a system that needs fixing, Mr. Speaker. We have a pension 
system that has some loopholes where companies could not put money in 
their pension plan when they needed to, to make them funded, and then 
we have a system that disincentivizes companies from putting more money 
in their pension plan to prefund the workers and employees when they 
have one and they have the will to do so. That is wrong, and that needs 
to be fixed.
  Yet, on the other hand, Mr. Speaker, as this legislation was being 
drafted, we want to make sure we get to a time where companies fully 
fund their workers' pensions. Getting to that transition was difficult, 
and I want to thank the chairman of the Ways and Means Committee, Mr. 
Thomas; the chairman of the Education and the Workforce Committee, Mr. 
Boehner, for working with us to address our concerns specifically on 
behalf of the auto sector. Because of this, the issues surrounding 
credit balances, plant shutdown benefits and those things that were 
raised by the auto sector, by the UAW, have been addressed in this 
legislation, are being addressed in this manager's amendment.
  I opposed this bill in committee. I was the only Republican to do so. 
But, Mr. Speaker, we have fixed this legislation. This legislation is 
good for labor. This legislation is good for management. But, most 
importantly, this legislation is good to the employees and the workers 
of America.
  I encourage and I ask for a yes vote on this bill because it is 
fixed. It is good, and it should pass.
  Mr. CARDIN. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
Ohio (Mrs. Jones), distinguished member of the Ways and Means 
Committee.
  Mrs. JONES of Ohio. Mr. Speaker, I thank the gentleman for yielding 
me this time.
  The prior speaker said we have fixed it. Well, if it is fixed, why 
are the airlines not included in the legislation?
  I have been on the floor of the House ever since I came here. My 
daddy worked for United for 40 years. My sister worked for United for 
25 years. My brother-in-law worked for United for 27 years. My niece 
works for United right now. If we are so concerned about them, why is 
it not in the legislation?
  Secondly, if we fixed it, why is it unclear what happens with cash 
balance plans that are already in place and the IRS has not given them 
a decision? We go prospectively, but we do not go retroactively.
  In the City of Cleveland, there are four companies that went into a 
cash balance plan, and cash balance plans are the wave of the future. 
People want portability. They are not going to work for United, like my 
dad, for 40 years. They are going to work one place 7 years. They are 
going to work somewhere else 7 years, and they need to move their money 
around. It is the wave of the future, and we have not fixed cash 
balance plans. And I encourage my colleagues to fix it. If they are 
saying we fixed it, fix it right now.
  I want to encourage Mr. Boehner, Mr. Thomas, Mr. Camp and everyone 
else: Do not tell us we are going to fix it in conference. Put it in 
the bill. I would like to see it in writing. I want to see it in red, 
black, blue, brown, whatever color you want to give it to me. Our 
promises are idle if it is not in writing. I want this legislation to 
work for Americans because people do deserve certainty. They deserve 
certainty. Employers who went into a plan, they even paid up for their 
employees to deal with the issue of wear-away, and they cannot get 
clarity on the programs that they have in place right now. Help them. 
Fix it.
  Mr. CAMP of Michigan. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I yield to the gentleman from Minnesota (Mr. Kennedy) 
for the purpose of a colloquy.
  Mr. KENNEDY of Minnesota. Mr. Speaker, I believe that section 122 of 
this bill is an important public policy statement that says corporate 
executives who are not properly funding the pension plans of their 
employees should not be feathering their own nests with overly generous 
retirement packages. Currently, the bill penalizes employers who fund 
executive compensation if the sponsor's employee defined plans are less 
than 60 percent funded. My concern is that by setting this threshold 
too low, we are not discouraging them enough from being irresponsible 
with the retirement security of their employees while they take care of 
their own retirement packages.
  I ask the chairman to work with me in conference to increase the 
threshold to at least 80 percent so that we encourage executives to 
take their pension funding obligations more seriously, not leave their 
defined benefit plan beneficiaries and, indeed, the PBGC and taxpayers 
on the hook.
  Mr. CAMP of Michigan. Mr. Speaker, reclaiming my time, I would just 
say to the gentleman, as chairman of the Select Revenue Measures 
Subcommittee of Ways and Means, I look forward to working with him on 
this and other issues as this legislation moves through the process and 
to conference.
  Mr. KENNEDY of Minnesota. Mr. Speaker, I thank the gentleman for his 
response.
  Mr. CAMP of Michigan. Mr. Speaker, I yield 2 minutes to the 
gentlewoman from Pennsylvania (Ms. Hart), a distinguished member of the 
Ways and Means Committee.
  Ms. HART. Mr. Speaker, I thank the subcommittee chairman, Mr. Camp, 
and my colleagues for working so hard on this bill, along with our 
chairman and chairman of the Education and the Workforce Committee. 
Without their urging, this bill would not be on the floor today, and 
this bill is so extremely important, especially to constituents in my 
district.
  Over the last year, I have met with employees, union members, covered 
by both multi-employer and single-employer plans, also with the 
employers to discuss their concerns regarding pensions. Pension 
protection continues to be their top issue. Many of my constituents 
have faced challenges to their pensions with companies like U.S. 
Airways filing for bankruptcy or others turning their plans over to the 
Pension Benefit Guaranty Corporation.
  This bill would establish sensible funding rules, requiring employers 
to fund 100 percent of their pension liabilities. In this bill, fair 
consideration is given to those plans which need to catch up, but 
funding shortfalls must be made up within 7 years. Also, employers are 
urged to increase their pension contributions during profitable years, 
which they cannot currently do freely under the present rules.
  In addition, the bill encourages greater transparency so that 
employees know the status and financial health of their own company's 
pension plan. Ultimately, this is their own retirement financing. They 
have a right to know. These requirements will create more stability and 
certainty in these pension plans.
  This bill also prohibits employers from funding golden parachute 
executive compensation plans if the pension plans of the rank and file 
are underfunded. U.S. Airways executives

[[Page 28651]]

walked away with $35 million in executive compensation after running 
the company nearly into the ground and dragging concessions out of 
their employees, including reductions in pension benefits for pilots 
and leaving other employees in the dark about the funding of their 
pension plans. This is unfair to the hardworking employees of these 
companies, and this bill would prevent such a travesty in the future.
  Finally, this bill encourages additional retirement savings by 
extending and improving incentives to save. The bill makes permanent 
provisions passed in 2001 to increase annual contributions to IRAs and 
qualified pension plans and ``catch-up'' contributions for individuals 
over 50.
  I hope my colleagues will support this legislation because it finally 
gives employees what they need: stability in their retirement.
  Mr. CARDIN. Mr. Speaker, I yield 2 minutes to the gentleman from 
Illinois (Mr. Emanuel), whose provisions are in this bill concerning 
split refunds and automatic enrollment and other issues that he has 
brought to the table.
  Mr. EMANUEL. Mr. Speaker, this legislation is a missed opportunity.
  As my colleague from Maryland just noted, I have sponsored 
legislation on the automatic enrollment and 401(k) plans, direct 
deposit of tax savings into a savings plan, and the savers credit for 
people with moderate income, to start saving. Why? Because basically 
almost 80 percent of small business employees have no retirement plan 
outside of Social Security. For approximately 38 percent of the 
households in America, the only savings plan they have is Social 
Security.
  By doing what is right, by helping people start up their personal 
savings through 401(k)s and other types of personal savings, we would 
actually encourage people to save for their retirement. So this 
legislation on the defined contribution level takes the right step. And 
it is so unfortunate because we can get an overwhelming vote for those 
provisions to help Americans save outside of Social Security. And I am 
glad we took this year to stop the privatization of Social Security. 
But in doing that, they have added the provisions on the defined 
benefit plans. On a stand-alone, none of that would pass. So what they 
are trying to do is get the goods through Customs using the defined 
contributions to get through what I think are some very dangerous 
provisions as it relates to the defined benefit plans for millions of 
workers who have basically negotiated a deal with their employers. 
Because what does this legislation do?

                              {time}  1500

  It makes a bad situation worse.
  The PBGC and the Congressional Budget Office have estimated that in 
fact $9 billion in defaulted plans would be left on the taxpayers. We 
started 3 years ago with the PBGC, which guarantees all retirement 
plans in this country, with a surplus. Today, we are running a deficit, 
and this legislation would make that situation worse. As the old saying 
goes, when you are in a hole stop digging. This legislation would dig 
even faster.
  Companies, and we know them all, we have seen the stories, are using 
our bankruptcy laws to literally dump their pension systems, and it is 
a backdoor to walk out of their obligation. This legislation does 
nothing to stop companies from dumping their plans, and it does not 
ensure fairness between workers and executives. So while there are good 
provisions that relate to the defined contributions, it makes the 
defined benefit plans much worse.
  Mr. CAMP of Michigan. Mr. Speaker, I yield myself 2 minutes.
  Mr. Speaker, pension reform is more than just an accounting issue; it 
is about protecting the trust between employers and their employees. It 
is critical for Congress to address this issue and step in and fix 
rules that no longer work. Many businesses are complying with pension 
laws. However, the current system is too weak, and many companies have 
plans that are underfunded. It is time for Congress to step in and 
reform single-employer pension plans, multi-employer plans, improve 
disclosure and enhance retirement savings. The bill before us achieves 
these goals.
  The pension bill requires companies to accurately measure how much to 
contribute to their plans and how much they owe.
  This bill also protects shutdown benefits. Those are benefits that 
are paid to workers who are being laid off because of a plant closing. 
These benefits are critical to help older workers affected by corporate 
downsizing. It is imperative that well-funded plans be able to continue 
to provide their workers with shutdown double benefits, and I am glad 
this Pension Protection Act preserves this important pension security 
tool.
  The strength of multi-employer pension plans is critical to the 
retirement security of many Americans. Approximately 1,600 multi-
employer plans cover about 9.8 working people in the United States. 
Multi-employer plans, like single-employer plans, cannot simply be 
turned over to the PBGC. Therefore, it is even more important to those 
involved that these plans are properly funded.
  This bill strengthens the solvency of multi-employer defined pension 
benefit plans by providing trustees with the tools to fix the plan's 
financial situation. The bill requires trustees to adopt rehabilitation 
plans for critically funded pensions and protects employers from 
defaulting on their promises.
  One important provision of this bill, and perhaps one of the least 
mentioned, is regarding disclosure requirements. The bill would give 
retirees and employees better information on the financial condition of 
their plan. Now workers will be sent information from their plan's 
sponsor and the plan's ratio of assets to liabilities, the plan's 
funding and asset allocation policies and other critical information.
  While protecting pensions is a focus of this legislation, the bill 
does much more than that. It includes new opportunities for people to 
prepare for their retirement and bolster their savings. The bill 
provides individuals with new insurance products that help Americans 
better afford long-term health care costs.
  I applaud the work of Chairman Thomas and Chairman Boehner and urge 
support of this bill.
  Mr. CARDIN. Mr. Speaker, I yield myself the balance of my time.
  Mr. Speaker, I am sure that people who are watching this debate are 
somewhat confused about some of the technical provisions that we have 
talked about on the funding of a guaranteed fund. But let me try to 
simplify it.
  The bottom line is that the total changes that are being suggested 
make it more rigid and less predictable for those companies that have 
traditional pension plans as to how much money they have to put into 
the guaranteed fund. Understand that the guaranteed fund is funded by 
the companies making contributions to the guaranteed fund. It is not 
funded by the government.
  So if you have a plan that is well-funded and you are now being told 
it is going to cost you more to stay in that plan, there is an 
incentive for you to freeze your plan or to leave. That is what is 
going to happen, and that is why we are very concerned about many 
people losing their traditional pension plans as a result of this 
legislation.
  The second point, let me point out, is that many Members have been 
talking about the airline industry and to try to help the airline 
industry. I pointed out that I think we should do that. We should do 
that because, A, it will allow the guaranteed fund to concentrate on 
other plans, and companies will not arbitrarily cancel their plans 
because they are afraid they are going to be stuck with the costs of 
bailing out the airline industry. That makes sense. But we are told: We 
are going to do that in conference, trust us.
  We are the legislative body. We should do it. How do we know what is 
going to come out of conference? It is our responsibility to make sure 
it is done. We made some changes for the auto industry. Why have we not 
brought in those provisions? It is our responsibility to do it.
  And I haven't heard anyone talk about how we are going to correct the 
problem of an industry going into bankruptcy in order to save their

[[Page 28652]]

costs. Is there any hope that that will come out of conference? I doubt 
it.
  We can do better. I urge my colleagues to reject this bill.
  Mr. CAMP of Michigan. Mr. Speaker, I yield the balance of my time to 
the distinguished chairman of the Education and Workforce Committee, 
the gentleman from Ohio (Mr. Boehner).
  The SPEAKER pro tempore (Mr. Latham). The gentleman from Ohio is 
recognized for 3 minutes.
  Mr. BOEHNER. Let me thank my colleague and my friend and classmate, 
Mr. Camp, for yielding me time, and thank all of my colleagues for what 
I think has been a very healthy debate today about how we strengthen 
America's pension system.
  We have heard Members argue that the bill that we are bringing before 
us is too difficult, that we will force companies out of pension plans 
and leave their employees hanging; while others have argued that the 
rules are not tough enough, and we are keeping the door open to 
irresponsible practices.
  I truly do believe that we have a bill that is balanced, that will 
not push employers who have these plans out of the system and will 
protect American workers who have been promised these benefits.
  If we do not act, we know exactly what is going to happen: Millions 
and millions more Americans are going to lose an opportunity for a 
defined benefit pension plan, and millions of Americans who already 
have one are going to be at risk that they will not have their plan. So 
Congress must act.
  Not only did we deal with single-employer pension plans, but we have 
not talked much about multiple-employer pension plans that you find 
traditionally in the trucking industry, the food industry and others. 
And while they have not been talked about much today in this debate and 
the administration did not propose changes, there are serious changes 
to the multi-employer pension system in this plan that will help 
strengthen that system.
  Those plans, by and large, are healthier than single-employer plans, 
and we have labor and management on both sides in the multi-employer 
sector come together to put rules in place so that their plans can 
never get into a very weakly funded position. I am glad they are in the 
bill.
  Lastly, let me point out that there are large numbers of groups 
supporting this bill. Every major labor organization, with the 
exception of several, is supporting this bill. Many in the management 
sector in every large business organization is supporting this bill. 
Why would all of the labor organizations and the business organizations 
all be on board in support of this bill? Because they think it is 
balanced. They think it is the right thing to do, and they know that 
Congress needs to act.
  Is everything perfect in the bill? No. As the gentleman pointed out, 
we have got airline relief that we will probably be talking about again 
soon. Our commitment is to deal with this in conference.
  My colleague from Ohio talked about the need to go further on cash 
balance language. I certainly agree with her. There are 7 million 
Americans who have cash balance plans or other types of hybrid plans. 
We need to provide legal certainty for those who have converted to a 
cash balance plan so that we do not put in jeopardy the 7 million 
Americans counting on benefits from those plans.
  We have a good bill. I would urge my colleagues to support it.
  Ms. MILLENDER-McDONALD. Mr. Speaker, I rise in strong opposition to 
the Pension Protection Act of 2005. This Act does not protect the 
American worker. In fact, this bill places the future of today's 
American worker in jeopardy.
  Even worse, this bill places those who have put in the years and 
worked hard at the mercy of bad management decisions.
  Furthermore, pensions are a financial safety net that many Americans 
and businesses pay into. Pension programs are an important factor when 
workers choose a job and it plays a large part in financial planning.
  Many people go their entire career thinking they will have this money 
upon retirement and regularly contribute even when they could use the 
money to take their family on vacation or buy their children clothes. 
Instead, they place earnings into their pensions as much in the short 
run as they will need in the future.
  Pension plans are as much about personal responsibility as they are 
about good financial planning.
  The American worker's pension should not be a pawn for businesses to 
navigate bankruptcy. I am especially concerned about the adverse affect 
this bill has on women.
  As a Member on the Aviation subcommittee and a frequent flyer, I have 
worked for years with airlines and flight attendants.
  Many, many airline employees are women. Many of those women are 
single mothers. Without a guaranteed source of retirement income, it is 
almost impossible for these women to stay in the employ of the 
airlines--and worse yet, many of these women have already put in years 
of hard work and have already lost upwards of 75 percent of their 
pensions.
  Mr. Speaker, my office has received a towering pile of heartbreaking 
letters from people whose pensions have been lost.
  How do we as Members of Congress tell these people that after all 
these years of paying into a pension--working toward a retirement--they 
have to make other plans for their golden years.
  We have an opportunity to do some real good. We have an opportunity 
to strengthen the commitment between the employers and workers, however 
this bill further drives a wedge between the two.
  Vote no against this bill today and let us pledge to come back during 
the second session of the 109th Congress and do this right.
  We owe it to the American people to take their financial future as 
seriously as they do. Vote no on the Pension Protection Act of 2005.
  Mr. HOLT. Mr. Speaker, I rise to express my opposition to the pension 
reform legislation that we are considering today. I oppose this 
legislation because it will further erode an employer's willingness to 
provide defined benefit plans and will close the loopholes that allow 
companies to dump their pension obligations on to taxpayers.
  Throughout the 1990's, in American workplaces a dramatic shift from 
traditional defined-benefit plans to defined-contribution plans 
occurred. Rather than being able to count on a regular pension check of 
a specified amount each month for the rest of his or her life, many 
workers must now put money in a mutual fund or other investment and 
take what comes each month for as long as it may last. Many other 
companies began to ``cash out'' their pensions giving employees a cash 
balance payout, claiming it was equivalent to a pension. It is not 
equivalent to a pension. Furthermore, some companies have used the 
Pension Benefit Guarantee Corporation to bail them out of their 
financial troubles. Now, millions of workers have entered retirement, 
only to learn that their company could not provide the benefits they 
had been promised. The Pension Benefit Guarantee Corporation has 
amassed a $23 billion deficit, jeopardizing its ability to insure 
defined pension benefit plans. As millions of more workers face reduced 
benefits, it is clear that Congress must find an effective solution to 
this problem. Unfortunately, the legislation we are considering today 
will not strengthen the defined benefit program or help to ensure that 
millions of workers receive the benefits they have been promised and 
planned on for retirement.
  Unlike the Democratic substitute that Representative Miller and 
Representative Rangel tried to offer, this bill will not make it more 
difficult for companies to use the bankruptcy code to dump their 
pension obligations to the Pension Benefit Guarantee Corporation 
(PBGC). The decision of United Airlines to force the PBGC to cover its 
pension obligations resulted in reduced benefits for its employees and 
retirees and shifted its burden to fulfill pension promises on to the 
American taxpayer. As a result of United Airlines action, the PBGC was 
forced to absorb $8 billion in guaranteed benefits, and employees and 
retirees lost $3 billion in their earned pension benefits. Then the 
directors of the reorganized company gave themselves bonuses. Northwest 
and Delta Airlines, as well as companies such as Delphi are also on the 
verge of following in the path of United Airlines. This will 
undoubtedly increase the PBGC deficit, and further jeopardize its 
ability to insure pension plans. I hope that when this bill moves to 
conference, the conferees will include important provisions from the 
Democratic substitute that will reduce a company's ability to dump 
their pension liabilities to the PBGC. Specifically, pension reform 
legislation should include measures that require companies to seek 
alternatives before terminating their pension plan and require 
companies to prove that the plan is unaffordable in a court of law.
  I also believe that the provisions in the bill that legalize cash 
balance plans will hurt millions of workers. Over 8 million workers 
have already been affected by cash balance conversions, before the 
courts put a hold on the

[[Page 28653]]

discriminatory way companies converted to these cash balance plans. The 
GAO has estimated that without older worker protections over 85 percent 
of younger workers and 90 percent of older workers would loose expected 
pension benefits if a defined benefit plan were converted to a cash 
balance plan. Legalizing cash balance plans will hurt workers that are 
nearing retirement and will cause more anxiety for younger workers that 
must plan for retirement with uncertain benefits.
  Although I will oppose this bill for the aforementioned reasons, 
there are provisions that I believe will benefit workers. For example, 
this legislation will allow employers to give their employees access to 
professional investment advice. With the dramatic increase in hybrid 
plans and defined contribution plans, employees are now faced with 
making multiple investment decisions that will have a profound impact 
on their retirement security. This investment advice provision will 
ensure that workers will be able to make informed decisions regarding 
their future.
  American workers deserve to know that their pension is secure and 
that they will receive the benefits that they have been promised during 
their years of service. As this bill moves to conference, I hope the 
conferees will be able to improve the shortcomings of this legislation 
so that we can pass legislation that will preserve the defined benefit 
pension system.
  Mr. MARKEY. Mr. Speaker, I rise in opposition to the so-called 
pension ``reform'' bill today on the House Floor.
  The bill before us today fails to address fundamental problems that 
have robbed millions of hard-working Americans of the retirement 
benefits they have earned. This Republican bill will not prevent 
companies from dumping their pension plans onto the Pension Benefit 
Guarantee Corporation (PBGC), which already is burdened with a $23 
billion deficit and may have to be bailed out by taxpayers. This bill 
does nothing to protect older workers when their pension plan is 
converted to a ``cash-balance'' plan that could short-change them of 
the benefits they have accrued. This bill also contains provisions that 
increase the costs and regulations for companies to maintain pension 
plans to the point that many companies will freeze or abandon their 
plans, accelerating the growing pension crisis.
  Democrats were not permitted to offer amendments to improve this 
bill. While I cannot support this flawed, misguided Republican bill, I 
support the Democratic Substitute offered by Representative Miller, 
Representative Rangel and Representative Cardin. The Democratic 
Substitute would stabilize existing pension plans by extending for 2 
years the corporate-bond-rate used to determine PBGC liabilities, 
encourage employers to maintain defined benefit plans without cuts in 
workers' pension benefits, and protect older workers during cash-
balance conversions.
  As the pensions of workers remain at risk, I am concerned about 
conflicts-of-interest, hidden financial arrangements and unlawful 
activities that may be causing or contributing to the poor financial 
health of pension plans at companies across the country. In May 2005, 
the Securities and Exchange Commission (SEC) released a report, 
``Examinations of Select Pension Consultants'', that revealed 
significant conflict-of-interest and non-disclosure issues within the 
pension plan consultant industry. Specifically, the SEC found, among 
other conclusions, that:

       [P]ension consultants may steer clients to hire certain 
     money managers and other vendors based on the pension 
     consultant's (or affiliate's) other business relationships 
     and receipt of fees from these firms, rather than because the 
     money manager is best-suited to the client's needs. Such a 
     conflict can compromise the fiduciary duty that investment 
     advisers owe their clients.

  The findings included in the Commission's report are particularly 
disturbing for pension plan beneficiaries, whose benefit payments are 
dependent upon their plan management's diligent performance of its 
fiduciary duties, and for the Federal Government, which is faced with 
an enormous deficit at the Pension Benefit Guaranty Corporation (PBGC) 
as a result of a series of massive corporate bankruptcies that have 
resulted in PBGC assumption of severely underfunded pension plans 
terminated when the corporations entered bankruptcy.
  Representative Miller and I have requested that the Government 
Accountability Office (GAO) investigate whether the Federal Government 
is aggressively regulating and enforcing statutes intended to protect 
pension plans and their beneficiaries from conflicts-of-interest and 
similar undisclosed relationships that can impair pension fund returns. 
We have urged GAO to examine whether any of the 3,500 terminated 
pension plans that are now the responsibility of the PBGC may have been 
adversely affected--prior to PBGC assumption ofthe plans' liabilities--
by the types of conflicts and hidden financial arrangements uncovered 
by the SEC.
  I am hopeful that the pension legislation considered today by the 
House will be greatly improved during the conference with the Senate, 
so that we can have a vote on pension reform legislation that actually 
addresses the real problems that exist in the current system. 
Additionally, I look forward to GAO's work in the important area of 
pension fund consultants. The ongoing crisis in the pension fund 
marketplace requires a thorough, independent review to identify 
problems with government regulation and enforcement and recommend 
improvements. American workers have relied on the pension promises of 
their employers. It is unconscionable to abandon these workers.
  I urge a ``no'' vote on this Republican pension bill, and a ``yes'' 
vote on the Democratic Substitute.
  Mr. GUTKNECHT. Mr. Speaker, I rise to speak on behalf of 7,000 
current and former IBM employees who live in my district. While most of 
this bill is necessary and the legislation is appropriate, the weakness 
of the bill is that it fails to clarify the rules concerning the 
conversion of defined benefit pension plans into cash balance pension 
plans.
  I understand the bill will not affect the IBM employees and their 
court case. It could, however, affect millions of Americans that are 
currently vested in defined benefit pension plans. Even though they may 
be working for a very profitable company, they could, under the terms 
of this bill, show up for work one day and learn that their promised 
benefits have been dramatically reduced with the sweep of a pen.
  Under cash balance plans, older, long-serving employees do not have 
the same opportunities to build up retirement benefits that younger 
workers do. The bill before us today would allow conversions to take 
place but gives no protections to workers during these transitions. I 
offered an amendment last night at the Rules Committee to provide 
protections to vested workers. Unfortunately, the Committee did not 
rule my amendment in order.
  The Senate version of the bill contains more protections for workers. 
For those and other reasons AARP supports the Senate passed bill and 
opposes the House bill. I would hope protections like the amendment I 
tried to offer will be incorporated in the final version.
  While I am voting today to move the bill forward into conference with 
the Senate in the hopes more worker protections can be added, I reserve 
the right to oppose a report that fails to correct this glaring 
omission.
  Mr. LARSON of Connecticut. Mr. Speaker, I rise in opposiiton to the 
so-called Pension Protection Act and in support of the Democratic 
motion to recommit.
  There is no question that our Nation is facing a pension crisis. Over 
34 million American workers currently rely on the benefits they receive 
from a defined benefit pension plan to make ends meet. Yet, with the 
growing number of corporations cutting pension benefits or declaring 
bankruptcy, people are increasingly concerned about their retirement 
security. More and more, American workers are facing the prospect of 
seeing their employers use our Nation's bankruptcy laws to back out of 
their pension promises and turning their obligations over to the 
Pension Benefit Guaranty Corporation (PBGC)--which only partially funds 
promised benefits.
  Unfortunately, the bill before us today is a missed opportunity to 
provide American workers with real pension protection.
  H.R. 2830 makes significant changes to the rules for defined benefit 
pension plans, increases the premiums that companies pay into the PBGC, 
and does nothing to prevent companies from dumping their pension 
obligations on American taxpayers. According to the Chief Investment 
Officers of over sixty percent of our Nation's largest pension plans, 
these likely will lead to cuts or terminations of existing plans. 
According to the Congressional Budget Office, this legislation would 
add over $70 billion to the federal deficit and fails to improve the 
PBGC's financial condition by increasing the agency's financial 
shortfall by $2.5 billion.
  Rather than allowing an open debate on this important issue, the 
majority leadership has chosen to close this bill from amendments or 
even allow consideration of a Democratic substitute. The Miller/Cardin 
motion to recommit protects American pension benefits by making it 
harder for companies to declare bankruptcy and abandon workers 
pensions, protects worker's retirement security by providing employers 
with pension funding stability and gives the airlines the tools they 
need to shore up their employee pension plans. This alternative would 
provide American workers with real pension protection, rather than 
continued retirement insecurity.
  Mr. Speaker, today's legislation is the latest in a series of 
attempts to privatize profits and socialize losses. It is my sincere 
hope that as

[[Page 28654]]

we move into conference, we can produce legislation that will protect 
the hard earned pension benefits of our Nation's workers.
  Mr. NORWOOD. Mr. Speaker, I rise in strong support of the Pension 
Protection Act (H.R. 2830), legislation that responds to the many 
challenges currently facing the financial health of the defined benefit 
pension system.
  The defined benefit system provides millions of American retirees and 
current workers with retirement benefits earned over the course of a 
lifetime. Yet the rules governing the structure of the defined benefit 
system are geared towards a 20th century workforce that no longer 
exists. The Pension Protection Act will bring these outdated rules into 
the 21st century and respond to the rapidly evolving American workforce 
that is more fluid, technologically advanced and diverse than ever 
before.
  H.R. 2830 accomplishes this goal by implementing four commonsense 
reforms that hold employers to a higher standard and will ensure the 
fiscal future of the defined benefit system: (1) The legislation will 
ensure employers properly and adequately fund employees' defined 
benefit pension plans; (2) provide meaningful new disclosure to workers 
about the status of their pension plan; (3) secure the financial future 
of the Pension Benefit Guarantee Corporation (PBGC) and prevent a 
possible multi-billion dollar taxpayer-funded bailout; (4) encourage 
greater employee savings for retirement goals by reforming outdated 
defined contribution plan rules.
  The legislation also prohibits executive compensation arrangements 
when a rank and file employee pension plan is severely under-funded. 
This important provision will prevent corporate chieftains from 
escaping via the golden parachute when an employer carries a qualified 
pension plan that is 60 percent under-funded or more. After all, the 
average working man in rural Georgia deserves nothing less than a 
corporate executive in New York.
  And while H.R. 2830 includes important reforms to ensure employers 
more accurately fund their pension obligations, it also holds union 
leaders to a higher standard as well. Over the years, union leaders 
have exerted tremendous pressure on employers in every commercial 
sector by negotiating benefit increases to defined benefit plans that 
are already under-funded.
  While many employers have not held up their end of the bargain by 
responsibly funding plan benefits, union leaders are equally 
responsible for misleading their workers and pushing for unrealistic 
benefit increases knowing full well an employer's plan is already 
under-funded. This is no less outrageous, and H.R. 2830 takes important 
steps to prevent union leaders and employers from negotiating 
unrealistic benefit increases that will only hasten plan failure and an 
eventual taxpayer bailout.
  In addition, the compromise measure includes a series of requirements 
to address ``Critical Multiemployer Plans'' funded between 65 percent 
and 70 percent. These plans face significant and immediate funding 
problems. H.R. 2830 not only strengthens the funding requirements for 
critical plans, it also requires trustees to develop a rehabilitation 
proposal to show a 20 percent improvement over 15 years.
  Mr. Speaker, the number of employer sponsored defined benefit plans 
are declining by the day, down from an all-time high of 170,000 in 1985 
to 30,000 today. This is unacceptable. Congress should not sit idly by 
while the defined benefit system continues to die on the vine, and for 
that reason I urge all of my colleagues to avert the pending retirement 
security crisis by passing the Pension Protection Act today.
  Mr. UDALL of Colorado. Mr. Speaker, I must reluctantly oppose this 
legislation.
  I support changing the current rules related to pensions, and had 
hoped that this bill would be considered under procedures that would 
allow it to be improved.
  However, the Republican leadership has made it impossible for even a 
single amendment to be considered--and the bill's flaws so outweigh its 
good features that it should not be passed in its current form.
  Among the most troubling aspects of the bill is its potential effect 
on defined-benefit pension plans.
  Some 34 million Americans are now covered by defined-benefit plans, 
but their retirement security is threatened by the failure of some 
companies to adequately fund the plans, by corporate bankruptcies such 
as that of United Airlines, and consideration by even profitable 
companies of freezing benefits and ending their plans.
  And many of the people who manage large pension plans tell us the 
result of enacting this bill's provisions that would make significant 
changes to the rules for these plans and increase the premiums 
companies pay the Pension Benefit Guaranty Corporation, PBGC, could be 
benefit cuts or, worse, termination of even well-funded plans.
  At the same time, the bill's requirements for increased payments to 
PBGC threatens the financial health of many manufacturing companies and 
fail even to adequately improve PBGC's financial condition--its own 
analysis found that the bill would increase the agency's financial 
shortfall by $2.5 billion.
  And both the Congressional Budget Office and PBGC have concluded that 
the bill would increase claims on the Federal Government by billions of 
dollars, which would increase the likelihood of a massive taxpayer 
bailout as well as the loss of billions of dollars in employee and 
retiree benefits.
  I am not prepared to support legislation that would increase the 
chances of such outcomes, especially when its tax provisions would 
substantially increase future budget deficits and would primarily 
benefit taxpayers in the highest income groups.
  According to the Joint Committee on Taxation, the revenue effects of 
the tax provisions primarily benefiting higher-income households would 
grow from $3.6 billion in 2012, the first full year affected, to $5.6 
billion a year by 2015. But the effect of extending the saver's credit, 
which is most important to lower-income honseholds, would fall from 
$1.4 billion in 2008, the first full year affected by that provision, 
to $943 million by 2015.
  That means that while in 2012, the saver's credit would account for 
one-fourth of the total benefits of all of these provisions, by 2015 it 
would account for only 14 percent of the total benefits. And after that 
the saver's credit would dwindle further, eventually fading away, while 
the upper-income pension tax changes would become still more robust.
  As the Center on Budget and Policy Priorities says, ``To allow the 
severe erosion over time of the principal tax incentive for modest-
income families to save for retirement does not make sense as 
retirement policy. To do so while protecting very generous retirement 
tax-cut benefits that go overwhelmingly to higher-income taxpayers who 
generally are able to save adequately for retirement anyway, without 
these tax subsidies, is even less defensible. And incorporating 
regressive tax policy of this nature into a bill that swells budget 
deficits, and opens the door to still more deficit-increasing tax cuts 
in the future, stands sound policy on its head.''
  I think they are right.
  And, in addition to badly framed provisions, the bill's flaws also 
include some serious omissions. I am particularly disappointed there is 
nothing in the bill like the bipartisan Senate-passed provisions to 
protect the pensions of employees and retirees of airline companies. As 
Coloradans know all too well, the employees and retirees of United 
Airlines already have lost $3 billion in earned pension benefits. We 
should be working to help them, and we also should be working to make 
it less likely that their experience will be repeated.
  In summary, Mr. Speaker, while I recognize that there are good 
aspects to this bill, and while I think Congress does need to act on 
this subject, I think that on balance the bill as it stands should be 
rejected so that a better-balanced measure can be brought forward.
  Mr. BLUMENAUER. Mr. Speaker, the income security of Americans has 
been under constant attack by the administration and Congress this 
year, especially those families who have not had the good fortune to 
earn a living that places them in our highest income brackets.
  The year started with efforts to dismantle Social Security, an 
efficient program that is the primary source of income for a majority 
of retirees. Next, a slanted bankruptcy bill that puts no burden of 
responsibility on unscrupulous lenders and credit card companies and 
all of it on the families that face hardships from large medical bills, 
family breakups, and job losses. Congress has been wringing its hands 
the last couple of months over which programs for America's most 
vulnerable should be cut so tax cuts can be extended years from now.
  The latest attack on the security of American families is this 
pension bill. It is clear that the Pension Benefit Guaranty Corporation 
must be strengthened and that rules must be put in place to ensure 
companies adequately fund the promises they make to employees.
  Instead, the Congressional Budget Office has reported that this bill 
would actually increase the PBGC's deficit by $9 billion over the next 
10 years. The bill also legalizes cash balance plans without 
protections for long serving employees. It has been reported that 
without older worker protections over 90 percent of older workers would 
lose expected pension benefits if a defined benefit plan were converted 
to a cash balance plan. Additionally,

[[Page 28655]]

this bill does nothing to help the struggling airline industry that has 
already seen United Airlines employees and retirees lose over $3 
billion in earned pension benefits.
  Strengthening the pension system and providing security to all 
families should be a priority of Congress and can be achieved with 
fiscal responsibility and fair policy. This bill falls short on both 
accounts.
  Mr. STARK. Mr. Speaker, I rise today in strong opposition to H.R. 
2830, which would be better titled the Republican Pension Destruction 
Act. American workers deserve much better than a bill that will reduce 
employee pensions and provide incentives for employers to break pension 
promises to employees.
  Recent bankruptcies in the airline industry shed a bright light on 
exactly what big corporations are up to. A few months ago, United 
Airlines dumped its flight attendant pension program onto the Pension 
Benefit Guaranty Corporation (PBGC)--a government organization meant to 
serve as an insurance policy for corporations who can no longer afford 
to meet their pension obligations. The PBGC, however, does not fund 
pensions at 100 percent, instead making a reduced payment to retired 
employees.
  As a result, tens of thousands of United employees, past and present, 
will receive smaller pension payments than they deserve. Unbelievably, 
in the same bankruptcy proceedings United Airline's CEO Glen Tilton was 
allowed to keep his $4.5 million pension. This is unacceptable, and the 
bill offered today does nothing to prevent CEOs from opening these 
golden parachutes while their employees are forced to take a reduction 
in their benefits.
  I've heard from hundreds of constituents on this issue. I can't say 
it any better than this former United employee from Hayward, CA who 
made the following statement during an e-hearing I have been co-hosting 
regarding the United Airlines crisis.
  ``I worked for United Airlines 35 years as a mechanic. Two years ago 
I retired with the promise that my pension was safe. If I lose a big 
chunk of pension I will have to sell my house and take my almost blind 
wife to another state where it's cheaper to live. Away from our doctors 
and family. I am not able to work anymore--physically unable--can you 
help us?''
  We could help United employees and the retirement security of 
millions of Americans by passing real pension reform, but Republicans 
would rather destroy pensions instead of protecting them. When 
Democrats offered legislation to fix the pension solvency issue by 
protecting retirees and forcing CEOs to be held accountable, the 
Republican Majority wouldn't bring it up for a vote because it could 
have passed. Sadly, this is just one more example of Republicans siding 
with corporate campaign donors instead of working Americans.
  The list of problems associated with this bill is seemingly endless. 
The PBGC itself says its own ability to cover pensions will decrease by 
$2.5 billion under this bill. The Republican bill does nothing to 
protect airline employees. And in a final slap in the face to 
hardworking taxpayers, the bill adds $71 billion to the deficit over 
the next 10 years, because Republicans refuse to be fiscally 
responsible and pay for their reforms.
  This Republican pension bill undermines retirement security and puts 
the once guaranteed pension benefits of millions of hard working 
Americans in jeopardy. I urge all my colleagues to vote ``no'' on this 
bill.
  Ms. KILPATRICK of Michigan. Mr. Speaker, I rise in reluctant support 
of the Pension Protection Act of 2005, H.R. 2830. I commend the authors 
of this bill who worked with elements of the union movement to craft 
legislation designed to address some of the issues affecting the 
employer-provided pension system. Key stakeholders in Michigan's 13th 
Congressional District support the bill that we will consider today. 
Organizations like General Motors, Ford Motor Company, the United Auto 
Workers Union, building trade unions, Northwest Airlines, airline 
pilots, flight attendants, and more have contacted my office to express 
their support for the bill.
  The leadership of my party has pointed out that the bill has several 
major shortcomings. My leadership argues that H.R. 2830 does very 
little over the long-term to strengthen traditional, defined benefit 
plans. Had the majority permitted Members on my side of the aisle to 
amend the bill, I am sure that our suggestions would go a long way to 
improving the legislative product before us. We, however, are being 
denied that opportunity, and I must decide what best represents the 
interests of the income security needs of my Southeast Michigan 
constituents. After careful examination, I have decided to support the 
passage of H.R. 2830, but with the hope that it will be improved when a 
compromised is reached with the other body.
  My district is the center of the world automotive industry. As my 
colleagues know, the economic condition of the GM, Ford Motor and 
Daimler-Chrysler is under stress. The workers employed in local plant 
sites throughout the Nation feel their future income security is 
threatened because their pensions are dependent on the financial health 
of company-sponsored plans.
  All in all, this bill strengthens funding for employer pension plans 
and includes reforms advocated by companies and unions who participate 
in multi-employer pension plans. Therefore, I vote for this bill with 
hope that it will move the process forward to address the pension 
concerns of the airline industry and airline employees and the concerns 
of our steelworkers, who take exception with shutdown provisions of the 
bill to address the pension needs of companies in total ``shutdown'' 
status.
  Mr. DAVIS of Kentucky. Mr. Speaker, I rise today in strong support of 
H.R. 2830, The Pension Protection Act of 2005. This bill addresses a 
serious issue facing our Nation. The ultimate enactment of pension 
reform must be a priority to this House and the Congress.
  I congratulate and thank Chairman Boehner and Chairman Thomas for 
crafting a comprehensive pension reform bill with so much support from 
the business and the labor communities.
  This legislation represents a successful compromise that will help 
protect workers in the auto industry and also protect the major U.S. 
auto manufacturers against loss of promised benefits or plan 
terminations.
  One area that remains to be addressed in conference is the issue of 
airline pension plans. The Cincinnati/Northern Kentucky Airport is one 
of the Nation's busiest. It is home to Delta Air Lines' second largest 
hub. Thousands of men and women in Kentucky's Fourth District work for 
airlines. They depend on the retirement benefits provided by the 
airline industry.
  Without a change in current law that allows air carriers with Defined 
Benefit plan obligations to make their pension payments over a longer 
period of time--20 years--it is possible that some or all of these 
plans will be terminated, benefits reduced and liability shifted to the 
American taxpayer.
  The airlines want to keep their promises to their employees. They 
want to honor their obligations. They do NOT want to terminate their 
pension plans nor to reduce benefits. But, they need to be equipped 
with the tools necessary to have a fighting chance to keep those 
promises.
  The Senate airline pension language is carefully crafted to meet the 
particular concerns of all the major carriers and provide them with a 
20 year period to meet their obligations.
  Although we are not addressing this specific issue today, I strongly 
support continued pursuit in conference of the Senate-passed airline 
pension provision.
  Finally, I wish to thank my colleagues on the Ways and Means and 
Education and Workforce Committees and their staff for the hard work 
that has brought us to this point today. I urge all of my colleagues to 
vote in favor of final passage.
  Mr. VISCLOSKY. Mr. Speaker, I rise today in opposition to H.R. 2830. 
I am old enough to remember a time when everyone on my block in the 
Glen Park section of Gary, Indiana had a pension. The defined benefit 
pension system today, which protects the retirement security of over 44 
million workers, retirees, and their families, is at a critical 
juncture. The number of defined benefit plans has declined from over 
100,000 in 1985 to under 32,000 in 2004. While the number of active 
workers covered by such plans has dropped from over 40 million to under 
20 million, an additional 20 million retirees depend on defined benefit 
plans for their retirement security.
  Both the Congressional Budget Office and the Pension Benefit Guaranty 
Corporation have found that H.R. 2830 will add billions more to the 
PBGC's already mounting deficit. According to the CBO, this legislation 
would increase the PBGC's deficit by $9 billion dollars over the next 
ten years. The PBGC is already facing a deficit of $23 billion and 
could face additional liabilities of up to $100 billion in the near 
future.
  In the five years leading up to the closings of LTV and Bethlehem 
Steel, steel companies in North America were filing for bankruptcy in 
record numbers, using the bankruptcy courts to break their contractual 
obligations and impose cuts or outright elimination of jobs, benefits, 
pensions and wages of steelworkers. In 2000, LTV Steel filed for 
Chapter 11 bankruptcy for protection from its creditors, including its 
obligations to its pension plan. In 2002, LTV filed Section 7 
bankruptcy, which liquidated its assets. Today's legislation would put 
additional pressure on an agency that is

