[Congressional Record (Bound Edition), Volume 152 (2006), Part 12]
[House]
[Pages 16315-16451]
[From the U.S. Government Publishing Office, www.gpo.gov]




                     PENSION PROTECTION ACT OF 2006

  Mr. THOMAS. Mr. Speaker, pursuant to House Resolution 966, I call up 
the bill (H.R. 4) to provide economic security for all Americans, and 
for other purposes, and ask for its immediate consideration.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                                 H.R. 4

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

     SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Pension 
     Protection Act of 2006''.
       (b) Table of Contents.--The table of contents for this Act 
     (other than so much of title XIV as follows section 1401) is 
     as follows:

Sec. 1. Short title and table of contents.

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

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

Sec. 101. Minimum funding standards.
Sec. 102. Funding rules for single-employer defined benefit pension 
              plans.
Sec. 103. Benefit limitations under single-employer plans.
Sec. 104. Special rules for multiple employer plans of certain 
              cooperatives.
Sec. 105. Temporary relief for certain PBGC settlement plans.
Sec. 106. Special rules for plans of certain government contractors.
Sec. 107. Technical and conforming amendments.

        Subtitle B--Amendments to Internal Revenue Code of 1986

Sec. 111. Minimum funding standards.
Sec. 112. Funding rules for single-employer defined benefit pension 
              plans.
Sec. 113. Benefit limitations under single-employer plans.
Sec. 114. Technical and conforming amendments.
Sec. 115. Modification of transition rule to pension funding 
              requirements.
Sec. 116. Restrictions on funding of nonqualified deferred compensation 
              plans by employers maintaining underfunded or terminated 
              single-employer plans.

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

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

Sec. 201. Funding rules for multiemployer defined benefit plans.
Sec. 202. Additional funding rules for multiemployer plans in 
              endangered or critical status.
Sec. 203. Measures to forestall insolvency of multiemployer plans.
Sec. 204. Withdrawal liability reforms.
Sec. 205. Prohibition on retaliation against employers exercising their 
              rights to petition the Federal government.
Sec. 206. Special rule for certain benefits funded under an agreement 
              approved by the Pension Benefit Guaranty Corporation.

        Subtitle B--Amendments to Internal Revenue Code of 1986

Sec. 211. Funding rules for multiemployer defined benefit plans.
Sec. 212. Additional funding rules for multiemployer plans in 
              endangered or critical status.
Sec. 213. Measures to forestall insolvency of multiemployer plans.
Sec. 214. Exemption from excise taxes for certain multiemployer pension 
              plans.

             Subtitle C--Sunset of Additional Funding Rules

Sec. 221. Sunset of additional funding rules.

                  TITLE III--INTEREST RATE ASSUMPTIONS

Sec. 301. Extension of replacement of 30-year Treasury rates.
Sec. 302. Interest rate assumption for determination of lump sum 
              distributions.
Sec. 303. Interest rate assumption for applying benefit limitations to 
              lump sum distributions.

            TITLE IV--PBGC GUARANTEE AND RELATED PROVISIONS

Sec. 401. PBGC premiums.
Sec. 402. Special funding rules for certain plans maintained by 
              commercial airlines.
Sec. 403. Limitation on PBGC guarantee of shutdown and other benefits.
Sec. 404. Rules relating to bankruptcy of employer.
Sec. 405. PBGC premiums for small plans.

[[Page 16316]]

Sec. 406. Authorization for PBGC to pay interest on premium overpayment 
              refunds.
Sec. 407. Rules for substantial owner benefits in terminated plans.
Sec. 408. Acceleration of PBGC computation of benefits attributable to 
              recoveries from employers.
Sec. 409. Treatment of certain plans where cessation or change in 
              membership of a controlled group.
Sec. 410. Missing participants.
Sec. 411. Director of the Pension Benefit Guaranty Corporation.
Sec. 412. Inclusion of information in the PBGC annual report.

                          TITLE V--DISCLOSURE

Sec. 501. Defined benefit plan funding notice.
Sec. 502. Access to multiemployer pension plan information.
Sec. 503. Additional annual reporting requirements.
Sec. 504. Electronic display of annual report information.
Sec. 505. Section 4010 filings with the PBGC.
Sec. 506. Disclosure of termination information to plan participants.
Sec. 507. Notice of freedom to divest employer securities.
Sec. 508. Periodic pension benefit statements.
Sec. 509. Notice to participants or beneficiaries of blackout periods.

  TITLE VI--INVESTMENT ADVICE, PROHIBITED TRANSACTIONS, AND FIDUCIARY 
                                 RULES

                     Subtitle A--Investment Advice

Sec. 601. Prohibited transaction exemption for provision of investment 
              advice.

                  Subtitle B--Prohibited Transactions

Sec. 611. Prohibited transaction rules relating to financial 
              investments.
Sec. 612. Correction period for certain transactions involving 
              securities and commodities.

                 Subtitle C--Fiduciary and Other Rules

Sec. 621. Inapplicability of relief from fiduciary liability during 
              suspension of ability of participant or beneficiary to 
              direct investments.
Sec. 622. Increase in maximum bond amount.
Sec. 623. Increase in penalties for coercive interference with exercise 
              of ERISA rights.
Sec. 624. Treatment of investment of assets by plan where participant 
              fails to exercise investment election.
Sec. 625. Clarification of fiduciary rules.

                  TITLE VII--BENEFIT ACCRUAL STANDARDS

Sec. 701. Benefit accrual standards.
Sec. 702. Regulations relating to mergers and acquisitions.

             TITLE VIII--PENSION RELATED REVENUE PROVISIONS

                   Subtitle A--Deduction Limitations

Sec. 801. Increase in deduction limit for single-employer plans.
Sec. 802. Deduction limits for multiemployer plans.
Sec. 803. Updating deduction rules for combination of plans.

         Subtitle B--Certain Pension Provisions Made Permanent

Sec. 811. Pensions and individual retirement arrangement provisions of 
              Economic Growth and Tax Relief Reconciliation Act of 2001 
              made permanent.
Sec. 812. Saver's credit.

Subtitle C--Improvements in Portability, Distribution, and Contribution 
                                 Rules

Sec. 821. Clarifications regarding purchase of permissive service 
              credit.
Sec. 822. Allow rollover of after-tax amounts in annuity contracts.
Sec. 823. Clarification of minimum distribution rules for governmental 
              plans.
Sec. 824. Allow direct rollovers from retirement plans to Roth IRAs.
Sec. 825. Eligibility for participation in retirement plans.
Sec. 826. Modifications of rules governing hardships and unforseen 
              financial emergencies.
Sec. 827. Penalty-free withdrawals from retirement plans for 
              individuals called to active duty for at least 179 days.
Sec. 828. Waiver of 10 percent early withdrawal penalty tax on certain 
              distributions of pension plans for public safety 
              employees.
Sec. 829. Allow rollovers by nonspouse beneficiaries of certain 
              retirement plan distributions.
Sec. 830. Direct payment of tax refunds to individual retirement plans.
Sec. 831. Allowance of additional IRA payments in certain bankruptcy 
              cases.
Sec. 832. Determination of average compensation for section 415 limits.
Sec. 833. Inflation indexing of gross income limitations on certain 
              retirement savings incentives.

                Subtitle D--Health and Medical Benefits

Sec. 841. Use of excess pension assets for future retiree health 
              benefits and collectively bargained retiree health 
              benefits.
Sec. 842. Transfer of excess pension assets to multiemployer health 
              plan.
Sec. 843. Allowance of reserve for medical benefits of plans sponsored 
              by bona fide associations.
Sec. 844. Treatment of annuity and life insurance contracts with a 
              long-term care insurance feature.
Sec. 845. Distributions from governmental retirement plans for health 
              and Long-Term care insurance for public safety officers.

           Subtitle E--United States Tax Court Modernization

Sec. 851. Cost-of-living adjustments for Tax Court judicial survivor 
              annuities.
Sec. 852. Cost of life insurance coverage for Tax Court judges age 65 
              or over.
Sec. 853. Participation of Tax Court judges in the Thrift Savings Plan.
Sec. 854. Annuities to surviving spouses and dependent children of 
              special trial judges of the Tax Court.
Sec. 855. Jurisdiction of Tax Court over collection due process cases.
Sec. 856. Provisions for recall.
Sec. 857. Authority for special trial judges to hear and decide certain 
              employment status cases.
Sec. 858. Confirmation of authority of Tax Court to apply doctrine of 
              equitable recoupment.
Sec. 859. Tax Court filing fee in all cases commenced by filing 
              petition.
Sec. 860. Expanded use of Tax Court practice fee for pro se taxpayers.

                      Subtitle F--Other Provisions

Sec. 861. Extension to all governmental plans of current moratorium on 
              application of certain nondiscrimination rules applicable 
              to State and local plans.
Sec. 862. Elimination of aggregate limit for usage of excess funds from 
              black lung disability trusts.
Sec. 863. Treatment of death benefits from corporate-owned life 
              insurance.
Sec. 864. Treatment of test room supervisors and proctors who assist in 
              the administration of college entrance and placement 
              exams.
Sec. 865. Grandfather rule for church plans which self-annuitize.
Sec. 866. Exemption for income from leveraged real estate held by 
              church plans.
Sec. 867. Church plan rule.
Sec. 868. Gratuitous transfer for benefits of employees.

 TITLE IX--INCREASE IN PENSION PLAN DIVERSIFICATION AND PARTICIPATION 
                      AND OTHER PENSION PROVISIONS

Sec. 901. Defined contribution plans required to provide employees with 
              freedom to invest their plan assets.
Sec. 902. Increasing participation through automatic contribution 
              arrangements.
Sec. 903. Treatment of eligible combined defined benefit plans and 
              qualified cash or deferred arrangements.
Sec. 904. Faster vesting of employer nonelective contributions.
Sec. 905. Distributions during working retirement.
Sec. 906. Treatment of certain pension plans of Indian tribal 
              governments.

       TITLE X--PROVISIONS RELATING TO SPOUSAL PENSION PROTECTION

Sec. 1001. Regulations on time and order of issuance of domestic 
              relations orders.
Sec. 1002. Entitlement of divorced spouses to railroad retirement 
              annuities independent of actual entitlement of employee.
Sec. 1003. Extension of tier II railroad retirement benefits to 
              surviving former spouses pursuant to divorce agreements.
Sec. 1004. Requirement for additional survivor annuity option.

                  TITLE XI--ADMINISTRATIVE PROVISIONS

Sec. 1101. Employee plans compliance resolution system.
Sec. 1102. Notice and consent period regarding distributions.
Sec. 1103. Reporting simplification.
Sec. 1104. Voluntary early retirement incentive and employment 
              retention plans maintained by local educational agencies 
              and other entities.
Sec. 1105. No reduction in unemployment compensation as a result of 
              pension rollovers.
Sec. 1106. Revocation of election relating to treatment as 
              multiemployer plan.
Sec. 1107. Provisions relating to plan amendments.

[[Page 16317]]

         TITLE XII--PROVISIONS RELATING TO EXEMPT ORGANIZATIONS

                Subtitle A--Charitable Giving Incentives

Sec. 1201. Tax-free distributions from individual retirement plans for 
              charitable purposes.
Sec. 1202. Extension of modification of charitable deduction for 
              contributions of food inventory.
Sec. 1203. Basis adjustment to stock of S corporation contributing 
              property.
Sec. 1204. Extension of modification of charitable deduction for 
              contributions of book inventory.
Sec. 1205. Modification of tax treatment of certain payments to 
              controlling exempt organizations.
Sec. 1206. Encouragement of contributions of capital gain real property 
              made for conservation purposes.
Sec. 1207. Excise taxes exemption for blood collector organizations.

               Subtitle B--Reforming Exempt Organizations

                        Part 1--General Reforms

Sec. 1211. Reporting on certain acquisitions of interests in insurance 
              contracts in which certain exempt organizations hold an 
              interest.
Sec. 1212. Increase in penalty excise taxes relating to public 
              charities, social welfare organizations, and private 
              foundations.
Sec. 1213. Reform of charitable contributions of certain easements in 
              registered historic districts and reduced deduction for 
              portion of qualified conservation contribution 
              attributable to rehabilitation credit.
Sec. 1214. Charitable contributions of taxidermy property.
Sec. 1215. Recapture of tax benefit for charitable contributions of 
              exempt use property not used for an exempt use.
Sec. 1216. Limitation of deduction for charitable contributions of 
              clothing and household items.
Sec. 1217. Modification of recordkeeping requirements for certain 
              charitable contributions.
Sec. 1218. Contributions of fractional interests in tangible personal 
              property.
Sec. 1219. Provisions relating to substantial and gross overstatements 
              of valuations.
Sec. 1220. Additional standards for credit counseling organizations.
Sec. 1221. Expansion of the base of tax on private foundation net 
              investment income.
Sec. 1222. Definition of convention or association of churches.
Sec. 1223. Notification requirement for entities not currently required 
              to file.
Sec. 1224. Disclosure to State officials relating to exempt 
              organizations.
Sec. 1225. Public disclosure of information relating to unrelated 
              business income tax returns.
Sec. 1226. Study on donor advised funds and supporting organizations.

         Part 2--Improved Accountability of Donor Advised Funds

Sec. 1231. Excise taxes relating to donor advised funds.
Sec. 1232. Excess benefit transactions involving donor advised funds 
              and sponsoring organizations.
Sec. 1233. Excess business holdings of donor advised funds.
Sec. 1234. Treatment of charitable contribution deductions to donor 
              advised funds.
Sec. 1235. Returns of, and applications for recognition by, sponsoring 
              organizations.

      Part 3--Improved Accountability of Supporting Organizations

Sec. 1241. Requirements for supporting organizations.
Sec. 1242. Excess benefit transactions involving supporting 
              organizations.
Sec. 1243. Excess business holdings of supporting organizations.
Sec. 1244. Treatment of amounts paid to supporting organizations by 
              private foundations.
Sec. 1245. Returns of supporting organizations.

                      TITLE XIII--OTHER PROVISIONS

Sec. 1301. Technical corrections relating to mine safety.
Sec. 1302. Going-to-the-sun road.
Sec. 1303. Exception to the local furnishing requirement of the tax-
              exempt bond rules.
Sec. 1304. Qualified tuition programs.

                      TITLE XIV--TARIFF PROVISIONS

Sec. 1401. Short title; table of contents.

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

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

     SEC. 101. MINIMUM FUNDING STANDARDS.

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

     ``SEC. 302. MINIMUM FUNDING STANDARDS.

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

     the Secretary of the Treasury may, subject to subparagraph 
     (C), waive the requirements of subsection (a) for such year 
     with respect to all or any portion of the minimum funding 
     standard. The Secretary of the Treasury shall not waive the 
     minimum funding standard with respect to a plan for more than 
     3 of any 15 (5 of any 15 in the case of a multiemployer plan) 
     consecutive plan years.
       ``(B) Effects of waiver.--If a waiver is granted under 
     subparagraph (A) for any plan year--
       ``(i) in the case of a single-employer plan, the minimum 
     required contribution under section 303 for the plan year 
     shall be reduced by the amount of the waived funding 
     deficiency and such amount shall be amortized as required 
     under section 303(e), and
       ``(ii) in the case of a multiemployer plan, the funding 
     standard account shall be credited under section 304(b)(3)(C) 
     with the amount of the waived funding deficiency and such 
     amount shall be amortized as required under section 
     304(b)(2)(C).
       ``(C) Waiver of amortized portion not allowed.--The 
     Secretary of the Treasury may not waive under subparagraph 
     (A) any portion of the minimum funding standard under 
     subsection (a) for a plan year which is attributable to any 
     waived funding deficiency for any preceding plan year.
       ``(2) Determination of business hardship.--For purposes of 
     this subsection, the factors taken into account in 
     determining temporary substantial business hardship 
     (substantial business hardship in the case of a multiemployer 
     plan) shall include (but shall not be limited to) whether or 
     not--
       ``(A) the employer is operating at an economic loss,
       ``(B) there is substantial unemployment or underemployment 
     in the trade or business and in the industry concerned,
       ``(C) the sales and profits of the industry concerned are 
     depressed or declining, and
       ``(D) it is reasonable to expect that the plan will be 
     continued only if the waiver is granted.
       ``(3) Waived funding deficiency.--For purposes of this 
     part, the term `waived funding deficiency' means the portion 
     of the minimum funding standard under subsection (a) 
     (determined without regard to the waiver) for a plan year 
     waived by the Secretary of the Treasury and not satisfied by 
     employer contributions.
       ``(4) Security for waivers for single-employer plans, 
     consultations.--

[[Page 16318]]

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

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

       ``(ii) consider--

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

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

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

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

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

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

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

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

``Sec. 302. Minimum funding standards.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after 2007.

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

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

     ``SEC. 303. MINIMUM FUNDING STANDARDS FOR SINGLE-EMPLOYER 
                   DEFINED BENEFIT PENSION PLANS.

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

[[Page 16319]]

       ``(B) the shortfall amortization charge (if any) for the 
     plan for the plan year determined under subsection (c), and
       ``(C) the waiver amortization charge (if any) for the plan 
     for the plan year as determined under subsection (e); or
       ``(2) in any case in which the value of plan assets of the 
     plan (as reduced under subsection (f)(4)(B)) equals or 
     exceeds the funding target of the plan for the plan year, the 
     target normal cost of the plan for the plan year reduced (but 
     not below zero) by such excess.
       ``(b) Target Normal Cost.--For purposes of this section, 
     except as provided in subsection (i)(2) with respect to plans 
     in at-risk status, the term `target normal cost' means, for 
     any plan year, the present value of all benefits which are 
     expected to accrue or to be earned under the plan during the 
     plan year. For purposes of this subsection, if any benefit 
     attributable to services performed in a preceding plan year 
     is increased by reason of any increase in compensation during 
     the current plan year, the increase in such benefit shall be 
     treated as having accrued during the current plan year.
       ``(c) Shortfall Amortization Charge.--
       ``(1) In general.--For purposes of this section, the 
     shortfall amortization charge for a plan for any plan year is 
     the aggregate total (not less than zero) of the shortfall 
     amortization installments for such plan year with respect to 
     the shortfall amortization bases for such plan year and each 
     of the 6 preceding plan years.
       ``(2) Shortfall amortization installment.--For purposes of 
     paragraph (1)--
       ``(A) Determination.--The shortfall amortization 
     installments are the amounts necessary to amortize the 
     shortfall amortization base of the plan for any plan year in 
     level annual installments over the 7-plan-year period 
     beginning with such plan year.
       ``(B) Shortfall installment.--The shortfall amortization 
     installment for any plan year in the 7-plan-year period under 
     subparagraph (A) with respect to any shortfall amortization 
     base is the annual installment determined under subparagraph 
     (A) for that year for that base.
       ``(C) Segment rates.--In determining any shortfall 
     amortization installment under this paragraph, the plan 
     sponsor shall use the segment rates determined under 
     subparagraph (C) of subsection (h)(2), applied under rules 
     similar to the rules of subparagraph (B) of subsection 
     (h)(2).
       ``(3) Shortfall amortization base.--For purposes of this 
     section, the shortfall amortization base of a plan for a plan 
     year is--
       ``(A) the funding shortfall of such plan for such plan 
     year, minus
       ``(B) the present value (determined using the segment rates 
     determined under subparagraph (C) of subsection (h)(2), 
     applied under rules similar to the rules of subparagraph (B) 
     of subsection (h)(2)) of the aggregate total of the shortfall 
     amortization installments and waiver amortization 
     installments which have been determined for such plan year 
     and any succeeding plan year with respect to the shortfall 
     amortization bases and waiver amortization bases of the plan 
     for any plan year preceding such plan year.
       ``(4) Funding shortfall.--For purposes of this section, the 
     funding shortfall of a plan for any plan year is the excess 
     (if any) of--
       ``(A) the funding target of the plan for the plan year, 
     over
       ``(B) the value of plan assets of the plan (as reduced 
     under subsection (f)(4)(B)) for the plan year which are held 
     by the plan on the valuation date.
       ``(5) Exemption from new shortfall amortization base.--
       ``(A) In general.--In any case in which the value of plan 
     assets of the plan (as reduced under subsection (f)(4)(A)) is 
     equal to or greater than the funding target of the plan for 
     the plan year, the shortfall amortization base of the plan 
     for such plan year shall be zero.
       ``(B) Transition rule.--
       ``(i) In general.--Except as provided in clauses (iii) and 
     (iv), in the case of plan years beginning after 2007 and 
     before 2011, only the applicable percentage of the funding 
     target shall be taken into account under paragraph (3)(A) in 
     determining the funding shortfall for the plan year for 
     purposes of subparagraph (A).
       ``(ii) Applicable percentage.--For purposes of subparagraph 
     (A), the applicable percentage shall be determined in 
     accordance with the following table:

``In the case of a plan year beginning in cThe applicable percentage is
  2008..............................................................92 
  2009..............................................................94 
  2010..............................................................96.
       ``(iii) Limitation.--Clause (i) shall not apply with 
     respect to any plan year after 2008 unless the shortfall 
     amortization base for each of the preceding years beginning 
     after 2007 was zero (determined after application of this 
     subparagraph).
       ``(iv) Transition relief not available for new or deficit 
     reduction plans.--Clause (i) shall not apply to a plan--

       ``(I) which was not in effect for a plan year beginning in 
     2007, or
       ``(II) which was in effect for a plan year beginning in 
     2007 and which was subject to section 302(d) (as in effect 
     for plan years beginning in 2007), determined after the 
     application of paragraphs (6) and (9) thereof.

       ``(6) Early deemed amortization upon attainment of funding 
     target.--In any case in which the funding shortfall of a plan 
     for a plan year is zero, for purposes of determining the 
     shortfall amortization charge for such plan year and 
     succeeding plan years, the shortfall amortization bases for 
     all preceding plan years (and all shortfall amortization 
     installments determined with respect to such bases) shall be 
     reduced to zero.
       ``(d) Rules Relating to Funding Target.--For purposes of 
     this section--
       ``(1) Funding target.--Except as provided in subsection 
     (i)(1) with respect to plans in at-risk status, the funding 
     target of a plan for a plan year is the present value of all 
     benefits accrued or earned under the plan as of the beginning 
     of the plan year.
       ``(2) Funding target attainment percentage.--The `funding 
     target attainment percentage' of a plan for a plan year is 
     the ratio (expressed as a percentage) which--
       ``(A) the value of plan assets for the plan year (as 
     reduced under subsection (f)(4)(B)), bears to
       ``(B) the funding target of the plan for the plan year 
     (determined without regard to subsection (i)(1)).
       ``(e) Waiver Amortization Charge.--
       ``(1) Determination of waiver amortization charge.--The 
     waiver amortization charge (if any) for a plan for any plan 
     year is the aggregate total of the waiver amortization 
     installments for such plan year with respect to the waiver 
     amortization bases for each of the 5 preceding plan years.
       ``(2) Waiver amortization installment.--For purposes of 
     paragraph (1)--
       ``(A) Determination.--The waiver amortization installments 
     are the amounts necessary to amortize the waiver amortization 
     base of the plan for any plan year in level annual 
     installments over a period of 5 plan years beginning with the 
     succeeding plan year.
       ``(B) Waiver installment.--The waiver amortization 
     installment for any plan year in the 5-year period under 
     subparagraph (A) with respect to any waiver amortization base 
     is the annual installment determined under subparagraph (A) 
     for that year for that base.
       ``(3) Interest rate.--In determining any waiver 
     amortization installment under this subsection, the plan 
     sponsor shall use the segment rates determined under 
     subparagraph (C) of subsection (h)(2), applied under rules 
     similar to the rules of subparagraph (B) of subsection 
     (h)(2).
       ``(4) Waiver amortization base.--The waiver amortization 
     base of a plan for a plan year is the amount of the waived 
     funding deficiency (if any) for such plan year under section 
     302(c).
       ``(5) Early deemed amortization upon attainment of funding 
     target.--In any case in which the funding shortfall of a plan 
     for a plan year is zero, for purposes of determining the 
     waiver amortization charge for such plan year and succeeding 
     plan years, the waiver amortization bases for all preceding 
     plan years (and all waiver amortization installments 
     determined with respect to such bases) shall be reduced to 
     zero.
       ``(f) Reduction of Minimum Required Contribution by 
     Prefunding Balance and Funding Standard Carryover Balance.--
       ``(1) Election to maintain balances.--
       ``(A) Prefunding balance.--The plan sponsor of a single-
     employer plan may elect to maintain a prefunding balance.
       ``(B) Funding standard carryover balance.--
       ``(i) In general.--In the case of a single-employer plan 
     described in clause (ii), the plan sponsor may elect to 
     maintain a funding standard carryover balance, until such 
     balance is reduced to zero.
       ``(ii) Plans maintaining funding standard account in 
     2007.--A plan is described in this clause if the plan--

       ``(I) was in effect for a plan year beginning in 2007, and
       ``(II) had a positive balance in the funding standard 
     account under section 302(b) as in effect for such plan year 
     and determined as of the end of such plan year.