[[Page 28656]]

already picking up the slack because corporate America has used them as 
a dumping ground.
  In addition, H.R. 2830 does not ensure fair treatment between workers 
and executives. The bill permits CEOs to receive executive golden 
parachutes at the same time employees are suffering deep cuts in their 
promised retirement benefits. Under H.R. 2830, if an employer does not 
fund its pension plan above 80 percent, then workers cannot receive any 
increases in benefits or take a lump sum at retirement. No similar 
restriction is imposed on executives. If an employer does not fund 
above 60 percent, then the workers' plan must be frozen with no new 
benefits allowed to accrue. Only at 60 percent are employers prohibited 
from transferring funds to executive compensation. However, employers 
can get around this prohibition and make promises of future benefits to 
executives. I find this deplorable at a time when we are seeing 
companies like Delphi abuse the system. Under Chapter 11 
reorganization, Delphi could award 500 of their executives cash bonuses 
of 30 percent to 250 percent of their base salary for exiting Chapter 
11.
  In closing Mr. Speaker, I urge my colleagues to oppose H.R. 2830. 
According to CBO, H.R. 2830 would increase the Federal deficit by over 
$70 billion from 2006-2015. It contains a variety of unoffset tax 
incentives for corporate America that will not secure the pension of 
the hardworking men and women who are making our steel, mining our 
coal, building our homes, and flying our airplanes. Congress owes 
working Americans more.
  Mr. PAUL. Mr. Speaker, while H.R. 2830, the Pension Protection Act of 
2005, is not perfect, it does decrease the risk that employees will be 
deprived of pension benefits they were promised as part of their 
employment contracts. H.R. 2830 also decreases the likelihood that 
American taxpayers will be forced to bailout private pensions, and 
reduces the tax burden on American workers to provide them with greater 
incentives and opportunities to save for their own retirements. 
Therefore, I will vote for this bill on final passage.
  However, I oppose this rule, because I do not like the process under 
which this bill is being brought to the floor. The rule before us today 
does not allow any member to offer, or vote on, amendments that may 
improve this bill. In particular, I was hoping to vote on an amendment 
protecting United Airline retirees from having their pension benefits 
reduced or terminated even though United expects to make $1 billion in 
profit within 1 year of being discharged from bankruptcy. The Senate 
version of the bill does address same problems of the airline industry. 
However it fails to protect United Airlines retirees. The Federal 
Government should not facilitate a large companies getting out of its 
contractual obligations to their retired workers. I, therefore, urge my 
colleagues to protect the pensions of retired United Airline employees 
by rejecting this rule and voting for a rule that allows us to consider 
adding, language helping the United Airline retirees to the bill. If 
this rule does pass, I urge my colleagues to move the process foreword 
by voting for the bill and working to add language protecting the 
United Airline pilots to the bill when it goes to conference with the 
Senate.
  Mr. BRADY of Texas. Mr. Speaker, I rise today in strong support of 
H.R. 2830, the Pension Protection Act of 2005. I applaud the chairman 
of the Ways and Means Committee, the distinguished Bill Thomas, as well 
as the chairman of the Education and Workforce Committee, John Boehner, 
for their hard work and leadership on this issue. Protecting the 
pensions of millions of Americans is a top priority for this 109th 
Congress and H.R. 2830 is strong legislation designed to that end.
  I rise today to also thank Chairman Thomas for his inclusion in the 
Pension Protection Act of legislation I introduced related to the 
waiver of a 10 percent federal tax penalty for public safety 
employees--our Nation's firefighters, police officers and emergency 
medical personnel. People who put their lives on the iine for us 
everyday deserve our full support and they are receiving that support 
here today thanks to Chairman Thomas.
  Many public safety personnel begin their careers at a young age. They 
will vest in their regular pension plans and, even if they participate 
in one of the new deferred plans and remain on the job longer, will be 
eligible for retirement before they reach age 55.
  For example, in Houston the average firefighter begins his career at 
age 23. After 20 years of service, now age 43, the average firefighter 
is fully vested in the regular pension fund and can retire and begin 
receiving benefits immediately. Today, the firefighter can participate 
in the deferred plan for up to an additional 10 years. If the 
firefighter participates for the full 10 years and then elects to 
retire, he or she will be age 53 and, in general, will not be able to 
take distributions prior to the age of 59\1/2\ without triggering the 
10-percent penalty.
  For distributions to public safety employees that are subject to the 
10-percent penalty, section 905 of H.R. 2830 would waive the penalty. 
This provision has received considerable attention and support during 
this and previous Congresses. The effort began in 2002, when my Texas 
colleague, Congressman Gene Green, introduced H.R. 4796. Later that 
year, Senator Jim Inhofe introduced companion language, S. 3072.
  Mr. Speaker, in closing, I want to applaud my House colleagues and, 
particular, Ways and Means Chairman Thomas, to whom I would like to 
express the deep gratitude of our Nation's firefighters, police and 
emergency medical service employees for including section 905 in the 
House bill and moving the issue forward.
  I strongly urge my colleagues to support passage of H.R. 2830, the 
Pension Protection Act.
  Mr. RAHALL. Mr. Speaker, the House today passed the Pension 
Protection Act. I voted in favor of this legislation, though with great 
reservation.
  The Pension Protection Act is a comprehensive attempt to reform our 
Nation's pension laws. Congress is taking up this issue in the wake of 
several major corporations defaulting on their pension plans. American 
workers are crying out for assistance as their nest eggs, for which 
they've worked their entire lives, are shrinking before their very 
eyes. I don't think anyone can argue the fact that something must be 
done.
  But H.R. 2830 is a far cry from what is needed to place our pension 
system on a strong foundation. I am concerned that the workers in many 
of our Nation's oldest industries are going to lose out when this 
legislative process shakes out. I am concerned that the future of the 
defined benefit--and the future of the worker's nest egg built through 
a defined benefit plan--is in jeopardy. And I am concerned that 
companies will continue to be able to dump their negotiated pension 
plans through bankruptcy proceedings.
  Today's bill does not go far enough in alleviating my concerns.
  However, I can tolerate this legislation for the simple reason that 
it gives us an opportunity to go to conference and improve this bill. 
And improve it we must--or I will be unable to support final passage on 
a conference agreement.
  Today's debate was a needed and necessary exercise. But as we look to 
conference, we must remain focused on protecting the retirement dreams, 
and indeed the American dream, to which so many of our workers look 
forward.
  If the conference report doesn't include the silver lining of pension 
protection our workers will depend upon in their golden years, I will 
be unable to support this bill on final passage.
  Mr. VAN HOLLEN. Mr. Speaker, the good news is that this Congress is 
at long last attempting to address the looming crisis in our nation's 
pension system. The bad news is that the best available evidence 
suggests that today's optimistically entitled Pension Protection Act 
doesn't achieve its stated objective.
  Pension rules are complex. But in my view, the goals of pension 
policy are really pretty simple. First, we must protect taxpayers from 
an S&L style bailout of the Pension Benefit Guaranty Corporation 
(PBGC). And second, we must shore up the long term viability of the 
pension benefits promised our workers.
  The PBGC today faces a current deficit of about $23 billion, with 
additional liabilities estimated at up to $100 billion. However, rather 
than closing that gap, H.R. 2830 actually increases the PBGC's deficit 
by $9 billion over the next 10 years, according to the Congressional 
Budget Office (CBO).
  Mr. Speaker, I simply cannot support pension legislation that puts 
taxpayers in greater jeopardy than they already face today.
  With respect to pension security, we would do well to recall the 
Hippocratic admonition to ``First, Do No Harm''. Congressional action 
that results in companies terminating or freezing or failing to 
establish defined benefit plans in the first place hurts precisely the 
same workers we say we are trying to help. Yet that's precisely what 
this bill does.
  A recent survey of the Committee on Investment of Employee Benefit 
Assets (CIEBA), an organization representing Chief Investment Officers 
from the nation's largest corporations, found that 60% of pension plans 
would be frozen or terminated if this legislation becomes law. The 
CIEBA goes on to warn that HR 2830 would ``have long term consequences 
for current and future workers, with the potential to damage the 
retirement security of millions of Americans.''
  If we are not effectively securing the earned pension benefits of our 
workers, then what are we doing here today?
  Mr. Speaker, I have a final objection to today's proceedings 
regarding the inability of our

[[Page 28657]]

side to offer a Democratic substitute. If we had been allowed a 
substitute, this House would have had an opportunity to debate a range 
of critical issues not adequately addressed by the underlying bill--
including the inappropriate use of the PBGC as a dumping ground for 
underfunded pensions run by companies seeking a competitive advantage 
in the marketplace, the right of older workers not to face age 
discrimination under federal pension rules and the ability of all 
workers to receive disinterested investment advice for their company 
sponsored defined contribution plans. Because the majority has abused 
its procedural power to block our alternative, these and other 
important issues that ought to be receiving our careful attention will 
not see the light of this day.
  Mr. Speaker, for the sake of the millions of hardworking Americans 
counting on their hard-earned pension benefits to support themselves 
and their families in retirement, this Congress has an obligation to 
pass meaningful pension reform.
  However, I cannot and I will not support pension legislation that 
further imperils the taxpayers and workers real pension reform is 
supposed to serve.
  I urge my colleagues to vote no on H.R. 2830, and I yield back the 
balance of my time.
  Mr. STUPAK. Mr. Speaker, today, the House of Representatives passed 
the Pension Protection Act on a vote of 294-130. I voted in favor of 
this bill in order to move the legislative process forward because 
failure to approve pension reform legislation endangers the retirement 
security of hundreds of thousands of workers. Without changes our 
pension system, many employers will face even greater pressure to file 
for bankruptcy to terminate their workers' pension plans. Though I 
supported H.R. 2830, it is my hope that the final conference report 
will be a product more closely resembling the version that passed the 
Senate on a near unanimous vote.
  It is my understanding that when the Conference Committee convenes, 
Education and Workforce Chairman Boehner will support including a 
Senate provision that provides some industries with needed time to 
address their unique financial circumstances. Without immediate passage 
of this bill, some defined benefit plans may be forced to default on 
its payments to retirees.
  While not perfect, H.R. 2830, the Pension Protection Act, contains 
many important provisions that will strengthen our defined benefit 
system. For example, the Act provides relief to multi-employer pension 
plans by allowing more affordable and appropriate contributions to 
maintain their employees' pensions. This will greatly benefit workers 
in the skilled trades, such as plumbers, carpenters, and transport 
workers. I was disappointed that multi-employer pensions were excluded 
from the temporary pension relief that was signed into law last year, 
and I am glad that this bill provides long overdue relief to secure 
these workers' pensions.
  Though House passage of H.R. 2830 is better than passage of no bill 
at all, this legislation must be improved during the conference between 
the House and Senate. I would like to see a bill that does more to 
protect older workers whose employers convert their defined benefit 
pension plans to cash-balance plans. Further, this bill provides that 
the Pension Benefit Guarantee Corporation guarantee some, but not all, 
pensions when a factory or plant shuts down. Stronger protections for 
older workers and insurance for all shut down pension benefits should 
be included in the final Conference Report.
  All workers in every type of industry require immediate changes in 
our current pension laws if we are to ensure that future generations 
are able to participate in the defined benefit retirement plans that 
offer superior retirement security. Failure to pass this bill and move 
the legislative process forward endangers thousands of workers 
pensions. Though the Pension Protection Act is not a perfect bill, I am 
compelled to support this legislation so that our pension system can be 
changed to assist all employees.
  Mr. MOORE of Kansas. Mr. Speaker, I rise today to express my support 
for H.R. 2830, the Pension Protection Act of 2005.
  As the nature of our economy has changed in recent decades, our 
manufacturing sector has experienced difficult times. Many companies in 
the auto, auto parts, and steel producing industries are now burdened 
with expensive legacy costs, particularly pension obligations, that are 
increasingly difficult to honor. Long-term costs have contributed to 
the need for companies in these industries to seek significant cost 
savings, sometimes through factory closings and employee layoffs. 
Consequently, defined benefit pension plans sponsored by some of the 
companies in these industries, as well as in the airline industry, in 
which several companies have sought Chapter 11 bankruptcy protection in 
recent years, have been turned over to the Pension Benefit Guaranty 
Corporation [PBGC].
  This legislation, while not perfect, seeks to increase private 
companies' funding of their employees' pension plans, as well as 
improve the financial health of the PBGC by increasing companies' 
premiums to the agency. The risk of a taxpayer-funded bailout of the 
PBGC, which is funded entirely by companies' that sponsor defined 
benefit pension plans, is very real in the near future. According to 
Bradley Belt, the Executive Director of the PBGC, ``Unfortunately, the 
financial health of the PBGC is not improving. The money available to 
pay benefits is eventually going to run out unless Congress enacts 
comprehensive pension reform to get plans better funded and provide the 
insurance program with additional resources.'' Congress has a 
responsibility to act now to prevent a PBGC bankruptcy and future 
taxpayer bailout of the agency.
  Last year, the PBGC absorbed 120 terminated defined benefit pension 
plans, and last month the agency announced that in fiscal year [FY] 
2005 it had liabilities of $79.2 billion and assets of $56.5 billion. 
That amounts to a deficit in the pension insurance program of $22.8 
billion. While the FY05 deficit improved slightly over FY04's deficit 
of $23.3 billion, the latest deficit figure from the PBGC is somewhat 
misleading. The agency's FY05 deficit actually would have increased to 
$25.7 if it had included company-plan terminations announced after the 
fiscal year ended on September 30. Probable pension losses from 
companies that filed for Chapter 11 protection in September, including 
2 large airlines and a major auto-parts supplier, will likely increase 
the PBGC's liabilities. The PBGC estimates that the pension plans in 
those companies are underfunded by more than $15 billion. The agency 
includes those pension plans in its category of financially weak 
company plans, the liabilities of which rose to $108 billion this year 
from $96 billion in 2004.
  In 2004, the PBGC collected only $1.5 billion in premiums from the 
companies that it insures. H.R. 2830 would raise companies' annual PBGC 
premium payments from $19 to $30 per participant. The $30 premium would 
be phased in beginning in 2007, on a schedule based on a plan's funded 
status. Even with premium increases in H.R. 2830, it could take more 
than a decade to close the agency's deficit. I hope that this bill is 
the beginning of the PBGC's long march back to fiscal health.
  Further, H.R. 2830 would increase companies' funding requirements for 
their defined benefit plans and would shorten the period over which 
funding shortfalls must be eliminated. The bill's provisions regarding 
both single- and multi-employer plans move companies in the right 
direction.
  I also appreciate the willingness of Chairmen John Boehner and Bill 
Thomas to agree to a significant improvement in the ``shutdown 
benefits'' provision of H.R. 2830 as introduced. Shutdown benefits, 
which are payments made to long-service employees when a plant is shut 
down, would have been prohibited under the original version of H.R. 
2830. The improved version of this measure allows a defined benefit 
plan to provide shutdown benefits if the plan is at least 80 percent 
funded. Well-funded pension plans will be able to continue providing 
shutdown benefits to employees who have worked hard over their careers 
and expect the retirement benefits that they have been promised. H.R. 
2830 will soften the blow of expected plant shutdowns at companies that 
have fulfilled their responsibilities to their employees and funded 
their pension plans as they were supposed to over the years.
  Finally, I am very supportive of the provisions in H.R. 2830 that 
would make permanent several retirement savings provisions that were 
included in the 2001 tax law, including the increases in IRA and 401(k) 
contribution limits, with their full adjustments for inflation. Prior 
to 2001, the maximum amount that a taxpayer could contribute to an IRA 
was $2,000 per year. The 2001 tax law gradually increased that limit to 
$5,000 [by 2008]. I worked to ensure that IRA contribution limits 
increased in that law, and believe that the permanent extension of 
those limits will increase the certainty needed in retirement planning. 
Likewise, I strongly support the bill's language that would make 
permanent the saver's credit for low-income taxpayers. Taxpayers with 
incomes below $50,000 for a married couple, and below $25,000 for 
individuals, are eligible to receive a tax credit of up to 50% of 
contributions [up to $2,000] that they have made during the year to 
employer-sponsored retirement plans or IRAs. Increasing incentives for 
people of all income brackets to save for their retirements should be a 
top priority of Congress, and I will continue to work with my 
colleagues in both parties to improve the national savings rate in our 
country.

[[Page 28658]]

  Mrs. MALONEY. Mr. Speaker, I rise in opposition to H.R. 2830, the 
Pension Protection Act of 2005.
  Any bill that is called the ``Pension Protection Act'' should protect 
pensions, but the bill we have before us makes things worse in many 
ways for many current pensioners in this country and for many future 
pensioners.
  First and foremost, the Pension Benefit Guaranty Corporation was 
first created to protect some of the retiree benefits of people if 
pension plans went bust or the corporations went bust. We are now told 
that this legislation makes that problem worse. The Congressional 
Budget Office tells us that this will make it at least $9 billion worse 
over the next decade.
  This is an agency that can look out into the future and can see up to 
$100 billion of liabilities possibly coming their way. Much of which 
will come because this bill makes it easier to terminate plans. Simply, 
it makes it easier to put plans into bankruptcy.
  This bill does nothing to solve the problems we have seen with 
airline industry pensions because their pension plans can be dumped 
during bankruptcy just as easily as they can now. This bill does 
nothing to prevent this.
  The way we can tell that this legislation does not do the job is the 
way the Republican Leadership is making us debate the bill by taking 
the unusually restrictive step of not allowing us to debate substitute 
legislation. I guess they realize that this bill is so bad that if they 
allowed us the substitute, it certainly would have prevailed over this 
legislation. I would have supported the legislation that Congressmen 
Rangel and George Miller had prepared.
  I urge my colleagues to vote against this legislation. Its only 
accomplishment is to make the problems of America's pensioners even 
worse than they are today.
  Ms. DeGETTE. Mr. Speaker, I rise today in strong support of 
comprehensive pension reform, a topic that has been weighing heavily on 
the minds of thousands of my constituents, not to mention workers and 
retirees across the country. While I agree with many of the provisions 
of H.R. 2830, I cannot in good conscience support the bill in its 
current form. In fact, some provisions could make the current situation 
worse.
  I don't believe it's fair to rush through this complicated issue, one 
that is so critical to workers and retirees, without meaningful public 
debate and thorough consideration of alternatives. I had hoped to 
support this legislation, but I have many misgivings in its current 
form. We need to make it harder, not easier, for companies to unload 
pensions onto the taxpayers. We need to give employers more, not fewer 
incentives to keep their promises to retirees. And we need to return 
the PBGC to sound financial footing to protect the retirement security 
of hardworking Americans. On whole, many provisions in this bill will 
be a marked improvement over current law, but I cannot support it 
because we can do much better.
  For years, workers depended on employer-sponsored pensions to pay 
their bills and live comfortably in retirement. But now workers and 
retirees live in fear of losing these benefits, which they have 
rightfully earned over long careers. Each week it seems another company 
is considering bankruptcy filing, and too often the first costs they 
want to unload are promises to pensioners. Nationwide, the pension 
system is underfunded by $450 billion. We must do what we can to 
require companies to take all possible steps to fulfill the promises 
they make to workers. Unfortunately, the bill before us may make the 
problem worse, and could force even more companies to unload their 
pensions.
  The bill fails to shore up the Pension Benefit Guaranty Corporation, 
the government insurer of defined benefit pensions. The PBGC is 
currently $24 billion in the hole, and if we do not take meaningful 
steps now, it will require a taxpayer bailout. I support a Democratic 
alternative that would make it harder for companies to unload their 
obligations to the PBGC, and help return the agency to solvency. This 
option was not even given the benefit of an up-or-down vote.
  Another major concern I have with this legislation is its lack of 
protection for older workers. Cash balance plans, hybrid plans that 
have become attractive alternatives to traditional pension plans, can 
unfairly discriminate against older employees. When companies switch to 
cash balance plans, older workers often see their promised benefits 
summarily reduced. Even the Bush administration has recognized these 
complications, and I would like to see a pension bill with more 
adequate protections for older workers.
  This bill also fails to hold company executives to the same standards 
they expect of their rank-and-file employees. When faced with financial 
problems, CEOs have made decisions to cut the benefits earned by 
employees and unloading pension obligations onto the federal 
government. Far too often, these executives escape with multi-million 
dollar benefit packages, leaving the company in bankruptcy and workers 
in poverty. Congress has the chance to require our business leaders to 
act in the best interest of their firm and their employees, and 
sacrifice along with them if the financial situation is beyond repair.
  I am also concerned that this bill does not have sufficient 
disclosure requirements. Beneficiaries have the right to know the 
funding status of their pensions, and companies should not be allowed 
to keep this information from regulators or retirees. Current law 
allows companies to use accounting techniques to make their pensions 
seem more solvent than they really are. This needs to stop, but bill 
does not go far enough.
  Mr. Speaker, on the same day voters are going to the polls in Iraq, 
democracy has been subverted in this distinguished chamber. The 
majority has not allowed adequate time for debate on this measure, 
refused to allow the consideration of amendments, and did not allow the 
Democrats to offer a common-sense alternative. This is no way to 
legislate, and we can do better.
  The SPEAKER pro tempore. All time for debate has expired.
  Pursuant to House Resolution 602, the previous question is ordered on 
the bill, as amended.
  The question is on the engrossment and third reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.


     Motion to Recommit Offered by Mr. George Miller of California

  Mr. GEORGE MILLER of California. Mr. Speaker, I offer a motion to 
recommit on behalf of myself and Congressman Cardin.
  The SPEAKER pro tempore. Is the gentleman opposed to the bill?
  Mr. GEORGE MILLER of California. Yes, I am, Mr. Speaker, in its 
present form.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  The Clerk read as follows:

       Mr. George Miller of California moves to recommit the bill 
     H.R. 2830 to the Committee on Education and the Workforce and 
     the Committee on Ways and Means with instructions to report 
     the same back to the House forthwith with the following 
     amendment:

       Strike all after the enacting clause and insert the 
     following:

     SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Pension 
     Protection Act of 2005''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title and table of contents.

     TITLE I--INTEREST RATE FOR 2006 AND 2007 FUNDING REQUIREMENTS

Sec. 101. Interest rate for 2006 and 2007 funding requirements.
Sec. 102. Government Accountability Office pension funding report.

          TITLE II--PROTECTING PENSION BENEFITS IN BANKRUPTCY

Sec. 201. Promotion of reasonable alternatives to plan termination.
Sec. 202. Election by employer to restore plan upon emergence from 
              bankruptcy.
Sec. 203. Date on which lien for missed contributions is deemed 
              perfected.

      TITLE III--PROTECTION OF PENSION PLANS FOR AIRLINE EMPLOYEES

Sec. 301. Special funding rules for plans maintained by commercial 
              airlines that are amended to cease future benefit 
              accruals.
Sec. 302. Recognition of legally mandated early retirement ages in 
              determining amount of guaranteed benefits.

             TITLE IV--FAIRNESS FOR RANK AND FILE EMPLOYEES

Sec. 401. Treatment of nonqualified deferred compensation plans when 
              employer defined benefit plan in at-risk status.
Sec. 402. Nonqualified deferred compensation reduced by percentage of 
              underfunded plan upon bankruptcy of employer.
Sec. 403. Termination fairness standard for nonqualified deferred 
              compensation plans in connection with pension plan 
              terminations based on bankruptcy reorganization.

TITLE V--FUNDING AND DEDUCTION RULES FOR MULTIEMPLOYER DEFINED BENEFIT 
                      PLANS AND RELATED PROVISIONS

                       Subtitle A--Funding Rules

 Part I--Amendments to Employee Retirement Income Security Act of 1974

Sec. 501. Funding rules for multiemployer defined benefit plans.

[[Page 28659]]

Sec. 502. Additional funding rules for multiemployer plans in 
              endangered or critical status.
Sec. 503. Measures to forestall insolvency of multiemployer plans.
Sec. 504. Special rule for certain benefits funded under an agreement 
              approved by the Pension Benefit Guaranty Corporation.
Sec. 505. Withdrawal liability reforms.
Sec. 506. Special rules for multiple employer plans of certain 
              cooperatives.

          Part II--AMENDMENTS TO INTERNAL REVENUE CODE OF 1986

Sec. 511. Funding rules for multiemployer defined benefit plans.
Sec. 512. Additional funding rules for multiemployer plans in 
              endangered or critical status.

                   Part III--SUNSET OF FUNDING RULES

Sec. 516. Sunset of funding rules.

              Subtitle B--Deduction and Related Provisions

Sec. 521. Deduction limits for multiemployer plans.
Sec. 522. Transfer of excess pension assets to multiemployer health 
              plan.

  TITLE VI--ENHANCED RETIREMENT SAVINGS AND DEFINED CONTRIBUTION PLANS

Sec. 601. AmeriSave matching credit.
Sec. 602. Manner in which AmeriSave matching credit allowed.
Sec. 603. Increasing participation through automatic contribution 
              arrangements.
Sec. 604. Preemption of State laws precluding automatic enrollment or 
              automatic rollovers.
Sec. 605. Fiduciary standards relating to automatic or default 
              investments.
Sec. 606. Penalty-free withdrawals from retirement plans for 
              individuals called to active duty for at least 179 days.
Sec. 607. Waiver of 10 percent early withdrawal penalty tax on certain 
              distributions of pension plans for public safety 
              employees.
Sec. 608. Combat zone compensation taken into account for purposes of 
              determining limitation and deductibility of contributions 
              to individual retirement plans.
Sec. 609. Direct payment of tax refunds to individual retirement plans.
Sec. 610. Allow rollovers by nonspouse beneficiaries of certain 
              retirement plan distributions.
Sec. 611. IRA eligibility for the disabled.

       TITLE VII--PROVISIONS TO ENHANCE HEALTH CARE AFFORDABILITY

Sec. 701. Treatment of annuity and life insurance contracts with a 
              long-term care insurance feature.
Sec. 702. Disposition of unused health benefits in cafeteria plans and 
              flexible spending arrangements.
Sec. 703. Distributions from governmental retirement plans for health 
              and long-term care insurance for public safety officers.

 TITLE VIII--REDUCTION IN BENEFIT OF RATE REDUCTION FOR FAMILIES WITH 
                        INCOMES OVER $1,000,000

Sec. 801. Reduction in benefit of rate reduction for families with 
              incomes over $1,000,000.

     TITLE I--INTEREST RATE FOR 2006 AND 2007 FUNDING REQUIREMENTS

     SEC. 101. INTEREST RATE FOR 2006 AND 2007 FUNDING 
                   REQUIREMENTS.

       (a) Amendments to ERISA.--
       (1) In general.--Subclause (II) of section 302(b)(5)(B)(ii) 
     of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1082(b)(5)(B)(ii)(II)) is amended--
       (A) by striking ``January 1, 2006'' and inserting ``January 
     1, 2008'', and
       (B) by striking ``and 2005'' in the heading and inserting 
     ``, 2005, 2006, and 2007''.
       (2) Current liability.--Subclause (IV) of section 
     302(d)(7)(C)(i) of such Act (29 U.S.C. 1082(d)(7)(C)(i)(IV)) 
     is amended--
       (A) by striking ``or 2005'' and inserting ``, 2005, 2006, 
     or 2007'', and
       (B) by striking ``and 2005'' in the heading and inserting 
     ``, 2005, 2006, and 2007''.
       (3) Risk-based premiums.--Section 4006(a)(3)(E)(iii)(V) of 
     such Act (29 U.S.C. 1306(a)(3)(E)(iii)(V)) is amended by 
     striking ``January 1, 2006'' and inserting ``January 1, 
     2008''.
       (b) Amendments to the Internal Revenue Code of 1986.--
       (1) In general.--Subclause (II) of section 412(b)(5)(B)(ii) 
     of the Internal Revenue Code of 1986 is amended--
       (A) by striking ``January 1, 2006'' and inserting ``January 
     1, 2008'', and
       (B) by striking ``and 2005'' in the heading and inserting 
     ``, 2005, 2006, and 2007''.
       (2) Current liability.--Subclause (IV) of section 
     412(l)(7)(C)(i) of such Code is amended--
       (A) by striking ``or 2005'' and inserting ``, 2005, 2006, 
     or 2007'', and
       (B) by striking ``and 2005'' in the heading and inserting 
     ``, 2005, 2006, and 2007''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2005.

     SEC. 102. GOVERNMENT ACCOUNTABILITY OFFICE PENSION FUNDING 
                   REPORT.

       (a) In General.--The Comptroller General of the Government 
     Accountability Office shall transmit to the Congress a 
     pension funding report not later than one year after the date 
     of the enactment of this Act.
       (b) Report Content.--The pension funding report required 
     under subsection (a) shall include an analysis of the 
     feasibility, advantages, and disadvantages of--
       (1) requiring an employee pension benefit plan to insure a 
     portion of such plan's total investments;
       (2) requiring an employee pension benefit plan to adhere to 
     uniform solvency standards set by the Pension Benefit 
     Guaranty Corporation, which are similar to those applied on a 
     State level in the insurance industry; and
       (3) amortizing a single-employer defined benefit pension 
     plan's shortfall amortization base (referred to in section 
     303(c)(3) of the Employee Retirement Income Security Act of 
     1974 (as amended by this Act)) over various periods of not 
     more than 7 years.

          TITLE II--PROTECTING PENSION BENEFITS IN BANKRUPTCY

     SEC. 201. PROMOTION OF REASONABLE ALTERNATIVES TO PLAN 
                   TERMINATION.

       (a) Additional Requirements for Distress Termination.--
     Section 4041(c)(2)(B) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1341(c)(2)(B)) is amended by 
     adding at the end the following:
       ``(iv) Additional requirements.--Notwithstanding any other 
     provision of this section, unless the corporation or the 
     court, in the case of a distress termination pursuant to 
     clause (ii), has determined that reasonable efforts to 
     consider available alternatives to termination (including, 
     but not limited to, alternatives described in section 
     4042(c)(3)) have been undertaken by such person (and, in the 
     case of a plan maintained pursuant to a collective bargaining 
     agreement, have been undertaken by the bargaining parties in 
     good faith bargaining), the plan may not be terminated. A 
     participant or beneficiary of the plan or an employee 
     organization representing such participants or beneficiaries 
     may bring an action in the appropriate court to challenge 
     such determination by the corporation and seek equitable 
     relief or must be afforded an opportunity to be heard by the 
     appropriate court if a court is making such determination.''.
       (b) Efforts by the Corporation at Consultation With 
     Parties.--Section 4042(c) of such Act (29 U.S.C. 1342(c)) is 
     amended--
       (1) by inserting ``(1)'' after ``(c)'';
       (2) by striking ``If the corporation and the plan 
     administrator agree'' and all that follows through ``in 
     subsection (d)(3).'';
       (3) by redesignating paragraph (3) as paragraph (2); and
       (4) by adding at the end the following new paragraph:
       ``(3)(A) The corporation may not institute proceedings 
     under this section to terminat such plan unless the 
     corporation demonstrates that it has made all reasonable 
     efforts to negoitate with the plan sponsor, the plan 
     participants, and (in the case of a plan maintained pursuant 
     to a collective bargaining agreement) the employee 
     organization representing plan participants for purposes of 
     collective bargaining to determine whether there are any 
     reasonable available alternatives to termination (including, 
     but not limited to, alternatives described subparagraph (B).
       ``(B) The reasonable alternatives to termination referred 
     to in subparagraph (A) consist of measures which are in the 
     best interest of plan participants and which include (but are 
     not limited to) the following:
       ``(i) Financing or loans sought by any member of the plan 
     sponsor's controlled group, with or without assistance from 
     the corporation, in order to obtain plan financing, including 
     back-up guarantees to any such financing which the 
     corporation is hereby authorized to provide for such purpose.
       ``(ii) New plan structures agreed to by the parties, such 
     as transfer of plan liabilities to multiemployer plans, new 
     benefit formulas for new hires or non-vested participants, or 
     other plan restructuring alternatives agreed to by the 
     parties.
       ``(iii) Reinsurance which the corporation is hereby 
     authorized to obtain for the plan.
       ``(iv) An agreement by the parties authorizing alternative 
     funding schedules, approved by the corporation, which shall 
     thereafter be treated as meeting the minimum funding 
     requirements for the plan under part 3 of subtitle B of title 
     I.
       ``(v) Purchase by the plan sponsor of an annuity contract 
     to cover liabilities of the plan, which the corporation is 
     hereby authorized to guarantee as necessary to secure such a 
     contract.''.
       (c) Required Court Determinations.--Section 4042(c) of such 
     Act is amended by adding at the end the following new 
     paragraph:
       ``(4)(A) A plan may not be terminated under this section 
     unless the court, in the proceedings described in paragraph 
     (1), finds that--
       ``(i) reasonable efforts to consider available alternatives 
     to termination (including, but not limited to, alternatives 
     described in

[[Page 28660]]

     paragraph (3)) have been undertaken by the plan sponsor (and, 
     in the case of a plan maintained pursuant to a collective 
     bargaining agreement, have been undertaken by the bargaining 
     parties in good faith bargaining),
       ``(ii) without such termination, a contributing sponsor of 
     the plan (or a member of such a sponsor's controlled group) 
     would be unable to pay its debts when due and--
       ``(I) if such proceedings include proceedings in which 
     reorganization of such sponsor or member is sought in a case 
     under title 11, United States Code, or under any similar law 
     of a State or political subdivision of a State, such sponsor 
     or member could not be discharged in such proceedings, or
       ``(II) in any other case, such sponsor or member would be 
     unable to continue in business, and
       ``(iii) all otherwise applicable requirements for 
     termination under this section are met.
       ``(B) Any party consisting of the plan sponsor, a plan 
     participant, or (in the case of a plan maintained pursuant to 
     a collective bargaining agreement) the employee organization 
     representing plan participants for purposes of collective 
     bargaining may intervene in the proceedings described in 
     paragraph (1) to challenge whether all applicable 
     requirements for termination under this section are met.''.
       (d) Notice.--
       (1) Section 4041(a) of such Act (29 U.S.C. 1341(a) is 
     amended by adding at the end the following new paragraph:
       ``(4) Notice of right to challenge.--Together with the 
     notice of intent to terminate, the plan administrator shall 
     provide to each participant and beneficiary a written notice 
     of the right of participants and beneficiaries to challenge 
     determinations under this section, written in a manner likely 
     to be understood by the participant or beneficiary.''.
       (2) Section 4042(a) of such Act (29 U.S.C. 1342(a)) is 
     amended by adding at the end the following new sentence: 
     ``Prior to commencing proceedings under this section with 
     respect to any plan, the corporation shall provide notice to 
     plan participants and beneficiaries of the right to challenge 
     determinations under this section, written in a manner likely 
     to be understood by the participant or beneficiary.''.
       (e) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply with respect to any plans undergoing termination 
     proceedings pursuant to section 4041 or 4042 of the Employee 
     Retirement Income Security Act of 1974 which are pending on 
     or after the date of the enactment of this Act.
       (2) Transitional rule for involuntary terminations.--In any 
     case in which, during the period beginning December 1, 2004, 
     and ending with the date of the enactment of this Act, the 
     Pension Benefit Guaranty Corporation has commenced 
     termination proceedings under section 4042 of the Employee 
     Retirement Income Security Act of 1974 (including the 
     execution of any termination or trust agreement under such 
     section)--
       (A) the Corporation or other entity serving as trustee 
     shall, effective as of the date of the enactment of this 
     Act--
       (i) cease any activities undertaken to terminate the plan, 
     and
       (ii) take such actions as may be necessary to restore the 
     plan to its status immediately prior to the commencement of 
     such proceedings or the execution of such agreement, and
       (B) the procedures and requirements of section 4042 of the 
     Employee Retirement Income Security Act of 1974 (as amended 
     by this section) shall apply to any further such proceedings 
     undertaken after the date of the enactment of this Act.

     SEC. 202. ELECTION BY EMPLOYER TO RESTORE PLAN UPON EMERGENCE 
                   FROM BANKRUPTCY.

       (a) In General.--Section 4047 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1347) is amended--
       (1) by inserting ``(a)'' before ``Whenever'', and
       (2) by adding at the end the following new subsection:
       ``(b) Within 3 years after the date on which a plan sponsor 
     of a plan terminated under section 4041(c)(2)(B)(ii) or under 
     section 4042 with respect to a reorganization case under 
     title 11 of the United States Code, or under any similar law 
     of a State or a political subdivision of a State (or with 
     respect to a case described in section 4041(c)(2)(B)(i) which 
     has been converted to such a reorganization case), is 
     discharged in such case (or the case is otherwise dismissed), 
     the plan sponsor may elect to restore the plan to its 
     pretermination status. Rules similar to the rules of 
     subsection (a) shall apply with respect to any election made 
     under this subsection. ''.
       (b) Premium Rate for Terminated Single-Employer Plans Which 
     Are not Restored.--Subsection (a) of section 4006 of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1306) is amended by adding at the end the following:
       ``(7) Premium Rate for Certain Terminated Single-Employer 
     Plans.--
       ``(A) In general.--In any case in which a plan sponsor of a 
     plan terminated under 4041(c)(2)(B)(ii) or under section 4042 
     with respect to a reorganization case under title 11 of the 
     United States Code, or under any similar law of a State or a 
     political subdivision of a State, (or with respect to a case 
     described in section 4041(c)(2)(B)(i) which has been 
     converted to such a reorganization case) is discharged in 
     such case (or the case is otherwise dismissed), unless there 
     is in effect an election under section 4047(b) in connection 
     with such case after such discharge (or dismissal), there 
     shall be payable to the corporation, with respect to each 
     applicable 12-month period before the end of the 3-year 
     period after such discharge (or dismissal) for which such 
     election is not in effect, a premium at a rate equal to 
     $1,250 multiplied by the number of individuals who were 
     participants in the plan immediately before the termination 
     date. Such premium shall be in addition to any other premium 
     under this section.
       ``(B) Applicable 12-month period.--For purposes of 
     subparagraph (A), the term `applicable 12-month period' 
     means--
       ``(i) the 12-month period beginning with the first month 
     following the month in which the termination date occurs, and
       ``(ii) each of the first two 12-month periods immediately 
     following the period described in subclause (I).
       ``(C) Coordination with section 4007.--
       ``(i) Notwithstanding section 4007--
       ``(I) premiums under this paragraph shall be due within 30 
     days after the beginning of any applicable 12-month period, 
     and
       ``(II) the designated payor shall be the person who is the 
     contributing sponsor as of immediately before the termination 
     date.
       ``(ii) The fifth sentence of section 4007(a) shall not 
     apply in connection with premiums determined under this 
     paragraph.
       ``(D) Use of Funds.--All amounts paid to the corporation 
     under subparagraph (A) shall be deposited in the appropriate 
     fund established under section 4005(a). Amounts deposited 
     under the preceding sentence shall only be available to the 
     corporation for payment of nonforfeitable benefits under the 
     plan to participants of the terminated plan in excess of the 
     corporation's guarantee under section 4022.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to plan terminations with respect to 
     which proceedings are instituted, or are pending, on or after 
     November 9, 2005.