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

[[Page 16320]]

     the minimum required contribution shall be determined after 
     taking into account any waiver under section 302(c).
       ``(B) Coordination with funding standard carryover 
     balance.--To the extent that any plan has a funding standard 
     carryover balance greater than zero, no amount of the 
     prefunding balance of such plan may be credited under this 
     paragraph in reducing the minimum required contribution.
       ``(C) Limitation for underfunded plans.--The preceding 
     provisions of this paragraph shall not apply for any plan 
     year if the ratio (expressed as a percentage) which--
       ``(i) the value of plan assets for the preceding plan year 
     (as reduced under paragraph (4)(C)), bears to
       ``(ii) the funding target of the plan for the preceding 
     plan year (determined without regard to subsection (i)(1)),

     is less than 80 percent. In the case of plan years beginning 
     in 2008, the ratio under this subparagraph may be determined 
     using such methods of estimation as the Secretary of the 
     Treasury may prescribe.
       ``(4) Effect of balances on amounts treated as value of 
     plan assets.--In the case of any plan maintaining a 
     prefunding balance or a funding standard carryover balance 
     pursuant to this subsection, the amount treated as the value 
     of plan assets shall be deemed to be such amount, reduced as 
     provided in the following subparagraphs:
       ``(A) Applicability of shortfall amortization base.--For 
     purposes of subsection (c)(5), the value of plan assets is 
     deemed to be such amount, reduced by the amount of the 
     prefunding balance, but only if an election under paragraph 
     (2) applying any portion of the prefunding balance in 
     reducing the minimum required contribution is in effect for 
     the plan year.
       ``(B) Determination of excess assets, funding shortfall, 
     and funding target attainment percentage.--
       ``(i) In general.--For purposes of subsections (a), 
     (c)(4)(B), and (d)(2)(A), the value of plan assets is deemed 
     to be such amount, reduced by the amount of the prefunding 
     balance and the funding standard carryover balance.
       ``(ii) Special rule for certain binding agreements with 
     pbgc.--For purposes of subsection (c)(4)(B), the value of 
     plan assets shall not be deemed to be reduced for a plan year 
     by the amount of the specified balance if, with respect to 
     such balance, there is in effect for a plan year a binding 
     written agreement with the Pension Benefit Guaranty 
     Corporation which provides that such balance is not available 
     to reduce the minimum required contribution for the plan 
     year. For purposes of the preceding sentence, the term 
     `specified balance' means the prefunding balance or the 
     funding standard carryover balance, as the case may be.
       ``(C) Availability of balances in plan year for crediting 
     against minimum required contribution.--For purposes of 
     paragraph (3)(C)(i) of this subsection, the value of plan 
     assets is deemed to be such amount, reduced by the amount of 
     the prefunding balance.
       ``(5) Election to reduce balance prior to determinations of 
     value of plan assets and crediting against minimum required 
     contribution.--
       ``(A) In general.--The plan sponsor may elect to reduce by 
     any amount the balance of the prefunding balance and the 
     funding standard carryover balance for any plan year (but not 
     below zero). Such reduction shall be effective prior to any 
     determination of the value of plan assets for such plan year 
     under this section and application of the balance in reducing 
     the minimum required contribution for such plan for such plan 
     year pursuant to an election under paragraph (2).
       ``(B) Coordination between prefunding balance and funding 
     standard carryover balance.--To the extent that any plan has 
     a funding standard carryover balance greater than zero, no 
     election may be made under subparagraph (A) with respect to 
     the prefunding balance.
       ``(6) Prefunding balance.--
       ``(A) In general.--A prefunding balance maintained by a 
     plan shall consist of a beginning balance of zero, increased 
     and decreased to the extent provided in subparagraphs (B) and 
     (C), and adjusted further as provided in paragraph (8).
       ``(B) Increases.--
       ``(i) In general.--As of the first day of each plan year 
     beginning after 2008, the prefunding balance of a plan shall 
     be increased by the amount elected by the plan sponsor for 
     the plan year. Such amount shall not exceed the excess (if 
     any) of--

       ``(I) the aggregate total of employer contributions to the 
     plan for the preceding plan year, over--
       ``(II) the minimum required contribution for such preceding 
     plan year.

       ``(ii) Adjustments for interest.--Any excess contributions 
     under clause (i) shall be properly adjusted for interest 
     accruing for the periods between the first day of the current 
     plan year and the dates on which the excess contributions 
     were made, determined by using the effective interest rate 
     for the preceding plan year and by treating contributions as 
     being first used to satisfy the minimum required 
     contribution.
       ``(iii) Certain contributions necessary to avoid benefit 
     limitations disregarded.--The excess described in clause (i) 
     with respect to any preceding plan year shall be reduced (but 
     not below zero) by the amount of contributions an employer 
     would be required to make under paragraph (1), (2), or (4) of 
     section 206(g) to avoid a benefit limitation which would 
     otherwise be imposed under such paragraph for the preceding 
     plan year. Any contribution which may be taken into account 
     in satisfying the requirements of more than 1 of such 
     paragraphs shall be taken into account only once for purposes 
     of this clause.
       ``(C) Decrease.--The prefunding balance of a plan shall be 
     decreased (but not below zero) by--
       ``(i) as of the first day of each plan year after 2008, the 
     amount of such balance credited under paragraph (2) (if any) 
     in reducing the minimum required contribution of the plan for 
     the preceding plan year, and
       ``(ii) as of the time specified in paragraph (5))(A), any 
     reduction in such balance elected under paragraph (5).
       ``(7) Funding standard carryover balance.--
       ``(A) In general.--A funding standard carryover balance 
     maintained by a plan shall consist of a beginning balance 
     determined under subparagraph (B), decreased to the extent 
     provided in subparagraph (C), and adjusted further as 
     provided in paragraph (8).
       ``(B) Beginning balance.--The beginning balance of the 
     funding standard carryover balance shall be the positive 
     balance described in paragraph (1)(B)(ii)(II).
       ``(C) Decreases.--The funding standard carryover balance of 
     a plan shall be decreased (but not below zero) by--
       ``(i) as of the first day of each plan year after 2008, the 
     amount of such balance credited under paragraph (2) (if any) 
     in reducing the minimum required contribution of the plan for 
     the preceding plan year, and
       ``(ii) as of the time specified in paragraph (5))(A), any 
     reduction in such balance elected under paragraph (5).
       ``(8) Adjustments for investment experience.--In 
     determining the prefunding balance or the funding standard 
     carryover balance of a plan as of the first day of the plan 
     year, the plan sponsor shall, in accordance with regulations 
     prescribed by the Secretary of the Treasury, adjust such 
     balance to reflect the rate of return on plan assets for the 
     preceding plan year. Notwithstanding subsection (g)(3), such 
     rate of return shall be determined on the basis of fair 
     market value and shall properly take into account, in 
     accordance with such regulations, all contributions, 
     distributions, and other plan payments made during such 
     period.
       ``(9) Elections.--Elections under this subsection shall be 
     made at such times, and in such form and manner, as shall be 
     prescribed in regulations of the Secretary of the Treasury.
       ``(g) Valuation of Plan Assets and Liabilities.--
       ``(1) Timing of determinations.--Except as otherwise 
     provided under this subsection, all determinations under this 
     section for a plan year shall be made as of the valuation 
     date of the plan for such plan year.
       ``(2) Valuation date.--For purposes of this section--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the valuation date of a plan for any plan year shall be the 
     first day of the plan year.
       ``(B) Exception for small plans.--If, on each day during 
     the preceding plan year, a plan had 100 or fewer 
     participants, the plan may designate any day during the plan 
     year as its valuation date for such plan year and succeeding 
     plan years. For purposes of this subparagraph, all defined 
     benefit plans which are single-employer plans and are 
     maintained by the same employer (or any member of such 
     employer's controlled group) shall be treated as 1 plan, but 
     only participants with respect to such employer or member 
     shall be taken into account.
       ``(C) Application of certain rules in determination of plan 
     size.--For purposes of this paragraph--
       ``(i) Plans not in existence in preceding year.--In the 
     case of the first plan year of any plan, subparagraph (B) 
     shall apply to such plan by taking into account the number of 
     participants that the plan is reasonably expected to have on 
     days during such first plan year.
       ``(ii) Predecessors.--Any reference in subparagraph (B) to 
     an employer shall include a reference to any predecessor of 
     such employer.
       ``(3) Determination of value of plan assets.--For purposes 
     of this section--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the value of plan assets shall be the fair market value of 
     the assets.
       ``(B) Averaging allowed.--A plan may determine the value of 
     plan assets on the basis of the averaging of fair market 
     values, but only if such method--
       ``(i) is permitted under regulations prescribed by the 
     Secretary of the Treasury,
       ``(ii) does not provide for averaging of such values over 
     more than the period beginning on the last day of the 25th 
     month preceding the month in which the valuation date occurs 
     and ending on the valuation date (or a similar period in the 
     case of a valuation date which is not the 1st day of a 
     month), and
       ``(iii) does not result in a determination of the value of 
     plan assets which, at any time,

[[Page 16321]]

     is lower than 90 percent or greater than 110 percent of the 
     fair market value of such assets at such time.

     Any such averaging shall be adjusted for contributions and 
     distributions (as provided by the Secretary of the Treasury).
       ``(4) Accounting for contribution receipts.--For purposes 
     of determining the value of assets under paragraph (3)--
       ``(A) Prior year contributions.--If--
       ``(i) an employer makes any contribution to the plan after 
     the valuation date for the plan year in which the 
     contribution is made, and
       ``(ii) the contribution is for a preceding plan year,

     the contribution shall be taken into account as an asset of 
     the plan as of the valuation date, except that in the case of 
     any plan year beginning after 2008, only the present value 
     (determined as of the valuation date) of such contribution 
     may be taken into account. For purposes of the preceding 
     sentence, present value shall be determined using the 
     effective interest rate for the preceding plan year to which 
     the contribution is properly allocable.
       ``(B) Special rule for current year contributions made 
     before valuation date.--If any contributions for any plan 
     year are made to or under the plan during the plan year but 
     before the valuation date for the plan year, the assets of 
     the plan as of the valuation date shall not include--
       ``(i) such contributions, and
       ``(ii) interest on such contributions for the period 
     between the date of the contributions and the valuation date, 
     determined by using the effective interest rate for the plan 
     year.
       ``(h) Actuarial Assumptions and Methods.--
       ``(1) In general.--Subject to this subsection, the 
     determination of any present value or other computation under 
     this section shall be made on the basis of actuarial 
     assumptions and methods--
       ``(A) each of which is reasonable (taking into account the 
     experience of the plan and reasonable expectations), and
       ``(B) which, in combination, offer the actuary's best 
     estimate of anticipated experience under the plan.
       ``(2) Interest rates.--
       ``(A) Effective interest rate.--For purposes of this 
     section, the term `effective interest rate' means, with 
     respect to any plan for any plan year, the single rate of 
     interest which, if used to determine the present value of the 
     plan's accrued or earned benefits referred to in subsection 
     (d)(1), would result in an amount equal to the funding target 
     of the plan for such plan year.
       ``(B) Interest rates for determining funding target.--For 
     purposes of determining the funding target and normal cost of 
     a plan for any plan year, the interest rate used in 
     determining the present value of the benefits of the plan 
     shall be--
       ``(i) in the case of benefits reasonably determined to be 
     payable during the 5-year period beginning on the first day 
     of the plan year, the first segment rate with respect to the 
     applicable month,
       ``(ii) in the case of benefits reasonably determined to be 
     payable during the 15-year period beginning at the end of the 
     period described in clause (i), the second segment rate with 
     respect to the applicable month, and
       ``(iii) in the case of benefits reasonably determined to be 
     payable after the period described in clause (ii), the third 
     segment rate with respect to the applicable month.
       ``(C) Segment rates.--For purposes of this paragraph--
       ``(i) First segment rate.--The term `first segment rate' 
     means, with respect to any month, the single rate of interest 
     which shall be determined by the Secretary of the Treasury 
     for such month on the basis of the corporate bond yield curve 
     for such month, taking into account only that portion of such 
     yield curve which is based on bonds maturing during the 5-
     year period commencing with such month.
       ``(ii) Second segment rate.--The term `second segment rate' 
     means, with respect to any month, the single rate of interest 
     which shall be determined by the Secretary of the Treasury 
     for such month on the basis of the corporate bond yield curve 
     for such month, taking into account only that portion of such 
     yield curve which is based on bonds maturing during the 15-
     year period beginning at the end of the period described in 
     clause (i).
       ``(iii) Third segment rate.--The term `third segment rate' 
     means, with respect to any month, the single rate of interest 
     which shall be determined by the Secretary of the Treasury 
     for such month on the basis of the corporate bond yield curve 
     for such month, taking into account only that portion of such 
     yield curve which is based on bonds maturing during periods 
     beginning after the period described in clause (ii).
       ``(D) Corporate bond yield curve.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `corporate bond yield curve' 
     means, with respect to any month, a yield curve which is 
     prescribed by the Secretary of the Treasury for such month 
     and which reflects the average, for the 24-month period 
     ending with the month preceding such month, of monthly yields 
     on investment grade corporate bonds with varying maturities 
     and that are in the top 3 quality levels available.
       ``(ii) Election to use yield curve.--Solely for purposes of 
     determining the minimum required contribution under this 
     section, the plan sponsor may, in lieu of the segment rates 
     determined under subparagraph (C), elect to use interest 
     rates under the corporate bond yield curve. For purposes of 
     the preceding sentence such curve shall be determined without 
     regard to the 24-month averaging described in clause (i) . 
     Such election, once made, may be revoked only with the 
     consent of the Secretary of the Treasury.
       ``(E) Applicable month.--For purposes of this paragraph, 
     the term `applicable month' means, with respect to any plan 
     for any plan year, the month which includes the valuation 
     date of such plan for such plan year or, at the election of 
     the plan sponsor, any of the 4 months which precede such 
     month. Any election made under this subparagraph shall apply 
     to the plan year for which the election is made and all 
     succeeding plan years, unless the election is revoked with 
     the consent of the Secretary of the Treasury.
       ``(F) Publication requirements.--The Secretary of the 
     Treasury shall publish for each month the corporate bond 
     yield curve (and the corporate bond yield curve reflecting 
     the modification described in section 205(g)(3)(B)(iii)(I)) 
     for such month and each of the rates determined under 
     subparagraph (B) for such month. The Secretary of the 
     Treasury shall also publish a description of the methodology 
     used to determine such yield curve and such rates which is 
     sufficiently detailed to enable plans to make reasonable 
     projections regarding the yield curve and such rates for 
     future months based on the plan's projection of future 
     interest rates.
       ``(G) Transition rule.--
       ``(i) In general.--Notwithstanding the preceding provisions 
     of this paragraph, for plan years beginning in 2008 or 2009, 
     the first, second, or third segment rate for a plan with 
     respect to any month shall be equal to the sum of--

       ``(I) the product of such rate for such month determined 
     without regard to this subparagraph, multiplied by the 
     applicable percentage, and
       ``(II) the product of the rate determined under the rules 
     of section 302(b)(5)(B)(ii)(II) (as in effect for plan years 
     beginning in 2007), multiplied by a percentage equal to 100 
     percent minus the applicable percentage.

       ``(ii) Applicable percentage.--For purposes of clause (i), 
     the applicable percentage is 33\1/3\ percent for plan years 
     beginning in 2008 and 66\2/3\ percent for plan years 
     beginning in 2009.
       ``(iii) New plans ineligible.--Clause (i) shall not apply 
     to any plan if the first plan year of the plan begins after 
     December 31, 2007.
       ``(iv) Election.--The plan sponsor may elect not to have 
     this subparagraph apply. Such election, once made, may be 
     revoked only with the consent of the Secretary of the 
     Treasury.
       ``(3) Mortality tables.--
       ``(A) In general.--Except as provided in subparagraph (C) 
     or (D), the Secretary of the Treasury shall by regulation 
     prescribe mortality tables to be used in determining any 
     present value or making any computation under this section. 
     Such tables shall be based on the actual experience of 
     pension plans and projected trends in such experience. In 
     prescribing such tables, the Secretary of the Treasury shall 
     take into account results of available independent studies of 
     mortality of individuals covered by pension plans.
         ``(B) Periodic revision.--The Secretary of the Treasury 
     shall (at least every 10 years) make revisions in any table 
     in effect under subparagraph (A) to reflect the actual 
     experience of pension plans and projected trends in such 
     experience.
         ``(C) Substitute mortality table.--
         ``(i) In general.--Upon request by the plan sponsor and 
     approval by the Secretary of the Treasury, a mortality table 
     which meets the requirements of clause (iii) shall be used in 
     determining any present value or making any computation under 
     this section during the period of consecutive plan years (not 
     to exceed 10) specified in the request.
         ``(ii) Early termination of period.--Notwithstanding 
     clause (i), a mortality table described in clause (i) shall 
     cease to be in effect as of the earliest of--

         ``(I) the date on which there is a significant charge in 
     the participations in the plan by reason of a plan spinoff or 
     merger or otherwise, or

       ``(II) the date on which the plan actuary determines that 
     such table does not meet the requirements of clause (iii).

       ``(iii) Requirements.--A mortality table meets the 
     requirements of this clause if--

       ``(I) there is a sufficient number of plan participants, 
     and the pension plans have been maintained for a sufficient 
     period of time, to have credible information necessary for 
     purposes of subclause (II), and
       ``(II) such table reflects the actual experience of the 
     pension plans maintained by the sponsor and projected trends 
     in general mortality experience.

       ``(iv) All plans in controlled group must use separate 
     table.--Except as provided by the Secretary of the Treasury, 
     a plan sponsor may not use a mortality table under this 
     subparagraph for any plan maintained by the plan sponsor 
     unless--

       ``(I) a separate mortality table is established and used 
     under this subparagraph for

[[Page 16322]]

     each other plan maintained by the plan sponsor and if the 
     plan sponsor is a member of a controlled group, each member 
     of the controlled group, and
       ``(II) the requirements of clause (iii) are met separately 
     with respect to the table so established for each such plan, 
     determined by only taking into account the participants of 
     such plan, the time such plan has been in existence, and the 
     actual experience of such plan.

       ``(v) Deadline for submission and disposition of 
     application.--

       ``(I) Submission.--The plan sponsor shall submit a 
     mortality table to the Secretary of the Treasury for approval 
     under this subparagraph at least 7 months before the 1st day 
     of the period described in clause (i).
       ``(II) Disposition.--Any mortality table submitted to the 
     Secretary of the Treasury for approval under this 
     subparagraph shall be treated as in effect as of the 1st day 
     of the period described in clause (i) unless the Secretary of 
     the Treasury, during the 180-day period beginning on the date 
     of such submission, disapproves of such table and provides 
     the reasons that such table fails to meet the requirements of 
     clause (iii). The 180-day period shall be extended upon 
     mutual agreement of the Secretary of the Treasury and the 
     plan sponsor.

       ``(D) Separate mortality tables for the disabled.--
     Notwithstanding subparagraph (A)--
       ``(i) In general.--The Secretary of the Treasury shall 
     establish mortality tables which may be used (in lieu of the 
     tables under subparagraph (A)) under this subsection for 
     individuals who are entitled to benefits under the plan on 
     account of disability. The Secretary of the Treasury shall 
     establish separate tables for individuals whose disabilities 
     occur in plan years beginning before January 1, 1995, and for 
     individuals whose disabilities occur in plan years beginning 
     on or after such date.
       ``(ii) Special rule for disabilities occurring after 
     1994.--In the case of disabilities occurring in plan years 
     beginning after December 31, 1994, the tables under clause 
     (i) shall apply only with respect to individuals described in 
     such subclause who are disabled within the meaning of title 
     II of the Social Security Act and the regulations thereunder.
       ``(iii) Periodic revision.--The Secretary of the Treasury 
     shall (at least every 10 years) make revisions in any table 
     in effect under clause (i) to reflect the actual experience 
     of pension plans and projected trends in such experience.
       ``(4) Probability of benefit payments in the form of lump 
     sums or other optional forms.--For purposes of determining 
     any present value or making any computation under this 
     section, there shall be taken into account--
       ``(A) the probability that future benefit payments under 
     the plan will be made in the form of optional forms of 
     benefits provided under the plan (including lump sum 
     distributions, determined on the basis of the plan's 
     experience and other related assumptions), and
       ``(B) any difference in the present value of such future 
     benefit payments resulting from the use of actuarial 
     assumptions, in determining benefit payments in any such 
     optional form of benefits, which are different from those 
     specified in this subsection.
       ``(5) Approval of large changes in actuarial assumptions.--
       ``(A) In general.--No actuarial assumption used to 
     determine the funding target for a plan to which this 
     paragraph applies may be changed without the approval of the 
     Secretary of the Treasury.
       ``(B) Plans to which paragraph applies.--This paragraph 
     shall apply to a plan only if--
       ``(i) the plan is a single-employer plan to which title IV 
     applies,
       ``(ii) the aggregate unfunded vested benefits as of the 
     close of the preceding plan year (as determined under section 
     4006(a)(3)(E)(iii)) of such plan and all other plans 
     maintained by the contributing sponsors (as defined in 
     section 4001(a)(13)) and members of such sponsors' controlled 
     groups (as defined in section 4001(a)(14)) which are covered 
     by title IV (disregarding plans with no unfunded vested 
     benefits) exceed $50,000,000, and
       ``(iii) the change in assumptions (determined after taking 
     into account any changes in interest rate and mortality 
     table) results in a decrease in the funding shortfall of the 
     plan for the current plan year that exceeds $50,000,000, or 
     that exceeds $5,000,000 and that is 5 percent or more of the 
     funding target of the plan before such change.
       ``(i) Special Rules for At-Risk Plans.--
       ``(1) Funding target for plans in at-risk status.--
       ``(A) In general.--In the case of a plan which is in at-
     risk status for a plan year, the funding target of the plan 
     for the plan year shall be equal to the sum of--
       ``(i) the present value of all benefits accrued or earned 
     under the plan as of the beginning of the plan year, as 
     determined by using the additional actuarial assumptions 
     described in subparagraph (B), and
       ``(ii) in the case of a plan which also has been in at-risk 
     status for at least 2 of the 4 preceding plan years, a 
     loading factor determined under subparagraph (C).
       ``(B) Additional actuarial assumptions.--The actuarial 
     assumptions described in this subparagraph are as follows:
       ``(i) All employees who are not otherwise assumed to retire 
     as of the valuation date but who will be eligible to elect 
     benefits during the plan year and the 10 succeeding plan 
     years shall be assumed to retire at the earliest retirement 
     date under the plan but not before the end of the plan year 
     for which the at-risk funding target and at-risk target 
     normal cost are being determined.
       ``(ii) All employees shall be assumed to elect the 
     retirement benefit available under the plan at the assumed 
     retirement age (determined after application of clause (i)) 
     which would result in the highest present value of benefits.
       ``(C) Loading factor.--The loading factor applied with 
     respect to a plan under this paragraph for any plan year is 
     the sum of--
       ``(i) $700, times the number of participants in the plan, 
     plus
       ``(ii) 4 percent of the funding target (determined without 
     regard to this paragraph) of the plan for the plan year.
       ``(2) Target normal cost of at-risk plans.--In the case of 
     a plan which is in at-risk status for a plan year, the target 
     normal cost of the plan for such plan year shall be equal to 
     the sum of--
       ``(A) the present value of all benefits which are expected 
     to accrue or be earned under the plan during the plan year, 
     determined using the additional actuarial assumptions 
     described in paragraph (1)(B), plus
       ``(B) in the case of a plan which also has been in at-risk 
     status for at least 2 of the 4 preceding plan years, a 
     loading factor equal to 4 percent of the target normal cost 
     (determined without regard to this paragraph) of the plan for 
     the plan year.
       ``(3) Minimum amount.--In no event shall--
       ``(A) the at-risk funding target be less than the funding 
     target, as determined without regard to this subsection, or
       ``(B) the at-risk target normal cost be less than the 
     target normal cost, as determined without regard to this 
     subsection.
       ``(4) Determination of at-risk status.--For purposes of 
     this subsection--
       ``(A) In general.--A plan is in at-risk status for a plan 
     year if--
       ``(i) the funding target attainment percentage for the 
     preceding plan year (determined under this section without 
     regard to this subsection) is less than 80 percent, and
       ``(ii) the funding target attainment percentage for the 
     preceding plan year (determined under this section by using 
     the additional actuarial assumptions described in paragraph 
     (1)(B) in computing the funding target) is less than 70 
     percent.
       ``(B) Transition rule.--In the case of plan years beginning 
     in 2008, 2009, and 2010, subparagraph (A)(i) shall be applied 
     by substituting the following percentages for `80 percent':
       ``(i) 65 percent in the case of 2008.
       ``(ii) 70 percent in the case of 2009.
       ``(iii) 75 percent in the case of 2010.
     In the case of plan years beginning in 2008, the funding 
     target attainment percentage for the preceding plan year 
     under subparagraph (A)(ii) may be determined using such 
     methods of estimation as the Secretary of the Treasury may 
     provide.
       ``(C) Special rule for employees offered early retirement 
     in 2006.--
       ``(i) In general.--For purposes of subparagraph (A)(ii), 
     the additional actuarial assumptions described in paragraph 
     (1)(B) shall not be taken into account with respect to any 
     employee if--

       ``(I) such employee is employed by a specified automobile 
     manufacturer,
       ``(II) such employee is offered a substantial amount of 
     additional cash compensation, substantially enhanced 
     retirement benefits under the plan, or materially reduced 
     employment duties on the condition that by a specified date 
     (not later than December 31, 2010) the employee retires (as 
     defined under the terms of the plan),
       ``(III) such offer is made during 2006 and pursuant to a 
     bona fide retirement incentive program and requires, by the 
     terms of the offer, that such offer can be accepted not later 
     than a specified date (not later than December 31, 2006), and
       ``(IV) such employee does not elect to accept such offer 
     before the specified date on which the offer expires.

       ``(ii) Specified automobile manufacturer.--For purposes of 
     clause (i), the term `specified automobile manufacturer' 
     means--

       ``(I) any manufacturer of automobiles, and
       ``(II) any manufacturer of automobile parts which supplies 
     such parts directly to a manufacturer of automobiles and 
     which, after a transaction or series of transactions ending 
     in 1999, ceased to be a member of a controlled group which 
     included such manufacturer of automobiles.

       ``(5) Transition between applicable funding targets and 
     between applicable target normal costs.--
       ``(A) In general.--In any case in which a plan which is in 
     at-risk status for a plan year has been in such status for a 
     consecutive period of fewer than 5 plan years, the applicable 
     amount of the funding target and of the target normal cost 
     shall be, in lieu of the amount determined without regard to 
     this paragraph, the sum of--
       ``(i) the amount determined under this section without 
     regard to this subsection, plus

[[Page 16323]]

       ``(ii) the transition percentage for such plan year of the 
     excess of the amount determined under this subsection 
     (without regard to this paragraph) over the amount determined 
     under this section without regard to this subsection.
       ``(B) Transition percentage.--For purposes of subparagraph 
     (A), the transition percentage shall be determined in 
     accordance with the following table:

``If the consecutive number of years (including the plan year) the plan 
  is in at-risk status is--              The transition percentage is--
  1..................................................................20
  2..................................................................40
  3..................................................................60
  4.................................................................80.

       ``(C) Years before effective date.--For purposes of this 
     paragraph, plan years beginning before 2008 shall not be 
     taken into account.
       ``(6) Small plan exception.--If, on each day during the 
     preceding plan year, a plan had 500 or fewer participants, 
     the plan shall not be treated as in at-risk status for the 
     plan year. For purposes of this paragraph, all defined 
     benefit plans (other than multiemployer plans) maintained by 
     the same employer (or any member of such employer's 
     controlled group) shall be treated as 1 plan, but only 
     participants with respect to such employer or member shall be 
     taken into account and the rules of subsection (g)(2)(C) 
     shall apply.
       ``(j) Payment of Minimum Required Contributions.--
       ``(1) In general.--For purposes of this section, the due 
     date for any payment of any minimum required contribution for 
     any plan year shall be 8\1/2\ months after the close of the 
     plan year.
       ``(2) Interest.--Any payment required under paragraph (1) 
     for a plan year that is made on a date other than the 
     valuation date for such plan year shall be adjusted for 
     interest accruing for the period between the valuation date 
     and the payment date, at the effective rate of interest for 
     the plan for such plan year.
       ``(3) Accelerated quarterly contribution schedule for 
     underfunded plans.--
       ``(A) Failure to timely make required installment.--In any 
     case in which the plan has a funding shortfall for the 
     preceding plan year, the employer maintaining the plan shall 
     make the required installments under this paragraph and if 
     the employer fails to pay the full amount of a required 
     installment for the plan year, then the amount of interest 
     charged under paragraph (2) on the underpayment for the 
     period of underpayment shall be determined by using a rate of 
     interest equal to the rate otherwise used under paragraph (2) 
     plus 5 percentage points.
       ``(B) Amount of underpayment, period of underpayment.--For 
     purposes of subparagraph (A)--
       ``(i) Amount.--The amount of the underpayment shall be the 
     excess of--

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

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


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


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

       ``(I) 90 percent of the minimum required contribution 
     (determined without regard to this subsection) to the plan 
     for the plan year under this section, or
       ``(II) 100 percent of the minimum required contribution 
     (determined without regard to this subsection or to any 
     waiver under section 302(c)) to the plan for the preceding 
     plan year.

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

       ``(I) the base amount with respect to such quarter, over
       ``(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

[[Page 16324]]

     person and any other person who is a member of the same 
     controlled group of which such person is a member.
       ``(2) Plans to which subsection applies.--This subsection 
     shall apply to a single-employer plan covered under section 
     4021 for any plan year for which the funding target 
     attainment percentage (as defined in subsection (d)(2)) of 
     such plan is less than 100 percent.
       ``(3) Amount of lien.--For purposes of paragraph (1), the 
     amount of the lien shall be equal to the aggregate unpaid 
     balance of contribution payments required under this section 
     and section 302 for which payment has not been made before 
     the due date.
       ``(4) Notice of failure; lien.--
       ``(A) Notice of failure.--A person committing a failure 
     described in paragraph (1) shall notify the Pension Benefit 
     Guaranty Corporation of such failure within 10 days of the 
     due date for the required contribution payment.
       ``(B) Period of lien.--The lien imposed by paragraph (1) 
     shall arise on the due date for the required contribution 
     payment and shall continue until the last day of the first 
     plan year in which the plan ceases to be described in 
     paragraph (1)(B). Such lien shall continue to run without 
     regard to whether such plan continues to be described in 
     paragraph (2) during the period referred to in the preceding 
     sentence.
       ``(C) Certain rules to apply.--Any amount with respect to 
     which a lien is imposed under paragraph (1) shall be treated 
     as taxes due and owing the United States and rules similar to 
     the rules of subsections (c), (d), and (e) of section 4068 
     shall apply with respect to a lien imposed by subsection (a) 
     and the amount with respect to such lien.
       ``(5) Enforcement.--Any lien created under paragraph (1) 
     may be perfected and enforced only by the Pension Benefit 
     Guaranty Corporation, or at the direction of the Pension 
     Benefit Guaranty Corporation, by the contributing sponsor (or 
     any member of the controlled group of the contributing 
     sponsor).
       ``(6) Definitions.--For purposes of this subsection--
       ``(A) Contribution payment.--The term `contribution 
     payment' means, in connection with a plan, a contribution 
     payment required to be made to the plan, including any 
     required installment under paragraphs (3) and (4) of 
     subsection (j).
       ``(B) Due date; required installment.--The terms `due date' 
     and `required installment' have the meanings given such terms 
     by subsection (j), except that in the case of a payment other 
     than a required installment, the due date shall be the date 
     such payment is required to be made under section 303.
       ``(C) Controlled group.--The term `controlled group' means 
     any group treated as a single employer under subsections (b), 
     (c), (m), and (o) of section 414 of the Internal Revenue Code 
     of 1986.
       ``(l) Qualified Transfers to Health Benefit Accounts.--In 
     the case of a qualified transfer (as defined in section 420 
     of the Internal Revenue Code of 1986), any assets so 
     transferred shall not, for purposes of this section, be 
     treated as assets in the plan.''.
       (b) Clerical Amendment.--The table of sections in section 1 
     of such Act (as amended by section 101) is amended by 
     inserting after the item relating to section 302 the 
     following new item:

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

       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to plan years beginning after 2007.

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

       (a) Funding-Based Limits on Benefits and Benefit Accruals 
     Under Single-Employer Plans.--Section 206 of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1056) is 
     amended by adding at the end the following new subsection:
       ``(g) Funding-Based Limits on Benefits and Benefit Accruals 
     Under Single-Employer Plans.--
       ``(1) Funding-based limitation on shutdown benefits and 
     other unpredictable contingent event benefits under single-
     employer plans.--
       ``(A) In general.--If a participant of a defined benefit 
     plan which is a single-employer plan is entitled to an 
     unpredictable contingent event benefit payable with respect 
     to any event occurring during any plan year, the plan shall 
     provide that such benefit may not be provided if the adjusted 
     funding target attainment percentage for such plan year--
       ``(i) is less than 60 percent, or
       ``(ii) would be less than 60 percent taking into account 
     such occurrence.
       ``(B) Exemption.--Subparagraph (A) shall cease to apply 
     with respect to any plan year, effective as of the first day 
     of the plan year, upon payment by the plan sponsor of a 
     contribution (in addition to any minimum required 
     contribution under section 303) equal to--
       ``(i) in the case of subparagraph (A)(i), the amount of the 
     increase in the funding target of the plan (under section 
     303) for the plan year attributable to the occurrence 
     referred to in subparagraph (A), and
       ``(ii) in the case of subparagraph (A)(ii), the amount 
     sufficient to result in a funding target attainment 
     percentage of 60 percent.
       ``(C) Unpredictable contingent event.--For purposes of this 
     paragraph, the term `unpredictable contingent event benefit' 
     means any benefit payable solely by reason of--
       ``(i) a plant shutdown (or similar event, as determined by 
     the Secretary of the Treasury), or
       ``(ii) an event other than the attainment of any age, 
     performance of any service, receipt or derivation of any 
     compensation, or occurrence of death or disability.
       ``(2) Limitations on plan amendments increasing liability 
     for benefits.--
       ``(A) In general.--No amendment to a defined benefit plan 
     which is a single-employer plan which has the effect of 
     increasing liabilities of the plan by reason of increases in 
     benefits, establishment of new benefits, changing the rate of 
     benefit accrual, or changing the rate at which benefits 
     become nonforfeitable may take effect during any plan year if 
     the adjusted funding target attainment percentage for such 
     plan year is--
       ``(i) less than 80 percent, or
       ``(ii) would be less than 80 percent taking into account 
     such amendment.
       ``(B) Exemption.--Subparagraph (A) shall cease to apply 
     with respect to any plan year, effective as of the first day 
     of the plan year (or if later, the effective date of the 
     amendment), upon payment by the plan sponsor of a 
     contribution (in addition to any minimum required 
     contribution under section 303) equal to--
       ``(i) in the case of subparagraph (A)(i), the amount of the 
     increase in the funding target of the plan (under section 
     303) for the plan year attributable to the amendment, and
       ``(ii) in the case of subparagraph (A)(ii), the amount 
     sufficient to result in an adjusted funding target attainment 
     percentage of 80 percent.
       ``(C) Exception for certain benefit increases.--
     Subparagraph (A) shall not apply to any amendment which 
     provides for an increase in benefits under a formula which is 
     not based on a participant's compensation, but only if the 
     rate of such increase is not in excess of the contemporaneous 
     rate of increase in average wages of participants covered by 
     the amendment.
       ``(3) Limitations on accelerated benefit distributions.--
       ``(A) Funding percentage less than 60 percent.--A defined 
     benefit plan which is a single-employer plan shall provide 
     that, in any case in which the plan's adjusted funding target 
     attainment percentage for a plan year is less than 60 
     percent, the plan may not pay any prohibited payment after 
     the valuation date for the plan year.
       ``(B) Bankruptcy.--A defined benefit plan which is a 
     single-employer plan shall provide that, during any period in 
     which the plan sponsor is a debtor in a case under title 11, 
     United States Code, or similar Federal or State law, the plan 
     may not pay any prohibited payment. The preceding sentence 
     shall not apply on or after the date on which the enrolled 
     actuary of the plan certifies that the adjusted funding 
     target attainment percentage of such plan is not less than 
     100 percent.
       ``(C) Limited payment if percentage at least 60 percent but 
     less than 80 percent.--
       ``(i) In general.--A defined benefit plan which is a 
     single-employer plan shall provide that, in any case in which 
     the plan's adjusted funding target attainment percentage for 
     a plan year is 60 percent or greater but less than 80 
     percent, the plan may not pay any prohibited payment after 
     the valuation date for the plan year to the extent the amount 
     of the payment exceeds the lesser of--

       ``(I) 50 percent of the amount of the payment which could 
     be made without regard to this subsection, or
       ``(II) the present value (determined under guidance 
     prescribed by the Pension Benefit Guaranty Corporation, using 
     the interest and mortality assumptions under section 205(g)) 
     of the maximum guarantee with respect to the participant 
     under section 4022.

       ``(ii) One-time application.--

       ``(I) In general.--The plan shall also provide that only 1 
     prohibited payment meeting the requirements of clause (i) may 
     be made with respect to any participant during any period of 
     consecutive plan years to which the limitations under either 
     subparagraph (A) or (B) or this subparagraph applies.
       ``(II) Treatment of beneficiaries.--For purposes of this 
     clause, a participant and any beneficiary on his behalf 
     (including an alternate payee, as defined in section 
     206(d)(3)(K)) shall be treated as 1 participant. If the 
     accrued benefit of a participant is allocated to such an 
     alternate payee and 1 or more other persons, the amount under 
     clause (i) shall be allocated among such persons in the same 
     manner as the accrued benefit is allocated unless the 
     qualified domestic relations order (as defined in section 
     206(d)(3)(B)(i)) provides otherwise.

       ``(D) Exception.--This paragraph shall not apply to any 
     plan for any plan year if the terms of such plan (as in 
     effect for the period beginning on September 1, 2005, and 
     ending with such plan year) provide for no benefit accruals 
     with respect to any participant during such period.

[[Page 16325]]

       ``(E) Prohibited payment.--For purpose of this paragraph, 
     the term `prohibited payment' means--
       ``(i) any payment, in excess of the monthly amount paid 
     under a single life annuity (plus any social security 
     supplements described in the last sentence of section 
     204(b)(1)(G)), to a participant or beneficiary whose annuity 
     starting date (as defined in section 205(h)(2)) occurs during 
     any period a limitation under subparagraph (A) or (B) is in 
     effect,
       ``(ii) any payment for the purchase of an irrevocable 
     commitment from an insurer to pay benefits, and
       ``(iii) any other payment specified by the Secretary of the 
     Treasury by regulations.
       ``(4) Limitation on benefit accruals for plans with severe 
     funding shortfalls.--
       ``(A) In general.--A defined benefit plan which is a 
     single-employer plan shall provide that, in any case in which 
     the plan's adjusted funding target attainment percentage for 
     a plan year is less than 60 percent, benefit accruals under 
     the plan shall cease as of the valuation date for the plan 
     year.
       ``(B) Exemption.--Subparagraph (A) shall cease to apply 
     with respect to any plan year, effective as of the first day 
     of the plan year, upon payment by the plan sponsor of a 
     contribution (in addition to any minimum required 
     contribution under section 303) equal to the amount 
     sufficient to result in an adjusted funding target attainment 
     percentage of 60 percent.
       ``(5) Rules relating to contributions required to avoid 
     benefit limitations.--
       ``(A) Security may be provided.--
       ``(i) In general.--For purposes of this subsection, the 
     adjusted funding target attainment percentage shall be 
     determined by treating as an asset of the plan any security 
     provided by a plan sponsor in a form meeting the requirements 
     of clause (ii).
       ``(ii) Form of security.--The security required under 
     clause (i) shall consist of--

       ``(I) a bond issued by a corporate surety company that is 
     an acceptable surety for purposes of section 412 of this Act,
       ``(II) cash, or United States obligations which mature in 3 
     years or less, held in escrow by a bank or similar financial 
     institution, or
       ``(III) such other form of security as is satisfactory to 
     the Secretary of the Treasury and the parties involved.

       ``(iii) Enforcement.--Any security provided under clause 
     (i) may be perfected and enforced at any time after the 
     earlier of--

       ``(I) the date on which the plan terminates,
       ``(II) if there is a failure to make a payment of the 
     minimum required contribution for any plan year beginning 
     after the security is provided, the due date for the payment 
     under section 303(j), or
       ``(III) if the adjusted funding target attainment 
     percentage is less than 60 percent for a consecutive period 
     of 7 years, the valuation date for the last year in the 
     period.

       ``(iv) Release of security.--The security shall be released 
     (and any amounts thereunder shall be refunded together with 
     any interest accrued thereon) at such time as the Secretary 
     of the Treasury may prescribe in regulations, including 
     regulations for partial releases of the security by reason of 
     increases in the funding target attainment percentage.
       ``(B) Prefunding balance or funding standard carryover 
     balance may not be used.--No prefunding balance or funding 
     standard carryover balance under section 303(f) may be used 
     under paragraph (1), (2), or (4) to satisfy any payment an 
     employer may make under any such paragraph to avoid or 
     terminate the application of any limitation under such 
     paragraph.
       ``(C) Deemed reduction of funding balances.--
       ``(i) In general.--Subject to clause (iii), in any case in 
     which a benefit limitation under paragraph (1), (2), (3), or 
     (4) would (but for this subparagraph and determined without 
     regard to paragraph (1)(B), (2)(B), or (4)(B)) apply to such 
     plan for the plan year, the plan sponsor of such plan shall 
     be treated for purposes of this Act as having made an 
     election under section 303(f) to reduce the prefunding 
     balance or funding standard carryover balance by such amount 
     as is necessary for such benefit limitation to not apply to 
     the plan for such plan year.
       ``(ii) Exception for insufficient funding balances.--Clause 
     (i) shall not apply with respect to a benefit limitation for 
     any plan year if the application of clause (i) would not 
     result in the benefit limitation not applying for such plan 
     year.
       ``(iii) Restrictions of certain rules to collectively 
     bargained plans.--With respect to any benefit limitation 
     under paragraph (1), (2), or (4), clause (i) shall only apply 
     in the case of a plan maintained pursuant to 1 or more 
     collective bargaining agreements between employee 
     representatives and 1 or more employers.
       ``(6) New plans.--Paragraphs (1), (2) and (4) shall not 
     apply to a plan for the first 5 plan years of the plan. For 
     purposes of this paragraph, the reference in this paragraph 
     to a plan shall include a reference to any predecessor plan.
       ``(7) Presumed underfunding for purposes of benefit 
     limitations.--
       ``(A) Presumption of continued underfunding.--In any case 
     in which a benefit limitation under paragraph (1), (2), (3), 
     or (4) has been applied to a plan with respect to the plan 
     year preceding the current plan year, the adjusted funding 
     target attainment percentage of the plan for the current plan 
     year shall be presumed to be equal to the adjusted funding 
     target attainment percentage of the plan for the preceding 
     plan year until the enrolled actuary of the plan certifies 
     the actual adjusted funding target attainment percentage of 
     the plan for the current plan year.
       ``(B) Presumption of underfunding after 10th month.--In any 
     case in which no certification of the adjusted funding target 
     attainment percentage for the current plan year is made with 
     respect to the plan before the first day of the 10th month of 
     such year, for purposes of paragraphs (1), (2), (3), and (4), 
     such first day shall be deemed, for purposes of such 
     paragraph, to be the valuation date of the plan for the 
     current plan year and the plan's adjusted funding target 
     attainment percentage shall be conclusively presumed to be 
     less than 60 percent as of such first day.
       ``(C) Presumption of underfunding after 4th month for 
     nearly underfunded plans.--In any case in which--
       ``(i) a benefit limitation under paragraph (1), (2), (3), 
     or (4) did not apply to a plan with respect to the plan year 
     preceding the current plan year, but the adjusted funding 
     target attainment percentage of the plan for such preceding 
     plan year was not more than 10 percentage points greater than 
     the percentage which would have caused such paragraph to 
     apply to the plan with respect to such preceding plan year, 
     and
       ``(ii) as of the first day of the 4th month of the current 
     plan year, the enrolled actuary of the plan has not certified 
     the actual adjusted funding target attainment percentage of 
     the plan for the current plan year,

     until the enrolled actuary so certifies, such first day shall 
     be deemed, for purposes of such paragraph, to be the 
     valuation date of the plan for the current plan year and the 
     adjusted funding target attainment percentage of the plan as 
     of such first day shall, for purposes of such paragraph, be 
     presumed to be equal to 10 percentage points less than the 
     adjusted funding target attainment percentage of the plan for 
     such preceding plan year.
       ``(8) Treatment of plan as of close of prohibited or 
     cessation period.--For purposes of applying this part--
       ``(A) Operation of plan after period.--Unless the plan 
     provides otherwise, payments and accruals will resume 
     effective as of the day following the close of the period for 
     which any limitation of payment or accrual of benefits under 
     paragraph (3) or (4) applies.
       ``(B) Treatment of affected benefits.--Nothing in this 
     paragraph shall be construed as affecting the plan's 
     treatment of benefits which would have been paid or accrued 
     but for this subsection.
       ``(9) Terms relating to funding target attainment 
     percentage.--For purposes of this subsection--
       ``(A) In general.--The term `funding target attainment 
     percentage' has the same meaning given such term by section 
     303(d)(2).
       ``(B) Adjusted funding target attainment percentage.--The 
     term `adjusted funding target attainment percentage' means 
     the funding target attainment percentage which is determined 
     under subparagraph (A) by increasing each of the amounts 
     under subparagraphs (A) and (B) of section 303(d)(2) by the 
     aggregate amount of purchases of annuities for employees 
     other than highly compensated employees (as defined in 
     section 414(q) of the Internal Revenue Code of 1986) which 
     were made by the plan during the preceding 2 plan years.
       ``(C) Application to plans which are fully funded without 
     regard to reductions for funding balances.--
       ``(i) In general.--In the case of a plan for any plan year, 
     if the funding target attainment percentage is 100 percent or 
     more (determined without regard to this subparagraph and 
     without regard to the reduction in the value of assets under 
     section 303(f)(4)), the funding target attainment percentage 
     for purposes of subparagraphs (A) and (B) shall be determined 
     without regard to such reduction.
       ``(ii) Transition rule.--Clause (i) shall be applied to 
     plan years beginning after 2007 and before 2011 by 
     substituting for `100 percent' the applicable percentage 
     determined in accordance with the following table:

``In the case of a plan year beginning in cThe applicable percentage is
  2008...............................................................92
  2009...............................................................94
  2010..............................................................96.

       ``(iii) Limitation.--Clause (ii) shall not apply with 
     respect to any plan year after 2008 unless the funding target 
     attainment percentage (determined without regard to this 
     subparagraph) of the plan for each preceding plan year after 
     2007 was not less than the applicable percentage with respect 
     to such preceding plan year determined under clause (ii).
       ``(10) Special rule for 2008.--For purposes of this 
     subsection, in the case of plan years beginning in 2008, the 
     funding target attainment percentage for the preceding plan 
     year may be determined using such methods of estimation as 
     the Secretary of the Treasury may provide.''.

[[Page 16326]]

       (b) Notice Requirement.--
       (1) In general.--Section 101 of such Act (29 U.S.C. 1021) 
     is amended--
       (A) by redesignating subsection (j) as subsection (k); and
       (B) by inserting after subsection (i) the following new 
     subsection:
       ``(j) Notice of Funding-Based Limitation on Certain Forms 
     of Distribution.--The plan administrator of a single-employer 
     plan shall provide a written notice to plan participants and 
     beneficiaries within 30 days--
       ``(1) after the plan has become subject to a restriction 
     described in paragraph (1) or (3) of section 206(g)),
       ``(2) in the case of a plan to which section 206(g)(4) 
     applies, after the valuation date for the plan year described 
     in section 206(g)(4)(B) for which the plan's adjusted funding 
     target attainment percentage for the plan year is less than 
     60 percent (or, if earlier, the date such percentage is 
     deemed to be less than 60 percent under section 206(g)(7)), 
     and
       ``(3) at such other time as may be determined by the 
     Secretary of the Treasury.

     The notice required to be provided under this subsection 
     shall be in writing, except that such notice may be in 
     electronic or other form to the extent that such form is 
     reasonably accessible to the recipient.''.
       (2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C. 
     1132(c)(4)) is amended by striking ``section 
     302(b)(7)(F)(iv)'' and inserting ``section 101(j) or 
     302(b)(7)(F)(iv)''.
       (c) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to plan years beginning after December 31, 2007.
       (2) Collective bargaining exception.--In the case of a plan 
     maintained pursuant to 1 or more collective bargaining 
     agreements between employee representatives and 1 or more 
     employers ratified before January 1, 2008, the amendments 
     made by this section shall not apply to plan years beginning 
     before the earlier of--
       (A) the later of--
       (i) the date on which the last collective bargaining 
     agreement relating to the plan terminates (determined without 
     regard to any extension thereof agreed to after the date of 
     the enactment of this Act), or
       (ii) the first day of the first plan year to which the 
     amendments made by this subsection would (but for this 
     subparagraph) apply, or
       (B) January 1, 2010.

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

     SEC. 104. SPECIAL RULES FOR MULTIPLE EMPLOYER PLANS OF 
                   CERTAIN COOPERATIVES.

       (a) General Rule.--Except as provided in this section, if a 
     plan in existence on July 26, 2005, was an eligible 
     cooperative plan for its plan year which includes such date, 
     the amendments made by this subtitle and subtitle B shall not 
     apply to plan years beginning before the earlier of--
       (1) the first plan year for which the plan ceases to be an 
     eligible cooperative plan, or
       (2) January 1, 2017.
       (b) Interest Rate.--In applying section 302(b)(5)(B) of the 
     Employee Retirement Income Security Act of 1974 and section 
     412(b)(5)(B) of the Internal Revenue Code of 1986 (as in 
     effect before the amendments made by this subtitle and 
     subtitle B) to an eligible cooperative plan for plan years 
     beginning after December 31, 2007, and before the first plan 
     year to which such amendments apply, the third segment rate 
     determined under section 303(h)(2)(C)(iii) of such Act and 
     section 430(h)(2)(C)(iii) of such Code (as added by such 
     amendments) shall be used in lieu of the interest rate 
     otherwise used.
       (c) Eligible Cooperative Plan Defined.--For purposes of 
     this section, a plan shall be treated as an eligible 
     cooperative plan for a plan year if the plan is maintained by 
     more than 1 employer and at least 85 percent of the employers 
     are--
       (1) rural cooperatives (as defined in section 401(k)(7)(B) 
     of such Code without regard to clause (iv) thereof), or
       (2) organizations which are--
       (A) cooperative organizations described in section 1381(a) 
     of such Code which are more than 50-percent owned by 
     agricultural producers or by cooperatives owned by 
     agricultural producers, or
       (B) more than 50-percent owned, or controlled by, one or 
     more cooperative organizations described in subparagraph (A).