     SEC. 203. DATE ON WHICH LIEN FOR MISSED CONTRIBUTIONS IS 
                   DEEMED PERFECTED.

       (a) In General.--Section 4041 of the Employee Retirement 
     Income Security Act of 1974 is amended by adding at the end 
     the following new subsection:
       ``(f) In the case of the commencement of any reorganization 
     case under title 11 of the United States Code, or under any 
     similar law of a State or a political subdivision of a State, 
     (a case described in section 4041(c)(2)(B)(i)) by or against 
     a plan sponsor which has been converted to such a 
     reorganization case), any lien or other security of a plan in 
     such plan sponsor for missed contributions to the plan shall 
     be treated as being perfected as of the earlier of the date 
     of the commencement of such case or the date such security or 
     lien is filed.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply with respect to plan terminations with respect to 
     which proceedings are instituted, or are pending, on or after 
     November 9, 2005.

      TITLE III--PROTECTION OF PENSION PLANS FOR AIRLINE EMPLOYEES

     SEC. 301. SPECIAL FUNDING RULES FOR PLANS MAINTAINED BY 
                   COMMERCIAL AIRLINES THAT ARE AMENDED TO CEASE 
                   FUTURE BENEFIT ACCRUALS.

       (a) In General.--If an election is made to have this 
     section apply to an eligible plan--
       (1) in the case of any applicable plan year beginning 
     before January 1, 2007, the plan shall not have an 
     accumulated funding deficiency for purposes of section 302 of 
     the Employee Retirement Income Security Act of 1974 and 
     sections 412 and 4971 of the Internal Revenue Code of 1986 if 
     contributions to the plan for the plan year are not less than 
     the minimum required contribution determined under subsection 
     (d) for the plan for the plan year, and
       (2) in the case of any applicable plan year beginning on or 
     after January 1, 2007, the minimum required contribution 
     determined under sections 303 of such Act and 430 of such 
     Code shall, for purposes of sections 302 and 303 of such Act 
     and sections 412, 430, and 4971 of such Code, be equal to the 
     minimum required contribution determined under subsection (d) 
     for the plan for the plan year.
       (b) Eligible Plan.--For purposes of this section--
       (1) In general.--The term ``eligible plan'' means a defined 
     benefit plan (other than a multiemployer plan) to which 
     sections 302 of such Act and 412 of such Code applies--
       (A) which is sponsored by an employer--
       (i) which is a commercial airline passenger airline, or
       (ii) the principal business of which is providing catering 
     services to a commercial passenger airline, and
       (B) with respect to which the requirements of paragraphs 
     (2) and (3) are met.
       (2) Accrual restrictions.--
       (A) In general.--The requirements of this paragraph are met 
     if, effective as of the first day of the first applicable 
     plan year and at

[[Page 28661]]

     all times thereafter while an election under this section is 
     in effect, the plan provides that--
       (i) the accrued benefit, any death or disability benefit, 
     and any social security supplement described in the last 
     sentence of section 411(a)(9) of such Code and section 
     204(b)(1)(G) of such Act, of each participant are frozen at 
     the amount of such benefit or supplement immediately before 
     such first day, and
       (ii) all other benefits under the plan are eliminated,
     but only to the extent the freezing or elimination of such 
     benefits would have been permitted under section 411(d)(6) of 
     such Code and section 204(g) of such Act if they had been 
     implemented by a plan amendment adopted immediately before 
     such first day.
       (B) Increases in section 415 limits disregarded.--If a plan 
     provides that an accrued benefit of a participant which has 
     been subject to any limitation under section 415 of such Code 
     will be increased if such limitation is increased, the plan 
     shall not be treated as meeting the requirements of this 
     paragraph unless, effective as of the first day of the first 
     applicable plan year and at all times thereafter while an 
     election under this section is in effect, the plan provides 
     that any such increase shall not take effect. A plan shall 
     not fail to meet the requirements of section 411(d)(6) of 
     such Code and section 204(g) of such Act solely because the 
     plan is amended to meet the requirements of this 
     subparagraph.
       (3) Restriction on applicable benefit increases.--
       (A) In general.--The requirements of this paragraph are met 
     if no applicable benefit increase takes effect at any time 
     during the period beginning on July 26, 2005, and ending on 
     the day before the first day of the first applicable plan 
     year.
       (B) Applicable benefit increase.--For purposes of this 
     paragraph, the term ``applicable benefit increase'' means, 
     with respect to any plan year, any increase in liabilities of 
     the plan by plan amendment (or otherwise provided in 
     regulations provided by the Secretary) which, but for this 
     paragraph, would occur during the plan year by reason of--
       (i) any increase in benefits,
       (ii) any change in the accrual of benefits, or
       (iii) any change in the rate at which benefits become 
     nonforfeitable under the plan.
       (4) Exception for imputed disability service.--Paragraphs 
     (2) and (3) shall not apply to any accrual or increase with 
     respect to imputed service provided to a participant during 
     any period of the participant's disability occurring on or 
     after the effective date of the plan amendment providing the 
     restrictions under paragraph (2) if the participant--
       (A) was receiving disability benefits as of such date, or
       (B) was receiving sick pay and subsequently determined to 
     be eligible for disability benefits as of such date.
       (c) Elections and Related Terms.--
       (1) In general.--A plan sponsor shall make the election 
     under subsection (a) at such time and in such manner as the 
     Secretary of the Treasury may prescribe. Except as provided 
     in subsection (h)(5), such election, once made, may be 
     revoked only with the consent of such Secretary.
       (2) Years for which election made.--
       (A) In general.--The plan sponsor may select the first plan 
     year to which the election under subsection (a) applies from 
     among plan years ending after the date of the election. The 
     election shall apply to such plan year and all subsequent 
     years.
       (B) Election of new plan year.--The plan sponsor may 
     specify a new plan year in the election under subsection (a) 
     and the plan year of the plan may be changed to such new plan 
     year without the approval of the Secretary of the Treasury.
       (3) Applicable plan year.--The term ``applicable plan 
     year'' means each plan year to which the election under 
     subsection (a) applies under paragraph (1).
       (d) Minimum Required Contribution.--
       (1) In general.--In the case of any applicable plan year 
     during the amortization period, the minimum required 
     contribution shall be the amount necessary to amortize the 
     unfunded liability of the plan, determined as of the first 
     day of the plan year, in equal annual installments (until 
     fully amortized) over the remainder of the amortization 
     period. Such amount shall be separately determined for each 
     applicable plan year.
       (2) Years after amortization period.--In the case of any 
     plan year beginning after the end of the amortization period, 
     section 302(a)(2)(A) of such Act and section 412(a)(2)(A) of 
     such Code shall apply to such plan, but any charge or credit 
     in the funding standard account under section 302 of such Act 
     of section 412 of such Code shall be zero.
       (3) Definitions.--For purposes of this section--
       (A) Unfunded liability.--The term ``unfunded liability'' 
     means the unfunded accrued liability under the plan, 
     determined under the unit credit funding method.
       (B) Amortization period.--The term ``amortization period'' 
     means the 20-plan year period beginning with the first 
     applicable plan year.
       (4) Other rules.--In determining the minimum required 
     contribution and amortization amount under this subsection--
       (A) the provisions of section 302(c)(3) of such Act and 
     section 412(c)(3) of such Code, as in effect before the date 
     of enactment of this section, shall apply,
       (B) the rate of interest under section 302(b) of such Act 
     and section 412(b) of such Code, as so in effect, shall be 
     used for all calculations requiring an interest rate, and
       (C) the value of plan assets shall be equal to their fair 
     market value.
       (5) Special rule for certain plan spinoffs.--For purposes 
     of subsection (a), if, with respect to any eligible plan to 
     which this subsection applies--
       (A) any applicable plan year includes the date of the 
     enactment of this Act, and
       (B) a plan was spun off from the eligible plan during the 
     plan year but before such date of enactment,
     the minimum required contribution under subsection (a)(1) for 
     the eligible plan for such applicable plan year shall be 
     determined as if the plans were a single plan for that plan 
     year (based on the full 12-month plan year in effect prior to 
     the spin-off). The employer shall designate the allocation of 
     the minimum required contribution between such plans for the 
     applicable plan year and direct the appropriate reallocation 
     between the plans of any contributions for the applicable 
     plan year.
       (e) Funding Standard Account and Prefunding Balance.--Any 
     charge or credit in the funding standard account under 
     section 302 of such Act or section 412 of such Code, and any 
     prefunding balance under section 303 of such Act or section 
     430 of such Code, as of the day before the first day of the 
     first applicable plan year, shall be reduced to zero.
       (f) Amendments to Other Provisions.--
       (1) Qualification requirement.--Section 401(a)(36) of the 
     Internal Revenue Code of 1986, as added by section 402 of 
     this Act, is amended by adding at the end the following: 
     ``This paragraph shall also apply to any plan during any 
     period during which an amortization schedule under section 
     403 of the Pension Security and Transparency Act of 2005 is 
     in effect.''
       (2) PBGC liability limited.--Section 4022 of the Employee 
     Retirement Income Security Act of 1974, as amended by this 
     Act, is amended by adding at the end the following new 
     subsection:
       ``(g) Special Rule for Plans Electing Certain Funding 
     Requirements.--During any period in which an election by a 
     plan under section 301 of the Pension Protection Act of 2005 
     is in effect, then this section and section 4044(a)(3) shall 
     be applied by treating the first day of the first applicable 
     plan year as the termination date of the plan. This 
     subsection shall not apply to any plan for which an election 
     under section 403(h) of such Act is in effect.''.
       (3) Limitation on deductions under certain plans.--Section 
     404(a)(7)(C)(iii) of the Internal Revenue Code of 1986, as 
     added by this Act, is amended by adding at the end the 
     following new sentence: ``This clause shall also apply to any 
     plan for a plan year if an election under section 403 of the 
     Pension Security and Transparency Act of 2005 is in effect 
     for such year.''
       (4) Notice.--In the case of a plan amendment adopted in 
     order to comply with this section, any notice required under 
     section 204(h) of such Act or section 4980F(e) of such Code 
     shall be provided within 15 days of the effective date of 
     such plan amendment. This subsection shall not apply to any 
     plan unless such plan is maintained pursuant to one or more 
     collective bargaining agreements between employee 
     representatives and 1 or more employers.
       (g) Special Rules for Termination of Eligible Plans.--
     During any period an election is in effect under this section 
     with respect to an eligible plan, the Pension Benefit 
     Guaranty Corporation shall, before it seeks or approves a 
     termination of such plan under section 4041(c) or 4042 of the 
     Employee Retirement Income Security Act of 1974--
       (1) make a determination under section 4041(c)(4) or 
     4042(i) of such Act whether the termination would be 
     necessary if the Secretary of the Treasury were to enter into 
     an agreement under section 4047(a) of such Act which provides 
     an alternative funding agreement to replace the amortization 
     schedule under this section, and
       (2) if the Corporation determines such an agreement would 
     make such termination unnecessary, take all necessary actions 
     to ensure the agreement is entered into.
     The Pension Benefit Guaranty Corporation shall make the 
     determination under paragraph (1) within 90 days of receiving 
     all information needed in connection with a request for a 
     termination (or if no such request is made, within 90 days of 
     consideration of the termination by the Corporation).
       (h) Certain Benefit Accruals and Increases Allowed If 
     Additional Contributions Made to Cover Costs.--
       (1) In general.--If an employer elects the application of 
     this subsection--
       (A) the requirements of paragraphs (2) and (3) of 
     subsection (b) shall not apply with respect to any eligible 
     plan maintained by the employer and specified in the 
     election, and
       (B) the minimum required contribution under subsection (d) 
     for any plan year with

[[Page 28662]]

     respect to the plan shall be increased by the amounts 
     described in paragraphs (2) and (3).
     Any liabilities and assets taken into account under this 
     subsection shall not be taken into account in determining the 
     unfunded liability of the plan for purposes of subsection 
     (d).
       (2) Current funding of accruals and increases.--The amount 
     determined under this paragraph for any plan year is the 
     target normal cost which would occur under section 302 of 
     such Act and 412 of such Code if--
       (A) any benefit accrual, or benefit increase taking effect, 
     during the plan year by reason of this subsection were 
     treated as having been accrued or earned during the plan 
     year, and
       (B) the plan were treated as if it were subject to section 
     302(d) of such Act and section 412(d) of such Code.
       (3) Funding must be maintained.--The amount determined 
     under this paragraph for any plan year is the amount charged 
     to the funding standard account under section 302(d) of such 
     Act and section 412(d) of such Code if--
       (A) the funding target were determined by only taking into 
     account benefits to which paragraph (2) applied for preceding 
     plan years,
       (B) the only assets taken into account were the 
     contributions required under this paragraph and paragraph (2) 
     for preceding plan years (and any earnings thereon),
       (C) the amortization period included only the plan year,
       (D) the transition rule under section 303(c)(4)(B) of such 
     Act and section 430(c)(4)(B) of such Code did not apply, and
       (E) the plan were treated as if it were subject to section 
     302(d) of such Act and section 412(d) of such Code.
       (4) Special rules for years before 2007.--Notwithstanding 
     any other provision of this Act, in the case of an applicable 
     plan year of an eligible plan to which this subsection 
     applies which begins before January 1, 2007, in determining 
     the amounts described in paragraphs (2) and (3) for such plan 
     year--
       (A) the provisions of, and amendments made by, sections 
     101, 102, 111, and 112 shall apply to such plan year, except 
     that
       (B) the interest rate used under section 303 of such Act 
     and section 430 of such Code for purposes of applying 
     paragraphs (2) and (3) to such plan year shall be the 
     interest rate determined under section 302(b)(5) of such Act 
     and section 412(b)(5) of such Code, as in effect for plan 
     years beginning in 2005.
       (5) Election out of section.--An employer maintaining an 
     eligible plan to which this subsection applies may make a 
     one-time election with respect to any applicable plan year 
     not to have this section apply to such plan year and all 
     subsequent plan years. Subject to subsection (d)(2), the 
     minimum required contribution under section 302 of such Act 
     and 412 of such Code for all such plan years shall be 
     determined without regard to this section.
       (i) Exclusion of Certain Employees From Minimum Coverage 
     Requirements.--
       (1) In general.--Section 410(b)(3) of such Code is amended 
     by striking the last sentence and inserting the following: 
     ``For purposes of subparagraph (B), management pilots who are 
     not represented in accordance with title II of the Railway 
     Labor Act shall be treated as covered by a collective 
     bargaining agreement described in such subparagraph if the 
     management pilots manage the flight operations of air pilots 
     who are so represented and the management pilots are, 
     pursuant to the terms of the agreement, included in the group 
     of employees benefitting under the trust described in such 
     subparagraph. Subparagraph (B) shall not apply in the case of 
     a plan which provides contributions or benefits for employees 
     whose principal duties are not customarily performed aboard 
     an aircraft in flight (other than management pilots described 
     in the preceding sentence).''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to years beginning before, on, or after the date 
     of the enactment of this Act.
       (j) Effective Date.--Except as otherwise provided in this 
     section, the amendments made by this section shall apply to 
     plan years ending after the date of the enactment of this 
     Act.

     SEC. 302. RECOGNITION OF LEGALLY MANDATED EARLY RETIREMENT 
                   AGES IN DETERMINING AMOUNT OF GUARANTEED 
                   BENEFITS.

       (a) Single-Employer Plan Benefits Guaranteed.--Section 
     4022(b)(3) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1322(b)(3)) is amended, in the flush matter 
     following subparagraph (B), by adding at the end the 
     following: ``If, at the time of termination of a plan under 
     this title, regulations prescribed by the Federal Aviation 
     Administration require an individual to separate from service 
     as a commercial airline pilot after attaining a specified age 
     which is less than age 65, the first sentence of this 
     paragraph shall be applied to an individual who is a 
     participant in the plan by reason of such service by 
     substituting such age for age 65.''.
       (b) Aggregate Limit on Benefit Guaranteed.--Section 
     4022B(a) of such Act (29 U.S.C. 1322b(a)) is amended by 
     adding at the end the following: ``If, as of such date, 
     regulations prescribed by the Federal Aviation Administration 
     require an individual to separate from service as a 
     commercial airline pilot after attaining a specified age 
     which is less than age 65, this subsection shall be applied 
     to an individual who is a participant in any such plan by 
     reason of such service by substituting such age for age 
     65.''.
       (c) Effective Date.--The amendments made by this Act shall 
     apply to benefits payable on or after the date of the 
     enactment of this Act.

             TITLE IV--FAIRNESS FOR RANK AND FILE EMPLOYEES

     SEC. 401. TREATMENT OF NONQUALIFIED DEFERRED COMPENSATION 
                   PLANS WHEN EMPLOYER DEFINED BENEFIT PLAN IN AT-
                   RISK STATUS.

       (a) In General.--Subsection (b) of section 409A of the 
     Internal Revenue Code of 1986 (providing rules relating to 
     funding) is amended by redesignating paragraphs (3) and (4) 
     as paragraphs (4) and (5), respectively, and by inserting 
     after paragraph (2) the following new paragraph:
       ``(3) Employer's defined benefit plan in at-risk status.--
       ``(A) If--
       ``(i) during any period in which a defined benefit plan to 
     which section 412 applies is in an at-risk status, assets are 
     set aside (directly or indirectly) in a trust (or other 
     arrangement determined by the Secretary), or transferred to 
     such a trust or other arrangement, for purposes of paying 
     deferred compensation under a nonqualified deferred 
     compensation plan of the employer maintaining the defined 
     benefit plan, or
       ``(ii) a nonqualified deferred compensation plan of the 
     employer provides that assets will become restricted to the 
     provision of benefits under the plan in connection with such 
     at-risk status (or other similar financial measure determined 
     by the Secretary) of the defined benefit plan, or assets are 
     so restricted,
     such assets shall for purposes of section 83 be treated as 
     property transferred in connection with the performance of 
     services whether or not such assets are available to satisfy 
     claims of general creditors.
       ``(B) At-risk status.--For purposes of subparagraph (A), a 
     plan is in an at-risk status if the funded current liability 
     percentage (as defined in section 412(l)(8)), reduced as 
     described in subparagraph (E) thereof, of the plan is less 
     than 60 percent. ''.
       (b) Conforming Amendments.--Paragraphs (4) and (5) of 
     section 409A(b) of such Code, as redesignated by subsection 
     (a) of this subsection, are each amended by striking 
     ``paragraph (1) or (2)'' each place it appears and inserting 
     ``paragraph (1), (2), or (3)''.
       (c)  Effective Date.--The amendments made by this section 
     shall apply to transfers or reservations of assets after 
     December 31, 2005.

     SEC. 402. NONQUALIFIED DEFERRED COMPENSATION REDUCED BY 
                   PERCENTAGE OF UNDERFUNDED PLAN UPON BANKRUPTCY 
                   OF EMPLOYER.

       (a) In General.--Subsection (b) of section 409A of the 
     Internal Revenue Code of 1986 (providing rules relating to 
     funding), as amended by section 302, is amended by 
     redesignating paragraphs (4) and (5) as paragraphs (5) and 
     (6), respectively, and by inserting after paragraph (3) the 
     following new paragraph:
       ``(4) Reduction in allowable deferred compensation upon 
     bankruptcy.--
       ``(A) Upon the commencement of any reorganization case 
     under title 11 of the United States Code, or under any 
     similar Federal or State law--
       ``(i) during any period in which a defined benefit plan to 
     which section 412 applies is in an at-risk status, assets are 
     set aside (directly or indirectly) in a trust (or other 
     arrangement determined by the Secretary), or transferred to 
     such a trust or other arrangement, for purposes of paying 
     deferred compensation under a nonqualified deferred 
     compensation plan of the employer maintaining the defined 
     benefit plan, or
       ``(ii) a nonqualified deferred compensation plan of the 
     employer provides that assets will become restricted to the 
     provision of benefits under the plan in connection with such 
     at-risk status (or other similar financial measure determined 
     by the Secretary) of the defined benefit plan, or assets are 
     so restricted,
     the employer shall reduce the amount of benefit under the 
     non-qualified plan by the applicable percentage of 
     underfunding in the pension plan.
       ``(B) Applicable percentage.--For purposes of subparagraph 
     (A), the applicable percentage is the excess (if any) of 100 
     percentage points over the funded current liability 
     percentage (as defined in section 412(l)(8)), reduced as 
     described in subparagraph (E) thereof.
       ``(C) Additional tax.--The tax imposed by this chapter for 
     any taxable year on any taxpayer with respect to whom a 
     benefit is reduced under subparagraph (A) shall be increased 
     by 100 percent of the amount of such reduction. Such amount 
     shall not be treated as a tax for purposes of section 
     26(b)(2).''.
       (b) Conforming Amendments.--Paragraphs (5) and (6) of 
     section 409A(b) of such Code, as redesignated by subsection 
     (a) of this subsection, are each amended by striking ``or 
     (3)'' each place it appears and inserting ``(3), or (4)''.

[[Page 28663]]

       (c)  Effective Date.--The amendments made by this section 
     shall apply to transfers or reservations of assets after 
     December 31, 2005.

     SEC. 403. TERMINATION FAIRNESS STANDARD FOR NONQUALIFIED 
                   DEFERRED COMPENSATION PLANS IN CONNECTION WITH 
                   PENSION PLAN TERMINATIONS BASED ON BANKRUPTCY 
                   REORGANIZATION.

       (a) In General.--Section 206 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1056) is amended by 
     adding at the end the following new subsection:
       ``(g) Termination Fairness Standard for Nonqualified 
     Deferred Compensation Plans in Connection With Pension Plan 
     Terminations Based on Bankruptcy Reorganization.--
       ``(1) In general.--In any case in which a corporation is a 
     plan sponsor of a defined benefit plan with respect to which 
     a plan amendment is adopted that has the effect of 
     implementing a distress termination of the plan under section 
     4041(c) based on bankruptcy reorganization or a termination 
     of the plan initiated by the Pension Benefit Guaranty 
     Corporation under section 4042 based on bankruptcy 
     reorganization, in any case in which the plan is not 
     sufficient for guaranteed benefits (within the meaning of 
     section 4041(d)(2)) as of the proposed termination date, any 
     covered deferred compensation plan established or maintained 
     by such plan sponsor after the date of the adoption of such 
     plan amendment shall meet the termination fairness standard 
     of this subsection with respect to such plan amendment.
       ``(2) Termination fairness standard.--A covered deferred 
     compensation plan established or maintained by a plan sponsor 
     described in paragraph (1) meets the termination fairness 
     standard of this subsection with respect to a plan amendment 
     described in paragraph (1) if, during the 5-year period 
     beginning on the date of the adoption of such plan 
     amendment--
       ``(A) no amount of deferred compensation accrues to a 
     disqualified individual under the terms of such covered 
     deferred compensation plan (irrespective of whether the 
     accrual in deferred compensation is expressed in the form of 
     a promise, a guarantee, or any other representation), and
       ``(B) in the case of a covered deferred compensation plan 
     established during or after the 1-year period preceding the 
     notice date (or any amendment to a covered deferred 
     compensation plan if such amendment is adopted during or 
     after such 1-year period), no distribution of accrued 
     deferred compensation is made under such plan (or such 
     amendment) to a disqualified individual.
       ``(3) Definitions.--For purposes of this subsection--
       ``(A) Notice date.--The term `notice date' means, with 
     respect to an amendment described in paragraph (1)--
       ``(i) in the case of a distress termination under section 
     4041(d), the date of the advance notice of intent to 
     terminate provided pursuant to section 4041(a)(2), and
       ``(ii) in the case of a termination initiated by the 
     Pension Benefit Guaranty Corporation under section 4042, the 
     date of the application to the court under section 4042(c).
       ``(B) Covered deferred compensation plan.--
       ``(i) In general.--The term `covered deferred compensation 
     plan' means any plan providing for the deferral of 
     compensation of a disqualified individual, whether or not--

       ``(I) compensation of the disqualified individual which is 
     deferred under such plan is subject to substantial risk of 
     forfeiture,
       ``(II) the disqualified individual's rights to the 
     compensation deferred under the plan are no greater than the 
     rights of a general creditor of the plan sponsor,
       ``(III) all amounts set aside (directly or indirectly) for 
     purposes of paying the deferred compensation (including 
     income), and all income attributable to such amounts, remain 
     (until made available to the disqualified individual or other 
     beneficiary) solely the property of the plan sponsor (without 
     being restricted to the provision of benefits under the 
     plan),
       ``(IV) the amounts referred to in subclause (III) are 
     available to satisfy the claims of the plan sponsor's general 
     creditors at all times (not merely after bankruptcy or 
     insolvency), and
       ``(V) some or all of the compensation of the disqualified 
     individual which is deferred under such plan is guaranteed by 
     an insurance company, insurance service, or other similar 
     organization.

       ``(ii) Exception for qualified plans.--Such term shall not 
     include a plan that is--

       ``(I) described in section 219(g)(5)(A) of the Internal 
     Revenue Code of 1986, or
       ``(II) an eligible deferred compensation plan (as defined 
     in section 457(b) of such Code) of an eligible employer 
     described in section 457(e)(1)(A) of such Code.

       ``(iii) Plan includes arrangements, etc.--For purposes of 
     this subparagraph, the term `plan' includes any agreement or 
     arrangement.
       ``(C) Disqualified individual.--The term `disqualified 
     individual' means a director or executive officer of the plan 
     sponsor.
       ``(D) Termination based on bankruptcy reorganization.--A 
     termination of a plan which is a distress termination under 
     section 4041(c) or a termination instituted by the Pension 
     Benefit Guaranty Corporation under section 4042 is `based on 
     bankruptcy reorganization' if such termination is based in 
     whole or in part on the filing, by or against any person who 
     is a contributing sponsor of such plan or a member of such 
     sponsor's controlled group, of a petition seeking 
     reorganization in a case under title 11, United States Code, 
     or under any similar law of a State or political subdivision 
     of a State (or such a case in which liquidation is sought has 
     been converted to a case in which reorganization is sought).
       ``(E) Title iv terminology.--Any term used in this 
     subsection which is defined in section 4001(a) shall have the 
     meaning provided such term in section 4001(a).
       ``(4) Special rules.--
       ``(A) Coordinated benefits.--If the benefits of 2 or more 
     defined benefit plans established or maintained by an 
     employer are coordinated in such a manner as to have the 
     effect of the adoption of an amendment described in paragraph 
     (1), the sponsor of the defined benefit plan or plans 
     providing for such coordination shall be treated as having 
     adopted such a plan amendment as of the date such 
     coordination begins.
       ``(B) Multiple amendments.--The Secretary shall issue 
     regulations to prevent the avoidance of the purposes of this 
     subsection through the use of 2 or more plan amendments 
     rather than a single amendment.
       ``(C) Controlled groups, etc.--For purposes of this 
     subsection, all persons treated as a single employer under 
     subsection (b), (c), (m), or (o) of section 414 of the 
     Internal Revenue Code of 1986 shall be treated as 1 employer.
       ``(D) Treatment of earnings.--References to deferred 
     compensation shall be treated as including references to 
     income attributable to such compensation or such income.
       ``(5) Coordination.--The Secretary and the Secretary of the 
     Treasury shall ensure, through the execution of an 
     interagency memorandum of understanding among such 
     Secretaries, that regulations, rulings, and interpretations 
     issued by such Secretaries relating to the same matter over 
     which both such Secretaries have responsibility under this 
     subsection and section 4980H of the Internal Revenue Code of 
     1986 are administered so as to have the same effect at all 
     times.
       ``(6) Effect of waiver granted by secretary of the 
     treasury.--To the extent that any requirement of the 
     termination fairness standard of section 4980H(a)(2) of the 
     Internal Revenue Code of 1986 is waived by the Secretary of 
     the Treasury with respect to any disqualified individual 
     under section 4980H(g) of such Code in the case of any plan 
     amendment having the effect of a termination described in 
     paragraph (1) of this subsection, such requirement under the 
     termination fairness standard of paragraph (2) of this 
     subsection shall not apply with respect to such individual in 
     the case of such plan amendment.''.
       (b) Excise Tax on Funding Nonqualified Deferred 
     Compensation Plans in the Event of a Pension Plan Termination 
     Based on Bankruptcy Reorganization.--
       (1) In general.--Chapter 43 of the Internal Revenue Code of 
     1986 (relating to qualified pension, etc., plans) is amended 
     by adding at the end the following new section:

     ``SEC. 4980H. FUNDING NONQUALIFIED DEFERRED COMPENSATION 
                   PLANS.

       ``(a) Imposition of Tax in the Event of a Pension Plan 
     Termination Based on Bankruptcy Reorganization.--
       ``(1) In general.--In any case in which a corporation is a 
     plan sponsor of a defined benefit plan with respect to which 
     an plan amendment is adopted that has the effect of 
     implementing a distress termination of the plan under section 
     4041(c) of the Employee Retirement Income Security Act of 
     1974 based on bankruptcy reorganization or a termination of 
     the plan initiated by the Pension Benefit Guaranty 
     Corporation under section 4042 of such Act based on 
     bankruptcy reorganization, in any case in which the plan is 
     not sufficient for guaranteed benefits (within the meaning of 
     section 4041(d)(2) of such Act) as of the proposed 
     termination date, there is hereby imposed a tax on any 
     failure to meet the termination fairness standard of 
     paragraph (2) with respect to such plan amendment.
       ``(2) Termination fairness standard.--A covered deferred 
     compensation plan established or maintained by a plan sponsor 
     described in paragraph (1) meets the termination fairness 
     standard of this subsection with respect to a plan amendment 
     described in paragraph (1) if, during the 5-year period 
     beginning on the date of the adoption of such plan 
     amendment--
       ``(A) no amount of deferred compensation accrues to a 
     disqualified individual under the terms of such covered 
     deferred compensation plan, irrespective of whether the 
     accrual in deferred compensation is expressed in the form of 
     a promise, a guarantee, or any other representation, and
       ``(B) in the case of a covered deferred compensation plan 
     established during or after the 1-year period preceding the 
     notice date (or any amendment to a covered deferred 
     compensation plan if such amendment is adopted during or 
     after such 1-year period), no distribution of accrued 
     deferred compensation is made under such plan (or such 
     amendment) to a disqualified individual.
       ``(b) Amount of Tax.--The amount of the tax imposed by 
     subsection (a) shall be equal

[[Page 28664]]

     to the amount of the accrual described in subsection 
     (a)(2)(A) comprising the failure or the distribution 
     described in subsection (a)(2)(B) comprising the failure.
       ``(c) Liability for Tax.--The plan sponsor shall be liable 
     for the tax imposed by this section.
       ``(d) Definitions.--For purposes of this section--
       ``(1) Notice date.--The term `notice date' means with 
     respect to an amendment described in subsection (a)(1)--
       ``(A) in the case of a distress termination under section 
     4041(d) of the Employee Retirement Income Security Act of 
     1974, the date of the advance notice of intent to terminate 
     provided pursuant to section 4041(a)(2) of such Act, and
       ``(B) in the case of a termination initiated by the Pension 
     Benefit Guaranty Corporation under section 4042 of such Act, 
     the date of the application to the court under section 
     4042(c) of such Act.
       ``(2) Covered deferred compensation plan.--
       ``(A) In general.--The term `covered deferred compensation 
     plan' means any plan providing for the deferral of 
     compensation of a disqualified individual, whether or not--
       ``(i) compensation of the disqualified individual which is 
     deferred under such plan is subject to substantial risk of 
     forfeiture,
       ``(ii) the disqualified individual's rights to the 
     compensation deferred under the plan are no greater than the 
     rights of a general creditor of the plan sponsor,
       ``(iii) all amounts set aside (directly or indirectly) for 
     purposes of paying the deferred compensation, and all income 
     attributable to such amounts, remain (until made available to 
     the participant or other beneficiary) solely the property of 
     the (without being restricted to the provision of benefits 
     under the plan),
       ``(iv) the amounts referred to in clause (iii) are 
     available to satisfy the claims of the plan sponsor's general 
     creditors at all times (not merely after bankruptcy or 
     insolvency), and
       ``(v) some or all of the compensation of the disqualified 
     individual which is deferred under such plan is guaranteed by 
     an insurance company, insurance service, or other similar 
     organization.
       ``(B) Exception for qualified plans.--Such term shall not 
     include a plan that is--
       ``(i) described in section 219(g)(5)(A), or
       ``(ii) an eligible deferred compensation plan (as defined 
     in section 457(b)) of an eligible employer described in 
     section 457(e)(1)(A).
       ``(C) Plan includes arrangements, etc.--For purposes of 
     this paragraph, the term `plan' includes any agreement or 
     arrangement.
       ``(3) Disqualified individual.--The term `disqualified 
     individual' means a director or executive officer of the plan 
     sponsor.
       ``(4) Termination based on bankruptcy reorganization.--A 
     termination of a plan which is a distress termination under 
     section 4041(c) of the Employee Retirement Income Security 
     Act of 1974 or a termination instituted by the Pension 
     Benefit Guaranty Corporation under section 4042 of such Act 
     is `based on bankruptcy reorganization' if such termination 
     is based in whole or in part on the filing, by or against any 
     person who is a contributing sponsor of such plan or a member 
     of such sponsor's controlled group, of a petition seeking 
     reorganization in a case under title 11, United States Code, 
     or under any similar law of a State or political subdivision 
     of a State (or such a case in which liquidation is sought has 
     been converted to a case in which reorganization is sought).
       ``(5) Title iv terminology.--Any term used in this section 
     which is defined in section 4001(a) of the Employee 
     Retirement Income Security Act of 1974 shall have the meaning 
     provided such term in such section 4001(a).
       ``(e) Special Rules.--
       ``(1) Coordinated benefits.--If the benefits of 2 or more 
     defined benefit plans established or maintained by an 
     employer are coordinated in such a manner as to have the 
     effect of the adoption of an amendment described in 
     subsection (a)(1), the sponsor of the defined benefit plan or 
     plans providing for such coordination shall be treated as 
     having adopted such a plan amendment as of the date such 
     coordination begins.
       ``(2) Multiple amendments.--The Secretary shall issue 
     regulations to prevent the avoidance of the purposes of this 
     section through the use of 2 or more plan amendments rather 
     than a single amendment.
       ``(3) Controlled groups, etc.--For purposes of this 
     section, all persons treated as a single employer under 
     subsection (b), (c), (m), or (o) of section 414 shall be 
     treated as 1 employer.
       ``(4) Treatment of earnings.--References to deferred 
     compensation shall be treated as including references to 
     income attributable to such compensation or such income.
       ``(f) Coordination.--The Secretary and the Secretary of 
     Labor shall ensure, through the execution of an interagency 
     memorandum of understanding among such Secretaries, that 
     regulations, rulings, and interpretations issued by such 
     Secretaries relating to the same matter over which both such 
     Secretaries have responsibility under this section and 
     section 206(g) of the Employee Retirement Income Security Act 
     of 1974 are administered so as to have the same effect at all 
     times.
       ``(g) Waiver.--
       ``(1) In general.--In the case of any plan amendment having 
     the effect of a termination described in subsection (a)(1), 
     the Secretary may waive the application of any requirement of 
     the termination fairness standard of subsection (a)(2) with 
     respect to any disqualified individual who first commences 
     service for the plan sponsor after the notice date with 
     respect to such plan amendment. The Secretary may grant any 
     such waiver in the case of any such plan amendment with 
     respect to any such disqualified individual only after 
     consultation with the Pension Benefit Guaranty Corporation. 
     The Secretary shall promptly notify the Secretary of Labor of 
     any such waiver granted by the Secretary.
       ``(2) Requirements for waiver.--A waiver may be granted 
     under paragraph (1) only--
       ``(A) upon the filing with the Secretary by the plan 
     sponsor of an application for such waiver, in such form and 
     manner as shall be prescribed in regulations of the 
     Secretary,
       ``(B) upon a showing, to the satisfaction of the Secretary, 
     that such waiver is a business necessity for the plan 
     sponsor, as determined under such regulations, and is in the 
     interest of plan participants and beneficiaries, as 
     determined under such regulations, and
       ``(C) after the participants, in such form and manner as 
     shall be provided in such regulations, have been notified of 
     the filing of the application for the waiver and have been 
     provided a reasonable opportunity to provide in advance 
     comments to the Secretary regarding the proposed waiver.''.
       (2) Clerical amendment.--The table of sections for chapter 
     43 of such Code is amended by adding at the end the following 
     new item:

``Sec. 4980H. Funding nonqualified deferred compensation plans.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to--
       (1) plan amendments adopted on or after May 10, 2005, and
       (2) plan amendments adopted before such date implementing a 
     plan termination as described in section 206(g)(1) of the 
     Employee Retirement Income Security Act of 1974 (as added by 
     subsection (a)) or section 4980H(a)(1)(A) of the Internal 
     Revenue Code of 1986 (as added by subsection (b)) based on a 
     bankruptcy reorganization in a case under title 11 of the 
     United States Code (or under any similar law of a State or a 
     political subdivision of a State) pending on such date.

TITLE V--FUNDING AND DEDUCTION RULES FOR MULTIEMPLOYER DEFINED BENEFIT 
                      PLANS AND RELATED PROVISIONS

                       Subtitle A--Funding Rules

 PART I--AMENDMENTS TO EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974

     SEC. 501. FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT 
                   PLANS.