     A plan shall also be treated as an eligible cooperative plan 
     for any plan year for which it is described in section 210(a) 
     of the Employee Retirement Income Security Act of 1974 and is 
     maintained by a rural telephone cooperative association 
     described in section 3(40)(B)(v) of such Act.

     SEC. 105. TEMPORARY RELIEF FOR CERTAIN PBGC SETTLEMENT PLANS.

       (a) General Rule.--Except as provided in this section, if a 
     plan in existence on July 26, 2005, was a PBGC settlement 
     plan as of such date, the amendments made by this subtitle 
     and subtitle B shall not apply to plan years beginning before 
     January 1, 2014.
       (b) Interest Rate.--In applying section 302(b)(5)(B) of the 
     Employee Retirement Income Security Act of 1974 and section 
     412(b)(5)(B) of the Internal Revenue Code of 1986 (as in 
     effect before the amendments made by this subtitle and 
     subtitle B), to a PBGC settlement plan for plan years 
     beginning after December 31, 2007, and before January 1, 
     2014, the third segment rate determined under section 
     303(h)(2)(C)(iii) of such Act and section 430(h)(2)(C)(iii) 
     of such Code (as added by such amendments) shall be used in 
     lieu of the interest rate otherwise used.
       (c) PBGC Settlement Plan.--For purposes of this section, 
     the term ``PBGC settlement plan'' means a defined benefit 
     plan (other than a multiemployer plan) to which section 302 
     of such Act and section 412 of such Code apply and--
       (1) which was sponsored by an employer which was in 
     bankruptcy, giving rise to a claim by the Pension Benefit 
     Guaranty Corporation of not greater than $150,000,000, and 
     the sponsorship of which was assumed by another employer that 
     was not a member of the same controlled group as the bankrupt 
     sponsor and the claim of the Pension Benefit Guaranty 
     Corporation was settled or withdrawn in connection with the 
     assumption of the sponsorship, or
       (2) which, by agreement with the Pension Benefit Guaranty 
     Corporation, was spun off from a plan subsequently terminated 
     by such Corporation under section 4042 of the Employee 
     Retirement Income Security Act of 1974.

     SEC. 106. SPECIAL RULES FOR PLANS OF CERTAIN GOVERNMENT 
                   CONTRACTORS.

       (a) General Rule.--Except as provided in this section, if a 
     plan is an eligible government contractor plan, this subtitle 
     and subtitle B shall not apply to plan years beginning before 
     the earliest of--
       (1) the first plan year for which the plan ceases to be an 
     eligible government contractor plan,
       (2) the effective date of the Cost Accounting Standards 
     Pension Harmonization Rule, or
       (3) January 1, 2011.
       (b) Interest Rate.--In applying section 302(b)(5)(B) of the 
     Employee Retirement Income Security Act of 1974 and section 
     412(b)(5)(B) of the Internal Revenue Code of 1986 (as in 
     effect before the amendments made by this subtitle and 
     subtitle B) to an eligible government contractor plan for 
     plan years beginning after December 31, 2007, and before the 
     first plan year to which such amendments apply, the third 
     segment rate determined under section 303(h)(2)(C)(iii) of 
     such Act and section 430(h)(2)(C)(iii) of such Code (as added 
     by such amendments) shall be used in lieu of the interest 
     rate otherwise used.
       (c) Eligible Government Contractor Plan Defined.--For 
     purposes of this section, a plan shall be treated as an 
     eligible government contractor plan if it is maintained by a 
     corporation or a member of the same affiliated group (as 
     defined by section 1504(a) of the Internal Revenue Code of 
     1986), whose primary source of revenue is derived from 
     business performed under contracts with the United States 
     that are subject to the Federal Acquisition Regulations 
     (Chapter 1 of Title 48, C.F.R.) and that are also subject to 
     the Defense Federal Acquisition Regulation Supplement 
     (Chapter 2 of Title 48, C.F.R.), and whose revenue derived 
     from such business in the previous fiscal year exceeded 
     $5,000,000,000, and whose pension plan costs that are 
     assignable under those contracts are subject to sections 412 
     and 413 of the Cost Accounting Standards (48 C.F.R. 9904.412 
     and 9904.413).
       (d) Cost Accounting Standards Pension Harmonization Rule.--
     The Cost Accounting Standards Board shall review and revise 
     sections 412 and 413 of the Cost Accounting Standards (48 
     C.F.R. 9904.412 and 9904.413) to harmonize the minimum 
     required contribution under the Employee Retirement Income 
     Security Act of 1974 of eligible government contractor plans 
     and government reimbursable pension plan costs not later than 
     January 1, 2010. Any final rule adopted by the Cost 
     Accounting Standards Board shall be deemed the Cost 
     Accounting Standards Pension Harmonization Rule.

     SEC. 107. TECHNICAL AND CONFORMING AMENDMENTS.

       (a) Miscellaneous Amendments to Title I.--Subtitle B of 
     title I of such Act (29 U.S.C. 1021 et seq.) is amended--
       (1) in section 101(d)(3), by striking ``section 302(e)'' 
     and inserting ``section 303(j)'';
       (2) in section 103(d)(8)(B), by striking ``the requirements 
     of section 302(c)(3)'' and inserting ``the applicable 
     requirements of sections 303(h) and 304(c)(3)'';
       (3) in section 103(d), by striking paragraph (11) and 
     inserting the following:
       ``(11) If the current value of the assets of the plan is 
     less than 70 percent of--
       ``(A) in the case of a single-employer plan, the funding 
     target (as defined in section 303(d)(1)) of the plan, or
       ``(B) in the case of a multiemployer plan, the current 
     liability (as defined in section 304(c)(6)(D)) under the 
     plan,

     the percentage which such value is of the amount described in 
     subparagraph (A) or (B).'';
       (4) in section 203(a)(3)(C), by striking ``section 
     302(c)(8)'' and inserting ``section 302(d)(2)'';

[[Page 16327]]

       (5) in section 204(g)(1), by striking ``section 302(c)(8)'' 
     and inserting ``section 302(d)(2)'';
       (6) in section 204(i)(2)(B), by striking ``section 
     302(c)(8)'' and inserting ``section 302(d)(2)'';
       (7) in section 204(i)(3), by striking ``funded current 
     liability percentage (within the meaning of section 302(d)(8) 
     of this Act)'' and inserting ``funding target attainment 
     percentage (as defined in section 303(d)(2))'';
       (8) in section 204(i)(4), by striking ``section 
     302(c)(11)(A), without regard to section 302(c)(11)(B)'' and 
     inserting ``section 302(b)(1), without regard to section 
     302(b)(2)'';
       (9) in section 206(e)(1), by striking ``section 302(d)'' 
     and inserting ``section 303(j)(4)'', and by striking 
     ``section 302(e)(5)'' and inserting ``section 
     303(j)(4)(E)(i)'';
       (10) in section 206(e)(3), by striking ``section 302(e) by 
     reason of paragraph (5)(A) thereof'' and inserting ``section 
     303(j)(3) by reason of section 303(j)(4)(A)''; and
       (11) in sections 101(e)(3), 403(c)(1), and 408(b)(13), by 
     striking ``American Jobs Creation Act of 2004'' and inserting 
     ``Pension Protection Act of 2006''.
       (b) Miscellaneous Amendments to Title IV.--Title IV of such 
     Act is amended--
       (1) in section 4001(a)(13) (29 U.S.C. 1301(a)(13)), by 
     striking ``302(c)(11)(A)'' and inserting ``302(b)(1)'', by 
     striking ``412(c)(11)(A)'' and inserting ``412(b)(1)'', by 
     striking ``302(c)(11)(B)'' and inserting ``302(b)(2)'', and 
     by striking ``412(c)(11)(B)'' and inserting ``412(b)(2)'';
       (2) in section 4003(e)(1) (29 U.S.C. 1303(e)(1)), by 
     striking ``302(f)(1)(A) and (B)'' and inserting 
     ``303(k)(1)(A) and (B)'', and by striking ``412(n)(1)(A) and 
     (B)'' and inserting ``430(k)(1)(A) and (B)'';
       (3) in section 4010(b)(2) (29 U.S.C. 1310(b)(2)), by 
     striking ``302(f)(1)(A) and (B)'' and inserting 
     ``303(k)(1)(A) and (B)'', and by striking ``412(n)(1)(A) and 
     (B)'' and inserting ``430(k)(1)(A) and (B)'';
       (4) in section 4062(c) (29 U.S.C. 1362(c)), by striking 
     paragraphs (1), (2), and (3) and inserting the following:
       ``(1) the sum of the shortfall amortization charge (within 
     the meaning of section 303(c)(1) of this Act and 430(d)(1) of 
     the Internal Revenue Code of 1986) with respect to the plan 
     (if any) for the plan year in which the termination date 
     occurs, plus the aggregate total of shortfall amortization 
     installments (if any) determined for succeeding plan years 
     under section 303(c)(2) of this Act and section 430(d)(2) of 
     such Code (which, for purposes of this subparagraph, shall 
     include any increase in such sum which would result if all 
     applications for waivers of the minimum funding standard 
     under section 302(c) of this Act and section 412(c) of such 
     Code which are pending with respect to such plan were denied 
     and if no additional contributions (other than those already 
     made by the termination date) were made for the plan year in 
     which the termination date occurs or for any previous plan 
     year), and
       ``(2) the sum of the waiver amortization charge (within the 
     meaning of section 303(e)(1) of this Act and 430(e)(1) of the 
     Internal Revenue Code of 1986) with respect to the plan (if 
     any) for the plan year in which the termination date occurs, 
     plus the aggregate total of waiver amortization installments 
     (if any) determined for succeeding plan years under section 
     303(e)(2) of this Act and section 430(e)(2) of such Code,'';
       (5) in section 4071 (29 U.S.C. 1371), by striking 
     ``302(f)(4)'' and inserting ``303(k)(4)'';
       (6) in section 4243(a)(1)(B) (29 U.S.C. 1423(a)(1)(B)), by 
     striking ``302(a)'' and inserting ``304(a)'', and, in clause 
     (i), by striking ``302(a)'' and inserting ``304(a)'';
       (7) in section 4243(f)(1) (29 U.S.C. 1423(f)(1)), by 
     striking ``303(a)'' and inserting ``302(c)'';
       (8) in section 4243(f)(2) (29 U.S.C. 1423(f)(2)), by 
     striking ``303(c)'' and inserting ``302(c)(3)''; and
       (9) in section 4243(g) (29 U.S.C. 1423(g)), by striking 
     ``302(c)(3)'' and inserting ``304(c)(3)''.
       (c) Amendments to Reorganization Plan No. 4 of 1978.--
     Section 106(b)(ii) of Reorganization Plan No. 4 of 1978 
     (ratified and affirmed as law by Public Law 98-532 (98 Stat. 
     2705)) is amended by striking ``302(c)(8)'' and inserting 
     ``302(d)(2)'', by striking ``304(a) and (b)(2)(A)'' and 
     inserting ``304(d)(1), (d)(2), and (e)(2)(A)'', and by 
     striking ``412(c)(8), (e), and (f)(2)(A)'' and inserting 
     ``412(c)(2) and 431(d)(1), (d)(2), and (e)(2)(A)''.
       (d) Repeal of Expired Authority for Temporary Variances.--
     Section 207 of such Act (29 U.S.C. 1057) is repealed.
       (e) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after 2007.

        Subtitle B--Amendments to Internal Revenue Code of 1986

     SEC. 111. MINIMUM FUNDING STANDARDS.

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

     ``SEC. 412. MINIMUM FUNDING STANDARDS.

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

     the Secretary may, subject to subparagraph (C), waive the 
     requirements of subsection (a) for such year with respect to 
     all or any portion of the minimum funding standard. The 
     Secretary shall not waive the minimum funding standard with 
     respect to a plan for more than 3 of any 15 (5 of any 15 in 
     the case of a multiemployer plan) consecutive plan years
       ``(B) Effects of waiver.--If a waiver is granted under 
     subparagraph (A) for any plan year--
       ``(i) in the case of a defined benefit plan which is not a 
     multiemployer plan, the minimum required contribution under 
     section 430 for the plan year shall be reduced by the amount 
     of the waived funding deficiency and such amount shall be 
     amortized as required under section 430(e), and
       ``(ii) in the case of a multiemployer plan, the funding 
     standard account shall be credited under section 431(b)(3)(C) 
     with the amount of the waived funding deficiency and such 
     amount shall be amortized as required under section 
     431(b)(2)(C).
       ``(C) Waiver of amortized portion not allowed.--The 
     Secretary may not waive under subparagraph (A) any portion of 
     the minimum funding standard under subsection (a) for a plan 
     year which is attributable to any waived funding deficiency 
     for any preceding plan year.
       ``(2) Determination of business hardship.--For purposes of 
     this subsection, the factors taken into account in 
     determining temporary substantial business hardship 
     (substantial business hardship in the case of a multiemployer 
     plan) shall include (but shall not be limited to) whether or 
     not--
       ``(A) the employer is operating at an economic loss,
       ``(B) there is substantial unemployment or underemployment 
     in the trade or business and in the industry concerned,
       ``(C) the sales and profits of the industry concerned are 
     depressed or declining, and
       ``(D) it is reasonable to expect that the plan will be 
     continued only if the waiver is granted.
       ``(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

[[Page 16328]]

     controlled group (within the meaning of section 4001(a)(14) 
     of such Act).
       ``(B) Consultation with the pension benefit guaranty 
     corporation.--Except as provided in subparagraph (C), the 
     Secretary shall, before granting or modifying a waiver under 
     this subsection with respect to a plan described in 
     subparagraph (A)(i)--
       ``(i) provide the Pension Benefit Guaranty Corporation 
     with--

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

       ``(ii) consider--

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

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

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

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

     The Secretary may provide that an analysis of a trade or 
     business or industry of a member need not be conducted if the 
     Secretary determines such analysis is not necessary because 
     the taking into account of such member would not 
     significantly affect the determination under this paragraph.
       ``(6) Advance notice.--
       ``(A) In general.--The Secretary shall, before granting a 
     waiver under this subsection, require each applicant to 
     provide evidence satisfactory to the Secretary that the 
     applicant has provided notice of the filing of the 
     application for such waiver to each affected party (as 
     defined in section 4001(a)(21) of the Employee Retirement 
     Income Security Act of 1974). Such notice shall include a 
     description of the extent to which the plan is funded for 
     benefits which are guaranteed under title IV of the Employee 
     Retirement Income Security Act of 1974 and for benefit 
     liabilities.
       ``(B) Consideration of relevant information.--The Secretary 
     shall consider any relevant information provided by a person 
     to whom notice was given under subparagraph (A).
       ``(7) Restriction on plan amendments.--
       ``(A) In general.--No amendment of a plan which increases 
     the liabilities of the plan by reason of any increase in 
     benefits, any change in the accrual of benefits, or any 
     change in the rate at which benefits become nonforfeitable 
     under the plan shall be adopted if a waiver under this 
     subsection or an extension of time under section 431(d) is in 
     effect with respect to the plan, or if a plan amendment 
     described in subsection (d)(2) has been made at any time in 
     the preceding 12 months (24 months in the case of a 
     multiemployer plan). If a plan is amended in violation of the 
     preceding sentence, any such waiver, or extension of time, 
     shall not apply to any plan year ending on or after the date 
     on which such amendment is adopted.
       ``(B) Exception.--Subparagraph (A) shall not apply to any 
     plan amendment which--
       ``(i) the Secretary determines to be reasonable and which 
     provides for only de minimis increases in the liabilities of 
     the plan,
       ``(ii) only repeals an amendment described in subsection 
     (d)(2), or
       ``(iii) is required as a condition of qualification under 
     part I of subchapter D, of chapter 1.
       ``(d) Miscellaneous Rules.--
       ``(1) Change in method or year.--If the funding method, the 
     valuation date, or a plan year for a plan is changed, the 
     change shall take effect only if approved by the Secretary.
       ``(2) Certain retroactive plan amendments.--For purposes of 
     this section, any amendment applying to a plan year which--
       ``(A) is adopted after the close of such plan year but no 
     later than 2\1/2\ months after the close of the plan year 
     (or, in the case of a multiemployer plan, no later than 2 
     years after the close of such plan year),
       ``(B) does not reduce the accrued benefit of any 
     participant determined as of the beginning of the first plan 
     year to which the amendment applies, and
       ``(C) does not reduce the accrued benefit of any 
     participant determined as of the time of adoption except to 
     the extent required by the circumstances,

     shall, at the election of the plan administrator, be deemed 
     to have been made on the first day of such plan year. No 
     amendment described in this paragraph which reduces the 
     accrued benefits of any participant shall take effect unless 
     the plan administrator files a notice with the Secretary 
     notifying him of such amendment and the Secretary has 
     approved such amendment, or within 90 days after the date on 
     which such notice was filed, failed to disapprove such 
     amendment. No amendment described in this subsection shall be 
     approved by the Secretary unless the Secretary determines 
     that such amendment is necessary because of a temporary 
     substantial business hardship (as determined under subsection 
     (c)(2)) or a substantial business hardship (as so determined) 
     in the case of a multiemployer plan and that a waiver under 
     subsection (c) (or, in the case of a multiemployer plan, any 
     extension of the amortization period under section 431(d)) is 
     unavailable or inadequate.
       ``(3) Controlled group.--For purposes of this section, the 
     term `controlled group' means any group treated as a single 
     employer under subsection (b), (c), (m), or (o) of section 
     414.
       ``(e) Plans to Which Section Applies.--
       ``(1) In general.--Except as provided in paragraphs (2) and 
     (4), this section applies to a plan if, for any plan year 
     beginning on or after the effective date of this section for 
     such plan under the Employee Retirement Income Security Act 
     of 1974--
       ``(A) such plan included a trust which qualified (or was 
     determined by the Secretary to have qualified) under section 
     401(a), or
       ``(B) such plan satisfied (or was determined by the 
     Secretary to have satisfied) the requirements of section 
     403(a).
       ``(2) Exceptions.--This section shall not apply to--
       ``(A) any profit-sharing or stock bonus plan,
       ``(B) any insurance contract plan described in paragraph 
     (3),
       ``(C) any governmental plan (within the meaning of section 
     414(d)),
       ``(D) any church plan (within the meaning of section 
     414(e)) with respect to which the election provided by 
     section 410(d) has not been made,
       ``(E) any plan which has not, at any time after September 
     2, 1974, provided for employer contributions, or
       ``(F) any plan established and maintained by a society, 
     order, or association described in section 501(c)(8) or (9), 
     if no part of the contributions to or under such plan are 
     made by employers of participants in such plan.

     No plan described in subparagraph (C), (D), or (F) shall be 
     treated as a qualified plan for purposes of section 401(a) 
     unless such plan meets the requirements of section 401(a)(7) 
     as in effect on September 1, 1974.
       ``(3) Certain insurance contract plans.--A plan is 
     described in this paragraph if--
       ``(A) the plan is funded exclusively by the purchase of 
     individual insurance contracts,
       ``(B) such contracts provide for level annual premium 
     payments to be paid extending not later than the retirement 
     age for each individual participating in the plan, and 
     commencing with the date the individual became a participant 
     in the plan (or, in the case of an increase in benefits, 
     commencing at the time such increase becomes effective),
       ``(C) benefits provided by the plan are equal to the 
     benefits provided under each 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

[[Page 16329]]

     as contracts described in the preceding sentence shall be 
     treated as a plan described in this paragraph.
       ``(4) Certain terminated multiemployer plans.--This section 
     applies with respect to a terminated multiemployer plan to 
     which section 4021 of the Employee Retirement Income Security 
     Act of 1974 applies until the last day of the plan year in 
     which the plan terminates (within the meaning of section 
     4041A(a)(2) of such Act).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2007.

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

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

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

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

       ``(a) Minimum Required Contribution.--For purposes of this 
     section and section 412(a)(2)(A), except as provided in 
     subsection (f), the term `minimum required contribution' 
     means, with respect to any plan year of a defined benefit 
     plan which is not a multiemployer plan--
       ``(1) in any case in which the value of plan assets of the 
     plan (as reduced under subsection (f)(4)(B)) is less than the 
     funding target of the plan for the plan year, the sum of--
       ``(A) the target normal cost of the plan for the plan year,
       ``(B) the shortfall amortization charge (if any) for the 
     plan for the plan year determined under subsection (c), and
       ``(C) the waiver amortization charge (if any) for the plan 
     for the plan year as determined under subsection (e);
       ``(2) in any case in which the value of plan assets of the 
     plan (as reduced under subsection (f)(4)(B)) equals or 
     exceeds the funding target of the plan for the plan year, the 
     target normal cost of the plan for the plan year reduced (but 
     not below zero) by such excess.
       ``(b) Target Normal Cost.--For purposes of this section, 
     except as provided in subsection (i)(2) with respect to plans 
     in at-risk status, the term `target normal cost' means, for 
     any plan year, the present value of all benefits which are 
     expected to accrue or to be earned under the plan during the 
     plan year. For purposes of this subsection, if any benefit 
     attributable to services performed in a preceding plan year 
     is increased by reason of any increase in compensation during 
     the current plan year, the increase in such benefit shall be 
     treated as having accrued during the current plan year.
       ``(c) Shortfall Amortization Charge.--
       ``(1) In general.--For purposes of this section, the 
     shortfall amortization charge for a plan for any plan year is 
     the aggregate total (not less than zero) of the shortfall 
     amortization installments for such plan year with respect to 
     the shortfall amortization bases for such plan year and each 
     of the 6 preceding plan years.
       ``(2) Shortfall amortization installment.--For purposes of 
     paragraph (1)--
       ``(A) Determination.--The shortfall amortization 
     installments are the amounts necessary to amortize the 
     shortfall amortization base of the plan for any plan year in 
     level annual installments over the 7-plan-year period 
     beginning with such plan year.
       ``(B) Shortfall installment.--The shortfall amortization 
     installment for any plan year in the 7-plan-year period under 
     subparagraph (A) with respect to any shortfall amortization 
     base is the annual installment determined under subparagraph 
     (A) for that year for that base.
       ``(C) Segment rates.--In determining any shortfall 
     amortization installment under this paragraph, the plan 
     sponsor shall use the segment rates determined under 
     subparagraph (C) of subsection (h)(2), applied under rules 
     similar to the rules of subparagraph (B) of subsection 
     (h)(2).
       ``(3) Shortfall amortization base.--For purposes of this 
     section, the shortfall amortization base of a plan for a plan 
     year is--
       ``(A) the funding shortfall of such plan for such plan 
     year, minus
       ``(B) the present value (determined using the segment rates 
     determined under subparagraph (C) of subsection (h)(2), 
     applied under rules similar to the rules of subparagraph (B) 
     of subsection (h)(2)) of the aggregate total of the shortfall 
     amortization installments and waiver amortization 
     installments which have been determined for such plan year 
     and any succeeding plan year with respect to the shortfall 
     amortization bases and waiver amortization bases of the plan 
     for any plan year preceding such plan year.
       ``(4) Funding shortfall.--For purposes of this section, the 
     funding shortfall of a plan for any plan year is the excess 
     (if any) of--
       ``(A) the funding target of the plan for the plan year, 
     over
       ``(B) the value of plan assets of the plan (as reduced 
     under subsection (f)(4)(B)) for the plan year which are held 
     by the plan on the valuation date.
       ``(5) Exemption from new shortfall amortization base.--
       ``(A) In general.--In any case in which the value of plan 
     assets of the plan (as reduced under subsection (f)(4)(A)) is 
     equal to or greater than the funding target of the plan for 
     the plan year, the shortfall amortization base of the plan 
     for such plan year shall be zero.
       ``(B) Transition rule.--
       ``(i) In general.--Except as provided in clauses (iii) and 
     (iv), in the case of plan years beginning after 2007 and 
     before 2011, only the applicable percentage of the funding 
     target shall be taken into account under paragraph (3)(A) in 
     determining the funding shortfall for the plan year for 
     purposes of subparagraph (A).
       ``(ii) Applicable percentage.--For purposes of subparagraph 
     (A), the applicable percentage shall be determined in 
     accordance with the following table:

``In the case of a plan year beginning in cThe applicable percentage is
  2008..............................................................92 
  2009..............................................................94 
  2010..............................................................96.

       ``(iii) Limitation.--Clause (i) shall not apply with 
     respect to any plan year after 2008 unless the shortfall 
     amortization base for each of the preceding years beginning 
     after 2007 was zero (determined after application of this 
     subparagraph).
       ``(iv) Transition relief not available for new or deficit 
     reduction plans.--Clause (i) shall not apply to a plan--

       ``(I) which was not in effect for a plan year beginning in 
     2007, or
       ``(II) which was in effect for a plan year beginning in 
     2007 and which was subject to section 412(l) (as in effect 
     for plan years beginning in 2007), determined after the 
     application of paragraphs (6) and (9) thereof.

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

[[Page 16330]]

       ``(i) In general.--In the case of a defined benefit plan 
     (other than a multiemployer plan) described in clause (ii), 
     the plan sponsor may elect to maintain a funding standard 
     carryover balance, until such balance is reduced to zero.
       ``(ii) Plans maintaining funding standard account in 
     2007.--A plan is described in this clause if the plan--

       ``(I) was in effect for a plan year beginning in 2007, and
       ``(II) had a positive balance in the funding standard 
     account under section 412(b) as in effect for such plan year 
     and determined as of the end of such plan year.

       ``(2) Application of balances.--A prefunding balance and a 
     funding standard carryover balance maintained pursuant to 
     this paragraph--
       ``(A) shall be available for crediting against the minimum 
     required contribution, pursuant to an election under 
     paragraph (3),
       ``(B) shall be applied as a reduction in the amount treated 
     as the value of plan assets for purposes of this section, to 
     the extent provided in paragraph (4), and
       ``(C) may be reduced at any time, pursuant to an election 
     under paragraph (5).
       ``(3) Election to apply balances against minimum required 
     contribution.--
       ``(A) In general.--Except as provided in subparagraphs (B) 
     and (C), in the case of any plan year in which the plan 
     sponsor elects to credit against the minimum required 
     contribution for the current plan year all or a portion of 
     the prefunding balance or the funding standard carryover 
     balance for the current plan year (not in excess of such 
     minimum required contribution), the minimum required 
     contribution for the plan year shall be reduced as of the 
     first day of the plan year by the amount so credited by the 
     plan sponsor as of the first day of the plan year. For 
     purposes of the preceding sentence, the minimum required 
     contribution shall be determined after taking into account 
     any waiver under section 412(c).
       ``(B) Coordination with funding standard carryover 
     balance.--To the extent that any plan has a funding standard 
     carryover balance greater than zero, no amount of the 
     prefunding balance of such plan may be credited under this 
     paragraph in reducing the minimum required contribution.
       ``(C) Limitation for underfunded plans.--The preceding 
     provisions of this paragraph shall not apply for any plan 
     year if the ratio (expressed as a percentage) which--
       ``(i) the value of plan assets for the preceding plan year 
     (as reduced under paragraph (4)(C)), bears to
       ``(ii) the funding target of the plan for the preceding 
     plan year (determined without regard to subsection (i)(1)),

     is less than 80 percent. In the case of plan years beginning 
     in 2008, the ratio under this subparagraph may be determined 
     using such methods of estimation as the Secretary may 
     prescribe.
       ``(4) Effect of balances on amounts treated as value of 
     plan assets.--In the case of any plan maintaining a 
     prefunding balance or a funding standard carryover balance 
     pursuant to this subsection, the amount treated as the value 
     of plan assets shall be deemed to be such amount, reduced as 
     provided in the following subparagraphs:
       ``(A) Applicability of shortfall amortization base.--For 
     purposes of subsection (c)(5), the value of plan assets is 
     deemed to be such amount, reduced by the amount of the 
     prefunding balance, but only if an election under paragraph 
     (2) applying any portion of the prefunding balance in 
     reducing the minimum required contribution is in effect for 
     the plan year.
       ``(B) Determination of excess assets, funding shortfall, 
     and funding target attainment percentage.--
       ``(i) In general.--For purposes of subsections (a), 
     (c)(4)(B), and (d)(2)(A), the value of plan assets is deemed 
     to be such amount, reduced by the amount of the prefunding 
     balance and the funding standard carryover balance.
       ``(ii) Special rule for certain binding agreements with 
     pbgc.--For purposes of subsection (c)(4)(B), the value of 
     plan assets shall not be deemed to be reduced for a plan year 
     by the amount of the specified balance if, with respect to 
     such balance, there is in effect for a plan year a binding 
     written agreement with the Pension Benefit Guaranty 
     Corporation which provides that such balance is not available 
     to reduce the minimum required contribution for the plan 
     year. For purposes of the preceding sentence, the term 
     `specified balance' means the prefunding balance or the 
     funding standard carryover balance, as the case may be.
       ``(C) Availability of balances in plan year for crediting 
     against minimum required contribution.--For purposes of 
     paragraph (3)(C)(i) of this subsection, the value of plan 
     assets is deemed to be such amount, reduced by the amount of 
     the prefunding balance.
       ``(5) Election to reduce balance prior to determinations of 
     value of plan assets and crediting against minimum required 
     contribution.--
       ``(A) In general.--The plan sponsor may elect to reduce by 
     any amount the balance of the prefunding balance and the 
     funding standard carryover balance for any plan year (but not 
     below zero). Such reduction shall be effective prior to any 
     determination of the value of plan assets for such plan year 
     under this section and application of the balance in reducing 
     the minimum required contribution for such plan for such plan 
     year pursuant to an election under paragraph (2).
       ``(B) Coordination between prefunding balance and funding 
     standard carryover balance.--To the extent that any plan has 
     a funding standard carryover balance greater than zero, no 
     election may be made under subparagraph (A) with respect to 
     the prefunding balance.
       ``(6) Prefunding balance.--
       ``(A) In general.--A prefunding balance maintained by a 
     plan shall consist of a beginning balance of zero, increased 
     and decreased to the extent provided in subparagraphs (B) and 
     (C), and adjusted further as provided in paragraph (8).
       ``(B) Increases.--
       ``(i) In general.--As of the first day of each plan year 
     beginning after 2008, the prefunding balance of a plan shall 
     be increased by the amount elected by the plan sponsor for 
     the plan year. Such amount shall not exceed the excess (if 
     any) of--

       ``(I) the aggregate total of employer contributions to the 
     plan for the preceding plan year, over--
       ``(II) the minimum required contribution for such preceding 
     plan year.

       ``(ii) Adjustments for interest.--Any excess contributions 
     under clause (i) shall be properly adjusted for interest 
     accruing for the periods between the first day of the current 
     plan year and the dates on which the excess contributions 
     were made, determined by using the effective interest rate 
     for the preceding plan year and by treating contributions as 
     being first used to satisfy the minimum required 
     contribution.
       ``(iii) Certain contributions necessary to avoid benefit 
     limitations disregarded.--The excess described in clause (i) 
     with respect to any preceding plan year shall be reduced (but 
     not below zero) by the amount of contributions an employer 
     would be required to make under paragraph (1), (2), or (4) of 
     section 206(g) to avoid a benefit limitation which would 
     otherwise be imposed under such paragraph for the preceding 
     plan year. Any contribution which may be taken into account 
     in satisfying the requirements of more than 1 of such 
     paragraphs shall be taken into account only once for purposes 
     of this clause.
       ``(C) Decreases.--The prefunding balance of a plan shall be 
     decreased (but not below zero) by the sum of--
       ``(i) as of the first day of each plan year after 2008, the 
     amount of such balance credited under paragraph (2) (if any) 
     in reducing the minimum required contribution of the plan for 
     the preceding plan year, and
       ``(ii) as of the time specified in paragraph (5))(A), any 
     reduction in such balance elected under paragraph (5).
       ``(7) Funding standard carryover balance.--
       ``(A) In general.--A funding standard carryover balance 
     maintained by a plan shall consist of a beginning balance 
     determined under subparagraph (B), decreased to the extent 
     provided in subparagraph (C), and adjusted further as 
     provided in paragraph (8).
       ``(B) Beginning balance.--The beginning balance of the 
     funding standard carryover balance shall be the positive 
     balance described in paragraph (1)(B)(ii)(II).
       ``(C) Decreases.--The funding standard carryover balance of 
     a plan shall be decreased (but not below zero) by--
       ``(i) as of the first day of each plan year after 2008, the 
     amount of such balance credited under paragraph (2) (if any) 
     in reducing the minimum required contribution of the plan for 
     the preceding plan year, and
       ``(ii) as of the time specified in paragraph (5))(A), any 
     reduction in such balance elected under paragraph (5).
       ``(8) Adjustments for investment experience.--In 
     determining the prefunding balance or the funding standard 
     carryover balance of a plan as of the first day of the plan 
     year, the plan sponsor shall, in accordance with regulations 
     prescribed by the Secretary of the Treasury, adjust such 
     balance to reflect the rate of return on plan assets for the 
     preceding plan year. Notwithstanding subsection (g)(3), such 
     rate of return shall be determined on the basis of fair 
     market value and shall properly take into account, in 
     accordance with such regulations, all contributions, 
     distributions, and other plan payments made during such 
     period.
       ``(9) Elections.--Elections under this subsection shall be 
     made at such times, and in such form and manner, as shall be 
     prescribed in regulations of the Secretary.
       ``(g) Valuation of Plan Assets and Liabilities.--
       ``(1) Timing of determinations.--Except as otherwise 
     provided under this subsection, all determinations under this 
     section for a plan year shall be made as of the valuation 
     date of the plan for such plan year.
       ``(2) Valuation date.--For purposes of this section--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the valuation date of a plan for any plan year shall be the 
     first day of the plan year.
       ``(B) Exception for small plans.--If, on each day during 
     the preceding plan year, a plan had 100 or fewer 
     participants, the plan

[[Page 16331]]

     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) Determination of value of plan assets.--For purposes 
     of this section--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the value of plan assets shall be the fair market value of 
     the assets.
       ``(B) Averaging allowed.--A plan may determine the value of 
     plan assets on the basis of the averaging of fair market 
     values, but only if such method--
       ``(i) is permitted under regulations prescribed by the 
     Secretary,
       ``(ii) does not provide for averaging of such values over 
     more than the period beginning on the last day of the 25th 
     month preceding the month in which the valuation date occurs 
     and ending on the valuation date (or a similar period in the 
     case of a valuation date which is not the 1st day of a 
     month), and
       ``(iii) does not result in a determination of the value of 
     plan assets which, at any time, is lower than 90 percent or 
     greater than 110 percent of the fair market value of such 
     assets at such time.

     Any such averaging shall be adjusted for contributions and 
     distributions (as provided by the Secretary).
       ``(4) Accounting for contribution receipts.--For purposes 
     of determining the value of assets under paragraph (3)--
       ``(A) Prior year contributions.--If--
       ``(i) an employer makes any contribution to the plan after 
     the valuation date for the plan year in which the 
     contribution is made, and
       ``(ii) the contribution is for a preceding plan year,

     the contribution shall be taken into account as an asset of 
     the plan as of the valuation date, except that in the case of 
     any plan year beginning after 2008, only the present value 
     (determined as of the valuation date) of such contribution 
     may be taken into account. For purposes of the preceding 
     sentence, present value shall be determined using the 
     effective interest rate for the preceding plan year to which 
     the contribution is properly allocable.
       ``(B) Special rule for current year contributions made 
     before valuation date.--If any contributions for any plan 
     year are made to or under the plan during the plan year but 
     before the valuation date for the plan year, the assets of 
     the plan as of the valuation date shall not include--
       ``(i) such contributions, and
       ``(ii) interest on such contributions for the period 
     between the date of the contributions and the valuation date, 
     determined by using the effective interest rate for the plan 
     year.
       ``(h) Actuarial Assumptions and Methods.--
       ``(1) In general.--Subject to this subsection, the 
     determination of any present value or other computation under 
     this section shall be made on the basis of actuarial 
     assumptions and methods--
       ``(A) each of which is reasonable (taking into account the 
     experience of the plan and reasonable expectations), and
       ``(B) which, in combination, offer the actuary's best 
     estimate of anticipated experience under the plan.
       ``(2) Interest rates.--
       ``(A) Effective interest rate.--For purposes of this 
     section, the term `effective interest rate' means, with 
     respect to any plan for any plan year, the single rate of 
     interest which, if used to determine the present value of the 
     plan's accrued or earned benefits referred to in subsection 
     (d)(1), would result in an amount equal to the funding target 
     of the plan for such plan year.
       ``(B) Interest rates for determining funding target.--For 
     purposes of determining the funding target of a plan for any 
     plan year, the interest rate used in determining the present 
     value of the liabilities of the plan shall be--
       ``(i) in the case of benefits reasonably determined to be 
     payable during the 5-year period beginning on the first day 
     of the plan year, the first segment rate with respect to the 
     applicable month,
       ``(ii) in the case of benefits reasonably determined to be 
     payable during the 15-year period beginning at the end of the 
     period described in clause (i), the second segment rate with 
     respect to the applicable month, and
       ``(iii) in the case of benefits reasonably determined to be 
     payable after the period described in clause (ii), the third 
     segment rate with respect to the applicable month.
       ``(C) Segment rates.--For purposes of this paragraph--
       ``(i) First segment rate.--The term `first segment rate' 
     means, with respect to any month, the single rate of interest 
     which shall be determined by the Secretary for such month on 
     the basis of the corporate bond yield curve for such month, 
     taking into account only that portion of such yield curve 
     which is based on bonds maturing during the 5-year period 
     commencing with such month.
       ``(ii) Second segment rate.--The term `second segment rate' 
     means, with respect to any month, the single rate of interest 
     which shall be determined by the Secretary for such month on 
     the basis of the corporate bond yield curve for such month, 
     taking into account only that portion of such yield curve 
     which is based on bonds maturing during the 15-year period 
     beginning at the end of the period described in clause (i).
       ``(iii) Third segment rate.--The term `third segment rate' 
     means, with respect to any month, the single rate of interest 
     which shall be determined by the Secretary for such month on 
     the basis of the corporate bond yield curve for such month, 
     taking into account only that portion of such yield curve 
     which is based on bonds maturing during periods beginning 
     after the period described in clause (ii).
       ``(D) Corporate bond yield curve.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `corporate bond yield curve' 
     means, with respect to any month, a yield curve which is 
     prescribed by the Secretary for such month and which reflects 
     the average, for the 24-month period ending with the month 
     preceding such month, of monthly yields on investment grade 
     corporate bonds with varying maturities and that are in the 
     top 3 quality levels available.
       ``(ii) Election to use yield curve.--Solely for purposes of 
     determining the minimum required contribution under this 
     section, the plan sponsor may, in lieu of the segment rates 
     determined under subparagraph (C), elect to use interest 
     rates under the corporate bond yield curve. For purposes of 
     the preceding sentence such curve shall be determined without 
     regard to the 24-month averaging described in clause (i) . 
     Such election, once made, may be revoked only with the 
     consent of the Secretary.
       ``(E) Applicable month.--For purposes of this paragraph, 
     the term `applicable month' means, with respect to any plan 
     for any plan year, the month which includes the valuation 
     date of such plan for such plan year or, at the election of 
     the plan sponsor, any of the 4 months which precede such 
     month. Any election made under this subparagraph shall apply 
     to the plan year for which the election is made and all 
     succeeding plan years, unless the election is revoked with 
     the consent of the Secretary.
       ``(F) Publication requirements.--The Secretary shall 
     publish for each month the corporate bond yield curve (and 
     the corporate bond yield curve reflecting the modification 
     described in section 417(e)(3)(D)(i) for such month and each 
     of the rates determined under subparagraph (B) for such 
     month. The Secretary shall also publish a description of the 
     methodology used to determine such yield curve and such rates 
     which is sufficiently detailed to enable plans to make 
     reasonable projections regarding the yield curve and such 
     rates for future months based on the plan's projection of 
     future interest rates.
       ``(G) Transition rule.--
       ``(i) In general.--Notwithstanding the preceding provisions 
     of this paragraph, for plan years beginning in 2008 or 2009, 
     the first, second, or third segment rate for a plan with 
     respect to any month shall be equal to the sum of--

       ``(I) the product of such rate for such month determined 
     without regard to this subparagraph, multiplied by the 
     applicable percentage, and
       ``(II) the product of the rate determined under the rules 
     of section 412(b)(5)(B)(ii)(II) (as in effect for plan years 
     beginning in 2007), multiplied by a percentage equal to 100 
     percent minus the applicable percentage.

       ``(ii) Applicable percentage.--For purposes of clause (i), 
     the applicable percentage is 33\1/3\ percent for plan years 
     beginning in 2008 and 66\2/3\ percent for plan years 
     beginning in 2009.
       ``(iii) New plans ineligible.--Clause (i) shall not apply 
     to any plan if the first plan year of the plan begins after 
     December 31, 2007.
       ``(iv) Election.--The plan sponsor may elect not to have 
     this subparagraph apply. Such election, once made, may be 
     revoked only with the consent of the Secretary.
       ``(3) Mortality tables.--
       ``(A) In general.--Except as provided in subparagraph (C) 
     or (D), the Secretary shall by regulation prescribe mortality 
     tables to be used in determining any present value or making 
     any computation under this section. Such tables shall be 
     based on the actual experience of pension plans and projected 
     trends in such experience. In prescribing such tables, the 
     Secretary shall take into account results of available 
     independent studies of mortality of individuals covered by 
     pension plans.
       ``(B) Periodic revision.--The Secretary shall (at least 
     every 10 years) make revisions in any table in effect under 
     subparagraph (A) to reflect the actual experience of pension

[[Page 16332]]

     plans and projected trends in such experience.
       ``(C) Substitute mortality table.--
       ``(i) In general.--Upon request by the plan sponsor and 
     approval by the Secretary, a mortality table which meets the 
     requirements of clause (iii) shall be used in determining any 
     present value or making any computation under this section 
     during the period of consecutive plan years (not to exceed 
     10) specified in the request.
       ``(ii) Early termination of period.--Notwithstanding clause 
     (i), a mortality table described in clause (i) shall cease to 
     be in effect as of the earliest of--

       ``(I) the date on which there is a significant change in 
     the participants in the plan by reason of a plan spinoff or 
     merger or otherwise, or
       ``(II) the date on which the plan actuary determines that 
     such table does not meet the requirements of clause (iii).

       ``(iii) Requirements.--A mortality table meets the 
     requirements of this clause if--

       ``(I) there is a sufficient number of plan participants, 
     and the pension plans have been maintained for a sufficient 
     period of time, to have credible information necessary for 
     purposes of subclause (II), and
       ``(II) such table reflects the actual experience of the 
     pension plans maintained by the sponsor and projected trends 
     in general mortality experience.

       ``(iv) All plans in controlled group must use separate 
     table.--Except as provided by the Secretary, a plan sponsor 
     may not use a mortality table under this subparagraph for any 
     plan maintained by the plan sponsor unless--

       ``(I) a separate mortality table is established and used 
     under this subparagraph for each other plan maintained by the 
     plan sponsor and if the plan sponsor is a member of a 
     controlled group, each member of the controlled group, and
       ``(II) the requirements of clause (iii) are met separately 
     with respect to the table so established for each such plan, 
     determined by only taking into account the participants of 
     such plan, the time such plan has been in existence, and the 
     actual experience of such plan.

       ``(v) Deadline for submission and disposition of 
     application.--

       ``(I) Submission.--The plan sponsor shall submit a 
     mortality table to the Secretary for approval under this 
     subparagraph at least 7 months before the 1st day of the 
     period described in clause (i).
       ``(II) Disposition.--Any mortality table submitted to the 
     Secretary for approval under this subparagraph shall be 
     treated as in effect as of the 1st day of the period 
     described in clause (i) unless the Secretary, during the 180-
     day period beginning on the date of such submission, 
     disapproves of such table and provides the reasons that such 
     table fails to meet the requirements of clause (iii). The 
     180-day period shall be extended upon mutual agreement of the 
     Secretary and the plan sponsor.

       ``(D) Separate mortality tables for the disabled.--
     Notwithstanding subparagraph (A)--
       ``(i) In general.--The Secretary shall establish mortality 
     tables which may be used (in lieu of the tables under 
     subparagraph (A)) under this subsection for individuals who 
     are entitled to benefits under the plan on account of 
     disability. The Secretary shall establish separate tables for 
     individuals whose disabilities occur in plan years beginning 
     before January 1, 1995, and for individuals whose 
     disabilities occur in plan years beginning on or after such 
     date.
       ``(ii) Special rule for disabilities occurring after 
     1994.--In the case of disabilities occurring in plan years 
     beginning after December 31, 1994, the tables under clause 
     (i) shall apply only with respect to individuals described in 
     such subclause who are disabled within the meaning of title 
     II of the Social Security Act and the regulations thereunder.
       ``(iii) Periodic revision.--The Secretary shall (at least 
     every 10 years) make revisions in any table in effect under 
     clause (i) to reflect the actual experience of pension plans 
     and projected trends in such experience.
       ``(4) Probability of benefit payments in the form of lump 
     sums or other optional forms.--For purposes of determining 
     any present value or making any computation under this 
     section, there shall be taken into account--
       ``(A) the probability that future benefit payments under 
     the plan will be made in the form of optional forms of 
     benefits provided under the plan (including lump sum 
     distributions, determined on the basis of the plan's 
     experience and other related assumptions), and
       ``(B) any difference in the present value of such future 
     benefit payments resulting from the use of actuarial 
     assumptions, in determining benefit payments in any such 
     optional form of benefits, which are different from those 
     specified in this subsection.
       ``(5) Approval of large changes in actuarial assumptions.--
       ``(A) In general.--No actuarial assumption used to 
     determine the funding target for a plan to which this 
     paragraph applies may be changed without the approval of the 
     Secretary.
       ``(B) Plans to which paragraph applies.--This paragraph 
     shall apply to a plan only if--
       ``(i) the plan is a defined benefit plan (other than a 
     multiemployer plan) to which title IV of the Employee 
     Retirement Income Security Act of 1974 applies,
       ``(ii) the aggregate unfunded vested benefits as of the 
     close of the preceding plan year (as determined under section 
     4006(a)(3)(E)(iii) of the Employee Retirement Income Security 
     Act of 1974) of such plan and all other plans maintained by 
     the contributing sponsors (as defined in section 4001(a)(13) 
     of such Act) and members of such sponsors' controlled groups 
     (as defined in section 4001(a)(14) of such Act) which are 
     covered by title IV (disregarding plans with no unfunded 
     vested benefits) exceed $50,000,000, and
       ``(iii) the change in assumptions (determined after taking 
     into account any changes in interest rate and mortality 
     table) results in a decrease in the funding shortfall of the 
     plan for the current plan year that exceeds $50,000,000, or 
     that exceeds $5,000,000 and that is 5 percent or more of the 
     funding target of the plan before such change.
       ``(i) Special Rules for At-Risk Plans.--
       ``(1) Funding target for plans in at-risk status.--
       ``(A) In general.--In the case of a plan which is in at-
     risk status for a plan year, the funding target of the plan 
     for the plan year shall be equal to the sum of--
       ``(i) the present value of all benefits accrued or earned 
     under the plan as of the beginning of the plan year, as 
     determined by using the additional actuarial assumptions 
     described in subparagraph (B), and
       ``(ii) in the case of a plan which also has been in at-risk 
     status for at least 2 of the 4 preceding plan years, a 
     loading factor determined under subparagraph (C).
       ``(B) Additional actuarial assumptions.--The actuarial 
     assumptions described in this subparagraph are as follows:
       ``(i) All employees who are not otherwise assumed to retire 
     as of the valuation date but who will be eligible to elect 
     benefits during the plan year and the 10 succeeding plan 
     years shall be assumed to retire at the earliest retirement 
     date under the plan but not before the end of the plan year 
     for which the at-risk funding target and at-risk target 
     normal cost are being determined.
       ``(ii) All employees shall be assumed to elect the 
     retirement benefit available under the plan at the assumed 
     retirement age (determined after application of clause (i)) 
     which would result in the highest present value of benefits.
       ``(C) Loading factor.--The loading factor applied with 
     respect to a plan under this paragraph for any plan year is 
     the sum of--
       ``(i) $700, times the number of participants in the plan, 
     plus
       ``(ii) 4 percent of the funding target (determined without 
     regard to this paragraph) of the plan for the plan year.
       ``(2) Target normal cost of at-risk plans.--In the case of 
     a plan which is in at-risk status for a plan year, the target 
     normal cost of the plan for such plan year shall be equal to 
     the sum of--
       ``(A) the present value of all benefits which are expected 
     to accrue or be earned under the plan during the plan year, 
     determined using the additional actuarial assumptions 
     described in paragraph (1)(B), plus
       ``(B) in the case of a plan which also has been in at-risk 
     status for at least 2 of the 4 preceding plan years, a 
     loading factor equal to 4 percent of the target normal cost 
     (determined without regard to this paragraph) of the plan for 
     the plan year.
       ``(3) Minimum amount.--In no event shall--
       ``(A) the at-risk funding target be less than the funding 
     target, as determined without regard to this subsection, or
       ``(B) the at-risk target normal cost be less than the 
     target normal cost, as determined without regard to this 
     subsection.
       ``(4) Determination of at-risk status.--For purposes of 
     this subsection--
       ``(A) In general.--A plan is in at-risk status for a plan 
     year if--
       ``(i) the funding target attainment percentage for the 
     preceding plan year (determined under this section without 
     regard to this subsection) is less than 80 percent, and
       ``(ii) the funding target attainment percentage for the 
     preceding plan year (determined under this section by using 
     the additional actuarial assumptions described in paragraph 
     (1)(B) in computing the funding target) is less than 70 
     percent.
       ``(B) Transition rule.--In the case of plan years beginning 
     in 2008, 2009, and 2010, subparagraph (A)(i) shall be applied 
     by substituting the following percentages for `80 percent':
       ``(i) 65 percent in the case of 2008.
       ``(ii) 70 percent in the case of 2009.
       ``(iii) 75 percent in the case of 2010.
     In the case of plan years beginning in 2008, the funding 
     target attainment percentage for the preceding plan year 
     under subparagraph (A)(ii) may be determined using such 
     methods of estimation as the Secretary may provide.
       ``(C) Special rule for employees offered early retirement 
     in 2006.--
       ``(i) In general.--For purposes of subparagraph (A)(ii), 
     the additional actuarial assumptions described in paragraph 
     (1)(B) shall not be taken into account with respect to any 
     employee if--

       ``(I) such employee is employed by a specified automobile 
     manufacturer,
       ``(II) such employee is offered a substantial amount of 
     additional cash compensation,

[[Page 16333]]

     substantially enhanced retirement benefits under the plan, or 
     materially reduced employment duties on the condition that by 
     a specified date (not later than December 31, 2010) the 
     employee retires (as defined under the terms of the plan),
       ``(III) such offer is made during 2006 and pursuant to a 
     bona fide retirement incentive program and requires, by the 
     terms of the offer, that such offer can be accepted not later 
     than a specified date (not later than December 31, 2006), and
       ``(IV) such employee does not elect to accept such offer 
     before the specified date on which the offer expires.