       (a) In General.--Part 3 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974 (as amended 
     by this Act) is amended by inserting after section 303 the 
     following new section:


          ``Minimum funding standards for multiemployer plans

       ``Sec. 304. (a) In General.--For purposes of section 302, 
     the accumulated funding deficiency of a multiemployer plan 
     for any plan year is--
       ``(1) except as provided in paragraph (2), the amount, 
     determined as of the end of the plan year, equal to the 
     excess (if any) of the total charges to the funding standard 
     account of the plan for all plan years (beginning with the 
     first plan year for which this part applies to the plan) over 
     the total credits to such account for such years, and
       ``(2) if the multiemployer plan is in reorganization for 
     any plan year, the accumulated funding deficiency of the plan 
     determined under section 4243.
       ``(b) Funding Standard Account.--
       ``(1) Account required.--Each multiemployer plan to which 
     this part applies shall establish and maintain a funding 
     standard account. Such account shall be credited and charged 
     solely as provided in this section.
       ``(2) Charges to account.--For a plan year, the funding 
     standard account shall be charged with the sum of--
       ``(A) the normal cost of the plan for the plan year,
       ``(B) the amounts necessary to amortize in equal annual 
     installments (until fully amortized)--
       ``(i) separately, with respect to each plan year, the net 
     increase (if any) in unfunded past service liability under 
     the plan arising from plan amendments adopted in such year, 
     over a period of 15 plan years,
       ``(ii) separately, with respect to each plan year, the net 
     experience loss (if any) under the plan, over a period of 15 
     plan years, and
       ``(iii) separately, with respect to each plan year, the net 
     loss (if any) resulting from changes in actuarial assumptions 
     used under the plan, over a period of 15 plan years,
       ``(C) the amount necessary to amortize each waived funding 
     deficiency (within the meaning of section 302(c)(3)) for each 
     prior plan year in equal annual installments (until fully 
     amortized) over a period of 15 plan years,

[[Page 28665]]

       ``(D) the amount necessary to amortize in equal annual 
     installments (until fully amortized) over a period of 5 plan 
     years any amount credited to the funding standard account 
     under section 302(b)(3)(D) (as in effect on the day before 
     the date of the enactment of the Pension Security and 
     Transparency Act of 2005), and
       ``(E) the amount necessary to amortize in equal annual 
     installments (until fully amortized) over a period of 20 
     years the contributions which would be required to be made 
     under the plan but for the provisions of section 
     302(c)(7)(A)(i)(I) (as in effect on the day before the date 
     of the enactment of the Pension Security and Transparency Act 
     of 2005).
       ``(3) Credits to account.--For a plan year, the funding 
     standard account shall be credited with the sum of--
       ``(A) the amount considered contributed by the employer to 
     or under the plan for the plan year,
       ``(B) the amount necessary to amortize in equal annual 
     installments (until fully amortized)--
       ``(i) separately, with respect to each plan year, the net 
     decrease (if any) in unfunded past service liability under 
     the plan arising from plan amendments adopted in such year, 
     over a period of 15 plan years,
       ``(ii) separately, with respect to each plan year, the net 
     experience gain (if any) under the plan, over a period of 15 
     plan years, and
       ``(iii) separately, with respect to each plan year, the net 
     gain (if any) resulting from changes in actuarial assumptions 
     used under the plan, over a period of 15 plan years,
       ``(C) the amount of the waived funding deficiency (within 
     the meaning of section 302(c)(3)) for the plan year, and
       ``(D) in the case of a plan year for which the accumulated 
     funding deficiency is determined under the funding standard 
     account if such plan year follows a plan year for which such 
     deficiency was determined under the alternative minimum 
     funding standard under section 305 (as in effect on the day 
     before the date of the enactment of the Pension Security and 
     Transparency Act of 2005), the excess (if any) of any debit 
     balance in the funding standard account (determined without 
     regard to this subparagraph) over any debit balance in the 
     alternative minimum funding standard account.
       ``(4) Special rule for amounts first amortized to plan 
     years before 2007.--In the case of any amount amortized under 
     section 302(b) (as in effect on the day before the date of 
     the enactment of the Pension Security and Transparency Act of 
     2005) over any period beginning with a plan year beginning 
     before 2007, in lieu of the amortization described in 
     paragraphs (2)(B) and (3)(B), such amount shall continue to 
     be amortized under such section as so in effect.
       ``(5) Combining and offsetting amounts to be amortized.--
     Under regulations prescribed by the Secretary of the 
     Treasury, amounts required to be amortized under paragraph 
     (2) or paragraph (3), as the case may be--
       ``(A) may be combined into one amount under such paragraph 
     to be amortized over a period determined on the basis of the 
     remaining amortization period for all items entering into 
     such combined amount, and
       ``(B) may be offset against amounts required to be 
     amortized under the other such paragraph, with the resulting 
     amount to be amortized over a period determined on the basis 
     of the remaining amortization periods for all items entering 
     into whichever of the two amounts being offset is the 
     greater.
       ``(6) Interest.--The funding standard account (and items 
     therein) shall be charged or credited (as determined under 
     regulations prescribed by the Secretary of the Treasury) with 
     interest at the appropriate rate consistent with the rate or 
     rates of interest used under the plan to determine costs.
       ``(7) Special rules relating to charges and credits to 
     funding standard account.--For purposes of this part--
       ``(A) Withdrawal liability.--Any amount received by a 
     multiemployer plan in payment of all or part of an employer's 
     withdrawal liability under part 1 of subtitle E of title IV 
     shall be considered an amount contributed by the employer to 
     or under the plan. The Secretary of the Treasury may 
     prescribe by regulation additional charges and credits to a 
     multiemployer plan's funding standard account to the extent 
     necessary to prevent withdrawal liability payments from being 
     unduly reflected as advance funding for plan liabilities.
       ``(B) Adjustments when a multiemployer plan leaves 
     reorganization.--If a multiemployer plan is not in 
     reorganization in the plan year but was in reorganization in 
     the immediately preceding plan year, any balance in the 
     funding standard account at the close of such immediately 
     preceding plan year--
       ``(i) shall be eliminated by an offsetting credit or charge 
     (as the case may be), but
       ``(ii) shall be taken into account in subsequent plan years 
     by being amortized in equal annual installments (until fully 
     amortized) over 30 plan years.

     The preceding sentence shall not apply to the extent of any 
     accumulated funding deficiency under section 4243(a) as of 
     the end of the last plan year that the plan was in 
     reorganization.
       ``(C) Plan payments to supplemental program or withdrawal 
     liability payment fund.--Any amount paid by a plan during a 
     plan year to the Pension Benefit Guaranty Corporation 
     pursuant to section 4222 of this Act or to a fund exempt 
     under section 501(c)(22) of the Internal Revenue Code of 1986 
     pursuant to section 4223 of this Act shall reduce the amount 
     of contributions considered received by the plan for the plan 
     year.
       ``(D) Interim withdrawal liability payments.--Any amount 
     paid by an employer pending a final determination of the 
     employer's withdrawal liability under part 1 of subtitle E of 
     title IV and subsequently refunded to the employer by the 
     plan shall be charged to the funding standard account in 
     accordance with regulations prescribed by the Secretary of 
     the Treasury.
       ``(E) Election for deferral of charge for portion of net 
     experience loss.--If an election is in effect under section 
     302(b)(7)(F) (as in effect on the day before the date of the 
     enactment of the Pension Security and Transparency Act of 
     2005) for any plan year, the funding standard account shall 
     be charged in the plan year to which the portion of the net 
     experience loss deferred by such election was deferred with 
     the amount so deferred (and paragraph (2)(B)(ii) shall not 
     apply to the amount so charged).
       ``(F) Financial assistance.--Any amount of any financial 
     assistance from the Pension Benefit Guaranty Corporation to 
     any plan, and any repayment of such amount, shall be taken 
     into account under this section and section 412 of the 
     Internal Revenue Code of 1986 in such manner as is determined 
     by the Secretary of the Treasury.
       ``(G) Short-term benefits.--To the extent that any plan 
     amendment increases the unfunded past service liability under 
     the plan by reason of an increase in benefits which are 
     payable under the terms of the plan for a period that does 
     not exceed 14 years from the effective date of the amendment, 
     paragraph (2)(B)(i) shall be applied separately with respect 
     to such increase in unfunded past service liability by 
     substituting the number of years of the period during which 
     such benefits are payable for `15'.
       ``(c) Additional Rules.--
       ``(1) Determinations to be made under funding method.--For 
     purposes of this part, normal costs, accrued liability, past 
     service liabilities, and experience gains and losses shall be 
     determined under the funding method used to determine costs 
     under the plan.
       ``(2) Valuation of assets.--
       ``(A) In general.--For purposes of this part, the value of 
     the plan's assets shall be determined on the basis of any 
     reasonable actuarial method of valuation which takes into 
     account fair market value and which is permitted under 
     regulations prescribed by the Secretary of the Treasury.
       ``(B) Election with respect to bonds.--The value of a bond 
     or other evidence of indebtedness which is not in default as 
     to principal or interest may, at the election of the plan 
     administrator, be determined on an amortized basis running 
     from initial cost at purchase to par value at maturity or 
     earliest call date. Any election under this subparagraph 
     shall be made at such time and in such manner as the 
     Secretary of the Treasury shall by regulations provide, shall 
     apply to all such evidences of indebtedness, and may be 
     revoked only with the consent of such Secretary.
       ``(3) Actuarial assumptions must be reasonable.--For 
     purposes of this section, all costs, liabilities, rates of 
     interest, and other factors under the plan shall be 
     determined on the basis of actuarial assumptions and 
     methods--
       ``(A) each of which is reasonable (taking into account the 
     experience of the plan and reasonable expectations), and
       ``(B) which, in combination, offer the actuary's best 
     estimate of anticipated experience under the plan.
       ``(4) Treatment of certain changes as experience gain or 
     loss.--For purposes of this section, if--
       ``(A) a change in benefits under the Social Security Act or 
     in other retirement benefits created under Federal or State 
     law, or
       ``(B) a change in the definition of the term `wages' under 
     section 3121 of the Internal Revenue Code of 1986, or a 
     change in the amount of such wages taken into account under 
     regulations prescribed for purposes of section 401(a)(5) of 
     such Code,

     results in an increase or decrease in accrued liability under 
     a plan, such increase or decrease shall be treated as an 
     experience loss or gain.
       ``(5) Full funding.--If, as of the close of a plan year, a 
     plan would (without regard to this paragraph) have an 
     accumulated funding deficiency in excess of the full funding 
     limitation--
       ``(A) the funding standard account shall be credited with 
     the amount of such excess, and
       ``(B) all amounts described in subparagraphs (B), (C), and 
     (D) of subsection (b) (2) and subparagraph (B) of subsection 
     (b)(3) which are required to be amortized shall be considered 
     fully amortized for purposes of such subparagraphs.
       ``(6) Full-funding limitation.--
       ``(A) In general.--For purposes of paragraph (5), the term 
     `full-funding limitation' means the excess (if any) of--
       ``(i) the accrued liability (including normal cost) under 
     the plan (determined under the

[[Page 28666]]

     entry age normal funding method if such accrued liability 
     cannot be directly calculated under the funding method used 
     for the plan), over
       ``(ii) the lesser of--

       ``(I) the fair market value of the plan's assets, or
       ``(II) the value of such assets determined under paragraph 
     (2).

       ``(B) Minimum amount.--
       ``(i) In general.--In no event shall the full-funding 
     limitation determined under subparagraph (A) be less than the 
     excess (if any) of--

       ``(I) 90 percent of the current liability of the plan 
     (including the expected increase in current liability due to 
     benefits accruing during the plan year), over
       ``(II) the value of the plan's assets determined under 
     paragraph (2).

       ``(ii) Assets.--For purposes of clause (i), assets shall 
     not be reduced by any credit balance in the funding standard 
     account.
       ``(C) Full funding limitation.--For purposes of this 
     paragraph, unless otherwise provided by the plan, the accrued 
     liability under a multiemployer plan shall not include 
     benefits which are not nonforfeitable under the plan after 
     the termination of the plan (taking into consideration 
     section 411(d)(3) of the Internal Revenue Code of 1986).
       ``(D) Current liability.--For purposes of this paragraph--
       ``(i) In general.--The term `current liability' means all 
     liabilities to employees and their beneficiaries under the 
     plan.
       ``(ii) Treatment of unpredictable contingent event 
     benefits.--For purposes of clause (i), any benefit contingent 
     on an event other than--

       ``(I) age, service, compensation, death, or disability, or
       ``(II) an event which is reasonably and reliably 
     predictable (as determined by the Secretary of the Treasury),

     shall not be taken into account until the event on which the 
     benefit is contingent occurs.
       ``(iii) Interest rate used.--The rate of interest used to 
     determine current liability under this paragraph shall be the 
     rate of interest determined under subparagraph (E).
       ``(iv) Mortality tables.--

       ``(I) Commissioners' standard table.--In the case of plan 
     years beginning before the first plan year to which the first 
     tables prescribed under subclause (II) apply, the mortality 
     table used in determining current liability under this 
     paragraph shall be the table prescribed by the Secretary of 
     the Treasury which is based on the prevailing commissioners' 
     standard table (described in section 807(d)(5)(A) of the 
     Internal Revenue Code of 1986) used to determine reserves for 
     group annuity contracts issued on January 1, 1993.
       ``(II) Secretarial authority.--The Secretary of the 
     Treasury may by regulation prescribe for plan years beginning 
     after December 31, 1999, mortality tables to be used in 
     determining current liability under this subsection. Such 
     tables shall be based upon the actual experience of pension 
     plans and projected trends in such experience. In prescribing 
     such tables, such Secretary shall take into account results 
     of available independent studies of mortality of individuals 
     covered by pension plans.

       ``(v) Separate mortality tables for the disabled.--
     Notwithstanding clause (iv)--

       ``(I) In general.--The Secretary of the Treasury shall 
     establish mortality tables which may be used (in lieu of the 
     tables under clause (iv)) to determine current liability 
     under this subsection for individuals who are entitled to 
     benefits under the plan on account of disability. Such 
     Secretary shall establish separate tables for individuals 
     whose disabilities occur in plan years beginning before 
     January 1, 1995, and for individuals whose disabilities occur 
     in plan years beginning on or after such date.
       ``(II) Special rule for disabilities occurring after 
     1994.--In the case of disabilities occurring in plan years 
     beginning after December 31, 1994, the tables under subclause 
     (I) shall apply only with respect to individuals described in 
     such subclause who are disabled within the meaning of title 
     II of the Social Security Act and the regulations thereunder.

       ``(vi) Periodic review.--The Secretary of the Treasury 
     shall periodically (at least every 5 years) review any tables 
     in effect under this subparagraph and shall, to the extent 
     such Secretary determines necessary, by regulation update the 
     tables to reflect the actual experience of pension plans and 
     projected trends in such experience.
       ``(E) Required change of interest rate.--For purposes of 
     determining a plan's current liability for purposes of this 
     paragraph--
       ``(i) In general.--If any rate of interest used under the 
     plan under subsection (b)(6) to determine cost is not within 
     the permissible range, the plan shall establish a new rate of 
     interest within the permissible range.
       ``(ii) Permissible range.--For purposes of this 
     subparagraph--

       ``(I) In general.--Except as provided in subclause (II), 
     the term `permissible range' means a rate of interest which 
     is not more than 5 percent above, and not more than 10 
     percent below, the weighted average of the rates of interest 
     on 30-year Treasury securities during the 4-year period 
     ending on the last day before the beginning of the plan year.
       ``(II) Secretarial authority.--If the Secretary of the 
     Treasury finds that the lowest rate of interest permissible 
     under subclause (I) is unreasonably high, such Secretary may 
     prescribe a lower rate of interest, except that such rate may 
     not be less than 80 percent of the average rate determined 
     under such subclause.

       ``(iii) Assumptions.--Notwithstanding paragraph (3)(A), the 
     interest rate used under the plan shall be--

       ``(I) determined without taking into account the experience 
     of the plan and reasonable expectations, but
       ``(II) consistent with the assumptions which reflect the 
     purchase rates which would be used by insurance companies to 
     satisfy the liabilities under the plan.

       ``(7) Annual valuation.--
       ``(A) In general.--For purposes of this section, a 
     determination of experience gains and losses and a valuation 
     of the plan's liability shall be made not less frequently 
     than once every year, except that such determination shall be 
     made more frequently to the extent required in particular 
     cases under regulations prescribed by the Secretary of the 
     Treasury.
       ``(B) Valuation date.--
       ``(i) Current year.--Except as provided in clause (ii), the 
     valuation referred to in subparagraph (A) shall be made as of 
     a date within the plan year to which the valuation refers or 
     within one month prior to the beginning of such year.
       ``(ii) Use of prior year valuation.--The valuation referred 
     to in subparagraph (A) may be made as of a date within the 
     plan year prior to the year to which the valuation refers if, 
     as of such date, the value of the assets of the plan are not 
     less than 100 percent of the plan's current liability (as 
     defined in paragraph (6)(D) without regard to clause (iv) 
     thereof).
       ``(iii) Adjustments.--Information under clause (ii) shall, 
     in accordance with regulations, be actuarially adjusted to 
     reflect significant differences in participants.
       ``(iv) Limitation.--A change in funding method to use a 
     prior year valuation, as provided in clause (ii), may not be 
     made unless as of the valuation date within the prior plan 
     year, the value of the assets of the plan are not less than 
     125 percent of the plan's current liability (as defined in 
     paragraph (6)(D) without regard to clause (iv) thereof).
       ``(8) Time when certain contributions deemed made.--For 
     purposes of this section, any contributions for a plan year 
     made by an employer after the last day of such plan year, but 
     not later than two and one-half months after such day, shall 
     be deemed to have been made on such last day. For purposes of 
     this subparagraph, such two and one-half month period may be 
     extended for not more than six months under regulations 
     prescribed by the Secretary of the Treasury.
       ``(d) Extension of Amortization Periods for Multiemployer 
     Plans.--
       ``(1) Automatic extension upon application by certain 
     plans.--
       ``(A) In general.--If the plan sponsor of a multiemployer 
     plan--
       ``(i) submits to the Secretary of the Treasury an 
     application for an extension of the period of years required 
     to amortize any unfunded liability described in any clause of 
     subsection (b)(2)(B) or described in subsection (b)(4), and
       ``(ii) includes with the application a certification by the 
     plan's actuary described in subparagraph (B),

     the Secretary of the Treasury shall extend the amortization 
     period for the period of time (not in excess of 5 years) 
     specified in the application. Such extension shall be in 
     addition to any extension under paragraph (2).
       ``(B) Criteria.--A certification with respect to a 
     multiemployer plan is described in this subparagraph if the 
     plan's actuary certifies that, based on reasonable 
     assumptions--
       ``(i) absent the extension under subparagraph (A), the plan 
     would have an accumulated funding deficiency in the current 
     plan year or any of the 9 succeeding plan years,
       ``(ii) the plan sponsor has adopted a plan to improve the 
     plan's funding status,
       ``(iii) the plan is projected to have sufficient assets to 
     timely pay expected benefits and anticipated expenditures 
     over the amortization period as extended, and
       ``(iv) the notice required under paragraph (3)(A) has been 
     provided.
       ``(2) Additional extension.--
       ``(A) In general.--If the plan sponsor of a multiemployer 
     plan submits to the Secretary of the Treasury an application 
     for an extension of the period of years required to amortize 
     any unfunded liability described in any clause of subsection 
     (b)(2)(B) or described in subsection (b)(4), the Secretary of 
     the Treasury may extend the amortization period for a period 
     of time (not in excess of 5 years) if the Secretary of the 
     Treasury makes the determination described in subparagraph 
     (B). Such extension shall be in addition to any extension 
     under paragraph (1).
       ``(B) Determination.--The Secretary make grant an extension 
     under subparagraph (A) if the Secretary determines that--

[[Page 28667]]

       ``(i) such extension would carry out the purposes of this 
     Act and would provide adequate protection for participants 
     under the plan and their beneficiaries, and
       ``(ii) the failure to permit such extension would--

       ``(I) result in a substantial risk to the voluntary 
     continuation of the plan, or a substantial curtailment of 
     pension benefit levels or employee compensation, and
       ``(II) be adverse to the interests of plan participants in 
     the aggregate.

       ``(C) Action by secretary.--The Secretary of the Treasury 
     shall act upon any application for an extension under this 
     paragraph within 180 days of the submission of such 
     application. If the Secretary rejects the application for an 
     extension under this paragraph, the Secretary shall provide 
     notice to the plan detailing the specific reasons for the 
     rejection, including references to the criteria set forth 
     above.
       ``(3) Advance notice.--
       ``(A) In general.--The Secretary of the Treasury shall, 
     before granting an extension under this subsection, require 
     each applicant to provide evidence satisfactory to such 
     Secretary that the applicant has provided notice of the 
     filing of the application for such extension to each affected 
     party (as defined in section 4001(a)(21)) with respect to the 
     affected plan. Such notice shall include a description of the 
     extent to which the plan is funded for benefits which are 
     guaranteed under title IV and for benefit liabilities.
       ``(B) Consideration of relevant information.--The Secretary 
     of the Treasury shall consider any relevant information 
     provided by a person to whom notice was given under paragraph 
     (1).''.
       (b) Shortfall Funding Method.--
       (1) In general.--A multiemployer plan meeting the criteria 
     of paragraph (2) may adopt, use, or cease using, the 
     shortfall funding method and such adoption, use, or cessation 
     of use of such method, shall be deemed approved by the 
     Secretary of the Treasury under section 302(d)(1) of the 
     Employee Retirement Income Security Act of 1974 and section 
     412(e)(1) of the Internal Revenue Code of 1986.
       (2) Criteria.--A multiemployer pension plan meets the 
     criteria of this clause if--
       (A) the plan has not used the shortfall funding method 
     during the 5-year period ending on the day before the date 
     the plan is to use the method under paragraph (1); and
       (B) the plan is not operating under an amortization period 
     extension under section 304(d) of such Act and did not 
     operate under such an extension during such 5-year period.
       (3) Shortfall funding method defined.--For purposes of this 
     subsection, the term ``shortfall funding method'' means the 
     shortfall funding method described in Treasury Regulations 
     section 1.412(c)(1)-2 (26 C.F.R. 1.412(c)(1)-2).
       (4) Benefit restrictions to apply.--The benefit 
     restrictions under section 302(c)(7) of such Act and section 
     412(d)(7) of such Code shall apply during any period a 
     multiemployer plan is on the shortfall funding method 
     pursuant to this subsection.
       (5) Use of shortfall method not to preclude other 
     options.--Nothing in this subsection shall be construed to 
     affect a multiemployer plan's ability to adopt the shortfall 
     funding method with the Secretary's permission under 
     otherwise applicable regulations or to affect a multiemployer 
     plan's right to change funding methods, with or without the 
     Secretary's consent, as provided in applicable rules and 
     regulations.
       (c) Conforming Amendments.--
       (1) Section 301 of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1081) is amended by striking 
     subsection (d).
       (2) The table of contents in section 1 of such Act (as 
     amended by this Act) is amended by inserting after the item 
     relating to section 303 the following new item:

``Sec. 304. Minimum funding standards for multiemployer plans.''.

       (d) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to plan years beginning after 2006.
       (2) Special rule for certain amortization extensions.--If 
     the Secretary of the Treasury grants an extension under 
     section 304 of the Employee Retirement Income Security Act of 
     1974 and section 412(e) of the Internal Revenue Code of 1986 
     with respect to any application filed with the Secretary of 
     the Treasury on or before June 30, 2005, the extension (and 
     any modification thereof) shall be applied and administered 
     under the rules of such sections as in effect before the 
     enactment of this Act, including the use of the rate of 
     interest determined under section 6621(b) of such Code.

     SEC. 502. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS IN 
                   ENDANGERED OR CRITICAL STATUS.

       (a) In General.--Part 3 of subtitle B of title I of the 
     Employee Retirement Income Security Act of 1974 (as amended 
     by the preceding provisions of this Act) is amended by 
     inserting after section 304 the following new section:


``Additional funding rules for multiemployer plans in endangered status 
                           or critical status

       ``Sec. 305. (a) General Rule.--For purposes of this part, 
     in the case of a multiemployer plan--
       ``(1) if the plan is in endangered status--
       ``(A) the plan sponsor shall adopt and implement a funding 
     improvement plan in accordance with the requirements of 
     subsection (c), and
       ``(B) the requirements of subsection (d) shall apply during 
     the funding plan adoption period and the funding improvement 
     period, and
       ``(2) if the plan is in critical status--
       ``(A) the plan sponsor shall adopt and implement a 
     rehabilitation plan in accordance with the requirements of 
     subsection (e), and
       ``(B) the requirements of subsection (f) shall apply during 
     the rehabilitation plan adoption period and the 
     rehabilitation period.
       ``(b) Determination of Endangered and Critical Status.--For 
     purposes of this section--
       ``(1) Endangered status.--A multiemployer plan is in 
     endangered status for a plan year if, as determined by the 
     plan actuary under paragraph (3), the plan is not in critical 
     status for the plan year and either--
       ``(A) the plan's funded percentage for such plan year is 
     less than 80 percent, or
       ``(B) the plan has an accumulated funding deficiency for 
     such plan year, or is projected to have such an accumulated 
     funding deficiency for any of the 6 succeeding plan years, 
     taking into account any extension of amortization periods 
     under section 304(d).

     For purposes of this section, a plan described in 
     subparagraph (B) shall be treated as in seriously endangered 
     status.
       ``(2) Critical status.--A multiemployer plan is in critical 
     status for a plan year if, as determined by the plan actuary 
     under paragraph (3), the plan is described in 1 or more of 
     the following subparagraphs as of the beginning of the plan 
     year:
       ``(A) A plan is described in this subparagraph if--
       ``(i) the funded percentage of the plan is less than 65 
     percent, and
       ``(ii) the sum of--

       ``(I) the market value of plan assets, plus
       ``(II) the present value of the reasonably anticipated 
     employer contributions for the current plan year and each of 
     the 5 succeeding plan years, assuming that the terms of all 
     collective bargaining agreements pursuant to which the plan 
     is maintained for the current plan year continue in effect 
     for succeeding plan years,

     is less than the present value of all benefits projected to 
     be payable under the plan during the current plan year and 
     each of the 5 succeeding plan years (plus administrative 
     expenses for such plan years).
       ``(B) A plan is described in this subparagraph if--
       ``(i) the plan has an accumulated funding deficiency for 
     the current plan year, not taking into account any extension 
     of amortization periods under section 304(d), or
       ``(ii) the plan is projected to have an accumulated funding 
     deficiency for any of the 3 succeeding plan years (4 
     succeeding plan years if the funded percentage of the plan is 
     65 percent or less), not taking into account any extension of 
     amortization periods under section 304(d).
       ``(C) A plan is described in this subparagraph if--
       ``(i)(I) the plan's normal cost for the current plan year, 
     plus interest (determined at the rate used for determining 
     costs under the plan) for the current plan year on the amount 
     of unfunded benefit liabilities under the plan as of the last 
     date of the preceding plan year, exceeds
       ``(II) the present value of the reasonably anticipated 
     employer contributions for the current plan year,
       ``(ii) the present value of nonforfeitable benefits of 
     inactive participants is greater than the present value of 
     nonforfeitable benefits of active participants, and
       ``(iii) the plan has an accumulated funding deficiency for 
     the current plan year, or is projected to have such a 
     deficiency for any of the 4 succeeding plan years, not taking 
     into account any extension of amortization periods under 
     section 304(d).
       ``(D) A plan is described in this subparagraph if the sum 
     of--
       ``(i) the market value of plan assets, plus
       ``(ii) the present value of the reasonably anticipated 
     employer contributions for the current plan year and each of 
     the 4 succeeding plan years, assuming that the terms of all 
     collective bargaining agreements pursuant to which the plan 
     is maintained for the current plan year continue in effect 
     for succeeding plan years,

     is less than the present value of all benefits projected to 
     be payable under the plan during the current plan year and 
     each of the 4 succeeding plan years (plus administrative 
     expenses for such plan years).
       ``(3) Annual certification by plan actuary.--
       ``(A) In general.--During the 90-day period beginning on 
     the first day of each plan year of a multiemployer plan, the 
     plan actuary shall certify to the Secretary of the Treasury--
       ``(i) whether or not the plan is in endangered status for 
     such plan year and whether or not the plan is in critical 
     status for such plan year, and
       ``(ii) in the case of a plan which is in a funding 
     improvement or rehabilitation period, whether or not the plan 
     is making the

[[Page 28668]]

     scheduled progress in meeting the requirements of its funding 
     improvement or rehabilitation plan.
       ``(B) Actuarial projections of assets and liabilities.--
       ``(i) In general.--In making the determinations and 
     projections under this subsection, the plan actuary shall 
     make projections required for the current and succeeding plan 
     years, using reasonable actuarial estimates, assumptions, and 
     methods, of the current value of the assets of the plan and 
     the present value of all liabilities to participants and 
     beneficiaries under the plan for the current plan year as of 
     the beginning of such year. The projected present value of 
     liabilities as of the beginning of such year shall be 
     determined based on the actuarial statement required under 
     section 103(d) with respect to the most recently filed annual 
     report or the actuarial valuation for the preceding plan 
     year.
       ``(ii) Determinations of future contributions.--Any 
     actuarial projection of plan assets shall assume--

       ``(I) reasonably anticipated employer contributions for the 
     current and succeeding plan years, assuming that the terms of 
     the one or more collective bargaining agreements pursuant to 
     which the plan is maintained for the current plan year 
     continue in effect for succeeding plan years, or
       ``(II) that employer contributions for the most recent plan 
     year will continue indefinitely, but only if the plan actuary 
     determines there have been no significant demographic changes 
     that would make such assumption unreasonable.

       ``(C) Penalty for failure to secure timely actuarial 
     certification.--Any failure of the plan's actuary to certify 
     the plan's status under this subsection by the date specified 
     in subparagraph (A) shall be treated for purposes of section 
     502(c)(2) as a failure or refusal by the plan administrator 
     to file the annual report required to be filed with the 
     Secretary under section 101(b)(4).
       ``(D) Notice.--In any case in which a multiemployer plan is 
     certified to be in endangered or critical status under 
     subparagraph (A), the plan sponsor shall, not later than 30 
     days after the date of the certification, provide 
     notification of the endangered or critical status to the 
     participants and beneficiaries, the bargaining parties, the 
     Pension Benefit Guaranty Corporation, the Secretary of the 
     Treasury, and the Secretary.
       ``(c) Funding Improvement Plan Must Be Adopted for 
     Multiemployer Plans in Endangered Status.--
       ``(1) In general.--In any case in which a multiemployer 
     plan is in endangered status for a plan year, the plan 
     sponsor, in accordance with this subsection--
       ``(A) shall adopt a funding improvement plan not later than 
     240 days following the required date for the actuarial 
     certification of endangered status under subsection 
     (b)(3)(A), and
       ``(B) within 30 days after the adoption of the funding 
     improvement plan--
       ``(i) in the case of a plan in seriously endangered status, 
     shall provide to the bargaining parties 1 or more schedules 
     showing revised benefit structures, revised contribution 
     structures, or both, which, if adopted, may reasonably be 
     expected to enable the multiemployer plan to meet the 
     applicable requirements under paragraph (3) in accordance 
     with the funding improvement plan, including a description of 
     the reductions in future benefit accruals and increases in 
     contributions that the plan sponsor determines are reasonably 
     necessary to meet the applicable requirements if the plan 
     sponsor assumes that there are no increases in contributions 
     under the plan other than the increases necessary to meet the 
     applicable requirements after future benefit accruals have 
     been reduced to the maximum extent permitted by law, and
       ``(ii) may, if the plan sponsor deems appropriate, prepare 
     and provide the bargaining parties with additional 
     information relating to contribution rates or benefit 
     reductions, alternative schedules, or other information 
     relevant to achieving the requirements under paragraph (3) in 
     accordance with the funding improvement plan.
       ``(2) Exception for years after process begins.--Paragraph 
     (1) shall not apply to a plan year if such year is in a 
     funding plan adoption period or funding improvement period by 
     reason of the plan being in endangered status for a preceding 
     plan year. For purposes of this section, such preceding plan 
     year shall be the initial determination year with respect to 
     the funding improvement plan to which it relates.
       ``(3) Funding improvement plan.--For purposes of this 
     section--
       ``(A) In general.--A funding improvement plan is a plan 
     which consists of the actions, including options or a range 
     of options to be proposed to the bargaining parties, which, 
     under reasonable actuarial assumptions, will result in the 
     plan meeting the requirements of this paragraph.
       ``(B) Plans other than seriously endangered plans.--In the 
     case of plan not in seriously endangered status, the 
     requirements of this paragraph are met if the plan's funded 
     percentage as of the close of the funding improvement period 
     exceeds the lesser of 80 percent or a percentage equal to the 
     sum of--
       ``(i) such percentage as of the beginning of such period, 
     plus
       ``(ii) 10 percent of the percentage under clause (i).
       ``(C) Seriously endangered plans.--In the case of a plan in 
     seriously endangered status, the requirements of this 
     paragraph are met if--
       ``(i) the plan's funded percentage as of the close of the 
     funding improvement period equals or exceeds the percentage 
     which is equal to the sum of--

       ``(I) such percentage as of the beginning of such period, 
     plus
       ``(II) 33 percent of the difference between 100 percent and 
     the percentage under subclause (I), and

       ``(ii) there is no accumulated funding deficiency for any 
     plan year during the funding improvement period (taking into 
     account any extension of amortization periods under section 
     304(d)).
       ``(4) Funding improvement period.--For purposes of this 
     section--
       ``(A) In general.--The funding improvement period for any 
     funding improvement plan adopted pursuant to this subsection 
     is the 10-year period beginning on the first day of the first 
     plan year of the multiemployer plan beginning after the 
     earlier of--
       ``(i) the second anniversary of the date of the adoption of 
     the funding improvement plan, or
       ``(ii) the expiration of the collective bargaining 
     agreements in effect on the due date for the actuarial 
     certification of endangered status for the initial 
     determination year under subsection (b)(3)(A) and covering, 
     as of such due date, at least 75 percent of the active 
     participants in such multiemployer plan.
       ``(B) Coordination with changes in status.--
       ``(i) Plans no longer in endangered status.--If the plan's 
     actuary certifies under subsection (b)(3)(A) for a plan year 
     in any funding plan adoption period or funding improvement 
     period that the plan is no longer in endangered status and is 
     not in critical status, the funding plan adoption period or 
     funding improvement period, whichever is applicable, shall 
     end as of the close of the preceding plan year.
       ``(ii) Plans in critical status.--If the plan's actuary 
     certifies under subsection (b)(3)(A) for a plan year in any 
     funding plan adoption period or funding improvement period 
     that the plan is in critical status, the funding plan 
     adoption period or funding improvement period, whichever is 
     applicable, shall end as of the close of the plan year 
     preceding the first plan year in the rehabilitation period 
     with respect to such status.
       ``(C) Plans in endangered status at end of period.--If the 
     plan's actuary certifies under subsection (b)(3)(A) for the 
     first plan year following the close of the period described 
     in subparagraph (A) that the plan is in endangered status, 
     the provisions of this subsection and subsection (d) shall be 
     applied as if such first plan year were an initial 
     determination year, except that the plan may not be amended 
     in a manner inconsistent with the funding improvement plan in 
     effect for the preceding plan year until a new funding 
     improvement plan is adopted.
       ``(5) Special rules for certain underfunded plans.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     if the funded percentage of a plan in seriously endangered 
     status was 70 percent or less as of the beginning of the 
     initial determination year, the following rules shall apply 
     in determining whether the requirements of paragraph 
     (3)(C)(i) are met:
       ``(i) The plan's funded percentage as of the close of the 
     funding improvement period must equal or exceed a percentage 
     which is equal to the sum of--

       ``(I) such percentage as of the beginning of such period, 
     plus
       ``(II) 20 percent of the difference between 100 percent and 
     the percentage under subclause (I).

       ``(ii) The funding improvement period under paragraph 
     (4)(A) shall be 15 years rather than 10 years.
       ``(B) Special rules for plans with funded percentage over 
     70 percent.--If the funded percentage described in 
     subparagraph (A) was more than 70 percent but less than 80 
     percent as of the beginning of the initial determination 
     year--
       ``(i) subparagraph (A) shall apply if the plan's actuary 
     certifies, within 30 days after the certification under 
     subsection (b)(3)(A) for the initial determination year, 
     that, based on the terms of the plan and the collective 
     bargaining agreements in effect at the time of such 
     certification, the plan is not projected to meet the 
     requirements of paragraph (3)(C)(i) without regard to this 
     paragraph, and
       ``(ii) if there is a certification under clause (i), the 
     plan may, in formulating its funding improvement plan, only 
     take into account the rules of subparagraph (A) for plan 
     years in the funding improvement period beginning on or 
     before the date on which the last of the collective 
     bargaining agreements described in paragraph (4)(A)(ii) 
     expires.

     Notwithstanding clause (ii), if for any plan year ending 
     after the date described in clause (ii) the plan actuary 
     certifies (at the time of the annual certification under 
     subsection (b)(3)(A) for such plan year) that, based on the 
     terms of the plan and collective

[[Page 28669]]

     bargaining agreements in effect at the time of that annual 
     certification, the plan is not projected to be able to meet 
     the requirements of paragraph (3)(C)(i) without regard to 
     this paragraph, the plan may continue to assume for such year 
     that the funding improvement period is 15 years rather than 
     10 years.
       ``(6) Updates to funding improvement plan and schedules.--
       ``(A) Funding improvement plan.--The plan sponsor shall 
     annually update the funding improvement plan and shall file 
     the update with the plan's annual report under section 104.
       ``(B) Schedules.--The plan sponsor may periodically update 
     any schedule of contribution rates provided under this 
     subsection to reflect the experience of the plan, except that 
     the schedule or schedules described in paragraph (1)(B)(i) 
     shall be updated at least once every 3 years.
       ``(C) Duration of schedule.--A schedule of contribution 
     rates provided by the plan sponsor and relied upon by 
     bargaining parties in negotiating a collective bargaining 
     agreement shall remain in effect for the duration of that 
     collective bargaining agreement.
       ``(7) Penalty if no funding improvement plan adopted.--A 
     failure of the plan sponsor to adopt a funding improvement 
     plan by the date specified in paragraph (1)(A) shall be 
     treated for purposes of section 502(c)(2) as a failure or 
     refusal by the plan administrator to file the annual report 
     required to be filed with the Secretary under section 
     101(b)(4).
       ``(8) Funding plan adoption period.--For purposes of this 
     section, the term `funding plan adoption period' means the 
     period beginning on the date of the certification under 
     subsection (b)(3)(A) for the initial determination year and 
     ending on the day before the first day of the funding 
     improvement period.
       ``(d) Rules for Operation of Plan During Adoption and 
     Improvement Periods; Failure to Meet Requirements.--
       ``(1) Special rules for plan adoption period.--During the 
     plan adoption period--
       ``(A) the plan sponsor may not accept a collective 
     bargaining agreement or participation agreement with respect 
     to the multiemployer plan that provides for--
       ``(i) a reduction in the level of contributions for any 
     participants,
       ``(ii) a suspension of contributions with respect to any 
     period of service, or
       ``(iii) any new direct or indirect exclusion of younger or 
     newly hired employees from plan participation,
       ``(B) no amendment of the plan which increases the 
     liabilities of the plan by reason of any increase in 
     benefits, any change in the accrual of benefits, or any 
     change in the rate at which benefits become nonforfeitable 
     under the plan may be adopted unless the amendment is 
     required as a condition of qualification under part I of 
     subchapter D of chapter 1 of the Internal Revenue Code of 
     1986 or to comply with other applicable law, and
       ``(C) in the case of a plan in seriously endangered status, 
     the plan sponsor shall take all reasonable actions which are 
     consistent with the terms of the plan and applicable law and 
     which are expected, based on reasonable assumptions, to 
     achieve--
       ``(i) an increase in the plan's funded percentage, and
       ``(ii) postponement of an accumulated funding deficiency 
     for at least 1 additional plan year.

     Actions under subparagraph (C) include applications for 
     extensions of amortization periods under section 304(d), use 
     of the shortfall funding method in making funding standard 
     account computations, amendments to the plan's benefit 
     structure, reductions in future benefit accruals, and other 
     reasonable actions consistent with the terms of the plan and 
     applicable law.
       ``(2) Compliance with funding improvement plan.--
       ``(A) In general.--A plan may not be amended after the date 
     of the adoption of a funding improvement plan under 
     subsection (c) so as to be inconsistent with the funding 
     improvement plan.
       ``(B) No reduction in contributions.--A plan sponsor may 
     not during any funding improvement period accept a collective 
     bargaining agreement or participation agreement with respect 
     to the multiemployer plan that provides for--
       ``(i) a reduction in the level of contributions for any 
     participants,
       ``(ii) a suspension of contributions with respect to any 
     period of service, or
       ``(iii) any new direct or indirect exclusion of younger or 
     newly hired employees from plan participation.
       ``(C) Special rules for benefit increases.--A plan may not 
     be amended after the date of the adoption of a funding 
     improvement plan under subsection (c) so as to increase 
     benefits, including future benefit accruals, unless--
       ``(i) in the case of a plan in seriously endangered status, 
     the plan actuary certifies that, after taking into account 
     the benefit increase, the plan is still reasonably expected 
     to meet the requirements under subsection (c)(3) in 
     accordance with the schedule contemplated in the funding 
     improvement plan, and
       ``(ii) in the case of a plan not in seriously endangered 
     status, the actuary certifies that such increase is paid for 
     out of contributions not required by the funding improvement 
     plan to meet the requirements under subsection (c)(3) in 
     accordance with the schedule contemplated in the funding 
     improvement plan.
       ``(3) Failure to meet requirements.--
       ``(A) In general.--Notwithstanding section 4971(g) of the 
     Internal Revenue Code of 1986, if a plan fails to meet the 
     requirements of subsection (c)(3) by the end of the funding 
     improvement period, the plan shall be treated as having an 
     accumulated funding deficiency for purposes of section 4971 
     of such Code for the last plan year in such period (and each 
     succeeding plan year until such requirements are met) in an 
     amount equal to the greater of the amount of the 
     contributions necessary to meet such requirements or the 
     amount of such accumulated funding deficiency without regard 
     to this paragraph.
       ``(B) Waiver.--In the case of a failure described in 
     subparagraph (A) which is due to reasonable cause and not to 
     willful neglect, the Secretary of the Treasury may waive part 
     or all of the tax imposed by section 4971 of such Code to the 
     extent that the payment of such tax would be excessive or 
     otherwise inequitable relative to the failure involved.
       ``(e) Rehabilitation Plan Must Be Adopted for Multiemployer 
     Plans in Critical Status.--
       ``(1) In general.--In any case in which a multiemployer 
     plan is in critical status for a plan year, the plan sponsor, 
     in accordance with this subsection--
       ``(A) shall adopt a rehabilitation plan not later than 240 
     days following the required date for the actuarial 
     certification of critical status under subsection (b)(3)(A), 
     and
       ``(B) within 30 days after the adoption of the 
     rehabilitation plan--
       ``(i) shall provide to the bargaining parties 1 or more 
     schedules showing revised benefit structures, revised 
     contribution structures, or both, which, if adopted, may 
     reasonably be expected to enable the multiemployer plan to 
     emerge from critical status in accordance with the 
     rehabilitation plan, and
       ``(ii) may, if the plan sponsor deems appropriate, prepare 
     and provide the bargaining parties with additional 
     information relating to contribution rates or benefit 
     reductions, alternative schedules, or other information 
     relevant to emerging from critical status in accordance with 
     the rehabilitation plan.