       ``(ii) Specified automobile manufacturer.--For purposes of 
     clause (i), the term `specified automobile manufacturer' 
     means--

       ``(I) any manufacturer of automobiles, and
       ``(II) any manufacturer of automobile parts which supplies 
     such parts directly to a manufacturer of automobiles and 
     which, after a transaction or series of transactions ending 
     in 1999, ceased to be a member of a controlled group which 
     included such manufacturer of automobiles.

       ``(5) Transition between applicable funding targets and 
     between applicable target normal costs.--
       ``(A) In general.--In any case in which a plan which is in 
     at-risk status for a plan year has been in such status for a 
     consecutive period of fewer than 5 plan years, the applicable 
     amount of the funding target and of the target normal cost 
     shall be, in lieu of the amount determined without regard to 
     this paragraph, the sum of--
       ``(i) the amount determined under this section without 
     regard to this subsection, plus
       ``(ii) the transition percentage for such plan year of the 
     excess of the amount determined under this subsection 
     (without regard to this paragraph) over the amount determined 
     under this section without regard to this subsection.
       ``(B) Transition percentage.--For purposes of subparagraph 
     (A), the transition percentage shall be determined in 
     accordance with the following table:

``
``If the consecutive number of years (including the plan year) the plan 
  is in at-risk status is--              The transition percentage is--
  1.................................................................20 
  2.................................................................40 
  3.................................................................60 
  4.................................................................80.

       ``(C) Years before effective date.--For purposes of this 
     paragraph, plan years beginning before 2008 shall not be 
     taken into account.
       ``(6) Small plan exception.--If, on each day during the 
     preceding plan year, a plan had 500 or fewer participants, 
     the plan shall not be treated as in at-risk status for the 
     plan year. For purposes of this paragraph, all defined 
     benefit plans (other than multiemployer plans) maintained by 
     the same employer (or any member of such employer's 
     controlled group) shall be treated as 1 plan, but only 
     participants with respect to such employer or member shall be 
     taken into account and the rules of subsection (g)(2)(C) 
     shall apply.
       ``(j) Payment of Minimum Required Contributions.--
       ``(1) In general.--For purposes of this section, the due 
     date for any payment of any minimum required contribution for 
     any plan year shall be 8\1/2\ months after the close of the 
     plan year.
       ``(2) Interest.--Any payment required under paragraph (1) 
     for a plan year that is made on a date other than the 
     valuation date for such plan year shall be adjusted for 
     interest accruing for the period between the valuation date 
     and the payment date, at the effective rate of interest for 
     the plan for such plan year.
       ``(3) Accelerated quarterly contribution schedule for 
     underfunded plans.--
       ``(A) Failure to timely make required installment.--In any 
     case in which the plan has a funding shortfall for the 
     preceding plan year, the employer maintaining the plan shall 
     make the required installments under this paragraph and if 
     the employer fails to pay the full amount of a required 
     installment for the plan year, then the amount of interest 
     charged under paragraph (2) on the underpayment for the 
     period of underpayment shall be determined by using a rate of 
     interest equal to the rate otherwise used under paragraph (2) 
     plus 5 percentage points.
       ``(B) Amount of underpayment, period of underpayment.--For 
     purposes of subparagraph (A)--
       ``(i) Amount.--The amount of the underpayment shall be the 
     excess of--

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

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

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

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

       ``(I) 90 percent of the minimum required contribution 
     (determined without regard to this subsection) to the plan 
     for the plan year under this section, or
       ``(II) 100 percent of the minimum required contribution 
     (determined without regard to this subsection or to any 
     waiver under section 302(c)) to the plan for the preceding 
     plan year.

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

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

       ``(ii) Base amount.--

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

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

       ``(I) the plan's funding target attainment percentage for 
     the plan year, and

[[Page 16334]]

       ``(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) covered under section 4021 of the 
     Employee Retirement Income Security Act of 1974 for any plan 
     year for which the funding target attainment percentage (as 
     defined in subsection (d)(2)) of such plan is less than 100 
     percent.
       ``(3) Amount of lien.--For purposes of paragraph (1), the 
     amount of the lien shall be equal to the aggregate unpaid 
     balance of contribution payments required under this section 
     and section 412 for which payment has not been made before 
     the due date.
       ``(4) Notice of failure; lien.--
       ``(A) Notice of failure.--A person committing a failure 
     described in paragraph (1) shall notify the Pension Benefit 
     Guaranty Corporation of such failure within 10 days of the 
     due date for the required contribution payment.
       ``(B) Period of lien.--The lien imposed by paragraph (1) 
     shall arise on the due date for the required contribution 
     payment and shall continue until the last day of the first 
     plan year in which the plan ceases to be described in 
     paragraph (1)(B). Such lien shall continue to run without 
     regard to whether such plan continues to be described in 
     paragraph (2) during the period referred to in the preceding 
     sentence.
       ``(C) Certain rules to apply.--Any amount with respect to 
     which a lien is imposed under paragraph (1) shall be treated 
     as taxes due and owing the United States and rules similar to 
     the rules of subsections (c), (d), and (e) of section 4068 of 
     the Employee Retirement Income Security Act of 1974 shall 
     apply with respect to a lien imposed by subsection (a) and 
     the amount with respect to such lien.
       ``(5) Enforcement.--Any lien created under paragraph (1) 
     may be perfected and enforced only by the Pension Benefit 
     Guaranty Corporation, or at the direction of the Pension 
     Benefit Guaranty Corporation, by the contributing sponsor (or 
     any member of the controlled group of the contributing 
     sponsor).
       ``(6) Definitions.--For purposes of this subsection--
       ``(A) Contribution payment.--The term `contribution 
     payment' means, in connection with a plan, a contribution 
     payment required to be made to the plan, including any 
     required installment under paragraphs (3) and (4) of 
     subsection (j).
       ``(B) Due date; required installment.--The terms `due date' 
     and `required installment' have the meanings given such terms 
     by subsection (j), except that in the case of a payment other 
     than a required installment, the due date shall be the date 
     such payment is required to be made under section 430.
       ``(C) Controlled group.--The term `controlled group' means 
     any group treated as a single employer under subsections (b), 
     (c), (m), and (o) of section 414.
       ``(l) Qualified Transfers to Health Benefit Accounts.--In 
     the case of a qualified transfer (as defined in section 420), 
     any assets so transferred shall not, for purposes of this 
     section, be treated as assets in the plan.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply with respect to plan years beginning after 
     December 31, 2007.

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

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

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


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

     ``Subpart B. Benefit Limitations Under Single-Employer Plans.

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

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

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

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

     ``SEC. 436. FUNDING-BASED LIMITS ON BENEFITS AND BENEFIT 
                   ACCRUALS UNDER SINGLE-EMPLOYER PLANS.

       ``(a) General Rule.--For purposes of section 401(a)(29), a 
     defined benefit plan which is a single-employer plan shall be 
     treated as meeting the requirements of this section if the 
     plan meets the requirements of subsections (b), (c), (d), and 
     (e).
       ``(b) Funding-Based Limitation on Shutdown Benefits and 
     Other Unpredictable Contingent Event Benefits Under Single-
     Employer Plans.--
       ``(1) In general.--If a participant of a defined benefit 
     plan which is a single-employer plan is entitled to an 
     unpredictable contingent event benefit payable with respect 
     to any event occurring during any plan year, the plan shall 
     provide that such benefit may not be provided if the adjusted 
     funding target attainment percentage for such plan year--
       ``(A) is less than 60 percent, or
       ``(B) would be less than 60 percent taking into account 
     such occurrence.
       ``(2) Exemption.--Paragraph (1) shall cease to apply with 
     respect to any plan year, effective as of the first day of 
     the plan year, upon payment by the plan sponsor of a 
     contribution (in addition to any minimum required 
     contribution under section 303) equal to--
       ``(A) in the case of paragraph (1)(A), the amount of the 
     increase in the funding target of the plan (under section 
     430) for the plan year attributable to the occurrence 
     referred to in paragraph (1), and
       ``(B) in the case of paragraph (1)(B), the amount 
     sufficient to result in a funding target attainment 
     percentage of 60 percent.
       ``(3) Unpredictable contingent event.--For purposes of this 
     subsection, the term `unpredictable contingent event benefit' 
     means any benefit payable solely by reason of--
       ``(A) a plant shutdown (or similar event, as determined by 
     the Secretary), or
       ``(B) any event other than the attainment of any age, 
     performance of any service, receipt or derivation of any 
     compensation, or occurrence of death or disability.
       ``(c) Limitations on Plan Amendments Increasing Liability 
     for Benefits.--
       ``(1) In general.--No amendment to a defined benefit plan 
     which is a single-employer plan which has the effect of 
     increasing liabilities of the plan by reason of increases in 
     benefits, establishment of new benefits, changing the rate of 
     benefit accrual, or changing the rate at which benefits 
     become nonforfeitable may take effect during any plan year if 
     the adjusted funding target attainment percentage for such 
     plan year is--
       ``(A) less than 80 percent, or
       ``(B) would be less than 80 percent taking into account 
     such amendment.
       ``(2) Exemption.--Paragraph (1) shall cease to apply with 
     respect to any plan year, effective as of the first day of 
     the plan year (or if later, the effective date of the 
     amendment), upon payment by the plan sponsor of a 
     contribution (in addition to any minimum required 
     contribution under section 430) equal to--
       ``(A) in the case of paragraph (1)(A), the amount of the 
     increase in the funding target of the plan (under section 
     430) for the plan year attributable to the amendment, and
       ``(B) in the case of paragraph (1)(B), the amount 
     sufficient to result in an adjusted funding target attainment 
     percentage of 80 percent.
       ``(3) Exception for certain benefit increases.--Paragraph 
     (1) shall not apply to any amendment which provides for an 
     increase in benefits under a formula which is not based on a 
     participant's compensation, but only if the rate of such 
     increase is not in excess of the contemporaneous rate of 
     increase in average wages of participants covered by the 
     amendment.
       ``(d) Limitations on Accelerated Benefit Distributions.--
       ``(1) Funding percentage less than 60 percent.--A defined 
     benefit plan which is a single-employer plan shall provide 
     that, in any case in which the plan's adjusted funding target 
     attainment percentage for a plan year is less than 60 
     percent, the plan may not pay any prohibited payment after 
     the valuation date for the plan year.
       ``(2) Bankruptcy.--A defined benefit plan which is a 
     single-employer plan shall provide

[[Page 16335]]

     that, during any period in which the plan sponsor is a debtor 
     in a case under title 11, United States Code, or similar 
     Federal or State law, the plan may not pay any prohibited 
     payment. The preceding sentence shall not apply on or after 
     the date on which the enrolled actuary of the plan certifies 
     that the adjusted funding target attainment percentage of 
     such plan is not less than 100 percent.
       ``(3) Limited payment if percentage at least 60 percent but 
     less than 80 percent.--
       ``(A) In general.--A defined benefit plan which is a 
     single-employer plan shall provide that, in any case in which 
     the plan's adjusted funding target attainment percentage for 
     a plan year is 60 percent or greater but less than 80 
     percent, the plan may not pay any prohibited payment after 
     the valuation date for the plan year to the extent the amount 
     of the payment exceeds the lesser of--
       ``(i) 50 percent of the amount of the payment which could 
     be made without regard to this section, or
       ``(ii) the present value (determined under guidance 
     prescribed by the Pension Benefit Guaranty Corporation, using 
     the interest and mortality assumptions under section 417(e)) 
     of the maximum guarantee with respect to the participant 
     under section 4022 of the Employee Retirement Income Security 
     Act of 1974.
       ``(B) One-time application.--
       ``(i) In general.--The plan shall also provide that only 1 
     prohibited payment meeting the requirements of subparagraph 
     (A) may be made with respect to any participant during any 
     period of consecutive plan years to which the limitations 
     under either paragraph (1) or (2) or this paragraph applies.
       ``(ii) Treatment of beneficiaries.--For purposes of this 
     subparagraph, a participant and any beneficiary on his behalf 
     (including an alternate payee, as defined in section 
     414(p)(8)) shall be treated as 1 participant. If the accrued 
     benefit of a participant is allocated to such an alternate 
     payee and 1 or more other persons, the amount under 
     subparagraph (A) shall be allocated among such persons in the 
     same manner as the accrued benefit is allocated unless the 
     qualified domestic relations order (as defined in section 
     414(p)(1)(A)) provides otherwise.
       ``(4) Exception.--This subsection shall not apply to any 
     plan for any plan year if the terms of such plan (as in 
     effect for the period beginning on September 1, 2005, and 
     ending with such plan year) provide for no benefit accruals 
     with respect to any participant during such period.
       ``(5) Prohibited payment.--For purpose of this subsection, 
     the term `prohibited payment' means--
       ``(A) any payment, in excess of the monthly amount paid 
     under a single life annuity (plus any social security 
     supplements described in the last sentence of section 
     411(a)(9)), to a participant or beneficiary whose annuity 
     starting date (as defined in section 417(f)(2)) occurs during 
     any period a limitation under paragraph (1) or (2) is in 
     effect,
       ``(B) any payment for the purchase of an irrevocable 
     commitment from an insurer to pay benefits, and
       ``(C) any other payment specified by the Secretary by 
     regulations.
       ``(e) Limitation on Benefit Accruals for Plans With Severe 
     Funding Shortfalls.--
       ``(1) In general.--A defined benefit plan which is a 
     single-employer plan shall provide that, in any case in which 
     the plan's adjusted funding target attainment percentage for 
     a plan year is less than 60 percent, benefit accruals under 
     the plan shall cease as of the valuation date for the plan 
     year.
       ``(2) Exemption.--Paragraph (1) shall cease to apply with 
     respect to any plan year, effective as of the first day of 
     the plan year, upon payment by the plan sponsor of a 
     contribution (in addition to any minimum required 
     contribution under section 430) equal to the amount 
     sufficient to result in an adjusted funding target attainment 
     percentage of 60 percent.
       ``(f) Rules Relating to Contributions Required to Avoid 
     Benefit Limitations.--
       ``(1) Security may be provided.--
       ``(A) In general.--For purposes of this section, the 
     adjusted funding target attainment percentage shall be 
     determined by treating as an asset of the plan any security 
     provided by a plan sponsor in a form meeting the requirements 
     of subparagraph (B).
       ``(B) Form of security.--The security required under 
     subparagraph (A) shall consist of--
       ``(i) a bond issued by a corporate surety company that is 
     an acceptable surety for purposes of section 412 of the 
     Employee Retirement Income Security Act of 1974,
       ``(ii) cash, or United States obligations which mature in 3 
     years or less, held in escrow by a bank or similar financial 
     institution, or
       ``(iii) such other form of security as is satisfactory to 
     the Secretary and the parties involved.
       ``(C) Enforcement.--Any security provided under 
     subparagraph (A) may be perfected and enforced at any time 
     after the earlier of--
       ``(i) the date on which the plan terminates,
       ``(ii) if there is a failure to make a payment of the 
     minimum required contribution for any plan year beginning 
     after the security is provided, the due date for the payment 
     under section 430(j), or
       ``(iii) if the adjusted funding target attainment 
     percentage is less than 60 percent for a consecutive period 
     of 7 years, the valuation date for the last year in the 
     period.
       ``(D) Release of security.--The security shall be released 
     (and any amounts thereunder shall be refunded together with 
     any interest accrued thereon) at such time as the Secretary 
     may prescribe in regulations, including regulations for 
     partial releases of the security by reason of increases in 
     the funding target attainment percentage.
       ``(2) Prefunding balance or funding standard carryover 
     balance may not be used.--No prefunding balance under section 
     430(f) or funding standard carryover balance may be used 
     under subsection (b), (c), or (e) to satisfy any payment an 
     employer may make under any such subsection to avoid or 
     terminate the application of any limitation under such 
     subsection.
       ``(3) Deemed reduction of funding balances.--
       ``(A) In general.--Subject to subparagraph (C), in any case 
     in which a benefit limitation under subsection (b), (c), (d), 
     or (e) would (but for this subparagraph and determined 
     without regard to subsection (b)(2), (c)(2), or (e)(2)) apply 
     to such plan for the plan year, the plan sponsor of such plan 
     shall be treated for purposes of this title as having made an 
     election under section 430(f) to reduce the prefunding 
     balance or funding standard carryover balance by such amount 
     as is necessary for such benefit limitation to not apply to 
     the plan for such plan year.
       ``(B) Exception for insufficient funding balances.--
     Subparagraph (A) shall not apply with respect to a benefit 
     limitation for any plan year if the application of 
     subparagraph (A) would not result in the benefit limitation 
     not applying for such plan year.
       ``(C) Restrictions of certain rules to collectively 
     bargained plans.--With respect to any benefit limitation 
     under subsection (b), (c), or (e), subparagraph (A) shall 
     only apply in the case of a plan maintained pursuant to 1 or 
     more collective bargaining agreements between employee 
     representatives and 1 or more employers.
       ``(g) New Plans.--Subsections (b), (c), and (e) shall not 
     apply to a plan for the first 5 plan years of the plan. For 
     purposes of this subsection, the reference in this subsection 
     to a plan shall include a reference to any predecessor plan.
       ``(h) Presumed Underfunding for Purposes of Benefit 
     Limitations.--
       ``(1) Presumption of continued underfunding.--In any case 
     in which a benefit limitation under subsection (b), (c), (d), 
     or (e) has been applied to a plan with respect to the plan 
     year preceding the current plan year, the adjusted funding 
     target attainment percentage of the plan for the current plan 
     year shall be presumed to be equal to the adjusted funding 
     target attainment percentage of the plan for the preceding 
     plan year until the enrolled actuary of the plan certifies 
     the actual adjusted funding target attainment percentage of 
     the plan for the current plan year.
       ``(2) Presumption of underfunding after 10th month.--In any 
     case in which no certification of the adjusted funding target 
     attainment percentage for the current plan year is made with 
     respect to the plan before the first day of the 10th month of 
     such year, for purposes of subsections (b), (c), (d), and 
     (e), such first day shall be deemed, for purposes of such 
     subsection, to be the valuation date of the plan for the 
     current plan year and the plan's adjusted funding target 
     attainment percentage shall be conclusively presumed to be 
     less than 60 percent as of such first day.
       ``(3) Presumption of underfunding after 4th month for 
     nearly underfunded plans.--In any case in which--
       ``(A) a benefit limitation under subsection (b), (c), (d), 
     or (e) did not apply to a plan with respect to the plan year 
     preceding the current plan year, but the adjusted funding 
     target attainment percentage of the plan for such preceding 
     plan year was not more than 10 percentage points greater than 
     the percentage which would have caused such subsection to 
     apply to the plan with respect to such preceding plan year, 
     and
       ``(B) as of the first day of the 4th month of the current 
     plan year, the enrolled actuary of the plan has not certified 
     the actual adjusted funding target attainment percentage of 
     the plan for the current plan year,

     until the enrolled actuary so certifies, such first day shall 
     be deemed, for purposes of such subsection, to be the 
     valuation date of the plan for the current plan year and the 
     adjusted funding target attainment percentage of the plan as 
     of such first day shall, for purposes of such subsection, be 
     presumed to be equal to 10 percentage points less than the 
     adjusted funding target attainment percentage of the plan for 
     such preceding plan year.
       ``(i) Treatment of Plan as of Close of Prohibited or 
     Cessation Period.--For purposes of applying this title--
       ``(1) Operation of plan after period.--Unless the plan 
     provides otherwise, payments and accruals will resume 
     effective as of the day following the close of the period for 
     which any limitation of payment or accrual of benefits under 
     subsection (d) or (e) applies.

[[Page 16336]]

       ``(2) Treatment of affected benefits.--Nothing in this 
     subsection shall be construed as affecting the plan's 
     treatment of benefits which would have been paid or accrued 
     but for this section.
       ``(j) Terms Relating to Funding Target Attainment 
     Percentage.--For purposes of this section--
       ``(1) In general.--The term `funding target attainment 
     percentage' has the same meaning given such term by section 
     430(d)(2).
       ``(2) Adjusted funding target attainment percentage.--The 
     term `adjusted funding target attainment percentage' means 
     the funding target attainment percentage which is determined 
     under paragraph (1) by increasing each of the amounts under 
     subparagraphs (A) and (B) of section 430(d)(2) by the 
     aggregate amount of purchases of annuities for employees 
     other than highly compensated employees (as defined in 
     section 414(q)) which were made by the plan during the 
     preceding 2 plan years.
       ``(3) Application to plans which are fully funded without 
     regard to reductions for funding balances.--
       ``(A) In general.--In the case of a plan for any plan year, 
     if the funding target attainment percentage is 100 percent or 
     more (determined without regard to this paragraph and without 
     regard to the reduction in the value of assets under section 
     430(f)(4)(A)), the funding target attainment percentage for 
     purposes of paragraph (1) shall be determined without regard 
     to such reduction.
       ``(B) Transition rule.--Subparagraph (A) shall be applied 
     to plan years beginning after 2007 and before 2011 by 
     substituting for `100 percent' the applicable percentage 
     determined in accordance with the following table:

``In the case of a plan year beginning in cThe applicable percentage is
  2008..............................................................92 
  2009..............................................................94 
  2010..............................................................96.

       ``(C) Limitation.--Subparagraph (B) shall not apply with 
     respect to any plan year after 2008 unless the funding target 
     attainment percentage (determined without regard to this 
     paragraph) of the plan for each preceding plan year after 
     2007 was not less than the applicable percentage with respect 
     to such preceding plan year determined under subparagraph 
     (B).
       ``(k) Special Rule for 2008.--For purposes of this section, 
     in the case of plan years beginning in 2008, the funding 
     target attainment percentage for the preceding plan year may 
     be determined using such methods of estimation as the 
     Secretary may provide.''.
       (2) Clerical amendment.--The table of parts for subchapter 
     D of chapter 1 of the Internal Revenue Code of 1986 is 
     amended by adding at the end the following new item:

  ``Part III--Rules Relating to Minimum Funding Standards and Benefit 
                             Limitations''.

       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to plan years beginning after December 31, 2007.
       (2) Collective bargaining exception.--In the case of a plan 
     maintained pursuant to 1 or more collective bargaining 
     agreements between employee representatives and 1 or more 
     employers ratified before January 1, 2008, the amendments 
     made by this section shall not apply to plan years beginning 
     before the earlier of--
       (A) the later of--
       (i) the date on which the last collective bargaining 
     agreement relating to the plan terminates (determined without 
     regard to any extension thereof agreed to after the date of 
     the enactment of this Act), or
       (ii) the first day of the first plan year to which the 
     amendments made by this subsection would (but for this 
     subparagraph) apply, or
       (B) January 1, 2010.

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

     SEC. 114. TECHNICAL AND CONFORMING AMENDMENTS.