     The schedule or schedules described in subparagraph (B)(i) 
     shall reflect reductions in future benefit accruals and 
     increases in contributions that the plan sponsor determines 
     are reasonably necessary to emerge from critical status. One 
     schedule shall be designated as the default schedule and such 
     schedule shall assume that there are no increases in 
     contributions under the plan other than the increases 
     necessary to emerge from critical status after future benefit 
     accruals and other benefits (other than benefits the 
     reduction or elimination of which are not permitted under 
     section 204(g)) have been reduced to the maximum extent 
     permitted by law.
       ``(2) Exception for years after process begins.--Paragraph 
     (1) shall not apply to a plan year if such year is in a 
     rehabilitation plan adoption period or rehabilitation period 
     by reason of the plan being in critical status for a 
     preceding plan year. For purposes of this section, such 
     preceding plan year shall be the initial critical year with 
     respect to the rehabilitation plan to which it relates.
       ``(3) Rehabilitation plan.--For purposes of this section--
       ``(A) In general.--A rehabilitation plan is a plan which 
     consists of--
       ``(i) actions which will enable, under reasonable actuarial 
     assumptions, the plan to cease to be in critical status by 
     the end of the rehabilitation period and may include 
     reductions in plan expenditures (including plan mergers and 
     consolidations), reductions in future benefit accruals or 
     increases in contributions, if agreed to by the bargaining 
     parties, or any combination of such actions, or
       ``(ii) if the plan sponsor determines that, based on 
     reasonable actuarial assumptions and upon exhaustion of all 
     reasonable measures, the plan can not reasonably be expected 
     to emerge from critical status by the end of the 
     rehabilitation period, reasonable measures to emerge from 
     critical status at a later time or to forestall possible 
     insolvency (within the meaning of section 4245).

     Such plan shall include the schedules required to be provided 
     under paragraph (1)(B)(i). If clause (ii) applies, such plan 
     shall set forth the alternatives considered, explain why the 
     plan is not reasonably expected to emerge from critical 
     status by the end of the rehabilitation period, and specify 
     when, if ever, the plan is expected to emerge from critical 
     status in accordance with the rehabilitation plan.
       ``(B) Updates to rehabilitation plan and schedules.--
       ``(i) Rehabilitation plan.--The plan sponsor shall annually 
     update the rehabilitation plan and shall file the update with 
     the plan's annual report under section 104.
       ``(ii) Schedules.--The plan sponsor may periodically update 
     any schedule of contribution rates provided under this 
     subsection to reflect the experience of the plan, except that 
     the schedule or schedules described in

[[Page 28670]]

     paragraph (1)(B)(i) shall be updated at least once every 3 
     years.
       ``(iii) Duration of schedule.--A schedule of contribution 
     rates provided by the plan sponsor and relied upon by 
     bargaining parties in negotiating a collective bargaining 
     agreement shall remain in effect for the duration of that 
     collective bargaining agreement.
       ``(C) Default schedule.--If the collective bargaining 
     agreement providing for contributions under a multiemployer 
     plan that was in effect at the time the plan entered critical 
     status expires and, after receiving a schedule from the plan 
     sponsor under paragraph (1)(B)(i), the bargaining parties 
     have not adopted a collective bargaining agreement with terms 
     consistent with such a schedule, the default schedule 
     described in the last sentence of paragraph (1) shall go into 
     effect with respect to those bargaining parties.
       ``(4) Rehabilitation period.--For purposes of this 
     section--
       ``(A) In general.--The rehabilitation period for a plan in 
     critical status is the 10-year period beginning on the first 
     day of the first plan year of the multiemployer plan 
     following the earlier of--
       ``(i) the second anniversary of the date of the adoption of 
     the rehabilitation plan, or
       ``(ii) the expiration of the collective bargaining 
     agreements in effect on the date of the due date for the 
     actuarial certification of critical status for the initial 
     critical year under subsection (a)(1) and covering, as of 
     such date at least 75 percent of the active participants in 
     such multiemployer plan.

     If a plan emerges from critical status as provided under 
     subparagraph (B) before the end of such 10-year period, the 
     rehabilitation period shall end with the plan year preceding 
     the plan year for which the determination under subparagraph 
     (B) is made.
       ``(B) Emergence.--A plan in critical status shall remain in 
     such status until a plan year for which the plan actuary 
     certifies, in accordance with subsection (b)(3)(A), that the 
     plan is not projected to have an accumulated funding 
     deficiency for the plan year or any of the 9 succeeding plan 
     years, without regard to use of the shortfall method or any 
     extension of amortization periods under section 304(d).
       ``(5) Penalty if no rehabilitation plan adopted.--A failure 
     of a plan sponsor to adopt a rehabilitation plan by the date 
     specified in paragraph (1)(A) shall be treated for purposes 
     of section 502(c)(2) as a failure or refusal by the plan 
     administrator to file the annual report required to be filed 
     with the Secretary under section 101(b)(4).
       ``(6) Rehabilitation plan adoption period.--For purposes of 
     this section, the term `rehabilitation plan adoption period' 
     means the period beginning on the date of the certification 
     under subsection (b)(3)(A) for the initial critical year and 
     ending on the day before the first day of the rehabilitation 
     period.
       ``(7) Limitation on reduction in rates of future 
     accruals.--Any reduction in the rate of future accruals under 
     any schedule described in paragraph (1)(B)(i) shall not 
     reduce the rate of future accruals below--
       ``(A) a monthly benefit (payable as a single life annuity 
     commencing at the participant's normal retirement age) equal 
     to 1 percent of the contributions required to be made with 
     respect to a participant, or the equivalent standard accrual 
     rate for a participant or group of participants under the 
     collective bargaining agreements in effect as of the first 
     day of the initial critical year, or
       ``(B) if lower, the accrual rate under the plan on such 
     first day.

     The equivalent standard accrual rate shall be determined by 
     the plan sponsor based on the standard or average 
     contribution base units which the plan sponsor determines to 
     be representative for active participants and such other 
     factors as the plan sponsor determines to be relevant. 
     Nothing in this paragraph shall be construed as limiting the 
     ability of the plan sponsor to prepare and provide the 
     bargaining parties with alternative schedules to the default 
     schedule that established lower or higher accrual and 
     contribution rates than the rates otherwise described in this 
     paragraph.
       ``(8) Employer impact.--For the purposes of this section, 
     the plan sponsor shall consider the impact of the 
     rehabilitation plan and contribution schedules authorized by 
     this section on bargaining parties with fewer than 500 
     employees and shall implement the plan in a manner that 
     encourages their continued participation in the plan and 
     minimizes financial harm to employers and their workers.
       ``(f) Rules for Operation of Plan During Adoption and 
     Rehabilitation Period.--
       ``(1) Compliance with rehabilitation plan.--
       ``(A) In general.--A plan may not be amended after the date 
     of the adoption of a rehabilitation plan under subsection (e) 
     so as to be inconsistent with the rehabilitation plan.
       ``(B) Special rules for benefit increases.--A plan may not 
     be amended after the date of the adoption of a rehabilitation 
     plan under subsection (e) so as to increase benefits, 
     including future benefit accruals, unless the plan actuary 
     certifies that such increase is paid for out of additional 
     contributions not contemplated by the rehabilitation plan, 
     and, after taking into account the benefit increase, the 
     multiemployer plan still is reasonably expected to emerge 
     from critical status by the end of the rehabilitation period 
     on the schedule contemplated in the rehabilitation plan.
       ``(2) Restriction on lump sums and similar benefits.--
       ``(A) In general.--Effective on the date the notice of 
     certification of the plan's critical status for the initial 
     critical year under subsection (b)(3)(D) is sent, and 
     notwithstanding section 204(g), the plan shall not pay--
       ``(i) any payment, in excess of the monthly amount paid 
     under a single life annuity (plus any social security 
     supplements described in the last sentence of section 
     204(b)(1)(G)),
       ``(ii) any payment for the purchase of an irrevocable 
     commitment from an insurer to pay benefits, and
       ``(iii) any other payment specified by the Secretary of the 
     Treasury by regulations.
       ``(B) Exception.--Subparagraph (A) shall not apply to a 
     benefit which under section 203(e) may be immediately 
     distributed without the consent of the participant or to any 
     makeup payment in the case of a retroactive annuity starting 
     date or any similar payment of benefits owed with respect to 
     a prior period.
       ``(3) Adjustments disregarded in withdrawal liability 
     determination.--Any benefit reductions under this subsection 
     shall be disregarded in determining a plan's unfunded vested 
     benefits for purposes of determining an employer's withdrawal 
     liability under section 4201.
       ``(4) Special rules for plan adoption period.--During the 
     rehabilitation plan adoption period--
       ``(A) the plan sponsor may not accept a collective 
     bargaining agreement or participation agreement with respect 
     to the multiemployer plan that provides for--
       ``(i) a reduction in the level of contributions for any 
     participants,
       ``(ii) a suspension of contributions with respect to any 
     period of service, or
       ``(iii) any new direct or indirect exclusion of younger or 
     newly hired employees from plan participation, and
       ``(B) no amendment of the plan which increases the 
     liabilities of the plan by reason of any increase in 
     benefits, any change in the accrual of benefits, or any 
     change in the rate at which benefits become nonforfeitable 
     under the plan may be adopted unless the amendment is 
     required as a condition of qualification under part I of 
     subchapter D of chapter 1 of the Internal Revenue Code of 
     1986 or to comply with other applicable law.
       ``(5) Failure to meet requirements.--
       ``(A) In general.--Notwithstanding section 4971(g) of the 
     Internal Revenue Code of 1986, if a plan--
       ``(i) fails to meet the requirements of subsection (e) by 
     the end of the rehabilitation period, or
       ``(ii) has received a certification under subsection 
     (b)(3)(A)(ii) for 3 consecutive plan years that the plan is 
     not making the scheduled progress in meeting its requirements 
     under the rehabilitation plan,

     the plan shall be treated as having an accumulated funding 
     deficiency for purposes of section 4971 of such Code for the 
     last plan year in such period (and each succeeding plan year 
     until such requirements are met) in an amount equal to the 
     greater of the amount of the contributions necessary to meet 
     such requirements or the amount of such accumulated funding 
     deficiency without regard to this paragraph.
       ``(B) Waiver.--In the case of a failure described in 
     subparagraph (A) which is due to reasonable cause and not to 
     willful neglect, the Secretary of the Treasury may waive part 
     or all of the tax imposed by section 4971 of such Code to the 
     extent that the payment of such tax would be excessive or 
     otherwise inequitable relative to the failure involved.
       ``(g) Expedited Resolution of Plan Sponsor Decisions.--If, 
     within 60 days of the due date for adoption of a funding 
     improvement plan under subsection (c) or a rehabilitation 
     plan under subsection (e), the plan sponsor of a plan in 
     endangered status or a plan in critical status has not agreed 
     on a funding improvement plan or rehabilitation plan, then 
     any member of the board or group that constitutes the plan 
     sponsor may require that the plan sponsor enter into an 
     expedited dispute resolution procedure for the development 
     and adoption of a funding improvement plan or rehabilitation 
     plan.
       ``(h) Nonbargained Participation.--
       ``(1) Both bargained and nonbargained employee-
     participants.--In the case of an employer that contributes to 
     a multiemployer plan with respect to both employees who are 
     covered by one or more collective bargaining agreements and 
     to employees who are not so covered, if the plan is in 
     endangered status or in critical status, benefits of and 
     contributions for the nonbargained employees, including 
     surcharges on those contributions, shall be determined as if 
     those nonbargained employees were covered under the first to 
     expire of the employer's collective bargaining agreements in 
     effect when the plan entered endangered or critical status.
       ``(2) Nonbargained employees only.--In the case of an 
     employer that contributes to

[[Page 28671]]

     a multiemployer plan only with respect to employees who are 
     not covered by a collective bargaining agreement, this 
     section shall be applied as if the employer were the 
     bargaining parties, and its participation agreement with the 
     plan was a collective bargaining agreement with a term ending 
     on the first day of the plan year beginning after the 
     employer is provided the schedule or schedules described in 
     subsections (c) and (e).
       ``(3) Employees covered by a collective bargaining 
     agreement.--The determination as to whether an employee 
     covered by a collective bargaining agreement for purposes of 
     this section shall be made without regard to the special rule 
     in Treasury Regulation section 1.410(b)-6(d)(ii)(D).
       ``(i) Definitions; Actuarial Method.--For purposes of this 
     section--
       ``(1) Bargaining party.--The term `bargaining party' 
     means--
       ``(A)(i) except as provided in clause (ii), an employer who 
     has an obligation to contribute under the plan; or
       ``(ii) in the case of a plan described under section 404(c) 
     of the Internal Revenue Code of 1986, or a continuation of 
     such a plan, the association of employers that is the 
     employee settlor of the plan; and
       ``(B) an employee organization which, for purposes of 
     collective bargaining, represents plan participants employed 
     by an employer who has an obligation to contribute under the 
     plan.
       ``(2) Funded percentage.--The term `funded percentage' 
     means the percentage equal to a fraction--
       ``(A) the numerator of which is the value of the plan's 
     assets, as determined under section 304(c)(2), and
       ``(B) the denominator of which is the accrued liability of 
     the plan, determined using actuarial assumptions described in 
     section 304(c)(3).
       ``(3) Accumulated funding deficiency.--The term 
     `accumulated funding deficiency' has the meaning given such 
     term in section 304(a).
       ``(4) Active participant.--The term `active participant' 
     means, in connection with a multiemployer plan, a participant 
     who is in covered service under the plan.
       ``(5) Inactive participant.--The term `inactive 
     participant' means, in connection with a multiemployer plan, 
     a participant, or the beneficiary or alternate payee of a 
     participant, who--
       ``(A) is not in covered service under the plan, and
       ``(B) is in pay status under the plan or has a 
     nonforfeitable right to benefits under the plan.
       ``(6) Pay status.--A person is in pay status under a 
     multiemployer plan if--
       ``(A) at any time during the current plan year, such person 
     is a participant or beneficiary under the plan and is paid an 
     early, late, normal, or disability retirement benefit under 
     the plan (or a death benefit under the plan related to a 
     retirement benefit), or
       ``(B) to the extent provided in regulations of the 
     Secretary of the Treasury, such person is entitled to such a 
     benefit under the plan.
       ``(7) Obligation to contribute.--The term `obligation to 
     contribute' has the meaning given such term under section 
     4212(a).
       ``(8) Actuarial method.--Notwithstanding any other 
     provision of this section, the actuary's determinations with 
     respect to a plan's normal cost, actuarial accrued liability, 
     and improvements in a plan's funded percentage under this 
     section shall be based upon the unit credit funding method 
     (whether or not that method is used for the plan's actuarial 
     valuation).
       ``(9) Plan sponsor.--In the case of a plan described under 
     section 404(c) of the Internal Revenue Code of 1986, or a 
     continuation of such a plan, the term `plan sponsor' means 
     the bargaining parties described under paragraph (1).''.
       (b) Cause of Action to Compel Adoption of Funding 
     Improvement or Rehabilitation Plan.--Section 502(a) of the 
     Employee Retirement Income Security Act of 1974 is amended by 
     striking ``or'' at the end of paragraph (8), by striking the 
     period at the end of paragraph (9) and inserting ``; or'' and 
     by adding at the end the following:
       ``(10) in the case of a multiemployer plan that has been 
     certified by the actuary to be in endangered or critical 
     status under section 305, if the plan sponsor has not adopted 
     a funding improvement or rehabilitation plan under subsection 
     (c) or (e) of that section by the deadline established in 
     that section, by an employer that has an obligation to 
     contribute with respect to the multiemployer plan or an 
     employee organization that represents active participants in 
     the multiemployer plan, for an order compelling the plan 
     sponsor to adopt a funding improvement or rehabilitation 
     plan.''.
       (c) 4971 Excise Tax Inapplicable.--Section 4971 of the 
     Internal Revenue Code of 1986 is amended by redesignating 
     subsection (g) as subsection (h), and inserting after 
     subsection (f) the following:
       ``(g) Multiemployer Plans in Critical Status.--No tax shall 
     be imposed under this section for a taxable year with respect 
     to a multiemployer plan if, for the plan years ending with or 
     within the taxable year, the plan is in critical status 
     pursuant to section 305 of the Employee Retirement Income 
     Security Act of 1974. This subsection shall only apply if the 
     plan adopts a rehabilitation plan in accordance with section 
     305(e) of such Act and complies with such rehabilitation plan 
     (and any modifications of the plan) and shall not apply if an 
     excise tax is required to be imposed under this section by 
     reason of a violation of such section 305.''.
       (d) No Additional Contributions Required.--
       (1) Section 302(b) of the Employee Retirement Income 
     Security Act of 1974, as amended by this Act , is amended by 
     adding at the end the following new paragraph:
       ``(3) Multiemployer plans in critical status.--Subparagraph 
     (A) shall not apply in the case of a multiemployer plan for 
     any plan year in which the plan is in critical status 
     pursuant to section 305. This paragraph shall only apply if 
     the plan adopts a rehabilitation plan in accordance with 
     section 305(e) and complies with such rehabilitation plan 
     (and any modifications of the plan).''.
       (2) Section 412(c) of the Internal Revenue Code of 1986, as 
     amended by this Act, is amended by adding at the end the 
     following new paragraph:
       ``(3) Multiemployer plans in critical status.--Subparagraph 
     (A) shall not apply in the case of a multiemployer plan for 
     any plan year in which the plan is in critical status 
     pursuant to section 305 of the Employee Retirement Income 
     Security Act of 1974. This paragraph shall only apply if the 
     plan adopts a rehabilitation plan in accordance with section 
     305(e) of such Act and complies with such rehabilitation plan 
     (and any modifications of the plan).''.
       (e) Conforming Amendment.--The table of contents in section 
     1 of such Act (as amended by the preceding provisions of this 
     Act) is amended by inserting after the item relating to 
     section 304 the following new item:

``Sec. 305. Additional funding rules for multiemployer plans in 
              endangered status or critical status.''.

       (f) Effective Dates.--
       (1) In general.--The amendment made by this section shall 
     apply with respect to plan years beginning after 2006.
       (2) Special rule for certain restored benefits.--In the 
     case of a multiemployer plan--
       (A) with respect to which benefits were reduced pursuant to 
     a plan amendment adopted on or after January 1, 2002, and 
     before June 30, 2005, and
       (B) which, pursuant to the plan document, the trust 
     agreement, or a formal written communication from the plan 
     sponsor to participants provided before June 30, 2005, 
     provided for the restoration of such benefits,

     the amendments made by this section shall not apply to such 
     benefit restorations to the extent that any restriction on 
     the providing or accrual of such benefits would otherwise 
     apply by reason of such amendments.

     SEC. 503. MEASURES TO FORESTALL INSOLVENCY OF MULTIEMPLOYER 
                   PLANS.

       (a) Advance Determination of Impending Insolvency Over 5 
     Years.--Section 4245(d)(1) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1426(d)(1)) is amended--
       (1) by striking ``3 plan years'' the second place it 
     appears and inserting ``5 plan years''; and
       (2) by adding at the end the following new sentence: ``If 
     the plan sponsor makes such a determination that the plan 
     will be insolvent in any of the next 5 plan years, the plan 
     sponsor shall make the comparison under this paragraph at 
     least annually until the plan sponsor makes a determination 
     that the plan will not be insolvent in any of the next 5 plan 
     years.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply with respect to determinations made in plan years 
     beginning after 2006.

     SEC. 504. SPECIAL RULE FOR CERTAIN BENEFITS FUNDED UNDER AN 
                   AGREEMENT APPROVED BY THE PENSION BENEFIT 
                   GUARANTY CORPORATION.

       In the case of a multiemployer plan that is a party to an 
     agreement that was approved by the Pension Benefit Guaranty 
     Corporation prior to June 30, 2005, and that--
       (1) increases benefits, and
       (2) provides for special withdrawal liability rules under 
     section 4203(f) of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1383),

     the amendments made by sections 201, 202, 211, and 212 of 
     this Act shall not apply to the benefit increases under any 
     plan amendment adopted prior to June 30, 2005, that are 
     funded pursuant to such agreement if the plan is funded in 
     compliance with such agreement (and any amendments thereto).

     SEC. 505. WITHDRAWAL LIABILITY REFORMS.

       (a) Repeal of Limitation on Withdrawal Liability of 
     Insolvent Employers.--
       (1) In general.--Subsections (b) and (d) of section 4225 of 
     the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1405) are repealed.
       (2) Conforming amendments.--Subsections (c) and (e) of 
     section 4225 of such Act are redesignated as subsections (b) 
     and (c), respectively.
       (3) Effective date.--The amendments made by this section 
     shall apply with respect to sales occurring on or after 
     January 1, 2006.
       (b) Withdrawal Liability Continues If Work Contracted 
     Out.--

[[Page 28672]]

       (1) In general.--Clause (i) of section 4205(b)(2)(A) of 
     such Act (29 U.S.C. 1385(b)(2)(A)) is amended by inserting 
     ``or to an entity or entities owned or controlled by the 
     employer'' after ``to another location''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply with respect to work transferred on or after the 
     date of the enactment of this Act.
       (c) Application of Forgiveness Rule to Plans Primarily 
     Covering Employees in the Building and Construction.--
       (1) In general.--Section 4210(b) of such Act (29 U.S.C. 
     1390(b)) is amended--
       (A) by striking paragraph (1); and
       (B) by redesignating paragraphs (2) through (4) as 
     paragraphs (1) through (3), respectively.
       (2) Effective date.--The amendments made by this subsection 
     shall apply with respect to plan withdrawals occurring on or 
     after January 1, 2006.

     SEC. 506. SPECIAL RULES FOR MULTIPLE EMPLOYER PLANS OF 
                   CERTAIN COOPERATIVES.

       (a) General Rule.--Except as provided in this section, if a 
     plan in existence on July 26, 2005, was an eligible 
     cooperative plan for its plan year which includes such date, 
     the amendments made by this subtitle and subtitle B shall not 
     apply to plan years beginning before the earlier of--
       (1) the first plan year for which the plan ceases to be an 
     eligible cooperative plan, or
       (2) January 1, 2017.
       (b) Eligible Cooperative Plans.--For purposes of this 
     section, the term ``eligible cooperative plan'' means a plan 
     which is maintained by more than 1 employer and at least 85 
     percent of the employers are--
       (1) rural cooperatives (as defined in section 401(k)(7)(B) 
     of the Internal Revenue Code of 1986 without regard to clause 
     (iv) thereof),
       (2) rural telephone cooperative associations described in 
     section 3(40)(B)(v) of the Employee Retirement Income 
     Security Act of 1974 which is not described in paragraph (1), 
     or
       (3) organizations described in section 1381(a) of such Code 
     more than 50 percent of the ownership or capital and profits 
     interests of which are held--
       (A) by producers of agricultural products, or
       (B) organizations described in section 1381(a) of such Code 
     meeting the requirements of subparagraph (A).

          PART II--AMENDMENTS TO INTERNAL REVENUE CODE OF 1986

     SEC. 511. FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT 
                   PLANS.

       (a) In General.--Subpart A of part III of subchapter D of 
     chapter 1 of the Internal Revenue Code of 1986 (as added by 
     this Act) is amended by inserting after section 430 the 
     following new section:

     ``SEC. 431. MINIMUM FUNDING STANDARDS FOR MULTIEMPLOYER 
                   PLANS.

       ``(a) In General.--For purposes of section 412, the 
     accumulated funding deficiency of a multiemployer plan for 
     any plan year is--
       ``(1) except as provided in paragraph (2), the amount, 
     determined as of the end of the plan year, equal to the 
     excess (if any) of the total charges to the funding standard 
     account of the plan for all plan years (beginning with the 
     first plan year for which this part applies to the plan) over 
     the total credits to such account for such years, and
       ``(2) if the multiemployer plan is in reorganization for 
     any plan year, the accumulated funding deficiency of the plan 
     determined under section 4243 of the Employee Retirement 
     Income Security Act of 1974.
       ``(b) Funding Standard Account.--
       ``(1) Account required.--Each multiemployer plan to which 
     this part applies shall establish and maintain a funding 
     standard account. Such account shall be credited and charged 
     solely as provided in this section.
       ``(2) Charges to account.--For a plan year, the funding 
     standard account shall be charged with the sum of--
       ``(A) the normal cost of the plan for the plan year,
       ``(B) the amounts necessary to amortize in equal annual 
     installments (until fully amortized)--
       ``(i) separately, with respect to each plan year, the net 
     increase (if any) in unfunded past service liability under 
     the plan arising from plan amendments adopted in such year, 
     over a period of 15 plan years,
       ``(ii) separately, with respect to each plan year, the net 
     experience loss (if any) under the plan, over a period of 15 
     plan years, and
       ``(iii) separately, with respect to each plan year, the net 
     loss (if any) resulting from changes in actuarial assumptions 
     used under the plan, over a period of 15 plan years,
       ``(C) the amount necessary to amortize each waived funding 
     deficiency (within the meaning of section 412(d)(3)) for each 
     prior plan year in equal annual installments (until fully 
     amortized) over a period of 15 plan years,
       ``(D) the amount necessary to amortize in equal annual 
     installments (until fully amortized) over a period of 5 plan 
     years any amount credited to the funding standard account 
     under section 412(b)(3)(D) (as in effect on the day before 
     the date of the enactment of the Pension Security and 
     Transparency Act of 2005), and
       ``(E) the amount necessary to amortize in equal annual 
     installments (until fully amortized) over a period of 20 
     years the contributions which would be required to be made 
     under the plan but for the provisions of section 
     412(c)(7)(A)(i)(I) (as in effect on the day before the date 
     of the enactment of the Pension Security and Transparency Act 
     of 2005).
       ``(3) Credits to account.--For a plan year, the funding 
     standard account shall be credited with the sum of--
       ``(A) the amount considered contributed by the employer to 
     or under the plan for the plan year,
       ``(B) the amount necessary to amortize in equal annual 
     installments (until fully amortized)--
       ``(i) separately, with respect to each plan year, the net 
     decrease (if any) in unfunded past service liability under 
     the plan arising from plan amendments adopted in such year, 
     over a period of 15 plan years,
       ``(ii) separately, with respect to each plan year, the net 
     experience gain (if any) under the plan, over a period of 15 
     plan years, and
       ``(iii) separately, with respect to each plan year, the net 
     gain (if any) resulting from changes in actuarial assumptions 
     used under the plan, over a period of 15 plan years,
       ``(C) the amount of the waived funding deficiency (within 
     the meaning of section 412(d)(3)) for the plan year, and
       ``(D) in the case of a plan year for which the accumulated 
     funding deficiency is determined under the funding standard 
     account if such plan year follows a plan year for which such 
     deficiency was determined under the alternative minimum 
     funding standard under section 412(g) (as in effect on the 
     day before the date of the enactment of the Pension Security 
     and Transparency Act of 2005), the excess (if any) of any 
     debit balance in the funding standard account (determined 
     without regard to this subparagraph) over any debit balance 
     in the alternative minimum funding standard account.
       ``(4) Special rule for amounts first amortized to plan 
     years before 2007.--In the case of any amount amortized under 
     section 412(b) (as in effect on the day before the date of 
     the enactment of the Pension Security and Transparency Act of 
     2005) over any period beginning with a plan year beginning 
     before 2007, in lieu of the amortization described in 
     paragraphs (2)(B) and (3)(B), such amount shall continue to 
     be amortized under such section as so in effect.
       ``(5) Combining and offsetting amounts to be amortized.--
     Under regulations prescribed by the Secretary, amounts 
     required to be amortized under paragraph (2) or paragraph 
     (3), as the case may be--
       ``(A) may be combined into one amount under such paragraph 
     to be amortized over a period determined on the basis of the 
     remaining amortization period for all items entering into 
     such combined amount, and
       ``(B) may be offset against amounts required to be 
     amortized under the other such paragraph, with the resulting 
     amount to be amortized over a period determined on the basis 
     of the remaining amortization periods for all items entering 
     into whichever of the two amounts being offset is the 
     greater.
       ``(6) Interest.--The funding standard account (and items 
     therein) shall be charged or credited (as determined under 
     regulations prescribed by the Secretary of the Treasury) with 
     interest at the appropriate rate consistent with the rate or 
     rates of interest used under the plan to determine costs.
       ``(7) Special rules relating to charges and credits to 
     funding standard account.--For purposes of this part--
       ``(A) Withdrawal liability.--Any amount received by a 
     multiemployer plan in payment of all or part of an employer's 
     withdrawal liability under part 1 of subtitle E of title IV 
     of the Employee Retirement Income Security Act of 1974 shall 
     be considered an amount contributed by the employer to or 
     under the plan. The Secretary may prescribe by regulation 
     additional charges and credits to a multiemployer plan's 
     funding standard account to the extent necessary to prevent 
     withdrawal liability payments from being unduly reflected as 
     advance funding for plan liabilities.
       ``(B) Adjustments when a multiemployer plan leaves 
     reorganization.--If a multiemployer plan is not in 
     reorganization in the plan year but was in reorganization in 
     the immediately preceding plan year, any balance in the 
     funding standard account at the close of such immediately 
     preceding plan year--
       ``(i) shall be eliminated by an offsetting credit or charge 
     (as the case may be), but
       ``(ii) shall be taken into account in subsequent plan years 
     by being amortized in equal annual installments (until fully 
     amortized) over 30 plan years.
     The preceding sentence shall not apply to the extent of any 
     accumulated funding deficiency under section 4243(a) of such 
     Act as of the end of the last plan year that the plan was in 
     reorganization.
       ``(C) Plan payments to supplemental program or withdrawal 
     liability payment fund.--Any amount paid by a plan during a 
     plan year to the Pension Benefit Guaranty Corporation 
     pursuant to section 4222 of such Act or to a fund exempt 
     under section 501(c)(22) pursuant to section 4223 of such Act 
     shall reduce the amount of contributions considered received 
     by the plan for the plan year.
       ``(D) Interim withdrawal liability payments.--Any amount 
     paid by an employer

[[Page 28673]]

     pending a final determination of the employer's withdrawal 
     liability under part 1 of subtitle E of title IV of such Act 
     and subsequently refunded to the employer by the plan shall 
     be charged to the funding standard account in accordance with 
     regulations prescribed by the Secretary.
       ``(E) Election for deferral of charge for portion of net 
     experience loss.--If an election is in effect under section 
     412(b)(7)(F) (as in effect on the day before the date of the 
     enactment of the Pension Security and Transparency Act of 
     2005) for any plan year, the funding standard account shall 
     be charged in the plan year to which the portion of the net 
     experience loss deferred by such election was deferred with 
     the amount so deferred (and paragraph (2)(B)(ii) shall not 
     apply to the amount so charged).
       ``(F) Financial assistance.--Any amount of any financial 
     assistance from the Pension Benefit Guaranty Corporation to 
     any plan, and any repayment of such amount, shall be taken 
     into account under this section and section 412 in such 
     manner as is determined by the Secretary.
       ``(G) Short-term benefits.--To the extent that any plan 
     amendment increases the unfunded past service liability under 
     the plan by reason of an increase in benefits which are 
     payable under the terms of the plan for a period that does 
     not exceed 14 years from the effective date of the amendment, 
     paragraph (2)(B)(i) shall be applied separately with respect 
     to such increase in unfunded past service liability by 
     substituting the number of years of the period during which 
     such benefits are payable for `15'.
       ``(c) Additional Rules.--
       ``(1) Determinations to be made under funding method.--For 
     purposes of this part, normal costs, accrued liability, past 
     service liabilities, and experience gains and losses shall be 
     determined under the funding method used to determine costs 
     under the plan.
       ``(2) Valuation of assets.--
       ``(A) In general.--For purposes of this part, the value of 
     the plan's assets shall be determined on the basis of any 
     reasonable actuarial method of valuation which takes into 
     account fair market value and which is permitted under 
     regulations prescribed by the Secretary.
       ``(B) Election with respect to bonds.--The value of a bond 
     or other evidence of indebtedness which is not in default as 
     to principal or interest may, at the election of the plan 
     administrator, be determined on an amortized basis running 
     from initial cost at purchase to par value at maturity or 
     earliest call date. Any election under this subparagraph 
     shall be made at such time and in such manner as the 
     Secretary shall by regulations provide, shall apply to all 
     such evidences of indebtedness, and may be revoked only with 
     the consent of the Secretary.
       ``(3) Actuarial assumptions must be reasonable.--For 
     purposes of this section, all costs, liabilities, rates of 
     interest, and other factors under the plan shall be 
     determined on the basis of actuarial assumptions and 
     methods--
       ``(A) each of which is reasonable (taking into account the 
     experience of the plan and reasonable expectations), and
       ``(B) which, in combination, offer the actuary's best 
     estimate of anticipated experience under the plan.
       ``(4) Treatment of certain changes as experience gain or 
     loss.--For purposes of this section, if--
       ``(A) a change in benefits under the Social Security Act or 
     in other retirement benefits created under Federal or State 
     law, or
       ``(B) a change in the definition of the term `wages' under 
     section 3121, or a change in the amount of such wages taken 
     into account under regulations prescribed for purposes of 
     section 401(a)(5),

     results in an increase or decrease in accrued liability under 
     a plan, such increase or decrease shall be treated as an 
     experience loss or gain.
       ``(5) Full funding.--If, as of the close of a plan year, a 
     plan would (without regard to this paragraph) have an 
     accumulated funding deficiency in excess of the full funding 
     limitation--
       ``(A) the funding standard account shall be credited with 
     the amount of such excess, and
       ``(B) all amounts described in subparagraphs (B), (C), and 
     (D) of subsection (b) (2) and subparagraph (B) of subsection 
     (b)(3) which are required to be amortized shall be considered 
     fully amortized for purposes of such subparagraphs.
       ``(6) Full-funding limitation.--
       ``(A) In general.--For purposes of paragraph (5), the term 
     `full-funding limitation' means the excess (if any) of--
       ``(i) the accrued liability (including normal cost) under 
     the plan (determined under the entry age normal funding 
     method if such accrued liability cannot be directly 
     calculated under the funding method used for the plan), over
       ``(ii) the lesser of--

       ``(I) the fair market value of the plan's assets, or
       ``(II) the value of such assets determined under paragraph 
     (2).

       ``(B) Minimum amount.--
       ``(i) In general.--In no event shall the full-funding 
     limitation determined under subparagraph (A) be less than the 
     excess (if any) of--

       ``(I) 90 percent of the current liability of the plan 
     (including the expected increase in current liability due to 
     benefits accruing during the plan year), over
       ``(II) the value of the plan's assets determined under 
     paragraph (2).

       ``(ii) Assets.--For purposes of clause (i), assets shall 
     not be reduced by any credit balance in the funding standard 
     account.
       ``(C) Full funding limitation.--For purposes of this 
     paragraph, unless otherwise provided by the plan, the accrued 
     liability under a multiemployer plan shall not include 
     benefits which are not nonforfeitable under the plan after 
     the termination of the plan (taking into consideration 
     section 411(d)(3)).
       ``(D) Current liability.--For purposes of this paragraph--
       ``(i) In general.--The term `current liability' means all 
     liabilities to employees and their beneficiaries under the 
     plan.
       ``(ii) Treatment of unpredictable contingent event 
     benefits.--For purposes of clause (i), any benefit contingent 
     on an event other than--

       ``(I) age, service, compensation, death, or disability, or
       ``(II) an event which is reasonably and reliably 
     predictable (as determined by the Secretary),

     shall not be taken into account until the event on which the 
     benefit is contingent occurs.
       ``(iii) Interest rate used.--The rate of interest used to 
     determine current liability under this paragraph shall be the 
     rate of interest determined under subparagraph (E).
       ``(iv) Mortality tables.--

       ``(I) Commissioners' standard table.--In the case of plan 
     years beginning before the first plan year to which the first 
     tables prescribed under subclause (II) apply, the mortality 
     table used in determining current liability under this 
     paragraph shall be the table prescribed by the Secretary 
     which is based on the prevailing commissioners' standard 
     table (described in section 807(d)(5)(A)) used to determine 
     reserves for group annuity contracts issued on January 1, 
     1993.
       ``(II) Secretarial authority.--The Secretary may by 
     regulation prescribe for plan years beginning after December 
     31, 1999, mortality tables to be used in determining current 
     liability under this subsection. Such tables shall be based 
     upon the actual experience of pension plans and projected 
     trends in such experience. In prescribing such tables, the 
     Secretary shall take into account results of available 
     independent studies of mortality of individuals covered by 
     pension plans.

       ``(v) Separate mortality tables for the disabled.--
     Notwithstanding clause (iv)--

       ``(I) In general.--The Secretary shall establish mortality 
     tables which may be used (in lieu of the tables under clause 
     (iv)) to determine current liability under this subsection 
     for individuals who are entitled to benefits under the plan 
     on account of disability. The Secretary shall establish 
     separate tables for individuals whose disabilities occur in 
     plan years beginning before January 1, 1995, and for 
     individuals whose disabilities occur in plan years beginning 
     on or after such date.
       ``(II) Special rule for disabilities occurring after 
     1994.--In the case of disabilities occurring in plan years 
     beginning after December 31, 1994, the tables under subclause 
     (I) shall apply only with respect to individuals described in 
     such subclause who are disabled within the meaning of title 
     II of the Social Security Act and the regulations thereunder.

       ``(vi) Periodic review.--The Secretary shall periodically 
     (at least every 5 years) review any tables in effect under 
     this subparagraph and shall, to the extent such Secretary 
     determines necessary, by regulation update the tables to 
     reflect the actual experience of pension plans and projected 
     trends in such experience.
       ``(E) Required change of interest rate.--For purposes of 
     determining a plan's current liability for purposes of this 
     paragraph--
       ``(i) In general.--If any rate of interest used under the 
     plan under subsection (b)(6) to determine cost is not within 
     the permissible range, the plan shall establish a new rate of 
     interest within the permissible range.
       ``(ii) Permissible range.--For purposes of this 
     subparagraph--

       ``(I) In general.--Except as provided in subclause (II), 
     the term `permissible range' means a rate of interest which 
     is not more than 5 percent above, and not more than 10 
     percent below, the weighted average of the rates of interest 
     on 30-year Treasury securities during the 4-year period 
     ending on the last day before the beginning of the plan year.
       ``(II) Secretarial authority.--If the Secretary finds that 
     the lowest rate of interest permissible under subclause (I) 
     is unreasonably high, the Secretary may prescribe a lower 
     rate of interest, except that such rate may not be less than 
     80 percent of the average rate determined under such 
     subclause.

       ``(iii) Assumptions.--Notwithstanding paragraph (3)(A), the 
     interest rate used under the plan shall be--

       ``(I) determined without taking into account the experience 
     of the plan and reasonable expectations, but
       ``(II) consistent with the assumptions which reflect the 
     purchase rates which would

[[Page 28674]]

     be used by insurance companies to satisfy the liabilities 
     under the plan.

       ``(7) Annual valuation.--
       ``(A) In general.--For purposes of this section, a 
     determination of experience gains and losses and a valuation 
     of the plan's liability shall be made not less frequently 
     than once every year, except that such determination shall be 
     made more frequently to the extent required in particular 
     cases under regulations prescribed by the Secretary.
       ``(B) Valuation date.--
       ``(i) Current year.--Except as provided in clause (ii), the 
     valuation referred to in subparagraph (A) shall be made as of 
     a date within the plan year to which the valuation refers or 
     within one month prior to the beginning of such year.
       ``(ii) Use of prior year valuation.--The valuation referred 
     to in subparagraph (A) may be made as of a date within the 
     plan year prior to the year to which the valuation refers if, 
     as of such date, the value of the assets of the plan are not 
     less than 100 percent of the plan's current liability (as 
     defined in paragraph (6)(D) without regard to clause (iv) 
     thereof).
       ``(iii) Adjustments.--Information under clause (ii) shall, 
     in accordance with regulations, be actuarially adjusted to 
     reflect significant differences in participants.
       ``(iv) Limitation.--A change in funding method to use a 
     prior year valuation, as provided in clause (ii), may not be 
     made unless as of the valuation date within the prior plan 
     year, the value of the assets of the plan are not less than 
     125 percent of the plan's current liability (as defined in 
     paragraph (6)(D) without regard to clause (iv) thereof).
       ``(8) Time when certain contributions deemed made.--For 
     purposes of this section, any contributions for a plan year 
     made by an employer after the last day of such plan year, but 
     not later than two and one-half months after such day, shall 
     be deemed to have been made on such last day. For purposes of 
     this subparagraph, such two and one-half month period may be 
     extended for not more than six months under regulations 
     prescribed by the Secretary.
       ``(d) Extension of Amortization Periods for Multiemployer 
     Plans.--
       ``(1) Automatic extension upon application by certain 
     plans.--
       ``(A) In general.--If the plan sponsor of a multiemployer 
     plan--
       ``(i) submits to the Secretary an application for an 
     extension of the period of years required to amortize any 
     unfunded liability described in any clause of subsection 
     (b)(2)(B) or described in subsection (b)(4), and
       ``(ii) includes with the application a certification by the 
     plan's actuary described in subparagraph (B),

     the Secretary shall extend the amortization period for the 
     period of time (not in excess of 5 years) specified in the 
     application. Such extension shall be in addition to any 
     extension under paragraph (2).
       ``(B) Criteria.--A certification with respect to a 
     multiemployer plan is described in this subparagraph if the 
     plan's actuary certifies that, based on reasonable 
     assumptions--
       ``(i) absent the extension under subparagraph (A), the plan 
     would have an accumulated funding deficiency in the current 
     plan year or any of the 9 succeeding plan years,
       ``(ii) the plan sponsor has adopted a plan to improve the 
     plan's funding status,
       ``(iii) the plan is projected to have sufficient assets to 
     timely pay expected benefits and anticipated expenditures 
     over the amortization period as extended, and
       ``(iv) the notice required under paragraph (3)(A) has been 
     provided.
       ``(2) Additional extension.--
       ``(A) In general.--If the plan sponsor of a multiemployer 
     plan submits to the Secretary an application for an extension 
     of the period of years required to amortize any unfunded 
     liability described in any clause of subsection (b)(2)(B) or 
     described in subsection (b)(4), the Secretary may extend the 
     amortization period for a period of time (not in excess of 5 
     years) if the Secretary of the Treasury makes the 
     determination described in subparagraph (B). Such extension 
     shall be in addition to any extension under paragraph (1).
       ``(B) Determination.--The Secretary may grant an extension 
     under subparagraph (A) if the Secretary determines that--
       ``(i) such extension would carry out the purposes of this 
     Act and would provide adequate protection for participants 
     under the plan and their beneficiaries, and
       ``(ii) the failure to permit such extension would--

       ``(I) result in a substantial risk to the voluntary 
     continuation of the plan, or a substantial curtailment of 
     pension benefit levels or employee compensation, and
       ``(II) be adverse to the interests of plan participants in 
     the aggregate.

       ``(C) Action by secretary.--The Secretary shall act upon 
     any application for an extension under this paragraph within 
     180 days of the submission of such application. If the 
     Secretary rejects the application for an extension under this 
     paragraph, the Secretary shall provide notice to the plan 
     detailing the specific reasons for the rejection, including 
     references to the criteria set forth above.
       ``(3) Advance notice.--
       ``(A) In general.--The Secretary shall, before granting an 
     extension under this subsection, require each applicant to 
     provide evidence satisfactory to such Secretary that the 
     applicant has provided notice of the filing of the 
     application for such extension to each affected party (as 
     defined in section 4001(a)(21) of the Employee Retirement 
     Income Security Act of 1974) with respect to the affected 
     plan. Such notice shall include a description of the extent 
     to which the plan is funded for benefits which are guaranteed 
     under title IV of such Act and for benefit liabilities.
       ``(B) Consideration of relevant information.--The Secretary 
     shall consider any relevant information provided by a person 
     to whom notice was given under paragraph (1).''.
       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to plan years beginning after 2006.
       (2) Special rule for certain amortization extensions.--If 
     the Secretary of the Treasury grants an extension under 
     section 304 of the Employee Retirement Income Security Act of 
     1974 and section 412(e) of the Internal Revenue Code of 1986 
     with respect to any application filed with the Secretary of 
     the Treasury on or before June 30, 2005, the extension (and 
     any modification thereof) shall be applied and administered 
     under the rules of such sections as in effect before the 
     enactment of this Act, including the use of the rate of 
     interest determined under section 6621(b) of such Code.

     SEC. 512. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS IN 
                   ENDANGERED OR CRITICAL STATUS.

       (a) In General.--Subpart A of part III of subchapter D of 
     chapter 1 of the Internal Revenue Code of 1986 (as amended by 
     this Act) is amended by inserting after section 431 the 
     following new section:

     ``SEC. 432. ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER PLANS 
                   IN ENDANGERED STATUS OR CRITICAL STATUS.

       ``(a) General Rule.--For purposes of this part, in the case 
     of a multiemployer plan--
       ``(1) if the plan is in endangered status--
       ``(A) the plan sponsor shall adopt and implement a funding 
     improvement plan in accordance with the requirements of 
     subsection (c), and
       ``(B) the requirements of subsection (d) shall apply during 
     the funding plan adoption period and the funding improvement 
     period, and
       ``(2) if the plan is in critical status--
       ``(A) the plan sponsor shall adopt and implement a 
     rehabilitation plan in accordance with the requirements of 
     subsection (e), and
       ``(B) the requirements of subsection (f) shall apply during 
     the rehabilitation plan adoption period and the 
     rehabilitation period.
       ``(b) Determination of Endangered and Critical Status.--For 
     purposes of this section--
       ``(1) Endangered status.--A multiemployer plan is in 
     endangered status for a plan year if, as determined by the 
     plan actuary under paragraph (3), the plan is not in critical 
     status for the plan year and either--
       ``(A) the plan's funded percentage for such plan year is 
     less than 80 percent, or
       ``(B) the plan has an accumulated funding deficiency for 
     such plan year, or is projected to have such an accumulated 
     funding deficiency for any of the 6 succeeding plan years, 
     taking into account any extension of amortization periods 
     under section 431(d).

     For purposes of this section, a plan described in 
     subparagraph (B) shall be treated as in seriously endangered 
     status.
       ``(2) Critical status.--A multiemployer plan is in critical 
     status for a plan year if, as determined by the plan actuary 
     under paragraph (3), the plan is described in 1 or more of 
     the following subparagraphs as of the beginning of the plan 
     year:
       ``(A) A plan is described in this subparagraph if--
       ``(i) the funded percentage of the plan is less than 65 
     percent, and
       ``(ii) the sum of--

       ``(I) the market value of plan assets, plus
       ``(II) the present value of the reasonably anticipated 
     employer contributions for the current plan year and each of 
     the 5 succeeding plan years, assuming that the terms of all 
     collective bargaining agreements pursuant to which the plan 
     is maintained for the current plan year continue in effect 
     for succeeding plan years,

     is less than the present value of all benefits projected to 
     be payable under the plan during the current plan year and 
     each of the 5 succeeding plan years (plus administrative 
     expenses for such plan years).
       ``(B) A plan is described in this subparagraph if--
       ``(i) the plan has an accumulated funding deficiency for 
     the current plan year, not taking into account any extension 
     of amortization periods under section 431(d), or
       ``(ii) the plan is projected to have an accumulated funding 
     deficiency for any of the 3 succeeding plan years (4 
     succeeding plan years if the funded percentage of the plan is 
     65 percent or less), not taking into account any extension of 
     amortization periods under section 431(d).
       ``(C) A plan is described in this subparagraph if--

[[Page 28675]]

       ``(i)(I) the plan's normal cost for the current plan year, 
     plus interest (determined at the rate used for determining 
     costs under the plan) for the current plan year on the amount 
     of unfunded benefit liabilities under the plan as of the last 
     date of the preceding plan year, exceeds
       ``(II) the present value of the reasonably anticipated 
     employer contributions for the current plan year,
       ``(ii) the present value of nonforfeitable benefits of 
     inactive participants is greater than the present value of 
     nonforfeitable benefits of active participants, and
       ``(iii) the plan has an accumulated funding deficiency for 
     the current plan year, or is projected to have such a 
     deficiency for any of the 4 succeeding plan years, not taking 
     into account any extension of amortization periods under 
     section 431(d).
       ``(D) A plan is described in this subparagraph if the sum 
     of--
       ``(i) the market value of plan assets, plus
       ``(ii) the present value of the reasonably anticipated 
     employer contributions for the current plan year and each of 
     the 4 succeeding plan years, assuming that the terms of all 
     collective bargaining agreements pursuant to which the plan 
     is maintained for the current plan year continue in effect 
     for succeeding plan years,

     is less than the present value of all benefits projected to 
     be payable under the plan during the current plan year and 
     each of the 4 succeeding plan years (plus administrative 
     expenses for such plan years).
       ``(3) Annual certification by plan actuary.--
       ``(A) In general.--During the 90-day period beginning on 
     the first day of each plan year of a multiemployer plan, the 
     plan actuary shall certify to the Secretary--
       ``(i) whether or not the plan is in endangered status for 
     such plan year and whether or not the plan is in critical 
     status for such plan year, and
       ``(ii) in the case of a plan which is in a funding 
     improvement or rehabilitation period, whether or not the plan 
     is making the scheduled progress in meeting the requirements 
     of its funding improvement or rehabilitation plan.
       ``(B) Actuarial projections of assets and liabilities.--
       ``(i) In general.--In making the determinations and 
     projections under this subsection, the plan actuary shall 
     make projections required for the current and succeeding plan 
     years, using reasonable actuarial estimates, assumptions, and 
     methods, of the current value of the assets of the plan and 
     the present value of all liabilities to participants and 
     beneficiaries under the plan for the current plan year as of 
     the beginning of such year. The projected present value of 
     liabilities as of the beginning of such year shall be 
     determined based on the actuarial statement required under 
     section 103(d) of the Employee Retirement Income Security Act 
     of 1974 with respect to the most recently filed annual report 
     or the actuarial valuation for the preceding plan year.
       ``(ii) Determinations of future contributions.--Any 
     actuarial projection of plan assets shall assume--

       ``(I) reasonably anticipated employer contributions for the 
     current and succeeding plan years, assuming that the terms of 
     the one or more collective bargaining agreements pursuant to 
     which the plan is maintained for the current plan year 
     continue in effect for succeeding plan years, or
       ``(II) that employer contributions for the most recent plan 
     year will continue indefinitely, but only if the plan actuary 
     determines there have been no significant demographic changes 
     that would make such assumption unreasonable.

       ``(C) Penalty for failure to secure timely actuarial 
     certification.--Any failure of the plan's actuary to certify 
     the plan's status under this subsection by the date specified 
     in subparagraph (A) shall be treated for purposes of section 
     502(c)(2) of such Act as a failure or refusal by the plan 
     administrator to file the annual report required to be filed 
     with the Secretary under section 101(b)(4) of such Act.
       ``(D) Notice.--In any case in which a multiemployer plan is 
     certified to be in endangered or critical status under 
     subparagraph (A), the plan sponsor shall, not later than 30 
     days after the date of the certification, provide 
     notification of the endangered or critical status to the 
     participants and beneficiaries, the bargaining parties, the 
     Pension Benefit Guaranty Corporation, the Secretary, and the 
     Secretary of Labor.
       ``(c) Funding Improvement Plan Must Be Adopted for 
     Multiemployer Plans in Endangered Status.--
       ``(1) In general.--In any case in which a multiemployer 
     plan is in endangered status for a plan year, the plan 
     sponsor, in accordance with this subsection--
       ``(A) shall adopt a funding improvement plan not later than 
     240 days following the required date for the actuarial 
     certification of endangered status under subsection 
     (b)(3)(A), and
       ``(B) within 30 days after the adoption of the funding 
     improvement plan--
       ``(i) in the case of a plan in seriously endangered status, 
     shall provide to the bargaining parties 1 or more schedules 
     showing revised benefit structures, revised contribution 
     structures, or both, which, if adopted, may reasonably be 
     expected to enable the multiemployer plan to meet the 
     applicable requirements under paragraph (3) in accordance 
     with the funding improvement plan, including a description of 
     the reductions in future benefit accruals and increases in 
     contributions that the plan sponsor determines are reasonably 
     necessary to meet the applicable requirements if the plan 
     sponsor assumes that there are no increases in contributions 
     under the plan other than the increases necessary to meet the 
     applicable requirements after future benefit accruals have 
     been reduced to the maximum extent permitted by law, and
       ``(ii) may, if the plan sponsor deems appropriate, prepare 
     and provide the bargaining parties with additional 
     information relating to contribution rates or benefit 
     reductions, alternative schedules, or other information 
     relevant to achieving the requirements under paragraph (3) in 
     accordance with the funding improvement plan.
       ``(2) Exception for years after process begins.--Paragraph 
     (1) shall not apply to a plan year if such year is in a 
     funding plan adoption period or funding improvement period by 
     reason of the plan being in endangered status for a preceding 
     plan year. For purposes of this section, such preceding plan 
     year shall be the initial determination year with respect to 
     the funding improvement plan to which it relates.
       ``(3) Funding improvement plan.--For purposes of this 
     section--
       ``(A) In general.--A funding improvement plan is a plan 
     which consists of the actions, including options or a range 
     of options to be proposed to the bargaining parties, which, 
     under reasonable actuarial assumptions, will result in the 
     plan meeting the requirements of this paragraph.
       ``(B) Plans other than seriously endangered plans.--In the 
     case of plan not in seriously endangered status, the 
     requirements of this paragraph are met if the plan's funded 
     percentage as of the close of the funding improvement period 
     exceeds the lesser of 80 percent or a percentage equal to the 
     sum of--
       ``(i) such percentage as of the beginning of such period, 
     plus
       ``(ii) 10 percent of the percentage determined under clause 
     (i).
       ``(C) Seriously endangered plans.--In the case of a plan in 
     seriously endangered status, the requirements of this 
     paragraph are met if--
       ``(i) the plan's funded percentage as of the close of the 
     funding improvement period equals or exceeds the percentage 
     which is equal to the sum of--

       ``(I) such percentage as of the beginning of such period, 
     plus
       ``(II) 33 percent of the difference between 100 percent and 
     the percentage under subclause (I), and

       ``(ii) there is no accumulated funding deficiency for any 
     plan year during the funding improvement period (taking into 
     account any extension of amortization periods under section 
     431(d)).
       ``(4) Funding improvement period.--For purposes of this 
     section--
       ``(A) In general.--The funding improvement period for any 
     funding improvement plan adopted pursuant to this subsection 
     is the 10-year period beginning on the first day of the first 
     plan year of the multiemployer plan beginning after the 
     earlier of--
       ``(i) the second anniversary of the date of the adoption of 
     the funding improvement plan, or
       ``(ii) the expiration of the collective bargaining 
     agreements in effect on the due date for the actuarial 
     certification of endangered status for the initial 
     determination year under subsection (b)(3)(A) and covering, 
     as of such due date, at least 75 percent of the active 
     participants in such multiemployer plan.
       ``(B) Coordination with changes in status.--
       ``(i) Plans no longer in endangered status.--If the plan's 
     actuary certifies under subsection (b)(3)(A) for a plan year 
     in any funding plan adoption period or funding improvement 
     period that the plan is no longer in endangered status and is 
     not in critical status, the funding plan adoption period or 
     funding improvement period, whichever is applicable, shall 
     end as of the close of the preceding plan year.
       ``(ii) Plans in critical status.--If the plan's actuary 
     certifies under subsection (b)(3)(A) for a plan year in any 
     funding plan adoption period or funding improvement period 
     that the plan is in critical status, the funding plan 
     adoption period or funding improvement period, whichever is 
     applicable, shall end as of the close of the plan year 
     preceding the first plan year in the rehabilitation period 
     with respect to such status.
       ``(5) Special rules for certain underfunded plans.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     if the funded percentage of a plan in seriously endangered 
     status was 70 percent or less as of the beginning of the 
     initial determination year, the following rules shall apply 
     in determining whether the requirements of paragraph 
     (3)(C)(i) are met:
       ``(i) The plan's funded percentage as of the close of the 
     funding improvement period must equal or exceed a percentage 
     which is equal to the sum of--

       ``(I) such percentage as of the beginning of such period, 
     plus

[[Page 28676]]

       ``(II) 20 percent of the difference between 100 percent and 
     the percentage under subclause (I).

       ``(ii) The funding improvement period under paragraph 
     (4)(A) shall be 15 years rather than 10 years.
       ``(B) Special rules for plans with funded percentage over 
     70 percent.--If the funded percentage described in 
     subparagraph (A) was more than 70 percent but less than 80 
     percent as of the beginning of the initial determination 
     year--
       ``(i) subparagraph (A) shall apply if the plan's actuary 
     certifies, within 30 days after the certification under 
     subsection (b)(3)(A) for the initial determination year, 
     that, based on the terms of the plan and the collective 
     bargaining agreements in effect at the time of such 
     certification, the plan is not projected to meet the 
     requirements of paragraph (3)(C)(i) without regard to this 
     paragraph, and
       ``(ii) if there is a certification under clause (i), the 
     plan may, in formulating its funding improvement plan, only 
     take into account the rules of subparagraph (A) for plan 
     years in the funding improvement period beginning on or 
     before the date on which the last of the collective 
     bargaining agreements described in paragraph (4)(A)(ii) 
     expires.

     Notwithstanding clause (ii), if for any plan year ending 
     after the date described in clause (ii) the plan actuary 
     certifies (at the time of the annual certification under 
     subsection (b)(3)(A) for such plan year) that, based on the 
     terms of the plan and collective bargaining agreements in 
     effect at the time of that annual certification, the plan is 
     not projected to be able to meet the requirements of 
     paragraph (3)(C)(i) without regard to this paragraph, the 
     plan may continue to assume for such year that the funding 
     improvement period is 15 years rather than 10 years.
       ``(6) Updates to funding improvement plan and schedules.--
       ``(A) Funding improvement plan.--The plan sponsor shall 
     annually update the funding improvement plan and shall file 
     the update with the plan's annual report under section 104 of 
     the Employee Retirement Income Security Act of 1974.
       ``(B) Schedules.--The plan sponsor may periodically update 
     any schedule of contribution rates provided under this 
     subsection to reflect the experience of the plan, except that 
     the schedule or schedules described in paragraph (1)(B)(i) 
     shall be updated at least once every 3 years.
       ``(C) Duration of schedule.--A schedule of contribution 
     rates provided by the plan sponsor and relied upon by 
     bargaining parties in negotiating a collective bargaining 
     agreement shall remain in effect for the duration of that 
     collective bargaining agreement.
       ``(7) Penalty if no funding improvement plan adopted.--A 
     failure of the plan sponsor to adopt a funding improvement 
     plan by the date specified in paragraph (1)(A) shall be 
     treated for purposes of section 502(c)(2) of such Act as a 
     failure or refusal by the plan administrator to file the 
     annual report required to be filed with the Secretary of 
     Labor under section 101(b)(4) of such Act.
       ``(8) Funding plan adoption period.--For purposes of this 
     section, the term `funding plan adoption period' means the 
     period beginning on the date of the certification under 
     subsection (b)(3)(A) for the initial determination year and 
     ending on the day before the first day of the funding 
     improvement period.
       ``(d) Rules for Operation of Plan During Adoption and 
     Improvement Periods; Failure to Meet Requirements.--
       ``(1) Special rules for plan adoption period.--During the 
     plan adoption period--
       ``(A) the plan sponsor may not accept a collective 
     bargaining agreement or participation agreement with respect 
     to the multiemployer plan that provides for--
       ``(i) a reduction in the level of contributions for any 
     participants,
       ``(ii) a suspension of contributions with respect to any 
     period of service, or
       ``(iii) any new direct or indirect exclusion of younger or 
     newly hired employees from plan participation,
       ``(B) no amendment of the plan which increases the 
     liabilities of the plan by reason of any increase in 
     benefits, any change in the accrual of benefits, or any 
     change in the rate at which benefits become nonforfeitable 
     under the plan may be adopted unless the amendment is 
     required as a condition of qualification under part I of 
     subchapter D of chapter 1 or to comply with other applicable 
     law, and
       ``(C) in the case of a plan in seriously endangered status, 
     the plan sponsor shall take all reasonable actions which are 
     consistent with the terms of the plan and applicable law and 
     which are expected, based on reasonable assumptions, to 
     achieve--
       ``(i) an increase in the plan's funded percentage, and
       ``(ii) postponement of an accumulated funding deficiency 
     for at least 1 additional plan year.

     Actions under subparagraph (C) include applications for 
     extensions of amortization periods under section 431(d), use 
     of the shortfall funding method in making funding standard 
     account computations, amendments to the plan's benefit 
     structure, reductions in future benefit accruals, and other 
     reasonable actions consistent with the terms of the plan and 
     applicable law.
       ``(2) Compliance with funding improvement plan.--
       ``(A) In general.--A plan may not be amended after the date 
     of the adoption of a funding improvement plan under 
     subsection (c) so as to be inconsistent with the funding 
     improvement plan.
       ``(B) No reduction in contributions.--A plan sponsor may 
     not during any funding improvement period accept a collective 
     bargaining agreement or participation agreement with respect 
     to the multiemployer plan that provides for--
       ``(i) a reduction in the level of contributions for any 
     participants,
       ``(ii) a suspension of contributions with respect to any 
     period of service, or
       ``(iii) any new direct or indirect exclusion of younger or 
     newly hired employees from plan participation.
       ``(C) Special rules for benefit increases.--A plan may not 
     be amended after the date of the adoption of a funding 
     improvement plan under subsection (c) so as to increase 
     benefits, including future benefit accruals, unless--
       ``(i) in the case of a plan in seriously endangered status, 
     the plan actuary certifies that, after taking into account 
     the benefit increase, the plan is still reasonably expected 
     to meet the requirements under subsection (c)(3) in 
     accordance with the schedule contemplated in the funding 
     improvement plan, and
       ``(ii) in the case of a plan not in seriously endangered 
     status, the actuary certifies that such increase is paid for 
     out of contributions not required by the funding improvement 
     plan to meet the requirements under subsection (c)(3) in 
     accordance with the schedule contemplated in the funding 
     improvement plan.
       ``(3) Failure to meet requirements.--
       ``(A) In general.--Notwithstanding section 4971(g), if a 
     plan fails to meet the requirements of subsection (c)(3) by 
     the end of the funding improvement period, the plan shall be 
     treated as having an accumulated funding deficiency for 
     purposes of section 4971 for the last plan year in such 
     period (and each succeeding plan year until such requirements 
     are met) in an amount equal to the greater of the amount of 
     the contributions necessary to meet such requirements or the 
     amount of such accumulated funding deficiency without regard 
     to this paragraph.
       ``(B) Waiver.--In the case of a failure described in 
     subparagraph (A) which is due to reasonable cause and not to 
     willful neglect, the Secretary of the Treasury may waive part 
     or all of the tax imposed by section 4971 of such Code to the 
     extent that the payment of such tax would be excessive or 
     otherwise inequitable relative to the failure involved.
       ``(e) Rehabilitation Plan Must Be Adopted for Multiemployer 
     Plans in Critical Status.--
       ``(1) In general.--In any case in which a multiemployer 
     plan is in critical status for a plan year, the plan sponsor, 
     in accordance with this subsection--
       ``(A) shall adopt a rehabilitation plan not later than 240 
     days following the required date for the actuarial 
     certification of critical status under subsection (b)(3)(A), 
     and
       ``(B) within 30 days after the adoption of the 
     rehabilitation plan--
       ``(i) shall provide to the bargaining parties 1 or more 
     schedules showing revised benefit structures, revised 
     contribution structures, or both, which, if adopted, may 
     reasonably be expected to enable the multiemployer plan to 
     emerge from critical status in accordance with the 
     rehabilitation plan, and
       ``(ii) may, if the plan sponsor deems appropriate, prepare 
     and provide the bargaining parties with additional 
     information relating to contribution rates or benefit 
     reductions, alternative schedules, or other information 
     relevant to emerging from critical status in accordance with 
     the rehabilitation plan.

     The schedule or schedules described in subparagraph (B)(i) 
     shall reflect reductions in future benefit accruals and 
     increases in contributions that the plan sponsor determines 
     are reasonably necessary to emerge from critical status. One 
     schedule shall be designated as the default schedule and such 
     schedule shall assume that there are no increases in 
     contributions under the plan other than the increases 
     necessary to emerge from critical status after future benefit 
     accruals and other benefits (other than benefits the 
     reduction or elimination of which are not permitted under 
     section 411(d)(6)) have been reduced to the maximum extent 
     permitted by law.
       ``(2) Exception for years after process begins.--Paragraph 
     (1) shall not apply to a plan year if such year is in a 
     rehabilitation plan adoption period or rehabilitation period 
     by reason of the plan being in critical status for a 
     preceding plan year. For purposes of this section, such 
     preceding plan year shall be the initial critical year with 
     respect to the rehabilitation plan to which it relates.
       ``(3) Rehabilitation plan.--For purposes of this section--
       ``(A) In general.--A rehabilitation plan is a plan which 
     consists of--
       ``(i) actions which will enable, under reasonable actuarial 
     assumptions, the plan to

[[Page 28677]]

     cease to be in critical status by the end of the 
     rehabilitation period and may include reductions in plan 
     expenditures (including plan mergers and consolidations), 
     reductions in future benefit accruals or increases in 
     contributions, if agreed to by the bargaining parties, or any 
     combination of such actions, or
       ``(ii) if the plan sponsor determines that, based on 
     reasonable actuarial assumptions and upon exhaustion of all 
     reasonable measures, the plan can not reasonably be expected 
     to emerge from critical status by the end of the 
     rehabilitation period, reasonable measures to emerge from 
     critical status at a later time or to forestall possible 
     insolvency (within the meaning of section 4245 of the 
     Employee Retirement Income Security Act of 1974).

     Such plan shall include the schedules required to be provided 
     under paragraph (1)(B)(i). If clause (ii) applies, such plan 
     shall set forth the alternatives considered, explain why the 
     plan is not reasonably expected to emerge from critical 
     status by the end of the rehabilitation period, and specify 
     when, if ever, the plan is expected to emerge from critical 
     status in accordance with the rehabilitation plan.
       ``(B) Updates to rehabilitation plan and schedules.--
       ``(i) Rehabilitation plan.--The plan sponsor shall annually 
     update the rehabilitation plan and shall file the update with 
     the plan's annual report under section 104 of the Employee 
     Retirement Income Security Act of 1974.
       ``(ii) Schedules.--The plan sponsor may periodically update 
     any schedule of contribution rates provided under this 
     subsection to reflect the experience of the plan, except that 
     the schedule or schedules described in paragraph (1)(B)(i) 
     shall be updated at least once every 3 years.
       ``(iii) Duration of schedule.--A schedule of contribution 
     rates provided by the plan sponsor and relied upon by 
     bargaining parties in negotiating a collective bargaining 
     agreement shall remain in effect for the duration of that 
     collective bargaining agreement.
       ``(C) Default schedule.--If the collective bargaining 
     agreement providing for contributions under a multiemployer 
     plan that was in effect at the time the plan entered critical 
     status expires and, after receiving a schedule from the plan 
     sponsor under paragraph (1)(B)(i), the bargaining parties 
     have not adopted a collective bargaining agreement with terms 
     consistent with such a schedule, the default schedule 
     described in the last sentence of paragraph (1) shall go into 
     effect with respect to those bargaining parties.
       ``(4) Rehabilitation period.--For purposes of this 
     section--
       ``(A) In general.--The rehabilitation period for a plan in 
     critical status is the 10-year period beginning on the first 
     day of the first plan year of the multiemployer plan 
     following the earlier of--
       ``(i) the second anniversary of the date of the adoption of 
     the rehabilitation plan, or
       ``(ii) the expiration of the collective bargaining 
     agreements in effect on the date of the due date for the 
     actuarial certification of critical status for the initial 
     critical year under subsection (a)(1) and covering, as of 
     such date at least 75 percent of the active participants in 
     such multiemployer plan.

     If a plan emerges from critical status as provided under 
     subparagraph (B) before the end of such 10-year period, the 
     rehabilitation period shall end with the plan year preceding 
     the plan year for which the determination under subparagraph 
     (B) is made.
       ``(B) Emergence.--A plan in critical status shall remain in 
     such status until a plan year for which the plan actuary 
     certifies, in accordance with subsection (b)(3)(A), that the 
     plan is not projected to have an accumulated funding 
     deficiency for the plan year or any of the 9 succeeding plan 
     years, without regard to use of the shortfall method or any 
     extension of amortization periods under section 431(d).
       ``(5) Penalty if no rehabilitation plan adopted.--A failure 
     of a plan sponsor to adopt a rehabilitation plan by the date 
     specified in paragraph (1)(A) shall be treated for purposes 
     of section 502(c)(2) of the Employee Retirement Income 
     Security Act of 1974 as a failure or refusal by the plan 
     administrator to file the annual report required to be filed 
     with the Secretary of Labor under section 101(b)(4) of such 
     Act.
       ``(6) Rehabilitation plan adoption period.--For purposes of 
     this section, the term `rehabilitation plan adoption period' 
     means the period beginning on the date of the certification 
     under subsection (b)(3)(A) for the initial critical year and 
     ending on the day before the first day of the rehabilitation 
     period.
       ``(7) Limitation on reduction in rates of future 
     accruals.--Any reduction in the rate of future accruals under 
     any schedule described in paragraph (1)(B)(i) shall not 
     reduce the rate of future accruals below--
       ``(A) a monthly benefit (payable as a single life annuity 
     commencing at the participant's normal retirement age) equal 
     to 1 percent of the contributions required to be made with 
     respect to a participant, or the equivalent standard accrual 
     rate for a participant or group of participants under the 
     collective bargaining agreements in effect as of the first 
     day of the initial critical year, or
       ``(B) if lower, the accrual rate under the plan on such 
     first day.
     The equivalent standard accrual rate shall be determined by 
     the plan sponsor based on the standard or average 
     contribution base units which the plan sponsor determines to 
     be representative for active participants and such other 
     factors as the plan sponsor determines to be relevant. 
     Nothing in this paragraph shall be construed as limiting the 
     ability of the plan sponsor to prepare and provide the 
     bargaining parties with alternative schedules to the default 
     schedule that established lower or higher accrual and 
     contribution rates than the rates otherwise described in this 
     paragraph.
       ``(8) Employer impact.--For the purposes of this section, 
     the plan sponsor shall consider the impact of the 
     rehabilitation plan and contribution schedules authorized by 
     this section on bargaining parties with fewer than 500 
     employees and shall implement the plan in a manner that 
     encourages their continued participation in the plan and 
     minimizes financial harm to employers and their workers.
       ``(f) Rules for Operation of Plan During Adoption and 
     Rehabilitation Period.--
       ``(1) Compliance with rehabilitation plan.--
       ``(A) In general.--A plan may not be amended after the date 
     of the adoption of a rehabilitation plan under subsection (e) 
     so as to be inconsistent with the rehabilitation plan.
       ``(B) Special rules for benefit increases.--A plan may not 
     be amended after the date of the adoption of a rehabilitation 
     plan under subsection (e) so as to increase benefits, 
     including future benefit accruals, unless the plan actuary 
     certifies that such increase is paid for out of additional 
     contributions not contemplated by the rehabilitation plan, 
     and, after taking into account the benefit increase, the 
     multiemployer plan still is reasonably expected to emerge 
     from critical status by the end of the rehabilitation period 
     on the schedule contemplated in the rehabilitation plan.
       ``(2) Restriction on lump sums and similar benefits.--
       ``(A) In general.--Effective on the date the notice of 
     certification of the plan's critical status for the initial 
     critical year under subsection (b)(3)(D) is sent, and 
     notwithstanding section 411(d)(6), the plan shall not pay--
       ``(i) any payment, in excess of the monthly amount paid 
     under a single life annuity (plus any social security 
     supplements described in the last sentence of section 
     411(b)(1)(A)),
       ``(ii) any payment for the purchase of an irrevocable 
     commitment from an insurer to pay benefits, and
       ``(iii) any other payment specified by the Secretary by 
     regulations.
       ``(B) Exception.--Subparagraph (A) shall not apply to a 
     benefit which under section 411(a)(11) may be immediately 
     distributed without the consent of the participant or to any 
     makeup payment in the case of a retroactive annuity starting 
     date or any similar payment of benefits owed with respect to 
     a prior period.
       ``(3) Adjustments disregarded in withdrawal liability 
     determination.--Any benefit reductions under this subsection 
     shall be disregarded in determining a plan's unfunded vested 
     benefits for purposes of determining an employer's withdrawal 
     liability under section 4201 of the Employee Retirement 
     Income Security Act of 1974.
       ``(4) Special rules for plan adoption period.--During the 
     rehabilitation plan adoption period--
       ``(A) the plan sponsor may not accept a collective 
     bargaining agreement or participation agreement with respect 
     to the multiemployer plan that provides for--
       ``(i) a reduction in the level of contributions for any 
     participants,
       ``(ii) a suspension of contributions with respect to any 
     period of service, or
       ``(iii) any new direct or indirect exclusion of younger or 
     newly hired employees from plan participation, and
       ``(B) no amendment of the plan which increases the 
     liabilities of the plan by reason of any increase in 
     benefits, any change in the accrual of benefits, or any 
     change in the rate at which benefits become nonforfeitable 
     under the plan may be adopted unless the amendment is 
     required as a condition of qualification under part I of 
     subchapter D of chapter 1 or to comply with other applicable 
     law.
       ``(5) Failure to meet requirements.--
       ``(A) In general.--Notwithstanding section 4971(g), if a 
     plan--
       ``(i) fails to meet the requirements of subsection (e) by 
     the end of the rehabilitation period, or
       ``(ii) has received a certification under subsection 
     (b)(3)(A)(ii) for 3 consecutive plan years that the plan is 
     not making the scheduled progress in meeting its requirements 
     under the rehabilitation plan,

     the plan shall be treated as having an accumulated funding 
     deficiency for purposes of section 4971 for the last plan 
     year in such period (and each succeeding plan year until such 
     requirements are met) in an amount equal to the greater of 
     the amount of the

[[Page 28678]]

     contributions necessary to meet such requirements or the 
     amount of such accumulated funding deficiency without regard 
     to this paragraph.
       ``(B) Waiver.--In the case of a failure described in 
     subparagraph (A) which is due to reasonable cause and not to 
     willful neglect, the Secretary may waive part or all of the 
     tax imposed by section 4971 to the extent that the payment of 
     such tax would be excessive or otherwise inequitable relative 
     to the failure involved.
       ``(g) Expedited Resolution of Plan Sponsor Decisions.--If, 
     within 60 days of the due date for adoption of a funding 
     improvement plan under subsection (c) or a rehabilitation 
     plan under subsection (e), the plan sponsor of a plan in 
     endangered status or a plan in critical status has not agreed 
     on a funding improvement plan or rehabilitation plan, then 
     any member of the board or group that constitutes the plan 
     sponsor may require that the plan sponsor enter into an 
     expedited dispute resolution procedure for the development 
     and adoption of a funding improvement plan or rehabilitation 
     plan.
       ``(h) Nonbargained Participation.--
       ``(1) Both bargained and nonbargained employee-
     participants.--In the case of an employer that contributes to 
     a multiemployer plan with respect to both employees who are 
     covered by one or more collective bargaining agreements and 
     to employees who are not so covered, if the plan is in 
     endangered status or in critical status, benefits of and 
     contributions for the nonbargained employees, including 
     surcharges on those contributions, shall be determined as if 
     those nonbargained employees were covered under the first to 
     expire of the employer's collective bargaining agreements in 
     effect when the plan entered endangered or critical status.
       ``(2) Nonbargained employees only.--In the case of an 
     employer that contributes to a multiemployer plan only with 
     respect to employees who are not covered by a collective 
     bargaining agreement, this section shall be applied as if the 
     employer were the bargaining parties, and its participation 
     agreement with the plan was a collective bargaining agreement 
     with a term ending on the first day of the plan year 
     beginning after the employer is provided the schedule or 
     schedules described in subsections (c) and (e).
       ``(3) Employees covered by a collective bargaining 
     agreement.--The determination as to whether an employee 
     covered by a collective bargaining agreement for purposes of 
     this section shall be made without regard to the special rule 
     in Treasury Regulation section 1.410(b)-6(d)(ii)(D).
       ``(i) Definitions; Actuarial Method.--For purposes of this 
     section--
       ``(1) Bargaining party.--The term `bargaining party' 
     means--
       ``(A)(i) except as provided in clause (ii), an employer who 
     has an obligation to contribute under the plan; or
       ``(ii) in the case of a plan described under section 
     404(c), or a continuation of such a plan, the association of 
     employers that is the employee settlor of the plan; and
       ``(B) an employee organization which, for purposes of 
     collective bargaining, represents plan participants employed 
     by an employer who has an obligation to contribute under the 
     plan.
       ``(2) Funded percentage.--The term `funded percentage' 
     means the percentage equal to a fraction--
       ``(A) the numerator of which is the value of the plan's 
     assets, as determined under section 431(c)(2), and
       ``(B) the denominator of which is the accrued liability of 
     the plan, determined using actuarial assumptions described in 
     section 431(c)(3).
       ``(3) Accumulated funding deficiency.--The term 
     `accumulated funding deficiency' has the meaning given such 
     term in section 412(a).
       ``(4) Active participant.--The term `active participant' 
     means, in connection with a multiemployer plan, a participant 
     who is in covered service under the plan.
       ``(5) Inactive participant.--The term `inactive 
     participant' means, in connection with a multiemployer plan, 
     a participant, or the beneficiary or alternate payee of a 
     participant, who--
       ``(A) is not in covered service under the plan, and
       ``(B) is in pay status under the plan or has a 
     nonforfeitable right to benefits under the plan.
       ``(6) Pay status.--A person is in pay status under a 
     multiemployer plan if--
       ``(A) at any time during the current plan year, such person 
     is a participant or beneficiary under the plan and is paid an 
     early, late, normal, or disability retirement benefit under 
     the plan (or a death benefit under the plan related to a 
     retirement benefit), or
       ``(B) to the extent provided in regulations of the 
     Secretary, such person is entitled to such a benefit under 
     the plan.
       ``(7) Obligation to contribute.--The term `obligation to 
     contribute' has the meaning given such term under section 
     4212(a) of the Employee Retirement Income Security Act of 
     1974.
       ``(8) Actuarial method.--Notwithstanding any other 
     provision of this section, the actuary's determinations with 
     respect to a plan's normal cost, actuarial accrued liability, 
     and improvements in a plan's funded percentage under this 
     section shall be based upon the unit credit funding method 
     (whether or not that method is used for the plan's actuarial 
     valuation).
       ``(9) Plan sponsor.--In the case of a plan described under 
     section 404(c), or a continuation of such a plan, the term 
     `plan sponsor' means the bargaining parties described under 
     paragraph (1).''
       (b) Effective Dates.--
       (1) In general.--The amendment made by this section shall 
     apply with respect to plan years beginning after 2006.
       (2) Special rule for certain restored benefits.--In the 
     case of a multiemployer plan--
       (A) with respect to which benefits were reduced pursuant to 
     a plan amendment adopted on or after January 1, 2002, and 
     before June 30, 2005, and
       (B) which, pursuant to the plan document, the trust 
     agreement, or a formal written communication from the plan 
     sponsor to participants provided before June 30, 2005, 
     provided for the restoration of such benefits,

     the amendments made by this section shall not apply to such 
     benefit restorations to the extent that any restriction on 
     the providing or accrual of such benefits would otherwise 
     apply by reason of such amendments.

                   PART III--SUNSET OF FUNDING RULES

     SEC. 516. SUNSET OF FUNDING RULES.