       (a) Amendments Related to Qualification Requirements.--
       (1) Section 401(a)(29) of the Internal Revenue Code of 1986 
     is amended to read as follows:
       ``(29) Benefit limitations on plans in at-risk status.--In 
     the case of a defined benefit plan (other than a 
     multiemployer plan) to which the requirements of section 412 
     apply, the trust of which the plan is a part shall not 
     constitute a qualified trust under this subsection unless the 
     plan meets the requirements of section 436.''.
       (2) Section 401(a)(32) of such Code is amended--
       (A) in subparagraph (A), by striking ``412(m)(5)'' each 
     place it appears and inserting ``section 430(j)(4)'', and
       (B) in subparagraph (C), by striking ``section 412(m)'' and 
     inserting ``section 430(j)''.
       (3) Section 401(a)(33) of such Code is amended--
       (A) in subparagraph (B)(i), by striking ``funded current 
     liability percentage (within the meaning of section 
     412(l)(8))'' and inserting ``funding target attainment 
     percentage (as defined in section 430(d)(2))'',
       (B) in subparagraph (B)(iii), by striking ``subsection 
     412(c)(8)'' and inserting ``section 412(c)(2)'', and
       (C) in subparagraph (D), by striking ``section 412(c)(11) 
     (without regard to subparagraph (B) thereof)'' and inserting 
     ``section 412(b)(2) (without regard to subparagraph (B) 
     thereof)''.
       (b) Vesting Rules.--Section 411 of such Code is amended--
       (1) by striking ``section 412(c)(8)'' in subsection 
     (a)(3)(C) and inserting ``section 412(c)(2)'',
       (2) in subsection (b)(1)(F)--
       (A) by striking ``paragraphs (2) and (3) of section 
     412(i)'' in clause (ii) and inserting ``subparagraphs (B) and 
     (C) of section 412(e)(3)'', and
       (B) by striking ``paragraphs (4), (5), and (6) of section 
     412(i)'' and inserting ``subparagraphs (D), (E), and (F) of 
     section 412(e)(3)'', and
       (3) by striking ``section 412(c)(8)'' in subsection 
     (d)(6)(A) and inserting ``section 412(e)(2)''.
       (c) Mergers and Consolidations of Plans.--Subclause (I) of 
     section 414(l)(2)(B)(i) of such Code is amended to read as 
     follows:

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

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

     there is hereby imposed a tax equal to 100 percent of the 
     unpaid minimum required contribution or accumulated funding 
     deficiency, whichever is applicable, to the extent not so 
     paid or corrected.''.
       (2) Section 4971(c) of such Code is amended--
       (A) by striking ``the last two sentences of section 
     412(a)'' in paragraph (1) and inserting ``section 431'', and
       (B) by adding at the end the following new paragraph:
       ``(4) Unpaid minimum required contribution.--
       ``(A) In general.--The term `unpaid minimum required 
     contribution' means, with respect to any plan year, any 
     minimum required contribution under section 430 for the plan 
     year which is not paid on or before the due date (as 
     determined under section 430(j)(1)) for the plan year.
       ``(B) Ordering rule.--Any payment to or under a plan for 
     any plan year shall be allocated first to unpaid minimum 
     required contributions for all preceding plan years on a 
     first-in, first-out basis and then to the minimum required 
     contribution under section 430 for the plan year.''.
       (3) Section 4971(e)(1) of such Code is amended by striking 
     ``section 412(b)(3)(A)'' and inserting ``section 
     412(a)(1)(A)''.
       (4) Section 4971(f)(1) of such Code is amended--
       (A) by striking ``section 412(m)(5)'' and inserting 
     ``section 430(j)(4)'', and

[[Page 16337]]

       (B) by striking ``section 412(m)'' and inserting ``section 
     430(j)''.
       (5) Section 4972(c)(7) of such Code is amended by striking 
     ``except to the extent that such contributions exceed the 
     full-funding limitation (as defined in section 412(c)(7), 
     determined without regard to subparagraph (A)(i)(I) 
     thereof)'' and inserting ``except, in the case of a 
     multiemployer plan, to the extent that such contributions 
     exceed the full-funding limitation (as defined in section 
     431(c)(6))''.
       (f) Reporting Requirements.--Section 6059(b) of such Code 
     is amended--
       (1) by striking ``the accumulated funding deficiency (as 
     defined in section 412(a))'' in paragraph (2) and inserting 
     ``the minimum required contribution determined under section 
     430, or the accumulated funding deficiency determined under 
     section 431,'', and
       (2) by striking paragraph (3)(B) and inserting:
       ``(B) the requirements for reasonable actuarial assumptions 
     under section 430(h)(1) or 431(c)(3), whichever are 
     applicable, have been complied with.''.

     SEC. 115. MODIFICATION OF TRANSITION RULE TO PENSION FUNDING 
                   REQUIREMENTS.

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

     the rules described in subsection (b) shall apply for any 
     plan year beginning after December 31, 2007.
       (b) Modified Rules.--The rules described in this subsection 
     are as follows:
       (1) For purposes of section 430(j)(3) of the Internal 
     Revenue Code of 1986 and section 303(j)(3) of the Employee 
     Retirement Income Security Act of 1974, the plan shall be 
     treated as not having a funding shortfall for any plan year.
       (2) For purposes of--
       (A) determining unfunded vested benefits under section 
     4006(a)(3)(E)(iii) of such Act, and
       (B) determining any present value or making any computation 
     under section 412 of such Code or section 302 of such Act,

     the mortality table shall be the mortality table used by the 
     plan.
       (3) Section 430(c)(5)(B) of such Code and section 
     303(c)(5)(B) of such Act (relating to phase-in of funding 
     target for exemption from new shortfall amortization base) 
     shall each be applied by substituting ``2012'' for ``2011'' 
     therein and by substituting for the table therein the 
     following:

In the case of a plan year beginning in caThe applicable percentage is:
  2008.......................................................90 percent
  2009.......................................................92 percent
  2010.......................................................94 percent
  2011......................................................96 percent.

       (c) Definitions.--Any term used in this section which is 
     also used in section 430 of such Code or section 303 of such 
     Act shall have the meaning provided such term in such 
     section. If the same term has a different meaning in such 
     Code and such Act, such term shall, for purposes of this 
     section, have the meaning provided by such Code when applied 
     with respect to such Code and the meaning provided by such 
     Act when applied with respect to such Act.
       (d) Special Rule for 2006 and 2007.--
       (1) In general.--Section 769(c)(3) of the Retirement 
     Protection Act of 1994, as added by section 201 of the 
     Pension Funding Equity Act of 2004, is amended by striking 
     ``and 2005'' and inserting ``, 2005, 2006, and 2007''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to plan years beginning after December 31, 2005.
       (e) Conforming Amendment.--
       (1) Section 769 of the Retirement Protection Act of 1994 is 
     amended by striking subsection (c).
       (2) The amendment made by paragraph (1) shall take effect 
     on December 31, 2007, and shall apply to plan years beginning 
     after such date.

     SEC. 116. RESTRICTIONS ON FUNDING OF NONQUALIFIED DEFERRED 
                   COMPENSATION PLANS BY EMPLOYERS MAINTAINING 
                   UNDERFUNDED OR TERMINATED SINGLE-EMPLOYER 
                   PLANS.

       (a) Amendments of Internal Revenue Code.--Subsection (b) of 
     section 409A of the Internal Revenue Code of 1986 (providing 
     rules relating to funding) is amended by redesignating 
     paragraphs (3) and (4) as paragraphs (4) and (5), 
     respectively, and by inserting after paragraph (2) the 
     following new paragraph:
       ``(3) Treatment of employer's defined benefit plan during 
     restricted period.--
       ``(A) In general.--If-
       ``(i) during any restricted period with respect to a 
     single-employer defined benefit plan, assets are set aside or 
     reserved (directly or indirectly) in a trust (or other 
     arrangement as determined by the Secretary) or transferred to 
     such a trust or other arrangement for purposes of paying 
     deferred compensation of an applicable covered employee under 
     a nonqualified deferred compensation plan of the plan sponsor 
     or member of a controlled group which includes the plan 
     sponsor, or
       ``(ii) a nonqualified deferred compensation plan of the 
     plan sponsor or member of a controlled group which includes 
     the plan sponsor provides that assets will become restricted 
     to the provision of benefits under the plan in connection 
     with such restricted period (or other similar financial 
     measure determined by the Secretary) with respect to the 
     defined benefit plan, or assets are so restricted,

     such assets shall, for purposes of section 83, be treated as 
     property transferred in connection with the performance of 
     services whether or not such assets are available to satisfy 
     claims of general creditors. Clause (i) shall not apply with 
     respect to any assets which are so set aside before the 
     restricted period with respect to the defined benefit plan.
       ``(B) Restricted period.--For purposes of this section, the 
     term `restricted period' means, with respect to any plan 
     described in subparagraph (A)--
       ``(i) any period during which the plan is in at-risk status 
     (as defined in section 430(i));
       ``(ii) any period the plan sponsor is a debtor in a case 
     under title 11, United States Code, or similar Federal or 
     State law, and
       ``(iii) the 12-month period beginning on the date which is 
     6 months before the termination date of the plan if, as of 
     the termination date, the plan is not sufficient for benefit 
     liabilities (within the meaning of section 4041 of the 
     Employee Retirement Income Security Act of 1974).
       ``(C) Special rule for payment of taxes on deferred 
     compensation included in income.--If an employer provides 
     directly or indirectly for the payment of any Federal, State, 
     or local income taxes with respect to any compensation 
     required to be included in gross income by reason of this 
     paragraph--
       ``(i) interest shall be imposed under subsection 
     (a)(1)(B)(i)(I) on the amount of such payment in the same 
     manner as if such payment was part of the deferred 
     compensation to which it relates,
       ``(ii) such payment shall be taken into account in 
     determining the amount of the additional tax under subsection 
     (a)(1)(B)(i)(II) in the same manner as if such payment was 
     part of the deferred compensation to which it relates, and
       ``(iii) no deduction shall be allowed under this title with 
     respect to such payment.
       ``(D) Other definitions.--For purposes of this section--
       ``(i) Applicable covered employee.--The term `applicable 
     covered employee' means any--

       ``(I) covered employee of a plan sponsor,
       ``(II) covered employee of a member of a controlled group 
     which includes the plan sponsor, and
       ``(III) former employee who was a covered employee at the 
     time of termination of employment with the plan sponsor or a 
     member of a controlled group which includes the plan sponsor.

       ``(ii) Covered employee.--The term `covered employee' means 
     an individual described in section 162(m)(3) or an individual 
     subject to the requirements of section 16(a) of the 
     Securities Exchange Act of 1934.''.
       (b) Conforming Amendments.--Paragraphs (4) and (5) of 
     section 409A(b) of such Code, as redesignated by subsection 
     (a) of this subsection, are each amended by striking 
     ``paragraph (1) or (2)'' each place it appears and inserting 
     ``paragraph (1), (2), or (3)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to transfers or other reservation of assets after 
     the date of the enactment of this Act.

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

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

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

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


          ``MINIMUM FUNDING STANDARDS FOR MULTIEMPLOYER PLANS

       ``Sec. 304.  (a) In General.--For purposes of section 302, 
     the accumulated funding deficiency of a multiemployer plan 
     for any plan year is--
       ``(1) except as provided in paragraph (2), the amount, 
     determined as of the end of the plan year, equal to the 
     excess (if any) of the total charges to the funding standard 
     account of the plan for all plan years (beginning with the 
     first plan year for which this part applies to the plan) over 
     the total credits to such account for such years, and
       ``(2) if the multiemployer plan is in reorganization for 
     any plan year, the accumulated funding deficiency of the plan 
     determined under section 4243.
       ``(b) Funding Standard Account.--
       ``(1) Account required.--Each multiemployer plan to which 
     this part applies shall establish and maintain a funding 
     standard account. Such account shall be credited and charged 
     solely as provided in this section.

[[Page 16338]]

       ``(2) Charges to account.--For a plan year, the funding 
     standard account shall be charged with the sum of--
       ``(A) the normal cost of the plan for the plan year,
       ``(B) the amounts necessary to amortize in equal annual 
     installments (until fully amortized)--
       ``(i) in the case of a plan which comes into existence on 
     or after January 1, 2008, the unfunded past service liability 
     under the plan on the first day of the first plan year to 
     which this section applies, over a period of 15 plan years,
       ``(ii) separately, with respect to each plan year, the net 
     increase (if any) in unfunded past service liability under 
     the plan arising from plan amendments adopted in such year, 
     over a period of 15 plan years,
       ``(iii) separately, with respect to each plan year, the net 
     experience loss (if any) under the plan, over a period of 15 
     plan years, and
       ``(iv) separately, with respect to each plan year, the net 
     loss (if any) resulting from changes in actuarial assumptions 
     used under the plan, over a period of 15 plan years,
       ``(C) the amount necessary to amortize each waived funding 
     deficiency (within the meaning of section 302(c)(3)) for each 
     prior plan year in equal annual installments (until fully 
     amortized) over a period of 15 plan years,
       ``(D) the amount necessary to amortize in equal annual 
     installments (until fully amortized) over a period of 5 plan 
     years any amount credited to the funding standard account 
     under section 302(b)(3)(D) (as in effect on the day before 
     the date of the enactment of the Pension Protection Act of 
     2006), and
       ``(E) the amount necessary to amortize in equal annual 
     installments (until fully amortized) over a period of 20 
     years the contributions which would be required to be made 
     under the plan but for the provisions of section 
     302(c)(7)(A)(i)(I) (as in effect on the day before the date 
     of the enactment of the Pension Protection Act of 2006).
       ``(3) Credits to account.--For a plan year, the funding 
     standard account shall be credited with the sum of--
       ``(A) the amount considered contributed by the employer to 
     or under the plan for the plan year,
       ``(B) the amount necessary to amortize in equal annual 
     installments (until fully amortized)--
       ``(i) separately, with respect to each plan year, the net 
     decrease (if any) in unfunded past service liability under 
     the plan arising from plan amendments adopted in such year, 
     over a period of 15 plan years,
       ``(ii) separately, with respect to each plan year, the net 
     experience gain (if any) under the plan, over a period of 15 
     plan years, and
       ``(iii) separately, with respect to each plan year, the net 
     gain (if any) resulting from changes in actuarial assumptions 
     used under the plan, over a period of 15 plan years,
       ``(C) the amount of the waived funding deficiency (within 
     the meaning of section 302(c)(3)) for the plan year, and
       ``(D) in the case of a plan year for which the accumulated 
     funding deficiency is determined under the funding standard 
     account if such plan year follows a plan year for which such 
     deficiency was determined under the alternative minimum 
     funding standard under section 305 (as in effect on the day 
     before the date of the enactment of the Pension Protection 
     Act of 2006), the excess (if any) of any debit balance in the 
     funding standard account (determined without regard to this 
     subparagraph) over any debit balance in the alternative 
     minimum funding standard account.
       ``(4) Special rule for amounts first amortized in plan 
     years before 2008.--In the case of any amount amortized under 
     section 302(b) (as in effect on the day before the date of 
     the enactment of the Pension Protection Act of 2006) over any 
     period beginning with a plan year beginning before 2008, in 
     lieu of the amortization described in paragraphs (2)(B) and 
     (3)(B), such amount shall continue to be amortized under such 
     section as so in effect.
       ``(5) Combining and offsetting amounts to be amortized.--
     Under regulations prescribed by the Secretary of the 
     Treasury, amounts required to be amortized under paragraph 
     (2) or paragraph (3), as the case may be--
       ``(A) may be combined into one amount under such paragraph 
     to be amortized over a period determined on the basis of the 
     remaining amortization period for all items entering into 
     such combined amount, and
       ``(B) may be offset against amounts required to be 
     amortized under the other such paragraph, with the resulting 
     amount to be amortized over a period determined on the basis 
     of the remaining amortization periods for all items entering 
     into whichever of the two amounts being offset is the 
     greater.
       ``(6) Interest.--The funding standard account (and items 
     therein) shall be charged or credited (as determined under 
     regulations prescribed by the Secretary of the Treasury) with 
     interest at the appropriate rate consistent with the rate or 
     rates of interest used under the plan to determine costs.
       ``(7) Special rules relating to charges and credits to 
     funding standard account.--For purposes of this part--
       ``(A) Withdrawal liability.--Any amount received by a 
     multiemployer plan in payment of all or part of an employer's 
     withdrawal liability under part 1 of subtitle E of title IV 
     shall be considered an amount contributed by the employer to 
     or under the plan. The Secretary of the Treasury may 
     prescribe by regulation additional charges and credits to a 
     multiemployer plan's funding standard account to the extent 
     necessary to prevent withdrawal liability payments from being 
     unduly reflected as advance funding for plan liabilities.
       ``(B) Adjustments when a multiemployer plan leaves 
     reorganization.--If a multiemployer plan is not in 
     reorganization in the plan year but was in reorganization in 
     the immediately preceding plan year, any balance in the 
     funding standard account at the close of such immediately 
     preceding plan year--
       ``(i) shall be eliminated by an offsetting credit or charge 
     (as the case may be), but
       ``(ii) shall be taken into account in subsequent plan years 
     by being amortized in equal annual installments (until fully 
     amortized) over 30 plan years.

     The preceding sentence shall not apply to the extent of any 
     accumulated funding deficiency under section 4243(a) as of 
     the end of the last plan year that the plan was in 
     reorganization.
       ``(C) Plan payments to supplemental program or withdrawal 
     liability payment fund.--Any amount paid by a plan during a 
     plan year to the Pension Benefit Guaranty Corporation 
     pursuant to section 4222 of this Act or to a fund exempt 
     under section 501(c)(22) of the Internal Revenue Code of 1986 
     pursuant to section 4223 of this Act shall reduce the amount 
     of contributions considered received by the plan for the plan 
     year.
       ``(D) Interim withdrawal liability payments.--Any amount 
     paid by an employer pending a final determination of the 
     employer's withdrawal liability under part 1 of subtitle E of 
     title IV and subsequently refunded to the employer by the 
     plan shall be charged to the funding standard account in 
     accordance with regulations prescribed by the Secretary of 
     the Treasury.
       ``(E) Election for deferral of charge for portion of net 
     experience loss.--If an election is in effect under section 
     302(b)(7)(F) (as in effect on the day before the date of the 
     enactment of the Pension Protection Act of 2006) for any plan 
     year, the funding standard account shall be charged in the 
     plan year to which the portion of the net experience loss 
     deferred by such election was deferred with the amount so 
     deferred (and paragraph (2)(B)(iii) shall not apply to the 
     amount so charged).
       ``(F) Financial assistance.--Any amount of any financial 
     assistance from the Pension Benefit Guaranty Corporation to 
     any plan, and any repayment of such amount, shall be taken 
     into account under this section and section 302 in such 
     manner as is determined by the Secretary of the Treasury.
       ``(G) Short-term benefits.--To the extent that any plan 
     amendment increases the unfunded past service liability under 
     the plan by reason of an increase in benefits which are not 
     payable as a life annuity but are payable under the terms of 
     the plan for a period that does not exceed 14 years from the 
     effective date of the amendment, paragraph (2)(B)(ii) shall 
     be applied separately with respect to such increase in 
     unfunded past service liability by substituting the number of 
     years of the period during which such benefits are payable 
     for `15'.
       ``(c) Additional Rules.--
       ``(1) Determinations to be made under funding method.--For 
     purposes of this part, normal costs, accrued liability, past 
     service liabilities, and experience gains and losses shall be 
     determined under the funding method used to determine costs 
     under the plan.
       ``(2) Valuation of assets.--
       ``(A) In general.--For purposes of this part, the value of 
     the plan's assets shall be determined on the basis of any 
     reasonable actuarial method of valuation which takes into 
     account fair market value and which is permitted under 
     regulations prescribed by the Secretary of the Treasury.
       ``(B) Election with respect to bonds.--The value of a bond 
     or other evidence of indebtedness which is not in default as 
     to principal or interest may, at the election of the plan 
     administrator, be determined on an amortized basis running 
     from initial cost at purchase to par value at maturity or 
     earliest call date. Any election under this subparagraph 
     shall be made at such time and in such manner as the 
     Secretary of the Treasury shall by regulations provide, shall 
     apply to all such evidences of indebtedness, and may be 
     revoked only with the consent of such Secretary.
       ``(3) Actuarial assumptions must be reasonable.--For 
     purposes of this section, all costs, liabilities, rates of 
     interest, and other factors under the plan shall be 
     determined on the basis of actuarial assumptions and 
     methods--
       ``(A) each of which is reasonable (taking into account the 
     experience of the plan and reasonable expectations), and
       ``(B) which, in combination, offer the actuary's best 
     estimate of anticipated experience under the plan.
       ``(4) Treatment of certain changes as experience gain or 
     loss.--For purposes of this section, if--
       ``(A) a change in benefits under the Social Security Act or 
     in other retirement benefits created under Federal or State 
     law, or

[[Page 16339]]

       ``(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.--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

[[Page 16340]]

     this subparagraph if the plan's actuary certifies that, based 
     on reasonable assumptions--
       ``(i) absent the extension under subparagraph (A), the plan 
     would have an accumulated funding deficiency in the current 
     plan year or any of the 9 succeeding plan years,
       ``(ii) the plan sponsor has adopted a plan to improve the 
     plan's funding status,
       ``(iii) the plan is projected to have sufficient assets to 
     timely pay expected benefits and anticipated expenditures 
     over the amortization period as extended, and
       ``(iv) the notice required under paragraph (3)(A) has been 
     provided.
       ``(C) Termination.--The preceding provisions of this 
     paragraph shall not apply with respect to any application 
     submitted after December 31, 2014.
       ``(2) Alternative extension.--
       ``(A) In general.--If the plan sponsor of a multiemployer 
     plan submits to the Secretary of the Treasury an application 
     for an extension of the period of years required to amortize 
     any unfunded liability described in any clause of subsection 
     (b)(2)(B) or described in subsection (b)(4), the Secretary of 
     the Treasury may extend the amortization period for a period 
     of time (not in excess of 10 years reduced by the number of 
     years of any extension under paragraph (1) with respect to 
     such unfunded liability) if the Secretary of the Treasury 
     makes the determination described in subparagraph (B). Such 
     extension shall be in addition to any extension under 
     paragraph (1).
       ``(B) Determination.--The Secretary of the Treasury may 
     grant an extension under subparagraph (A) if such Secretary 
     determines that--
       ``(i) such extension would carry out the purposes of this 
     Act and would provide adequate protection for participants 
     under the plan and their beneficiaries, and
       ``(ii) the failure to permit such extension would--

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

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

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

       (d) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to plan years beginning after 2007.
       (2) Special rule for certain amortization extensions.--If 
     the Secretary of the Treasury grants an extension under 
     section 304 of the Employee Retirement Income Security Act of 
     1974 and section 412(e) of the Internal Revenue Code of 1986 
     with respect to any application filed with the Secretary of 
     the Treasury on or before June 30, 2005, the extension (and 
     any modification thereof) shall be applied and administered 
     under the rules of such sections as in effect before the 
     enactment of this Act, including the use of the rate of 
     interest determined under section 6621(b) of such Code.

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

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


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

       ``Sec. 305.  (a) General Rule.--For purposes of this part, 
     in the case of a multiemployer plan in effect on July 16, 
     2006--
       ``(1) if the plan is in endangered status--
       ``(A) the plan sponsor shall adopt and implement a funding 
     improvement plan in accordance with the requirements of 
     subsection (c), and
       ``(B) the requirements of subsection (d) shall apply during 
     the funding plan adoption period and the funding improvement 
     period, and
       ``(2) if the plan is in critical status--
       ``(A) the plan sponsor shall adopt and implement a 
     rehabilitation plan in accordance with the requirements of 
     subsection (e), and
       ``(B) the requirements of subsection (f) shall apply during 
     the rehabilitation plan adoption period and the 
     rehabilitation period.
       ``(b) Determination of Endangered and Critical Status.--For 
     purposes of this section--
       ``(1) Endangered status.--A multiemployer plan is in 
     endangered status for a plan year if, as determined by the 
     plan actuary under paragraph (3), the plan is not in critical 
     status for the plan year and, as of the beginning of the plan 
     year, either--
       ``(A) the plan's funded percentage for such plan year is 
     less than 80 percent, or
       ``(B) the plan has an accumulated funding deficiency for 
     such plan year, or is projected to have such an accumulated 
     funding deficiency for any of the 6 succeeding plan years, 
     taking into account any extension of amortization periods 
     under section 304(d).