       (a) Report.--Not later than December 31, 2011, the 
     Secretary of Labor, the Secretary of the Treasury, and the 
     Executive Director of the Pension Benefit Guaranty 
     Corporation shall conduct a study of the effect of the 
     amendments made by this subtitle on the operation and funding 
     status of multiemployer plans and shall report the results of 
     such study, including any recommendations for legislation, to 
     the Congress.
       (b) Matters Included in Study.--The study required under 
     subsection (a) shall include--
       (1) the effect of funding difficulties, funding rules in 
     effect before the date of the enactment of this Act, and the 
     amendments made by this subtitle on small businesses 
     participating in multiemployer plans,
       (2) the effect on the financial status of small employers 
     of--
       (A) funding targets set in funding improvement and 
     rehabilitation plans and associated contribution increases,
       (B) funding deficiencies,
       (C) excise taxes,
       (D) withdrawal liability,
       (E) the possibility of alternatives schedules and 
     procedures for financially-troubled employers, and
       (F) other aspects of the multiemployer system, and
       (3) the role of the multiemployer pension plan system in 
     helping small employers to offer pension benefits.
       (c) Sunset.--
       (1) In general.--Except as provided in this subsection, 
     notwithstanding any other provision of this Act, the 
     provisions of, and the amendments made by, this subtitle 
     shall not apply to plan years beginning after December 31, 
     2014, and the Employee Retirement Income Security Act of 1974 
     and the Internal Revenue Code of 1986 shall be applied to 
     such plan years under the provisions of sections 302 through 
     308 of such Act and 412 of such Code (as in effect before the 
     amendments made by this Act).
       (2) Funding improvement and rehabilitation plans.--If a 
     plan is operating under a funding improvement or 
     rehabilitation plan under section 305 of such Act or 432 of 
     such Code for its last year beginning before January 1, 2015, 
     such plan shall continue to operate under such funding 
     improvement or rehabilitation plan during any period after 
     December 31, 2014, such funding improvement or rehabilitation 
     plan is in effect and all provisions of such Act or Code 
     relating to the operation of such funding improvement or 
     rehabilitation plan shall continue in effect during such 
     period.
       (3) Amortization schedules.--In the case of any amount 
     amortized under section 304(b) of such Act or 431 of such 
     Code (as in effect after the amendments made by this 
     subtitle) over any period beginning with a plan year 
     beginning before January 1, 2015, such amount shall, in lieu 
     of the amortization which would apply after the application 
     of this subsection, continue to be amortized under such 
     section 304 or 431 (as so in effect).

              Subtitle B--Deduction and Related Provisions

     SEC. 521. DEDUCTION LIMITS FOR MULTIEMPLOYER PLANS.

       (a) Increase in Deduction.--Section 404(a)(1)(D) of the 
     Internal Revenue Code of 1986, as amended by this Act, is 
     amended to read as follows:
       ``(D) Amount determined on basis of unfunded current 
     liability.--
       ``(i) In general.--In the case of a defined benefit plan 
     which is a multiemployer plan, except as provided in 
     regulations, the maximum amount deductible under the 
     limitations of this paragraph shall not be less than the 
     unfunded current liability of the plan.
       ``(ii) Unfunded current liability.--For purposes of clause 
     (i), the term `unfunded current liability' means the excess 
     (if any) of--

[[Page 28679]]

       ``(I) 140 percent of the current liability of the plan 
     determined under section 431(c)(6)(C), over
       ``(II) the value of the plan's assets determined under 
     section 431(c)(2).''.

       (b) Exception From Limitation on Deduction Where 
     Combination of Defined Contribution and Defined Benefit 
     Plans.--
       (1) In general.--Section 404(a)(7)(C) of such Code, as 
     amended by this Act, is amended by adding at the end the 
     following new clause:
       ``(v) Multiemployer plans.--In applying this paragraph, any 
     multiemployer plan shall not be taken into account.''.
       (2) Conforming amendment.--Section 404(a)(7)(A) of such 
     Code is amended by striking the last sentence.
       (c) Effective Dates.--
       (1) Deduction limit.--The amendment made by subsection (a) 
     shall apply to years beginning after December 31, 2006.
       (2) Exception.--The amendments made by subsection (b) shall 
     apply to years beginning after December 31, 2005.

     SEC. 522. TRANSFER OF EXCESS PENSION ASSETS TO MULTIEMPLOYER 
                   HEALTH PLAN.

       (a) In General.--Section 420(e) of the Internal Revenue 
     Code of 1986 (relating to definitions and special rules) is 
     amended by adding at the end the following new paragraph:
       ``(5) Application to multiemployer plan.--In the case of 
     any plan to which section 404(c) applies (or any successor 
     plan primarily covering employees in the building and 
     construction industry)--
       ``(A) the prohibition under subsection (a) on the 
     application of this section to a multiemployer plan shall not 
     apply, and
       ``(B) this section shall be applied to any such plan--
       ``(i) by treating any reference in this section to an 
     employer as a reference to all employers maintaining the plan 
     (or, if appropriate, the plan sponsor), and
       ``(ii) in accordance with such modifications of this 
     section (and the provisions of this title and the Employee 
     Retirement Income Security Act of 1974 relating to this 
     section) as the Secretary determines appropriate to reflect 
     the fact the plan is not maintained by a single employer.''
       (b) Amendments of ERISA.--
       (1) Section 101(e)(3) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1021(e)(3)) is amended by 
     striking ``American Jobs Creation Act of 2004'' and inserting 
     ``Pension Security and Transparency Act of 2005''.
       (2) Section 403(c)(1) of such Act (29 U.S.C. 1103(c)(1)) is 
     amended by striking ``American Jobs Creation Act of 2004'' 
     and inserting ``Pension Security and Transparency Act of 
     2005''.
       (3) Section 408(b)(13) of such Act (29 U.S.C. 1108(b)(13)) 
     is amended by striking ``American Jobs Creation Act of 2004'' 
     and inserting ``Pension Security and Transparency Act of 
     2005''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to transfers made in taxable years beginning 
     after December 31, 2004.

  TITLE VI--ENHANCED RETIREMENT SAVINGS AND DEFINED CONTRIBUTION PLANS

     SEC. 601. AMERISAVE MATCHING CREDIT.

       (a) In General.--Subpart C of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     refundable credits) is amended by redesignating section 36 as 
     section 37 and by inserting after section 35 the following 
     new section:

     ``SEC. 36. AMERISAVE MATCHING CREDIT.

       ``(a) Allowance of Credit.--In the case of an eligible 
     individual, there shall be allowed as a credit against the 
     tax imposed by this subtitle for the taxable year an amount 
     equal to 100 percent of so much of the qualified retirement 
     savings contributions of the eligible individual for the 
     taxable year as do not exceed the applicable limit.
       ``(b) Applicable Limit.--For purposes of this section--
       ``(1) In general.--The applicable limit is $1,000, reduced 
     (but not below zero) by the reduction amount for each $1,000 
     (or fraction thereof) by which the taxpayer's adjusted gross 
     income for the taxable year exceeds the threshold amount.
       ``(2) Reduction amount; threshold amount.--For purposes of 
     paragraph (1), the reduction amount and the threshold amount 
     shall be determined in accordance with the following table:


 
 
                                                                 The
          ``In the case of            The reduction amount    threshold
                                               is:            amount is:
 
Joint return.......................  $50...................      $50,000
Head of a household................  $66.67................      $37,500
All other cases....................  $100..................     $25,000.
 


       ``(3) Joint return.--In the case of a joint return, this 
     subsection shall be applied separately to each individual 
     filing such return, except that for purposes of paragraph 
     (1), the adjusted gross income shall be their combined 
     adjusted gross income of the taxpayer.
       ``(4) Coordination with manner in which credit allowed.--
     The credit under subsection (a) shall be allowed only as 
     provided in section 6430.
       ``(c) Eligible Individual.--For purposes of this section--
       ``(1) In general.--The term `eligible individual' means any 
     individual if such individual has attained the age of 18 as 
     of the close of the taxable year.
       ``(2) Dependents and full-time students not eligible.--The 
     term `eligible individual' shall not include--
       ``(A) any individual with respect to whom a deduction under 
     section 151 is allowable to another taxpayer for a taxable 
     year beginning in the calendar year in which such 
     individual's taxable year begins, and
       ``(B) any individual who is a student (as defined in 
     section 152(f)).
       ``(d) Qualified Retirement Savings Contributions.--For 
     purposes of this section--
       ``(1) In general.--The term `qualified retirement savings 
     contributions' means, with respect to any taxable year, the 
     sum of--
       ``(A) the amount of the qualified retirement contributions 
     (as defined in section 219(e)) made by the eligible 
     individual,
       ``(B) the amount of--
       ``(i) any elective deferrals (as defined in section 
     402(g)(3)) of such individual, and
       ``(ii) any elective deferral of compensation by such 
     individual under an eligible deferred compensation plan (as 
     defined in section 457(b)) of an eligible employer described 
     in section 457(e)(1)(A), and
       ``(C) the amount of voluntary employee contributions by 
     such individual to any qualified retirement plan (as defined 
     in section 4974(c)).
       ``(2) Reduction for certain distributions.--
       ``(A) In general.--The qualified retirement savings 
     contributions determined under paragraph (1) shall be reduced 
     (but not below zero) by the aggregate distributions received 
     by the individual during the testing period from any entity 
     of a type to which contributions under paragraph (1) may be 
     made. The preceding sentence shall not apply to the portion 
     of any distribution which is not includible in gross income 
     by reason of a trustee-to-trustee transfer or a rollover 
     distribution.
       ``(B) Testing period.--For purposes of subparagraph (A), 
     the testing period, with respect to a taxable year, is the 
     period which includes such taxable year and the 3 preceding 
     taxable years.
       ``(C) Excepted distributions.--There shall not be taken 
     into account under subparagraph (A)--
       ``(i) any distribution referred to in section 72(p), 
     401(k)(8), 401(m)(6), 402(g)(2), 404(k), or 408(d)(4), and
       ``(ii) any distribution to which section 408A(d)(3) 
     applies.
       ``(D) Treatment of distributions received by spouse of 
     individual.--For purposes of determining distributions 
     received by an individual under subparagraph (A) for any 
     taxable year, any distribution received by the spouse of such 
     individual shall be treated as received by such individual if 
     such individual and spouse file a joint return for such 
     taxable year and for the taxable year during which the spouse 
     receives the distribution.
       ``(3) Additional tax on early net withdrawals.--
       ``(A) In general.--If with respect to a taxable year there 
     is a disqualified net withdrawal, the amount of tax imposed 
     by this chapter for such taxable year shall be increased by 
     the amount determined under subparagraph (B).
       ``(B) Determination of amount.--The amount determined under 
     this subparagraph is the aggregate decrease in credits 
     allowed under this section for any of the preceding 10 
     taxable years if the disqualified net withdrawals were 
     applied against (and operated to reduce) the qualified 
     retirement savings contributions taken into account under 
     subsection (a). Such reduction shall be applied in order 
     beginning with the first taxable year in such 10-year period 
     and shall take into account any prior application of this 
     paragraph.
       ``(C) Disqualified net withdrawals.--The term `disqualified 
     net withdrawals' means the aggregate distributions subject to 
     tax under section 72(t) for the taxable year over the 
     qualified retirement savings contributions for the taxable 
     year.
       ``(e) Special Rules.--For purposes of this section--
       ``(1) Adjusted gross income.--Adjusted gross income shall 
     be determined without regard to sections 911, 931, and 933.
       ``(2) Investment in the contract.--Any credit under this 
     section shall be disregarded in determining investment in the 
     contract.
       ``(f) Regulations.--The Secretary may prescribe such 
     regulations as may be necessary or appropriate to carry out 
     this section, including regulations requiring recordkeeping 
     and information reporting.
       ``(g) Termination.--This section shall not apply to taxable 
     years beginning after December 31, 2010.''.
       (b) Repeal of Savers Credit.--Subpart A of part IV of 
     subchapter A of chapter 1 of such Code is amended by striking 
     section 25B (relating to elective deferrals and IRA 
     contributions by certain individuals).
       (c) Conforming Amendments.--
       (1) Section 26(b)(2) of such Code is amended by striking 
     ``and'' at the end of subparagraph

[[Page 28680]]

     (R), by striking the period at the end of subparagraph (S) 
     and inserting ``, and'', and by inserting after subparagraph 
     (S) the following new subparagraph:
       ``(T) section 36(d)(3) (relating to additional tax where 
     net withdrawals exceed credit).''.
       (2) Section 24(b)(3)(B) of such Code is amended by striking 
     ``sections 23 and 25B'' and inserting ``section 23''.
       (3) Section 25(e)(1)(C) of such Code is amended by striking 
     ``25B,''.
       (4) Section 26(a)(1) of such Code is amended by striking 
     ``sections 23, 24, and 25B'' and inserting ``sections 23 and 
     24''.
       (5) Subchapter C of part IV of subchapter A of chapter 1 of 
     such Code is amended--
       (A) by redesignating section 36 as section 37, and
       (B) by redesignating section 25B, as moved by paragraph 
     (1), as section 36.
       (6) Section 904(h) of such Code is amended by striking 
     ``sections 23, 24, and 25B'' and inserting ``sections 23 and 
     24''.
       (7) Section 1400C of such Code is amended by striking 
     ``sections 23, 24, and 25B'' and inserting ``section 23 and 
     24''.
       (8) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 of such Code is amended by striking 
     the item relating to section 36 and inserting the following:

``Sec. 36. AmeriSave matching credit.
``Sec. 37. Overpayments of tax.''.

       (9) The table of sections for subpart A of part IV of such 
     Code is amended by striking the item relating to section 25B.
       (10) Section 1324(b)(2) of title 31, United States Code, is 
     amended by inserting ``, or from section 36 of such Code'' 
     before the period at the end.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 602. MANNER IN WHICH AMERISAVE MATCHING CREDIT ALLOWED.

       (a) In General.--Subchapter B of chapter 65 of the Internal 
     Revenue Code of 1986 (relating to rules of special 
     application) is amended by adding at the end the following 
     new section:

     ``SEC. 6430. MANNER IN WHICH AMERISAVE MATCHING CREDIT 
                   ALLOWED.

       ``(a) General Rule.--The credit allowed under section 36 
     shall be allowed only as provided in this section.
       ``(b) Amount Paid Directly to Retirement Plan.--The credit 
     allowed under section 36 for a taxable year shall be paid 
     directly by the Secretary to a plan to which qualified 
     retirement savings contributions (as defined by section 
     36(d)) may be made, as specified by the taxpayer on the 
     return for such taxable year.
       ``(c) Treatment of Amounts Received by Plans.--
       ``(1) Certain rules disregarded.--Amounts paid under this 
     section to a retirement plan shall be disregarded for all 
     purposes in determining whether the plan meets the applicable 
     requirements of subtitle A.
       ``(2) Acceptance by plans.--A plan to which payments may be 
     made under this section shall not fail to be treated as 
     qualified merely on account of the receipt of such payments.
       ``(d) Amount not Treated as Credit or Refund.--Except as 
     provided by subsection (b), the credit allowed under section 
     36 shall not be used as a credit under subtitle A or refunded 
     as part of a return under subtitle A.
       ``(e) Regulations.--The Secretary shall prescribe such 
     regulations as may be appropriate to carry out this 
     section.''.
       (b) Clerical Amendment.--The table of sections for 
     subchapter B of chapter 65 of such Code is amended by adding 
     at the end the following new item:

``Sec. 6430. Manner in which AmeriSave matching credit allowed.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 603. INCREASING PARTICIPATION THROUGH AUTOMATIC 
                   CONTRIBUTION ARRANGEMENTS.

       (a) Amendments to the Internal Revenue Code of 1986.--
       (1) In general.--Section 401(k) of the Internal Revenue 
     Code of 1986 (relating to cash or deferred arrangement) is 
     amended by adding at the end the following new paragraph:
       ``(13) Alternative method for automatic contribution 
     arrangements to meet nondiscrimination requirements.--
       ``(A) In general.--A qualified automatic contribution 
     arrangement shall be treated as meeting the requirements of 
     paragraph (3)(A)(ii).
       ``(B) Qualified automatic contribution arrangement.--For 
     purposes of this paragraph, the term `qualified automatic 
     contribution arrangement' means any cash or deferred 
     arrangement which meets the requirements of subparagraphs (C) 
     through (F).
       ``(C) Automatic deferral.--
       ``(i) In general.--The requirements of this subparagraph 
     are met if, under the arrangement, each employee eligible to 
     participate in the arrangement is treated as having elected 
     to have the employer make elective contributions in an amount 
     equal to a qualified percentage of compensation.
       ``(ii) Election out.--The election treated as having been 
     made under clause (i) shall cease to apply with respect to 
     any employee if such employee makes an affirmative election--

       ``(I) to not have such contributions made, or
       ``(II) to make elective contributions at a level specified 
     in such affirmative election.

       ``(iii) Qualified percentage.--For purposes of this 
     subparagraph, the term `qualified percentage' means, with 
     respect to any employee, any percentage determined under the 
     arrangement if such percentage is applied uniformly, does not 
     exceed 10 percent, and is at least--

       ``(I) 3 percent during the period ending on the last day of 
     the first plan year which begins after the date on which the 
     first elective contribution described in clause (i) is made 
     with respect to such employee,
       ``(II) 4 percent during the first plan year following the 
     plan year described in subclause (I),
       ``(III) 5 percent during the second plan year following the 
     plan year described in subclause (I), and
       ``(IV) 6 percent during any subsequent plan year.

       ``(iv) Automatic deferral for current employees not 
     required.--Clause (i) shall be applied without taking into 
     account any employee who was eligible to participate in the 
     arrangement (or a predecessor arrangement) immediately before 
     the date on which such arrangement becomes a qualified 
     automatic contribution arrangement (determined after 
     application of this clause).
       ``(D) Participation.--
       ``(i) In general.--An arrangement meets the requirements of 
     this subparagraph for any year if, during the plan year or 
     the preceding plan year, elective contributions are made on 
     behalf of at least 70 percent of the employees eligible to 
     participate in the arrangement other than--

       ``(I) highly compensated employees, and
       ``(II) at the election of the plan administrator, employees 
     described in subparagraph (C)(iv).

       ``(ii) First plan year.--An arrangement (other than a 
     successor arrangement) shall be treated as meeting the 
     requirements of this subparagraph with respect to the first 
     plan year with respect to which such arrangement is a 
     qualified automatic contribution arrangement (determined 
     without regard to this subparagraph).
       ``(E) Matching or nonelective contributions.--
       ``(i) In general.--The requirements of this subparagraph 
     are met if, under the arrangement, the employer--

       ``(I) makes matching contributions on behalf of each 
     employee who is not a highly compensated employee in an 
     amount equal to 50 percent of the elective contributions of 
     the employee to the extent such elective contributions do not 
     exceed 6 percent of compensation, or
       ``(II) is required, without regard to whether the employee 
     makes an elective contribution or employee contribution, to 
     make a contribution to a defined contribution plan on behalf 
     of each employee who is not a highly compensated employee and 
     who is eligible to participate in the arrangement in an 
     amount equal to at least 2 percent of the employee's 
     compensation.

       ``(ii) Application of rules for matching contributions.--
     The rules of clauses (ii) and (iii) of paragraph (12)(B) 
     shall apply for purposes of clause (i)(I).
       ``(iii) Withdrawal and vesting restrictions.--An 
     arrangement shall not be treated as meeting the requirements 
     of clause (i) unless, with respect to employer contributions 
     (including matching contributions) taken into account in 
     determining whether the requirements of clause (i) are met--

       ``(I) any employee who has completed at least 2 years of 
     service (within the meaning of section 411(a)) has a 
     nonforfeitable right to 100 percent of the employee's accrued 
     benefit derived from such employer contributions, and
       ``(II) the requirements of subparagraph (B) of paragraph 
     (2) are met with respect to all such employer contributions.

       ``(iv) Application of certain other rules.--The rules of 
     subparagraphs (E)(ii) and (F) of paragraph (12) shall apply 
     for purposes of subclauses (I) and (II) of clause (i).
       ``(F) Notice requirements.--
       ``(i) In general.--The requirements of this subparagraph 
     are met if, within a reasonable period before each plan year, 
     each employee eligible to participate in the arrangement for 
     such year receives written notice of the employee's rights 
     and obligations under the arrangement which--

       ``(I) is sufficiently accurate and comprehensive to apprise 
     the employee of such rights and obligations, and
       ``(II) is written in a manner calculated to be understood 
     by the average employee to whom the arrangement applies.

       ``(ii) Timing and content requirements.--A notice shall not 
     be treated as meeting the requirements of clause (i) with 
     respect to an employee unless--

       ``(I) the notice explains the employee's right under the 
     arrangement to elect not to have elective contributions made 
     on the employee's behalf (or to elect to have such 
     contributions made at a different percentage),
       ``(II) in the case of an arrangement under which the 
     employee may elect among 2 or more investment options, the 
     notice explains how contributions made under the arrangement 
     will be invested in the absence of any investment election by 
     the employee, and

[[Page 28681]]

       ``(III) the employee has a reasonable period of time after 
     receipt of the notice described in subclauses (I) and (II) 
     and before the first elective contribution is made to make 
     either such election.''.

       (2) Matching contributions.--Section 401(m) of such Code 
     (relating to nondiscrimination test for matching 
     contributions and employee contributions) is amended by 
     redesignating paragraph (12) as paragraph (13) and by 
     inserting after paragraph (11) the following new paragraph:
       ``(12) Alternative method for automatic contribution 
     arrangements.--A defined contribution plan shall be treated 
     as meeting the requirements of paragraph (2) with respect to 
     matching contributions if the plan--
       ``(A) is a qualified automatic contribution arrangement (as 
     defined in subsection (k)(13)), and
       ``(B) meets the requirements of paragraph (11)(B).''.
       (3) Exclusion from definition of top-heavy plans.--
       (A) Elective contribution rule.--Clause (i) of section 
     416(g)(4)(H) of such Code is amended by inserting ``or 
     401(k)(13)'' after ``section 401(k)(12)''.
       (B) Matching contribution rule.--Clause (ii) of section 
     416(g)(4)(H) of such Code is amended by inserting ``or 
     401(m)(12)'' after ``section 401(m)(11)''.
       (4) Corrective distributions.--
       (A) In general.--Section 414 of such Code (relating to 
     definitions and special rules) is amended by adding at the 
     end the following new subsection:
       ``(w) Automatic Contribution Arrangements.--
       ``(1) In general.--No tax shall be imposed under section 
     72(t) on a distribution from an applicable employer plan to 
     the employee with respect to whom such contribution relates 
     if such distribution does not exceed the erroneous automatic 
     contribution amount and is made not later than the 1st April 
     15 following the close of the taxable year in which such 
     contribution was made.
       ``(2) Erroneous automatic contribution amount.--For 
     purposes of this subsection--
       ``(A) In general.--The term `erroneous automatic 
     contribution amount' means the lesser of--
       ``(i) the amount of automatic contributions made during the 
     applicable period which the employee elects in a notice to 
     the plan administrator to treat as an erroneous automatic 
     contribution amount for purposes of this subsection, or
       ``(ii) $500.
       ``(B) Automatic contribution.--The term `automatic 
     contribution' means contributions which, under the terms of 
     the plan--
       ``(i) the employee can elect to be made as contributions 
     under the plan on behalf of the employee, or to the employee 
     directly in cash, and
       ``(ii) which are made on behalf of the employee under the 
     plan pursuant to a plan provision treating the employee as 
     having elected to have the employer make such contributions 
     on behalf of the employee until the employee affirmatively 
     elects not to have such contribution made or affirmatively 
     elects to make contributions as a specified level.
       ``(3) Applicable employer plan.--For purposes of this 
     subsection, the term `applicable employer plan'means--
       ``(A) an employees' trust described in section 401(a) which 
     is exempt from tax under section 501(a), and
       ``(B) a plan under which amounts are contributed by an 
     individual's employer for an annuity contract described in 
     section 403(b).
       ``(4) Applicable period.--For purposes of this subsection, 
     the term `applicable period' means, with respect to any 
     employee, the three month period that begins on the first 
     date that an automatic contribution described in paragraph 
     (2)(B) is made with respect to such employee.''.
       (B) Vesting conforming amendments.--
       (i) Section 411(a)(3)(G) of such Code is amended by 
     inserting ``an erroneous automatic contribution under section 
     414(w),'' after ``402(g)(2)(A),''.
       (ii) The heading of section 411(a)(3)(G) of such Code is 
     amended by inserting ``OR ERRONEOUS AUTOMATIC CONTRIBUTION'' 
     before the period.
       (iii) Section 401(k)(8)(E) of such Code is amended by 
     inserting ``an erroneous automatic contribution under section 
     414(w),'' after ``402(g)(2)(A),''.
       (iv) The heading of section 401(k)(8)(E) of such Code is 
     amended by inserting ``OR ERRONEOUS AUTOMATIC CONTRIBUTION'' 
     before the period.
       (5) Effective date.--The amendments made by this subsection 
     shall apply to plan years beginning after December 31, 2005.

     SEC. 604. PREEMPTION OF STATE LAWS PRECLUDING AUTOMATIC 
                   ENROLLMENT OR AUTOMATIC ROLLOVERS.

       (a) In General.--Section 514 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1144(b)) is amended--
       (1) by redesignating subsection (d) as subsection (e); and
       (2) by inserting after subsection (c) the following new 
     subsection:
       ``(d) The provisions of this title shall supersede any and 
     all State laws insofar as they may preclude, or have the 
     effect of precluding--
       ``(1) the establishment or operation of, or making of 
     contributions to, a pension plan under a qualified automatic 
     enrollment arrangement (as defined in section 401(k)(13) of 
     the Internal Revenue Code of 1986), or
       ``(2) a distribution described in section 401(a)(31)(B) of 
     the Internal Revenue Code of 1986 or the establishment or 
     operation of an individual retirement plan (as defined in 
     section 7701(a)(37) of such Code) allowing receipt of such 
     distributions.''.
       (b) Effective Date.--The amendments made by this subsection 
     shall apply with respect to actions (described in paragraph 
     (1) or (2) of section 514(d) of the Employee Retirement 
     Income Security Act of 1974 (added by this subsection)) taken 
     before, on, or after the date of the enactment of this Act.

     SEC. 605. FIDUCIARY STANDARDS RELATING TO AUTOMATIC OR 
                   DEFAULT INVESTMENTS.

       (a) In General.--Section 404 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1104) is amended by 
     adding at the end the following new subsection:
       ``(e)(1) A fiduciary with respect to an individual account 
     plan shall be deemed to have satisfied the requirements of 
     subsection (a)(1)(B) with respect to the plan, in connection 
     with any qualifying automatic investment under the plan, to 
     the extent those requirements pertain to asset allocation as 
     between equity instruments or investments and debt 
     instruments or investments and to such further extent as may 
     be specified by the Secretary in administrative guidance of 
     general applicability.
       ``(2) For purposes of this subsection, the term `qualifying 
     automatic investment' means, in connection with a participant 
     in a plan, an investment of assets constituting some or all 
     of the participant's accrued benefit under the plan in a form 
     of investment specified by the plan, in any case in which--
       ``(A) such assets--
       ``(i) are attributable to employer contributions (and 
     earnings thereon) made pursuant to a qualified automatic 
     enrollment arrangement (as defined in section 401(k)(13) of 
     the Internal Revenue Code of 1986),
       ``(ii) are attributable to distributions described in 
     section 401(a)(31)(B) of such Code, or
       ``(iii) have been identified by the Secretary as 
     appropriate for automatic investment,
       ``(B) the plan provides for investment of such assets in 
     such form of investment unless, in lieu thereof, alternative 
     forms of investments, which are also made available to the 
     participant under the terms of the plan, are selected by the 
     participant,
       ``(C) the plan provides, under such form of investment, for 
     investment of such assets under constraints designed to--
       ``(i) limit the risk associated with the investment 
     portfolio to a reasonable level of risk while seeking to 
     maximize return consistent with that level of risk, or
       ``(ii) minimize risk while seeking a reasonable expected 
     return, and
       ``(D) the expenses associated with the investment meet the 
     standards of paragraph (3).
       ``(3)(A) The expenses associated with an investment meet 
     the standards of this paragraph if they do not exceed 
     reasonable expenses. Such expenses shall not be treated as 
     exceeding reasonable expenses solely because the expenses in 
     any year (excluding expenses for acquisition of the 
     investment) exceed the investment returns for that year and 
     cause a reduction in principal.
       ``(B) For purposes of subparagraph (A), the term `expense' 
     means any fee, charge, commission, load, or other cost or 
     expense associated with the investment (including cost of 
     acquisition, establishment, maintenance, surrender, or 
     termination of the investment and any other cost of managing 
     or administering the investment) to the extent borne by 
     participants.
       ``(C) The expenses associated with an individual retirement 
     plan (as defined in section 7701(a)(37) of the Internal 
     Revenue Code of 1986) shall not be treated as meeting the 
     standards of this paragraph if such expenses exceed the 
     expenses normally charged by the trustee or custodian of a 
     comparable individual retirement plan established to receive 
     rollover contributions (as defined in section 408(d)(3) of 
     such Code) which are not distributions described in section 
     401(a)(31)(B) of such Code.
       ``(4) The requirements of paragraph (2)(C) shall be treated 
     as satisfied with respect to investments provided for by a 
     plan to the extent such investments consist of--
       ``(A) a balanced portfolio comprised of both equity 
     investments and either stable value or fixed income 
     investments provided by a financial institution (or similar 
     financial entity) that is regulated by the United States or a 
     State in any case in which--
       ``(i) the equity investments are broad-based index funds 
     or, to the extent permitted by the Secretary under 
     regulations, guidelines, or other administrative guidance, 
     actively managed funds that are broadly diversified so as to 
     minimize the risk of large losses, and
       ``(ii) the stable value or fixed income investments--
       ``(I) are designed to comprise at least 20 percent of the 
     total (measured in terms of fair market value), and
       ``(II) are either diversified to minimize the risk of large 
     losses or are obligations (which may include inflation-
     protected obligations) issued by the United States, or

[[Page 28682]]

       ``(B) stable value investments.

     For purposes of this paragraph, the term `stable value 
     investments' means investments provided by a financial 
     institution regulated by the United States or a State that 
     are designed to preserve principal and provide a reasonable 
     rate of return, whether or not guaranteed, which may include 
     investments designed to maintain a stable dollar value equal 
     to the original value of the investment. The Secretary may 
     prescribe regulations or other administrative guidance 
     prescribing the manner in which the requirements of paragraph 
     (A)(i) may be applied taking into account classes of 
     investment determined on the basis of investment in large, 
     intermediate, or small capitalization funds, funds of varying 
     styles (such as growth funds or value funds), or funds 
     consisting of, or not consisting of, foreign or international 
     securities.
       ``(5) An investment otherwise described in the preceding 
     provisions of this subsection shall not be treated as failing 
     to be a qualifying automatic investment solely by reason of:
       ``(A) the availability to the participant under the terms 
     of the plan of alternative forms of investment which meet the 
     requirements of subsection (c)(1) or are managed by an 
     independent investment manager;
       ``(B) the extent to which provisions of the plan are or are 
     not directed toward limiting the risk of loss of principal 
     under such investment or promoting long-term capital 
     appreciation;
       ``(C) any change or variation in the percentages of equity 
     and stable value investments included in the investment 
     portfolio or other aspects of the constituent investments to 
     the extent such change or variation is based on:
       ``(i) automatic rebalancing or variable investment returns 
     prior to periodic rebalancing,
       ``(ii) the participant's age, or
       ``(iii) other factors relating to the participant's 
     situation, such as years until retirement, other retirement 
     plan coverage, financial situation, or investment preferences 
     expressed to the plan by the participant; or
       ``(D) the extent to which such investment consists of 
     interests in real estate or real-estate-based investments, if 
     such interests are broadly diversified and do not comprise 
     more than 10 percent of the equity portion of the total 
     investment of plan assets.
       ``(6)(A) Notwithstanding paragraph (1), the requirements of 
     subsection (a)(1)(C) shall not be treated as satisfied in 
     connection with any qualifying automatic investment unless 
     such investment (other than the stable value portion thereof) 
     is designed so that no more than 0.5 percent of the total 
     fair market value of the assets invested are invested in 
     securities issued by, or interests in the property of, any 
     single person.
       ``(B) For purposes of subparagraph (A), any person and all 
     affiliates thereof shall be treated as a single person. A 
     corporation is an affiliate of a person if such corporation 
     is a member of any controlled group of corporations (as 
     defined in section 1563(a) of the Internal Revenue Code of 
     1986, except that `applicable percentage' shall be 
     substituted for `80 percent' wherever the latter percentage 
     appears in such section) of which person is a member. For 
     purposes of the preceding sentence, the term `applicable 
     percentage' means 50 percent, or such lower percentage as the 
     Secretary may prescribe by regulation. A person other than a 
     corporation shall be treated as an affiliate of any other 
     person to the extent provided in regulations of the 
     Secretary. Regulations under this subparagraph shall be 
     prescribed only after consultation and coordination with the 
     Secretary of the Treasury.
       ``(7) The Secretary shall issue regulations or other 
     administrative guidance specifying the manner in which 
     investments under independent professional investment 
     management pursuant to sections 402(c)(3) and 403(a)(2) and 
     other qualifying automatic investments may serve as the 
     default investment arrangement with respect to some or all 
     plan assets without adversely affecting plan compliance with 
     this part, as governed by subsection (c)(1) with respect to 
     assets over which participants or beneficiaries exercise 
     control.
       ``(8)(A) The Secretary may issue regulations or other 
     administrative guidance for compliance with the requirements 
     of this subsection which are consistent with the provisions 
     of this subsection. Compliance with such regulations or 
     guidance shall be deemed to be compliance with the 
     requirements of this subsection. Such regulations or guidance 
     may express compliance in terms of percentages of assets 
     under management, flat dollar amounts, or other factors.
       ``(B) The regulations issued pursuant to subparagraph (A) 
     may include procedures for granting conditional or 
     unconditional exemptions of investments, classes of 
     investments, investment managers, or classes of investment 
     managers from all or part of the requirements of this 
     subsection. Such procedures shall be similar to the 
     procedures applicable under section 408(a) and subject to the 
     same standards and limitations as apply under section 408(a). 
     Such exemptions may include, in the case of qualifying 
     automatic investments, relief from, or simplified methods of 
     compliance with, the requirements of subparagraphs (B) and 
     (C) of subsection (a)(1) and the provisions of subsection 
     (c).''.
       (b) Effective Date.--The amendment made by this subsection 
     shall apply with respect to investments made on or after 
     January 1, 2005 (irrespective of the extent to which the 
     Secretary of Labor has issued regulations, guidelines, or 
     other administrative guidance pursuant to section 404(e) of 
     the Employee Retirement Income Security Act of 1974 (added by 
     this subsection)).

     SEC. 606. PENALTY-FREE WITHDRAWALS FROM RETIREMENT PLANS FOR 
                   INDIVIDUALS CALLED TO ACTIVE DUTY FOR AT LEAST 
                   179 DAYS.

       (a) In General.--Paragraph (2) of section 72(t) of the 
     Internal Revenue Code of 1986 (relating to 10-percent 
     additional tax on early distributions from qualified 
     retirement plans) is amended by adding at the end the 
     following new subparagraph:
       ``(G) Distributions from retirement plans to individuals 
     called to active duty.--
       ``(i) In general.--Any qualified reservist distribution.
       ``(ii) Amount distributed may be repaid.--Any individual 
     who receives a qualified reservist distribution may, at any 
     time during the 2-year period beginning on the day after the 
     end of the active duty period, make one or more contributions 
     to an individual retirement plan of such individual in an 
     aggregate amount not to exceed the amount of such 
     distribution. The dollar limitations otherwise applicable to 
     contributions to individual retirement plans shall not apply 
     to any contribution made pursuant to the preceding sentence. 
     No deduction shall be allowed for any contribution pursuant 
     to this clause.
       ``(iii) Qualified reservist distribution.--For purposes of 
     this subparagraph, the term `qualified reservist 
     distribution' means any distribution to an individual if--

       ``(I) such distribution is from an individual retirement 
     plan, or from amounts attributable to employer contributions 
     made pursuant to elective deferrals described in subparagraph 
     (A) or (C) of section 402(g)(3) or section 
     501(c)(18)(D)(iii),
       ``(II) such individual was (by reason of being a member of 
     a reserve component (as defined in section 101 of title 37, 
     United States Code)), ordered or called to active duty for a 
     period in excess of 179 days or for an indefinite period, and
       ``(III) such distribution is made during the period 
     beginning on the date of such order or call and ending at the 
     close of the active duty period.

       ``(iv) Application of subparagraph.--This subparagraph 
     applies to individuals ordered or called to active duty after 
     September 11, 2001, and before September 12, 2007. In no 
     event shall the 2-year period referred to in clause (ii) end 
     before the date which is 2 years after the date of the 
     enactment of this subparagraph.''.
       (b) Conforming Amendments.--
       (1) Section 401(k)(2)(B)(i) of such Code is amended by 
     striking ``or'' at the end of subclause (III), by striking 
     ``and'' at the end of subclause (IV) and inserting ``or'', 
     and by inserting after subclause (IV) the following new 
     subclause:

       ``(V) in the case of a qualified reservist distribution (as 
     defined in section 72(t)(2)(G)(iii)), the date on which a 
     period referred to in subclause (III) of such section begins, 
     and''.

       (2) Section 403(b)(7)(A)(ii) of such Code is amended by 
     inserting ``(unless such amount is a distribution to which 
     section 72(t)(2)(G) applies)'' after ``distributee''.
       (3) Section 403(b)(11) of such Code is amended by striking 
     ``or'' at the end of subparagraph (A), by striking the period 
     at the end of subparagraph (B) and inserting ``, or'', and by 
     inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) for distributions to which section 72(t)(2)(G) 
     applies.''.
       (c) Effective Date; Waiver of Limitations.--
       (1) Effective date.--The amendment made by this section 
     shall apply to distributions after September 11, 2001.
       (2) Waiver of limitations.--If refund or credit of any 
     overpayment of tax resulting from the amendments made by this 
     section is prevented at any time before the close of the 1-
     year period beginning on the date of the enactment of this 
     Act by the operation of any law or rule of law (including res 
     judicata), such refund or credit may nevertheless be made or 
     allowed if claim therefor is filed before the close of such 
     period.

     SEC. 607. WAIVER OF 10 PERCENT EARLY WITHDRAWAL PENALTY TAX 
                   ON CERTAIN DISTRIBUTIONS OF PENSION PLANS FOR 
                   PUBLIC SAFETY EMPLOYEES.

       (a) In General.--Section 72(t)(2) of the Internal Revenue 
     Code of 1986 (relating to subsection not to apply to certain 
     distributions), as amended by section 904, is amended by 
     adding at the end the following new subsection:
       ``(H) DROP distributions to qualified public safety 
     employees in governmental plans.--
       ``(i) In general.--Distributions to an individual who is a 
     qualified public safety employee from a governmental plan 
     within the meaning of section 414(d) to the extent such 
     distributions are attributable to a DROP benefit.

[[Page 28683]]

       ``(ii) Definitions.--For purposes of this subparagraph--

       ``(I) DROP benefit.--The term `DROP benefit' means a 
     feature of a governmental plan which is a defined benefit 
     plan and under which an employee elects to receive credits to 
     an account (including a notional account) in the plan which 
     are not in excess of the plan benefits (payable in the form 
     of an annuity) that would have been provided if the employee 
     had retired under the plan at a specified earlier retirement 
     date and which are in lieu of increases in the employee's 
     accrued pension benefit based on years of service after the 
     effective date of the DROP election.
       ``(II) Qualified public safety employee.--The term 
     `qualified public safety employee' means any employee of any 
     police department or fire department organized and operated 
     by a State or political subdivision of a State if the 
     employee provides police protection, firefighting services, 
     or emergency medical services for any area within the 
     jurisdiction of such State or political subdivision and if 
     the employee was eligible to retire on or before the date of 
     such election and receive immediate retirement benefits.''.

       (b) Effective Date.--The amendments made by this section 
     shall apply to distributions after the date of the enactment 
     of this Act.

     SEC. 608. COMBAT ZONE COMPENSATION TAKEN INTO ACCOUNT FOR 
                   PURPOSES OF DETERMINING LIMITATION AND 
                   DEDUCTIBILITY OF CONTRIBUTIONS TO INDIVIDUAL 
                   RETIREMENT PLANS.

       (a) In General.--Subsection (f) of section 219 of the 
     Internal Revenue Code of 1986 is amended by redesignating 
     paragraph (7) as paragraph (8) and by inserting after 
     paragraph (6) the following new paragraph:
       ``(7) Special rule for compensation earned by members of 
     the armed forces for service in a combat zone.--For purposes 
     of subsections (b)(1)(B) and (c), the amount of compensation 
     includible in an individual's gross income shall be 
     determined without regard to section 112.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. 609. DIRECT PAYMENT OF TAX REFUNDS TO INDIVIDUAL 
                   RETIREMENT PLANS.

       (a) In General.--The Secretary of the Treasury (or the 
     Secretary's delegate) shall make available a form (or modify 
     existing forms) for use by individuals to direct that a 
     portion of any refund of overpayment of tax imposed by 
     chapter 1 of the Internal Revenue Code of 1986 be paid 
     directly to an individual retirement plan (as defined in 
     section 7701(a)(37) of such Code) of such individual.
       (b) Effective Date.--The form required by subsection (a) 
     shall be made available for taxable years beginning after 
     December 31, 2006.

     SEC. 610. ALLOW ROLLOVERS BY NONSPOUSE BENEFICIARIES OF 
                   CERTAIN RETIREMENT PLAN DISTRIBUTIONS.

       (a) In General.--
       (1) Qualified plans.--Section 402(c) of the Internal 
     Revenue Code of 1986 (relating to rollovers from exempt 
     trusts) is amended by adding at the end the following new 
     paragraph:
       ``(11) Distributions to inherited individual retirement 
     plan of nonspouse beneficiary.--
       ``(A) In general.--If, with respect to any portion of a 
     distribution from an eligible retirement plan of a deceased 
     employee, a direct trustee-to-trustee transfer is made to an 
     individual retirement plan described in clause (i) or (ii) of 
     paragraph (8)(B) established for the purposes of receiving 
     the distribution on behalf of an individual who is a 
     designated beneficiary (as defined by section 401(a)(9)(E)) 
     of the employee and who is not the surviving spouse of the 
     employee--
       ``(i) the transfer shall be treated as an eligible rollover 
     distribution for purposes of this subsection,
       ``(ii) the individual retirement plan shall be treated as 
     an inherited individual retirement account or individual 
     retirement annuity (within the meaning of section 
     408(d)(3)(C)) for purposes of this title, and
       ``(iii) section 401(a)(9)(B) (other than clause (iv) 
     thereof) shall apply to such plan.
       ``(B) Certain trusts treated as beneficiaries.--For 
     purposes of this paragraph, to the extent provided in rules 
     prescribed by the Secretary, a trust maintained for the 
     benefit of one or more designated beneficiaries shall be 
     treated in the same manner as a trust designated 
     beneficiary.''.
       (2) Section 403(a) plans.--Subparagraph (B) of section 
     403(a)(4) of such Code (relating to rollover amounts) is 
     amended by inserting ``and (11)'' after ``(7)''.
       (3) Section 403(b) plans.--Subparagraph (B) of section 
     403(b)(8) of such Code (relating to rollover amounts) is 
     amended by striking ``and (9)'' and inserting ``, (9), and 
     (11)''.
       (4) Section 457 plans.--Subparagraph (B) of section 
     457(e)(16) of such Code (relating to rollover amounts) is 
     amended by striking ``and (9)'' and inserting ``, (9), and 
     (11)''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 2005.

     SEC. 611. IRA ELIGIBILITY FOR THE DISABLED.

       (a) In General.--Subsection (f) of section 219 of the 
     Internal Revenue Code of 1986 (relating to other definitions 
     and special rules) is amended by adding at the end the 
     following:
       ``(8) Special rule for certain disabled individuals.--In 
     the case of an individual--
       ``(A) who is disabled (within the meaning of section 
     72(m)(7)), and
       ``(B) who has not attained the applicable age (as defined 
     in section 401(a)(9)(H)) before the close of the taxable 
     year,
     subparagraph (B) of subsection (b)(1) shall not apply.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.

       TITLE VII--PROVISIONS TO ENHANCE HEALTH CARE AFFORDABILITY

     SEC. 701. TREATMENT OF ANNUITY AND LIFE INSURANCE CONTRACTS 
                   WITH A LONG-TERM CARE INSURANCE FEATURE.

       (a) Exclusion From Gross Income.--Subsection (e) of section 
     72 of the Internal Revenue Code of 1986 (relating to amounts 
     not received as annuities) is amended by redesignating 
     paragraph (11) as paragraph (12) and by inserting after 
     paragraph (10) the following new paragraph:
       ``(11) Special rules for certain combination contracts 
     providing long-term care insurance.--Notwithstanding 
     paragraphs (2), (5)(C), and (10), in the case of any charge 
     against the cash value of an annuity contract or the cash 
     surrender value of a life insurance contract made as payment 
     for coverage under a qualified long-term care insurance 
     contract which is part of or a rider on such annuity or life 
     insurance contract--
       ``(A) the investment in the contract shall be reduced (but 
     not below zero) by such charge, and
       ``(B) such charge shall not be includible in gross 
     income.''.
       (b) Tax-Free Exchanges Among Certain Insurance Policies.--
       (1) Annuity contracts can include qualified long-term care 
     insurance riders.--Paragraph (2) of section 1035(b) of such 
     Code is amended by adding at the end the following new 
     sentence: ``For purposes of the preceding sentence, a 
     contract shall not fail to be treated as an annuity contract 
     solely because a qualified long-term care insurance contract 
     is a part of or a rider on such contract.''.
       (2) Life insurance contracts can include qualified long-
     term care insurance riders.--Paragraph (3) of section 1035(b) 
     of such Code is amended by adding at the end the following 
     new sentence: ``For purposes of the preceding sentence, a 
     contract shall not fail to be treated as a life insurance 
     contract solely because a qualified long-term care insurance 
     contract is a part of or a rider on such contract.''.
       (3) Expansion of tax-free exchanges of life insurance, 
     endowment, and annuity contracts for long-term care 
     contracts.--Subsection (a) of section 1035 of such Code 
     (relating to certain exchanges of insurance policies) is 
     amended--
       (A) in paragraph (1) by striking ``contract;'' and 
     inserting ``contract or for a qualified long-term care 
     insurance contract;'',
       (B) in paragraph (2) by striking ``contract;'' and 
     inserting ``contract, or (C) for a qualified long-term care 
     insurance contract;'', and
       (C) in paragraph (3) by striking ``contract.'' and 
     inserting ``contract or for a qualified long-term care 
     insurance contract.''.
       (4) Tax-free exchanges of qualified long-term care 
     insurance contract.--Subsection (a) of section 1035 of such 
     Code (relating to certain exchanges of insurance policies) is 
     amended by striking ``or'' at the end of paragraph (2), by 
     striking the period at the end of paragraph (3) and inserting 
     ``; or'', and by inserting after paragraph (3) the following 
     new paragraph:
       ``(4) a qualified long-term care insurance contract for a 
     qualified long-term care insurance contract.''.
       (c) Treatment of Coverage Provided as Part of a Life 
     Insurance or Annuity Contract.--Subsection (e) of section 
     7702B of such Code (relating to treatment of qualified long-
     term care insurance) is amended to read as follows:
       ``(e) Treatment of Coverage Provided as Part of a Life 
     Insurance or Annuity Contract.--
       ``(1) Coverage treated as contract.--Except as otherwise 
     provided in regulations prescribed by the Secretary, in the 
     case of any long-term care insurance coverage (whether or not 
     qualified) provided by a rider on or as part of a life 
     insurance contract or an annuity contract, this title shall 
     apply as if the portion of the contract providing such 
     coverage is a separate contract.
       ``(2) Denial of deduction under section 213.--No deduction 
     shall be allowed under section 213(a) for any payment made 
     for coverage under a qualified long-term care insurance 
     contract if such payment is made as a charge against the cash 
     value of an annuity contract or the cash surrender value of a 
     life insurance contract.
       ``(3) Application of section 7702.--Section 7702(c)(2) 
     (relating to the guideline premium limitation) shall be 
     applied by increasing the guideline premium limitation with 
     respect to the life insurance contract, as of any date--
       ``(A) by the sum of any charges (but not premium payments) 
     against the life insurance contract's cash surrender value 
     (within

[[Page 28684]]

     the meaning of section 7702(f)(2)(A)) for coverage under the 
     qualified long-term care insurance contract made to that date 
     under the life insurance contract, less
       ``(B) any such charges the imposition of which reduces the 
     premiums paid for the life insurance contract (within the 
     meaning of section 7702(f)(1)).
       ``(4) Portion defined.--For purposes of this subsection, 
     the term `portion' means only the terms and benefits under a 
     life insurance contract or annuity contract that are in 
     addition to the terms and benefits under the contract without 
     regard to long-term care insurance coverage.
       ``(5) Annuity contracts to which paragraph (1) does not 
     apply.--For purposes of this subsection, none of the 
     following shall be treated as an annuity contract:
       ``(A) A trust described in section 401(a) which is exempt 
     from tax under section 501(a).
       ``(B) A contract--
       ``(i) purchased by a trust described in subparagraph (A),
       ``(ii) purchased as part of a plan described in section 
     403(a),
       ``(iii) described in section 403(b),
       ``(iv) provided for employees of a life insurance company 
     under a plan described in section 818(a)(3), or
       ``(v) from an individual retirement account or an 
     individual retirement annuity.
       ``(C) A contract purchased by an employer for the benefit 
     of the employee (or the employee's spouse).

     Any dividend described in section 404(k) which is received by 
     a participant or beneficiary shall, for purposes of this 
     paragraph, be treated as paid under a separate contract to 
     which subparagraph (B)(i) applies.''.
       (d) Information Reporting.--
       (1) Subpart B of part III of subchapter A of chapter 61 of 
     such Code (relating to information concerning transactions 
     with other persons) is amended by adding at the end the 
     following new section:

     ``SEC. 6050U. CHARGES OR PAYMENTS FOR QUALIFIED LONG-TERM 
                   CARE INSURANCE CONTRACTS UNDER COMBINED 
                   ARRANGEMENTS.

       ``(a) Requirement of Reporting.--Any person who makes a 
     charge against the cash value of an annuity contract, or the 
     cash surrender value of a life insurance contract, which is 
     excludible from gross income under section 72(e)(11) shall 
     make a return, according to the forms or regulations 
     prescribed by the Secretary, setting forth--
       ``(1) the amount of the aggregate of such charges against 
     each such contract for the calendar year,
       ``(2) the amount of the reduction in the investment in each 
     such contract by reason of such charges, and
       ``(3) the name, address, and TIN of the individual who is 
     the holder of each such contract.
       ``(b) Statements to Be Furnished to Persons With Respect to 
     Whom Information Is Required.--Every person required to make 
     a return under subsection (a) shall furnish to each 
     individual whose name is required to be set forth in such 
     return a written statement showing--
       ``(1) the name, address, and phone number of the 
     information contact of the person making the payments, and
       ``(2) the information required to be shown on the return 
     with respect to such individual.

     The written statement required under the preceding sentence 
     shall be furnished to the individual on or before January 31 
     of the year following the calendar year for which the return 
     under subsection (a) was required to be made.''.
       (2) Clerical amendment.--The table of sections for subpart 
     B of part III of subchapter A of such chapter 61 of such Code 
     is amended by adding at the end the following new item:

``Sec. 6050U. Charges or payments for qualified long-term care 
              insurance contracts under combined arrangements.''.

       (e) Treatment of Policy Acquisition Expenses.--Subsection 
     (e) of section 848 of such Code (relating to classification 
     of contracts) is amended by adding at the end the following 
     new paragraph:
       ``(6) Treatment of certain qualified long-term care 
     insurance contract arrangements.--An annuity or life 
     insurance contract which includes a qualified long-term care 
     insurance contract as a part of or a rider on such annuity or 
     life insurance contract shall be treated as a specified 
     insurance contract not described in subparagraph (A) or (B) 
     of subsection (c)(1).''.
       (f) Treatment as Qualified Additional Benefit.--
     Subparagraph (A) of section 7702(f)(5) of such Code (relating 
     to qualified additional benefits) is amended by striking 
     ``or'' at the end of clause (iv), by redesignating clause (v) 
     as clause (vi), and by inserting after clause (iv) the 
     following new clause:
       ``(v) qualified long-term care insurance contract which is 
     a part of or a rider on the contract, or''.
       (g) Effective Dates.--
       (1) In general.--Except as provided by paragraph (2), the 
     amendments made by this section shall apply to contracts 
     issued before, on, or after December 31, 2006, but only with 
     respect to periods beginning after such date.
       (2) Subsection (b).--The amendments made by subsection (b) 
     shall apply with respect to exchanges occurring after 
     December 31, 2006.

     SEC. 702. DISPOSITION OF UNUSED HEALTH BENEFITS IN CAFETERIA 
                   PLANS AND FLEXIBLE SPENDING ARRANGEMENTS.

       (a) In General.--Section 125 of the Internal Revenue Code 
     of 1986 (relating to cafeteria plans) is amended by 
     redesignating subsections (h) and (i) as subsections (i) and 
     (j), respectively, and by inserting after subsection (g) the 
     following:
       ``(h) Contributions of Certain Unused Health Benefits.--
       ``(1) In general.--For purposes of this title, a plan or 
     other arrangement shall not fail to be treated as a cafeteria 
     plan solely because qualified benefits under such plan 
     include a health flexible spending arrangement under which 
     not more than $500 of unused health benefits may be--
       ``(A) carried forward to the succeeding plan year of such 
     health flexible spending arrangement, or
       ``(B) to the extent permitted by section 106(d), 
     contributed by the employer to a health savings account (as 
     defined in section 223(d)) maintained for the benefit of the 
     employee.
       ``(2) Health flexible spending arrangement.--For purposes 
     of this subsection, the term `health flexible spending 
     arrangement' means a flexible spending arrangement (as 
     defined in section 106(c)) that is a qualified benefit and 
     only permits reimbursement for expenses for medical care (as 
     defined in section 213(d)(1), without regard to subparagraphs 
     (C) and (D) thereof).
       ``(3) Unused health benefits.--For purposes of this 
     subsection, with respect to an employee, the term `unused 
     health benefits' means the excess of--
       ``(A) the maximum amount of reimbursement allowable to the 
     employee for a plan year under a health flexible spending 
     arrangement, over
       ``(B) the actual amount of reimbursement for such year 
     under such arrangement.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. 703. DISTRIBUTIONS FROM GOVERNMENTAL RETIREMENT PLANS 
                   FOR HEALTH AND LONG-TERM CARE INSURANCE FOR 
                   PUBLIC SAFETY OFFICERS.

       (a) In General.--Section 402 of the Internal Revenue Code 
     of 1986 (relating to taxability of beneficiary of employees' 
     trust) is amended by adding at the end the following new 
     subsection:
       ``(l) Distributions From Governmental Plans for Health and 
     Long-Term Care Insurance.--
       ``(1) In general.--In the case of an employee who is an 
     eligible retired public safety officer who makes the election 
     described in paragraph (6) with respect to any taxable year 
     of such employee, gross income of such employee for such 
     taxable year does not include any distribution from an 
     eligible retirement plan to the extent that the aggregate 
     amount of such distributions does not exceed the amount paid 
     by such employee for qualified health insurance premiums of 
     the employee, his spouse, or dependents (as defined in 
     section 152) for such taxable year.
       ``(2) Limitation.--The amount which may be excluded from 
     gross income for the taxable year by reason of paragraph (1) 
     shall not exceed $5,000.
       ``(3) Distributions must otherwise be includible.--
       ``(A) In general.--An amount shall be treated as a 
     distribution for purposes of paragraph (1) only to the extent 
     that such amount would be includible in gross income without 
     regard to paragraph (1).
       ``(B) Application of section 72.--Notwithstanding section 
     72, in determining the extent to which an amount is treated 
     as a distribution for purposes of subparagraph (A), the 
     aggregate amounts distributed from an eligible retirement 
     plan in a taxable year (up to the amount excluded under 
     paragraph (1)) shall be treated as includible in gross income 
     (without regard to subparagraph (A)) to the extent that such 
     amount does not exceed the aggregate amount which would have 
     been so includible if all amounts distributed from all 
     eligible retirement plans were treated as 1 contract for 
     purposes of determining the inclusion of such distribution 
     under section 72. Proper adjustments shall be made in 
     applying section 72 to other distributions in such taxable 
     year and subsequent taxable years.
       ``(4) Definitions.--For purposes of this subsection--
       ``(A) Eligible retirement plan.--For purposes of paragraph 
     (1), the term `eligible retirement plan' means a governmental 
     plan (within the meaning of section 414(d)) which is 
     described in clause (iii), (iv), (v), or (vi) of subsection 
     (c)(8)(B).
       ``(B) Eligible retired public safety officer.--The term 
     `eligible retired public safety officer' means an individual 
     who, by reason of disability or attainment of normal 
     retirement age, is separated from service as a public safety 
     officer with the employer who maintains the eligible 
     retirement plan from which distributions subject to paragraph 
     (1) are made.
       ``(C) Public safety officer.--The term `public safety 
     officer' shall have the same meaning given such term by 
     section

[[Page 28685]]

     1204(8)(A) of the Omnibus Crime Control and Safe Streets Act 
     of 1968 (42 U.S.C. 3796b(8)(A)).
       ``(D) Qualified health insurance premiums.--The term 
     `qualified health insurance premiums' means premiums for 
     coverage for the eligible retired public safety officer, his 
     spouse, and dependents, by an accident or health insurance 
     plan or qualified long-term care insurance contract (as 
     defined in section 7702B(b)).
       ``(5) Special rules.--For purposes of this subsection--
       ``(A) Direct payment to insurer required.--Paragraph (1) 
     shall only apply to a distribution if payment of the premiums 
     is made directly to the provider of the accident or health 
     insurance plan or qualified long-term care insurance contract 
     by deduction from a distribution from the eligible retirement 
     plan.
       ``(B) Related plans treated as 1.--All eligible retirement 
     plans of an employer shall be treated as a single plan.
       ``(6) Election described.--
       ``(A) In general.--For purposes of paragraph (1), an 
     election is described in this paragraph if the election is 
     made by an employee after separation from service with 
     respect to amounts not distributed from an eligible 
     retirement plan to have amounts from such plan distributed in 
     order to pay for qualified health insurance premiums.
       ``(B) Special rule.--A plan shall not be treated as 
     violating the requirements of section 401, or as engaging in 
     a prohibited transaction for purposes of section 503(b), 
     merely because it provides for an election with respect to 
     amounts that are otherwise distributable under the plan or 
     merely because of a distribution made pursuant to an election 
     described in subparagraph (A).
       ``(7) Coordination with medical expense deduction.--The 
     amounts excluded from gross income under paragraph (1) shall 
     not be taken into account under section 213.
       ``(8) Coordination with deduction for health insurance 
     costs of self-employed individuals.--The amounts excluded 
     from gross income under paragraph (1) shall not be taken into 
     account under section 162(l).''.
       (b) Conforming Amendments.--
       (1) Section 403(a) of such Code (relating to taxability of 
     beneficiary under a qualified annuity plan) is amended by 
     inserting after paragraph (1) the following new paragraph:
       ``(2) Special rule for health and long-term care 
     insurance.--To the extent provided in section 402(l), 
     paragraph (1) shall not apply to the amount distributed under 
     the contract which is otherwise includible in gross income 
     under this subsection.''.
       (2) Section 403(b) of such Code (relating to taxability of 
     beneficiary under annuity purchased by section 501(c)(3) 
     organization or public school) is amended by inserting after 
     paragraph (1) the following new paragraph:
       ``(2) Special rule for health and long-term care 
     insurance.--To the extent provided in section 402(l), 
     paragraph (1) shall not apply to the amount distributed under 
     the contract which is otherwise includible in gross income 
     under this subsection.''.
       (3) Section 457(a) of such Code (relating to year of 
     inclusion in gross income) is amended by adding at the end 
     the following new paragraph:
       ``(3) Special rule for health and long-term care 
     insurance.--In the case of a plan of an eligible employer 
     described in subsection (e)(1)(A), to the extent provided in 
     section 402(l), paragraph (1) shall not apply to amounts 
     otherwise includible in gross income under this 
     subsection.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions in taxable years beginning after 
     December 31, 2005.

 TITLE VIII--REDUCTION IN BENEFIT OF RATE REDUCTION FOR FAMILIES WITH 
                        INCOMES OVER $1,000,000

     SEC. 801. REDUCTION IN BENEFIT OF RATE REDUCTION FOR FAMILIES 
                   WITH INCOMES OVER $1,000,000.

       (a) General Rule.--Section 1 of the Internal Revenue Code 
     of 1986 (relating to imposition of tax on individuals) is 
     amended by adding at the end the following new subsection:
       ``(j) Reduction in Benefit of Rate Reduction for Families 
     With Incomes Over $1,000,000.--
       ``(1) In general.--If the adjusted gross income of a 
     taxpayer exceeds the threshold amount, the tax imposed by 
     this section (determined without regard to this subsection) 
     shall be increased by an amount equal to 1.8 percent of so 
     much of the adjusted gross income as exceeds the threshold 
     amount.
       ``(2) Threshold amounts.--For purposes of this subsection, 
     the term `threshold amount' means--
       ``(A) $1,000,000 in the case of a joint return, and
       ``(B) $500,000 in the case of any other return.
       ``(3) Tax not to apply to estates and trusts.--This 
     subsection shall not apply to an estate or trust.
       ``(4) Special rule.--For purposes of section 55, the amount 
     of the regular tax shall be determined without regard to this 
     subsection.
       ``(5) Termination.--This subsection shall not apply to 
     taxable years beginning after December 31, 2010.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.
       (c) Section 15 not to Apply.--The amendment made by 
     subsection (a) shall not be treated as a change in a rate of 
     tax for purposes of section 15 of the Internal Revenue Code 
     of 1986.

  Mr. GEORGE MILLER of California (during the reading). Mr. Speaker, I 
ask unanimous consent that the motion to recommit be considered as read 
and printed in the Record.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  There was no objection.
  The SPEAKER pro tempore. The gentleman from California is recognized 
for 5 minutes.
  Mr. GEORGE MILLER of California. Mr. Speaker, we offer this motion to 
recommit to address a number of issues that are not addressed in the 
legislation before us and to hopefully not do some of the things that 
the legislation before us does. We believe that we can do these things 
without driving employers out of the defined benefit system.
  The current bill before us provides a compilation of interest rates 
and premium fees and costs that we believe will drive employers to 
accelerate the termination and freezing of these plans. That is not 
because we say it; that is what the employers have told one another in 
their associations, the expectation that some 60 percent of the 
employers will freeze or terminate their plans.
  We believe that our motion to recommit does not impose arbitrary 
benefit cuts and freezes on workers who do not control whether or not 
the employers fund the pension plans or not.
  The motion to recommit would require companies to seek alternatives 
to the termination and prove that a plan is in fact unaffordable before 
they can cast it away in bankruptcy, as we saw United Airlines do, that 
cost the employees billions of dollars in pension benefits.
  Importantly, the motion to recommit would actually help the employees 
of American, Continental, Delta and Northwest Airlines, whose pension 
plans are in danger of being terminated. The bill before us does not do 
that. It talks about doing that in the future.
  The motion to recommit would also protect 9 million workers who are 
covered by multi-employer pension plans in the construction, food 
service and transportation industries. We would ensure that workers and 
executives would be affected equally in pension plans. Again, the 
horrible demonstration out of United Airlines, as the executives walked 
away with $235 million in a new, debt-free company and the employees 
walked away with wage cuts and benefits cuts and the loss of retirement 
benefits.
  Finally, the motion to recommit would help workers who do not have 
access to defined benefit plans through the automatic enrollment in 
401(k) plans and the expanded savers credit.
  This legislation, if it is not corrected, is the greatest assault on 
the pension benefits and the retirement nest eggs of hardworking, 
middle class Americans in the history of this Congress. I say that 
because it is quite clear that this will expedite and will accelerate 
the freezing and the termination of these plans that so many millions 
of Americans are relying on.
  One thing this legislation will do, if you want to continue to debate 
Social Security, you will now prove with the passage of this 
legislation that Social Security is the most secure retirement system 
in this country, that it is the only one that people can count on, 
because these other plans are in jeopardy.
  Mr. Speaker, I yield to my colleague, Mr. Cardin from Maryland.
  Mr. CARDIN. Let me thank Mr. Miller for offering this substitute. I 
am pleased to join him.
  I listened to a lot of my colleagues talk in favor of this bill, 
telling me things they do not particularly like about it, things that 
will be, they hope, corrected in conference, and now we have a motion 
to recommit that does exactly that.
  So if we are sincere in wanting to move the process forward so that 
we

[[Page 28686]]

can get to conference, let us speak to what we want to get from the 
conference report. Let me make it clear that the rule did not permit us 
to offer this directly as a substitute, so the only way we can do it is 
by the motion to recommit.
  But it does contain the issues that many have talked about. It has 
the good without the bad. It has the provisions for the defined 
contributions, so that we can deal with the 401(k)s and the IRAs and 
the savers credits and automatic enrollments and those provisions that 
are important. But it also deals with the issue of the airline industry 
directly, not on a promise that we will deal with it in conference, and 
it deals with the revolving door of bankruptcy, which, if we do not 
correct, we are going to have other problems in addition to the airline 
industry. So it deals with those problems.
  But it does one more thing, Mr. Speaker, that is critically 
important: It takes away the additional deficit that this bill would 
create. This bill will add an additional $14 billion to the deficit of 
this country. The substitute pays for the cost of the legislation so 
that we do not add to the growing problem of the deficit of this 
Nation.

                              {time}  1515

  This is a responsible motion, and I urge my colleagues to support it.
  Mr. BOEHNER. Mr. Speaker, I rise in opposition to the motion to 
recommit.
  The SPEAKER pro tempore (Mr. Latham). The gentleman is recognized for 
5 minutes.
  Mr. BOEHNER. Mr. Speaker, the debate today on the floor is about the 
massive underfunding in worker pensions and the need to change the 
status quo. Unfortunately, what we have just been presented is what 
would actually make pensions less secure by preserving the status quo 
and putting at risk millions of American pensions.
  Let me make five points. First, the motion to recommit preserves the 
status quo by requiring employers and union leaders to fund their plans 
at 90 percent or in some cases only 80 percent, instead of the 100 
percent funding requirements that we have in the underlying bill. It 
just does not pass the straight-face test.
  Second, they are preserving the status quo by continuing to allow 
employers to take up to 30 years to erase any funding shortfall in 
their plan. Pension experts agree that this increases the risk of plan 
termination, threatening the benefits of workers and retirees.
  Third, they are preserving the status quo on unrestricted use of 
credit balances which mask the massive pension plan underfunding we see 
today. We know that the credit balance rules that are in place today 
are irresponsible public policy. They must be changed if we are going 
to strengthen the pension system. And to allow those rules to stay in 
place, again, does not pass the straight-face test.
  Fourth, they propose preserving the status quo by failing to 
incorporate the full package of multi-employer reforms that were agreed 
to by a broad coalition of organized labor and employer groups.
  Last, they preserve the status quo by promoting uncertainty among 
employers if these pension benefits and workers who are relying on them 
maintain the current interest rate package for 2 years and then go back 
to the 30-year rate thereafter.
  The modified yield curve in the underlying bill presents a more 
accurate picture of the liabilities that these plans have and should, 
in fact, stay in the bill.
  Mr. Speaker, I believe that the underlying bill is far more balanced. 
It really does strengthen American pensions, and I would urge my 
colleagues to reject this.
  I yield to the gentleman from Michigan.
  Mr. CAMP of Michigan. Mr. Speaker, I thank the distinguished chairman 
for yielding.
  I oppose the motion to recommit. This motion to recommit leaves 
current pension funding rules in place which ends up weakening the 
funding rules in the underlying bill. This means that businesses would 
not be fulfilling their promises to working people.
  The motion to recommit also has a $53 billion surtax contained in it 
on small business. That surtax is bad for workers, bad for small 
business, bad for America. So I would urge a ``no'' vote on the motion 
to recommit, a ``yes'' vote on the underlying bill, which would ensure 
that pension plans would be appropriately funded, but not so strict as 
to cause employers to terminate their pension plans. I urge a ``yes'' 
vote on the underlying bill.
  The SPEAKER pro tempore. Without objection, the previous question is 
ordered on the motion to recommit.
  There was no objection.
  The SPEAKER pro tempore. The question is on the motion to recommit.
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Mr. GEORGE MILLER of California. Mr. Speaker, on that I demand the 
yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 and clause 9 of rule 
XX, this 15-minute vote on the motion to recommit will be followed by 
5-minute votes on the question of passage, if ordered; adoption of H. 
Res. 610; and motions to suspend the rules with respect to H. Res. 579 
and H. Con. Res. 315.
  The vote was taken by electronic device, and there were--yeas 200, 
nays 227, not voting 6, as follows:

                             [Roll No. 634]

                               YEAS--200

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baca
     Baird
     Baldwin
     Barrow
     Bean
     Becerra
     Berkley
     Berman
     Berry
     Bishop (GA)
     Bishop (NY)
     Blumenauer
     Boren
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brown (OH)
     Brown, Corrine
     Butterfield
     Capps
     Capuano
     Cardin
     Cardoza
     Carnahan
     Carson
     Case
     Chandler
     Clay
     Cleaver
     Clyburn
     Conyers
     Cooper
     Costa
     Costello
     Cramer
     Crowley
     Cuellar
     Cummings
     Davis (AL)
     Davis (CA)
     Davis (IL)
     Davis (TN)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Dicks
     Dingell
     Doggett
     Doyle
     Edwards
     Emanuel
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank (MA)
     Gonzalez
     Gordon
     Green, Al
     Green, Gene
     Grijalva
     Gutierrez
     Harman
     Hastings (FL)
     Herseth
     Higgins
     Hinchey
     Hinojosa
     Holden
     Holt
     Honda
     Hooley
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick (MI)
     Kind
     Kucinich
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren, Zoe
     Lowey
     Lynch
     Maloney
     Markey
     Marshall
     Matsui
     McCarthy
     McCollum (MN)
     McDermott
     McGovern
     McIntyre
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Melancon
     Menendez
     Michaud
     Millender-McDonald
     Miller (NC)
     Miller, George
     Mollohan
     Moore (KS)
     Moore (WI)
     Moran (VA)
     Murtha
     Nadler
     Napolitano
     Neal (MA)
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Peterson (MN)
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Ross
     Rothman
     Roybal-Allard
     Ruppersberger
     Rush
     Ryan (OH)
     Sabo
     Salazar
     Sanchez, Linda T.
     Sanchez, Loretta
     Sanders
     Schakowsky
     Schiff
     Schwartz (PA)
     Scott (GA)
     Scott (VA)
     Serrano
     Sherman
     Skelton
     Slaughter
     Smith (WA)
     Snyder
     Solis
     Spratt
     Stark
     Strickland
     Stupak
     Tanner
     Tauscher
     Taylor (MS)
     Thompson (CA)
     Thompson (MS)
     Tierney
     Towns
     Udall (CO)
     Udall (NM)
     Van Hollen
     Velazquez
     Visclosky
     Wasserman Schultz
     Watson
     Watt
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu
     Wynn

                               NAYS--227

     Aderholt
     Akin
     Alexander
     Bachus
     Baker
     Barrett (SC)
     Bartlett (MD)
     Barton (TX)
     Bass
     Beauprez
     Biggert
     Bilirakis
     Bishop (UT)
     Blackburn
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bonner
     Bono
     Boozman
     Boustany
     Bradley (NH)
     Brady (TX)
     Brown (SC)
     Brown-Waite, Ginny
     Burgess
     Burton (IN)
     Buyer
     Calvert
     Camp (MI)
     Campbell (CA)
     Cannon
     Cantor
     Capito
     Carter
     Castle
     Chabot
     Chocola
     Coble
     Cole (OK)
     Conaway
     Crenshaw
     Cubin
     Culberson
     Davis (KY)
     Davis, Jo Ann
     Davis, Tom
     Deal (GA)
     DeLay
     Dent
     Diaz-Balart, L.
     Doolittle
     Drake
     Dreier
     Duncan
     Ehlers
     Emerson
     English (PA)
     Everett
     Feeney
     Ferguson
     Fitzpatrick (PA)
     Flake
     Foley

[[Page 28687]]


     Forbes
     Fortenberry
     Fossella
     Foxx
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Garrett (NJ)
     Gerlach
     Gibbons
     Gilchrest
     Gillmor
     Gingrey
     Gohmert
     Goode
     Goodlatte
     Granger
     Graves
     Green (WI)
     Gutknecht
     Hall
     Harris
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Hensarling
     Herger
     Hobson
     Hoekstra
     Hostettler
     Hulshof
     Hunter
     Inglis (SC)
     Issa
     Istook
     Jenkins
     Jindal
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     King (IA)
     King (NY)
     Kingston
     Kirk
     Kline
     Knollenberg
     Kolbe
     Kuhl (NY)
     LaHood
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas
     Lungren, Daniel E.
     Mack
     Manzullo
     Marchant
     Matheson
     McCaul (TX)
     McCotter
     McCrery
     McHenry
     McHugh
     McKeon
     McMorris
     Mica
     Miller (FL)
     Miller (MI)
     Miller, Gary
     Moran (KS)
     Murphy
     Musgrave
     Myrick
     Neugebauer
     Ney
     Northup
     Norwood
     Nunes
     Nussle
     Osborne
     Otter
     Oxley
     Paul
     Pence
     Peterson (PA)
     Petri
     Pitts
     Platts
     Poe
     Pombo
     Porter
     Price (GA)
     Pryce (OH)
     Putnam
     Radanovich
     Ramstad
     Regula
     Rehberg
     Reichert
     Renzi
     Reynolds
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Royce
     Ryan (WI)
     Ryun (KS)
     Saxton
     Schmidt
     Schwarz (MI)
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Smith (NJ)
     Smith (TX)
     Sodrel
     Souder
     Stearns
     Sullivan
     Sweeney
     Tancredo
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Tiahrt
     Tiberi
     Turner
     Upton
     Walden (OR)
     Walsh
     Wamp
     Weldon (FL)
     Weldon (PA)
     Weller
     Westmoreland
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Young (AK)
     Young (FL)

                             NOT VOTING--6

     Davis (FL)
     Diaz-Balart, M.
     Hyde
     Pearce
     Pickering
     Waters


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (Mr. Latham) (during the vote). Members are 
advised there are 2 minutes remaining in this vote.

                              {time}  1542

  Mr. BARRETT of South Carolina and Mr. SOUDER changed their vote from 
``yea'' to ``nay.''
  Messrs. McDERMOTT, REYES and FARR changed their vote from ``nay'' to 
``yea.''
  So the motion to recommit was rejected.
  The result of the vote was announced as above recorded.
  The SPEAKER pro tempore. The question is on the passage of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.


                             Recorded Vote

  Mr. BOEHNER. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The SPEAKER pro tempore. This will be a 5-minute vote.
  The vote was taken by electronic device, and there were--ayes 294, 
noes 132, not voting 7, as follows:

                             [Roll No. 635]

                               AYES--294

     Aderholt
     Akin
     Alexander
     Andrews
     Baca
     Bachus
     Baker
     Barrett (SC)
     Barrow
     Bartlett (MD)
     Barton (TX)
     Bass
     Bean
     Beauprez
     Berry
     Biggert
     Bilirakis
     Bishop (GA)
     Bishop (UT)
     Blackburn
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bonner
     Bono
     Boozman
     Boren
     Boswell
     Boustany
     Bradley (NH)
     Brady (PA)
     Brady (TX)
     Brown (OH)
     Brown (SC)
     Brown-Waite, Ginny
     Burgess
     Burton (IN)
     Buyer
     Calvert
     Camp (MI)
     Campbell (CA)
     Cannon
     Cantor
     Capito
     Capuano
     Carter
     Case
     Castle
     Chabot
     Chandler
     Chocola
     Clay
     Cleaver
     Coble
     Cole (OK)
     Conaway
     Conyers
     Cooper
     Costello
     Cramer
     Crenshaw
     Cubin
     Cuellar
     Culberson
     Davis (KY)
     Davis (TN)
     Davis, Jo Ann
     Davis, Tom
     Deal (GA)
     DeLay
     Dent
     Dingell
     Doolittle
     Drake
     Dreier
     Duncan
     Edwards
     Ehlers
     Emerson
     Engel
     English (PA)
     Everett
     Fattah
     Feeney
     Ferguson
     Fitzpatrick (PA)
     Flake
     Foley
     Forbes
     Ford
     Fortenberry
     Fossella
     Foxx
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Garrett (NJ)
     Gerlach
     Gibbons
     Gillmor
     Gingrey
     Gohmert
     Goode
     Goodlatte
     Gordon
     Granger
     Graves
     Green (WI)
     Green, Gene
     Gutierrez
     Gutknecht
     Hall
     Harman
     Harris
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Hensarling
     Herger
     Herseth
     Hobson
     Hoekstra
     Holden
     Hooley
     Hulshof
     Hunter
     Inglis (SC)
     Inslee
     Israel
     Issa
     Istook
     Jenkins
     Jindal
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     Kildee
     Kilpatrick (MI)
     Kind
     King (IA)
     King (NY)
     Kingston
     Kirk
     Kline
     Knollenberg
     Kolbe
     Kucinich
     Kuhl (NY)
     LaHood
     Larsen (WA)
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     Lipinski
     LoBiondo
     Lucas
     Lungren, Daniel E.
     Lynch
     Mack
     Manzullo
     Marchant
     Marshall
     Matheson
     McCarthy
     McCaul (TX)
     McCotter
     McCrery
     McHenry
     McHugh
     McIntyre
     McKeon
     McMorris
     McNulty
     Meek (FL)
     Meeks (NY)
     Melancon
     Menendez
     Mica
     Miller (FL)
     Miller (MI)
     Miller, Gary
     Moore (KS)
     Moran (KS)
     Murphy
     Musgrave
     Myrick
     Neugebauer
     Ney
     Northup
     Norwood
     Nunes
     Nussle
     Oberstar
     Osborne
     Otter
     Owens
     Oxley
     Pascrell
     Pastor
     Paul
     Pearce
     Pence
     Peterson (MN)
     Peterson (PA)
     Petri
     Pitts
     Platts
     Poe
     Pombo
     Porter
     Price (GA)
     Pryce (OH)
     Putnam
     Radanovich
     Rahall
     Ramstad
     Regula
     Rehberg
     Reichert
     Renzi
     Reynolds
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Ross
     Rothman
     Royce
     Ryan (OH)
     Ryan (WI)
     Ryun (KS)
     Saxton
     Schmidt
     Schwarz (MI)
     Scott (GA)
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Snyder
     Sodrel
     Souder
     Stearns
     Strickland
     Stupak
     Sullivan
     Sweeney
     Tancredo
     Tanner
     Tauscher
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Tiahrt
     Tiberi
     Turner
     Upton
     Walden (OR)
     Walsh
     Wamp
     Weldon (FL)
     Weldon (PA)
     Weller
     Westmoreland
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Wu
     Wynn
     Young (AK)
     Young (FL)

                               NOES--132

     Abercrombie
     Ackerman
     Allen
     Baird
     Baldwin
     Becerra
     Berkley
     Berman
     Bishop (NY)
     Blumenauer
     Boucher
     Boyd
     Brown, Corrine
     Butterfield
     Capps
     Cardin
     Cardoza
     Carnahan
     Carson
     Clyburn
     Costa
     Crowley
     Cummings
     Davis (AL)
     Davis (CA)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Dicks
     Doggett
     Doyle
     Emanuel
     Eshoo
     Etheridge
     Evans
     Farr
     Filner
     Frank (MA)
     Gonzalez
     Green, Al
     Grijalva
     Hastings (FL)
     Higgins
     Hinchey
     Hinojosa
     Holt
     Honda
     Hostettler
     Hoyer
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Langevin
     Lantos
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     Lofgren, Zoe
     Lowey
     Maloney
     Markey
     Matsui
     McCollum (MN)
     McDermott
     McGovern
     McKinney
     Meehan
     Michaud
     Millender-McDonald
     Miller (NC)
     Miller, George
     Mollohan
     Moore (WI)
     Moran (VA)
     Murtha
     Nadler
     Napolitano
     Neal (MA)
     Obey
     Olver
     Ortiz
     Pallone
     Payne
     Pelosi
     Pomeroy
     Price (NC)
     Rangel
     Reyes
     Roybal-Allard
     Ruppersberger
     Rush
     Sabo
     Salazar
     Sanchez, Linda T.
     Sanchez, Loretta
     Sanders
     Schakowsky
     Schiff
     Schwartz (PA)
     Scott (VA)
     Serrano
     Sherman
     Skelton
     Slaughter
     Solis
     Spratt
     Stark
     Taylor (MS)
     Thompson (CA)
     Thompson (MS)
     Tierney
     Towns
     Udall (CO)
     Udall (NM)
     Van Hollen
     Velazquez
     Visclosky
     Wasserman Schultz
     Watson
     Watt
     Waxman
     Weiner
     Wexler
     Woolsey

                             NOT VOTING--7

     Davis (FL)
     Diaz-Balart, L.
     Diaz-Balart, M.
     Gilchrest
     Hyde
     Pickering
     Waters


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (Mr. Latham) (during the vote). Members are 
advised that 2 minutes remain in this vote.

                              {time}  1550

  Mr. COSTELLO and Mr. MEEK of Florida changed their vote from ``no'' 
to ``aye.''
  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.

                          ____________________