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

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

     is less than the present value of all nonforfeitable benefits 
     projected to be payable under the plan during the current 
     plan year and each of the 6 succeeding plan years (plus 
     administrative expenses for such plan years).
       ``(B) A plan is described in this subparagraph if--
       ``(i) the plan has an accumulated funding deficiency for 
     the current plan year, not taking into account any extension 
     of amortization periods under section 304(d), or
       ``(ii) the plan is projected to have an accumulated funding 
     deficiency for any of the 3 succeeding plan years (4 
     succeeding plan years if the funded percentage of the plan is 
     65 percent or less), not taking into account any extension of 
     amortization periods under section 304(d).
       ``(C) A plan is described in this subparagraph if--
       ``(i)(I) the plan's normal cost for the current plan year, 
     plus interest (determined at the rate used for determining 
     costs under the plan) for the current plan year on the amount 
     of unfunded benefit liabilities under

[[Page 16341]]

     the plan as of the last date of the preceding plan year, 
     exceeds
       ``(II) the present value of the reasonably anticipated 
     employer and employee contributions for the current plan 
     year,
       ``(ii) the present value, as of the beginning of the 
     current plan year, of nonforfeitable benefits of inactive 
     participants is greater than the present value of 
     nonforfeitable benefits of active participants, and
       ``(iii) the plan has an accumulated funding deficiency for 
     the current plan year, or is projected to have such a 
     deficiency for any of the 4 succeeding plan years, not taking 
     into account any extension of amortization periods under 
     section 304(d).
       ``(D) A plan is described in this subparagraph if the sum 
     of--
       ``(i) the fair market value of plan assets, plus
       ``(ii) the present value of the reasonably anticipated 
     employer contributions for the current plan year and each of 
     the 4 succeeding plan years, assuming that the terms of all 
     collective bargaining agreements pursuant to which the plan 
     is maintained for the current plan year continue in effect 
     for succeeding plan years,

     is less than the present value of all benefits projected to 
     be payable under the plan during the current plan year and 
     each of the 4 succeeding plan years (plus administrative 
     expenses for such plan years).
       ``(3) Annual certification by plan actuary.--
       ``(A) In general.--Not later than the 90th day of each plan 
     year of a multiemployer plan, the plan actuary shall certify 
     to the Secretary of the Treasury and to the plan sponsor--
       ``(i) whether or not the plan is in endangered status for 
     such plan year and whether or not the plan is or will be in 
     critical status for such plan year, and
       ``(ii) in the case of a plan which is in a funding 
     improvement or rehabilitation period, whether or not the plan 
     is making the scheduled progress in meeting the requirements 
     of its funding improvement or rehabilitation plan.
       ``(B) Actuarial projections of assets and liabilities.--
       ``(i) In general.--In making the determinations and 
     projections under this subsection, the plan actuary shall 
     make projections required for the current and succeeding plan 
     years of the current value of the assets of the plan and the 
     present value of all liabilities to participants and 
     beneficiaries under the plan for the current plan year as of 
     the beginning of such year. The actuary's projections shall 
     be based on reasonable actuarial estimates, assumptions, and 
     methods that, except as provided in clause (iii), offer the 
     actuary's best estimate of anticipated experience under the 
     plan. The projected present value of liabilities as of the 
     beginning of such year shall be determined based on the most 
     recent of either--

       ``(I) the actuarial statement required under section 103(d) 
     with respect to the most recently filed annual report, or
       ``(II) the actuarial valuation for the preceding plan year.

       ``(ii) Determinations of future contributions.--Any 
     actuarial projection of plan assets shall assume--

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

       ``(iii) Projected industry activity.--Any projection of 
     activity in the industry or industries covered by the plan, 
     including future covered employment and contribution levels, 
     shall be based on information provided by the plan sponsor, 
     which shall act reasonably and in good faith.
       ``(C) Penalty for failure to secure timely actuarial 
     certification.--Any failure of the plan's actuary to certify 
     the plan's status under this subsection by the date specified 
     in subparagraph (A) shall be treated for purposes of section 
     502(c)(2) as a failure or refusal by the plan administrator 
     to file the annual report required to be filed with the 
     Secretary under section 101(b)(4).
       ``(D) Notice.--
       ``(i) In general.--In any case in which it is certified 
     under subparagraph (A) that a multiemployer plan is or will 
     be in endangered or critical status for a plan year, the plan 
     sponsor shall, not later than 30 days after the date of the 
     certification, provide notification of the endangered or 
     critical status to the participants and beneficiaries, the 
     bargaining parties, the Pension Benefit Guaranty Corporation, 
     and the Secretary.
       ``(ii) Plans in critical status.--If it is certified under 
     subparagraph (A) that a multiemployer plan is or will be in 
     critical status, the plan sponsor shall include in the notice 
     under clause (i) an explanation of the possibility that--

       ``(I) adjustable benefits (as defined in subsection (e)(8)) 
     may be reduced, and
       ``(II) such reductions may apply to participants and 
     beneficiaries whose benefit commencement date is on or after 
     the date such notice is provided for the first plan year in 
     which the plan is in critical status.

       ``(iii) Model notice.--The Secretary shall prescribe a 
     model notice that a multiemployer plan may use to satisfy the 
     requirements under clause (ii).
       ``(c) Funding Improvement Plan Must Be Adopted for 
     Multiemployer Plans in Endangered Status.--
       ``(1) In general.--In any case in which a multiemployer 
     plan is in endangered status for a plan year, the plan 
     sponsor, in accordance with this subsection--
       ``(A) shall adopt a funding improvement plan not later than 
     240 days following the required date for the actuarial 
     certification of endangered status under subsection 
     (b)(3)(A), and
       ``(B) within 30 days after the adoption of the funding 
     improvement plan--
       ``(i) shall provide to the bargaining parties 1 or more 
     schedules showing revised benefit structures, revised 
     contribution structures, or both, which, if adopted, may 
     reasonably be expected to enable the multiemployer plan to 
     meet the applicable benchmarks in accordance with the funding 
     improvement plan, including--

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

       ``(ii) may, if the plan sponsor deems appropriate, prepare 
     and provide the bargaining parties with additional 
     information relating to contribution rates or benefit 
     reductions, alternative schedules, or other information 
     relevant to achieving the applicable benchmarks in accordance 
     with the funding improvement plan.

     For purposes of this section, the term `applicable 
     benchmarks' means the requirements applicable to the 
     multiemployer plan under paragraph (3) (as modified by 
     paragraph (5)).
       ``(2) Exception for years after process begins.--Paragraph 
     (1) shall not apply to a plan year if such year is in a 
     funding plan adoption period or funding improvement period by 
     reason of the plan being in endangered status for a preceding 
     plan year. For purposes of this section, such preceding plan 
     year shall be the initial determination year with respect to 
     the funding improvement plan to which it relates.
       ``(3) Funding improvement plan.--For purposes of this 
     section--
       ``(A) In general.--A funding improvement plan is a plan 
     which consists of the actions, including options or a range 
     of options to be proposed to the bargaining parties, 
     formulated to provide, based on reasonably anticipated 
     experience and reasonable actuarial assumptions, for the 
     attainment by the plan during the funding improvement period 
     of the following requirements:
       ``(i) Increase in plan's funding percentage.--The plan's 
     funded percentage as of the close of the funding improvement 
     period equals or exceeds a percentage equal to the sum of--

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

       ``(ii) Avoidance of accumulated funding deficiencies.--No 
     accumulated funding deficiency for any plan year during the 
     funding improvement period (taking into account any extension 
     of amortization periods under section 304(d)).
       ``(B) Seriously endangered plans.--In the case of a plan in 
     seriously endangered status, except as provided in paragraph 
     (5), subparagraph (A)(i)(II) shall be applied by substituting 
     `20 percent' for `33 percent'.
       ``(4) Funding improvement period.--For purposes of this 
     section--
       ``(A) In general.--The funding improvement period for any 
     funding improvement plan adopted pursuant to this subsection 
     is the 10-year period beginning on the first day of the first 
     plan year of the multiemployer plan beginning after the 
     earlier of--
       ``(i) the second anniversary of the date of the adoption of 
     the funding improvement plan, or
       ``(ii) the expiration of the collective bargaining 
     agreements in effect on the due date for the actuarial 
     certification of endangered status for the initial 
     determination year under subsection (b)(3)(A) and covering, 
     as of such due date, at least 75 percent of the active 
     participants in such multiemployer plan.
       ``(B) Seriously endangered plans.--In the case of a plan in 
     seriously endangered status, except as provided in paragraph 
     (5), subparagraph (A) shall be applied by substituting `15-
     year period' for `10-year period'.
       ``(C) Coordination with changes in status.--

[[Page 16342]]

       ``(i) Plans no longer in endangered status.--If the plan's 
     actuary certifies under subsection (b)(3)(A) for a plan year 
     in any funding plan adoption period or funding improvement 
     period that the plan is no longer in endangered status and is 
     not in critical status, the funding plan adoption period or 
     funding improvement period, whichever is applicable, shall 
     end as of the close of the preceding plan year.
       ``(ii) Plans in critical status.--If the plan's actuary 
     certifies under subsection (b)(3)(A) for a plan year in any 
     funding plan adoption period or funding improvement period 
     that the plan is in critical status, the funding plan 
     adoption period or funding improvement period, whichever is 
     applicable, shall end as of the close of the plan year 
     preceding the first plan year in the rehabilitation period 
     with respect to such status.
       ``(D) Plans in endangered status at end of period.--If the 
     plan's actuary certifies under subsection (b)(3)(A) for the 
     first plan year following the close of the period described 
     in subparagraph (A) that the plan is in endangered status, 
     the provisions of this subsection and subsection (d) shall be 
     applied as if such first plan year were an initial 
     determination year, except that the plan may not be amended 
     in a manner inconsistent with the funding improvement plan in 
     effect for the preceding plan year until a new funding 
     improvement plan is adopted.
       ``(5) Special rules for seriously endangered plans more 
     than 70 percent funded.--
       ``(A) In general.--If the funded percentage of a plan in 
     seriously endangered status was more than 70 percent as of 
     the beginning of the initial determination year--
       ``(i) paragraphs (3)(B) and (4)(B) shall apply only if the 
     plan's actuary certifies, within 30 days after the 
     certification under subsection (b)(3)(A) for the initial 
     determination year, that, based on the terms of the plan and 
     the collective bargaining agreements in effect at the time of 
     such certification, the plan is not projected to meet the 
     requirements of paragraph (3)(A) (without regard to 
     paragraphs (3)(B) and (4)(B)), and
       ``(ii) if there is a certification under clause (i), the 
     plan may, in formulating its funding improvement plan, only 
     take into account the rules of paragraph (3)(B) and (4)(B) 
     for plan years in the funding improvement period beginning on 
     or before the date on which the last of the collective 
     bargaining agreements described in paragraph (4)(A)(ii) 
     expires.
       ``(B) Special rule after expiration of agreements.--
     Notwithstanding subparagraph (A)(ii), if, for any plan year 
     ending after the date described in subparagraph (A)(ii), the 
     plan actuary certifies (at the time of the annual 
     certification under subsection (b)(3)(A) for such plan year) 
     that, based on the terms of the plan and collective 
     bargaining agreements in effect at the time of that annual 
     certification, the plan is not projected to be able to meet 
     the requirements of paragraph (3)(A) (without regard to 
     paragraphs (3)(B) and (4)(B)), paragraphs (3)(B) and (4)(B) 
     shall continue to apply for such year.
       ``(6) Updates to funding improvement plan and schedules.--
       ``(A) Funding improvement plan.--The plan sponsor shall 
     annually update the funding improvement plan and shall file 
     the update with the plan's annual report under section 104.
       ``(B) Schedules.--The plan sponsor shall annually update 
     any schedule of contribution rates provided under this 
     subsection to reflect the experience of the plan.
       ``(C) Duration of schedule.--A schedule of contribution 
     rates provided by the plan sponsor and relied upon by 
     bargaining parties in negotiating a collective bargaining 
     agreement shall remain in effect for the duration of that 
     collective bargaining agreement.
       ``(7) Imposition of default schedule where failure to adopt 
     funding improvement plan.--
       ``(A) In general.--If--
       ``(i) a collective bargaining agreement providing for 
     contributions under a multiemployer plan that was in effect 
     at the time the plan entered endangered status expires, and
       ``(ii) after receiving one or more schedules from the plan 
     sponsor under paragraph (1)(B), the bargaining parties with 
     respect to such agreement fail to agree on changes to 
     contribution or benefit schedules necessary to meet the 
     applicable benchmarks in accordance with the funding 
     improvement plan,

     the plan sponsor shall implement the schedule described in 
     paragraph (1)(B)(i)(I) beginning on the date specified in 
     subparagraph (B).
       ``(B) Date of implementation.--The date specified in this 
     subparagraph is the earlier of the date--
       ``(i) on which the Secretary certifies that the parties are 
     at an impasse, or
       ``(ii) which is 180 days after the date on which the 
     collective bargaining agreement described in subparagraph (A) 
     expires.
       ``(8) Funding plan adoption period.--For purposes of this 
     section, the term `funding plan adoption period' means the 
     period beginning on the date of the certification under 
     subsection (b)(3)(A) for the initial determination year and 
     ending on the day before the first day of the funding 
     improvement period.
       ``(d) Rules for Operation of Plan During Adoption and 
     Improvement Periods.--
       ``(1) Special rules for plan adoption period.--During the 
     funding plan adoption period--
       ``(A) the plan sponsor may not accept a collective 
     bargaining agreement or participation agreement with respect 
     to the multiemployer plan that provides for--
       ``(i) a reduction in the level of contributions for any 
     participants,
       ``(ii) a suspension of contributions with respect to any 
     period of service, or
       ``(iii) any new direct or indirect exclusion of younger or 
     newly hired employees from plan participation,
       ``(B) no amendment of the plan which increases the 
     liabilities of the plan by reason of any increase in 
     benefits, any change in the accrual of benefits, or any 
     change in the rate at which benefits become nonforfeitable 
     under the plan may be adopted unless the amendment is 
     required as a condition of qualification under part I of 
     subchapter D of chapter 1 of the Internal Revenue Code of 
     1986 or to comply with other applicable law, and
       ``(C) in the case of a plan in seriously endangered status, 
     the plan sponsor shall take all reasonable actions which are 
     consistent with the terms of the plan and applicable law and 
     which are expected, based on reasonable assumptions, to 
     achieve--
       ``(i) an increase in the plan's funded percentage, and
       ``(ii) postponement of an accumulated funding deficiency 
     for at least 1 additional plan year.

     Actions under subparagraph (C) include applications for 
     extensions of amortization periods under section 304(d), use 
     of the shortfall funding method in making funding standard 
     account computations, amendments to the plan's benefit 
     structure, reductions in future benefit accruals, and other 
     reasonable actions consistent with the terms of the plan and 
     applicable law.
       ``(2) Compliance with funding improvement plan.--
       ``(A) In general.--A plan may not be amended after the date 
     of the adoption of a funding improvement plan so as to be 
     inconsistent with the funding improvement plan.
       ``(B) No reduction in contributions.--A plan sponsor may 
     not during any funding improvement period accept a collective 
     bargaining agreement or participation agreement with respect 
     to the multiemployer plan that provides for--
       ``(i) a reduction in the level of contributions for any 
     participants,
       ``(ii) a suspension of contributions with respect to any 
     period of service, or
       ``(iii) any new direct or indirect exclusion of younger or 
     newly hired employees from plan participation.
       ``(C) Special rules for benefit increases.--A plan may not 
     be amended after the date of the adoption of a funding 
     improvement plan so as to increase benefits, including future 
     benefit accruals, unless the plan actuary certifies that the 
     benefit increase is consistent with the funding improvement 
     plan and is paid for out of contributions not required by the 
     funding improvement plan to meet the applicable benchmark in 
     accordance with the schedule contemplated in the funding 
     improvement plan.
       ``(e) Rehabilitation Plan Must Be Adopted for Multiemployer 
     Plans in Critical Status.--
       ``(1) In general.--In any case in which a multiemployer 
     plan is in critical status for a plan year, the plan sponsor, 
     in accordance with this subsection--
       ``(A) shall adopt a rehabilitation plan not later than 240 
     days following the required date for the actuarial 
     certification of critical status under subsection (b)(3)(A), 
     and
       ``(B) within 30 days after the adoption of the 
     rehabilitation plan--
       ``(i) shall provide to the bargaining parties 1 or more 
     schedules showing revised benefit structures, revised 
     contribution structures, or both, which, if adopted, may 
     reasonably be expected to enable the multiemployer plan to 
     emerge from critical status in accordance with the 
     rehabilitation plan, and
       ``(ii) may, if the plan sponsor deems appropriate, prepare 
     and provide the bargaining parties with additional 
     information relating to contribution rates or benefit 
     reductions, alternative schedules, or other information 
     relevant to emerging from critical status in accordance with 
     the rehabilitation plan.

     The schedule or schedules described in subparagraph (B)(i) 
     shall reflect reductions in future benefit accruals and 
     adjustable benefits, and increases in contributions, that the 
     plan sponsor determines are reasonably necessary to emerge 
     from critical status. One schedule shall be designated as the 
     default schedule and such schedule shall assume that there 
     are no increases in contributions under the plan other than 
     the increases necessary to emerge from critical status after 
     future benefit accruals and other benefits (other than 
     benefits the reduction or elimination of which are not 
     permitted under section 204(g)) have been reduced to the 
     maximum extent permitted by law.
       ``(2) Exception for years after process begins.--Paragraph 
     (1) shall not apply to a plan year if such year is in a 
     rehabilitation plan adoption period or rehabilitation period

[[Page 16343]]

     by reason of the plan being in critical status for a 
     preceding plan year. For purposes of this section, such 
     preceding plan year shall be the initial critical year with 
     respect to the rehabilitation plan to which it relates.
       ``(3) Rehabilitation plan.--For purposes of this section--
       ``(A) In general.--A rehabilitation plan is a plan which 
     consists of--
       ``(i) actions, including options or a range of options to 
     be proposed to the bargaining parties, formulated, based on 
     reasonably anticipated experience and reasonable actuarial 
     assumptions, to enable the plan to cease to be in critical 
     status by the end of the rehabilitation period and may 
     include reductions in plan expenditures (including plan 
     mergers and consolidations), reductions in future benefit 
     accruals or increases in contributions, if agreed to by the 
     bargaining parties, or any combination of such actions, or
       ``(ii) if the plan sponsor determines that, based on 
     reasonable actuarial assumptions and upon exhaustion of all 
     reasonable measures, the plan can not reasonably be expected 
     to emerge from critical status by the end of the 
     rehabilitation period, reasonable measures to emerge from 
     critical status at a later time or to forestall possible 
     insolvency (within the meaning of section 4245).

     A rehabilitation plan must provide annual standards for 
     meeting the requirements of such rehabilitation plan. Such 
     plan shall also include the schedules required to be provided 
     under paragraph (1)(B)(i) and if clause (ii) applies, shall 
     set forth the alternatives considered, explain why the plan 
     is not reasonably expected to emerge from critical status by 
     the end of the rehabilitation period, and specify when, if 
     ever, the plan is expected to emerge from critical status in 
     accordance with the rehabilitation plan.
       ``(B) Updates to rehabilitation plan and schedules.--
       ``(i) Rehabilitation plan.--The plan sponsor shall annually 
     update the rehabilitation plan and shall file the update with 
     the plan's annual report under section 104.
       ``(ii) Schedules.--The plan sponsor shall annually update 
     any schedule of contribution rates provided under this 
     subsection to reflect the experience of the plan.
       ``(iii) Duration of schedule.--A schedule of contribution 
     rates provided by the plan sponsor and relied upon by 
     bargaining parties in negotiating a collective bargaining 
     agreement shall remain in effect for the duration of that 
     collective bargaining agreement.
       ``(C) Imposition of default schedule where failure to adopt 
     rehabilitation plan.--
       ``(i) In general.--If--

       ``(I) a collective bargaining agreement providing for 
     contributions under a multiemployer plan that was in effect 
     at the time the plan entered critical status expires, and
       ``(II) after receiving one or more schedules from the plan 
     sponsor under paragraph (1)(B), the bargaining parties with 
     respect to such agreement fail to adopt a contribution or 
     benefit schedules with terms consistent with the 
     rehabilitation plan and the schedule from the plan sponsor 
     under paragraph (1)(B)(i),

     the plan sponsor shall implement the default schedule 
     described in the last sentence of paragraph (1) beginning on 
     the date specified in clause (ii).
       ``(ii) Date of implementation.--The date specified in this 
     clause is the earlier of the date--

       ``(I) on which the Secretary certifies that the parties are 
     at an impasse, or
       ``(II) which is 180 days after the date on which the 
     collective bargaining agreement described in clause (i) 
     expires.

       ``(4) Rehabilitation period.--For purposes of this 
     section--
       ``(A) In general.--The rehabilitation period for a plan in 
     critical status is the 10-year period beginning on the first 
     day of the first plan year of the multiemployer plan 
     following the earlier of--
       ``(i) the second anniversary of the date of the adoption of 
     the rehabilitation plan, or
       ``(ii) the expiration of the collective bargaining 
     agreements in effect on the date of the due date for the 
     actuarial certification of critical status for the initial 
     critical year under subsection (a)(1) and covering, as of 
     such date at least 75 percent of the active participants in 
     such multiemployer plan.

     If a plan emerges from critical status as provided under 
     subparagraph (B) before the end of such 10-year period, the 
     rehabilitation period shall end with the plan year preceding 
     the plan year for which the determination under subparagraph 
     (B) is made.
       ``(B) Emergence.--A plan in critical status shall remain in 
     such status until a plan year for which the plan actuary 
     certifies, in accordance with subsection (b)(3)(A), that the 
     plan is not projected to have an accumulated funding 
     deficiency for the plan year or any of the 9 succeeding plan 
     years, without regard to the use of the shortfall method and 
     taking into account any extension of amortization periods 
     under section 304(d).
       ``(5) Rehabilitation plan adoption period.--For purposes of 
     this section, the term `rehabilitation plan adoption period' 
     means the period beginning on the date of the certification 
     under subsection (b)(3)(A) for the initial critical year and 
     ending on the day before the first day of the rehabilitation 
     period.
       ``(6) Limitation on reduction in rates of future 
     accruals.--Any reduction in the rate of future accruals under 
     the default schedule described in paragraph (1)(B)(i) shall 
     not reduce the rate of future accruals below--
       ``(A) a monthly benefit (payable as a single life annuity 
     commencing at the participant's normal retirement age) equal 
     to 1 percent of the contributions required to be made with 
     respect to a participant, or the equivalent standard accrual 
     rate for a participant or group of participants under the 
     collective bargaining agreements in effect as of the first 
     day of the initial critical year, or
       ``(B) if lower, the accrual rate under the plan on such 
     first day.

     The equivalent standard accrual rate shall be determined by 
     the plan sponsor based on the standard or average 
     contribution base units which the plan sponsor determines to 
     be representative for active participants and such other 
     factors as the plan sponsor determines to be relevant. 
     Nothing in this paragraph shall be construed as limiting the 
     ability of the plan sponsor to prepare and provide the 
     bargaining parties with alternative schedules to the default 
     schedule that established lower or higher accrual and 
     contribution rates than the rates otherwise described in this 
     paragraph.
       ``(7) Automatic employer surcharge.--
       ``(A) Imposition of surcharge.--Each employer otherwise 
     obligated to make contributions for the initial critical year 
     shall be obligated to pay to the plan for such year a 
     surcharge equal to 5 percent of the contributions otherwise 
     required under the applicable collective bargaining agreement 
     (or other agreement pursuant to which the employer 
     contributes). For each succeeding plan year in which the plan 
     is in critical status for a consecutive period of years 
     beginning with the initial critical year, the surcharge shall 
     be 10 percent of the contributions otherwise so required.
       ``(B) Enforcement of surcharge.--The surcharges under 
     subparagraph (A) shall be due and payable on the same 
     schedule as the contributions on which the surcharges are 
     based. Any failure to make a surcharge payment shall be 
     treated as a delinquent contribution under section 515 and 
     shall be enforceable as such.
       ``(C) Surcharge to terminate upon collective bargaining 
     agreement renegotiation.--The surcharge under this paragraph 
     shall cease to be effective with respect to employees covered 
     by a collective bargaining agreement (or other agreement 
     pursuant to which the employer contributes), beginning on the 
     effective date of a collective bargaining agreement (or other 
     such agreement) that includes terms consistent with a 
     schedule presented by the plan sponsor under paragraph 
     (1)(B)(i), as modified under subparagraph (B) of paragraph 
     (3).
       ``(D) Surcharge not to apply until employer receives 
     notice.--The surcharge under this paragraph shall not apply 
     to an employer until 30 days after the employer has been 
     notified by the plan sponsor that the plan is in critical 
     status and that the surcharge is in effect.
       ``(E) Surcharge not to generate increased benefit 
     accruals.--Notwithstanding any provision of a plan to the 
     contrary, the amount of any surcharge under this paragraph 
     shall not be the basis for any benefit accrual under the 
     plan.
       ``(8) Benefit adjustments.--
       ``(A) Adjustable benefits.--
       ``(i) In general.--Notwithstanding section 204(g), the plan 
     sponsor shall, subject to the notice requirements in 
     subparagraph (C), make any reductions to adjustable benefits 
     which the plan sponsor deems appropriate, based upon the 
     outcome of collective bargaining over the schedule or 
     schedules provided under paragraph (1)(B)(i).
       ``(ii) Exception for retirees.--Except in the case of 
     adjustable benefits described in clause (iv)(III), the plan 
     sponsor of a plan in critical status shall not reduce 
     adjustable benefits of any participant or beneficiary whose 
     benefit commencement date is before the date on which the 
     plan provides notice to the participant or beneficiary under 
     subsection (b)(3)(D) for the initial critical year.
       ``(iii) Plan sponsor flexibility.--The plan sponsor shall 
     include in the schedules provided to the bargaining parties 
     an allowance for funding the benefits of participants with 
     respect to whom contributions are not currently required to 
     be made, and shall reduce their benefits to the extent 
     permitted under this title and considered appropriate by the 
     plan sponsor based on the plan's then current overall funding 
     status.
       ``(iv) Adjustable benefit defined.--For purposes of this 
     paragraph, the term `adjustable benefit' means--

       ``(I) benefits, rights, and features under the plan, 
     including post-retirement death benefits, 60-month 
     guarantees, disability benefits not yet in pay status, and 
     similar benefits,
       ``(II) any early retirement benefit or retirement-type 
     subsidy (within the meaning of section 204(g)(2)(A)) and any 
     benefit payment option (other than the qualified joint-and 
     survivor annuity), and
       ``(III) benefit increases that would not be eligible for a 
     guarantee under section 4022A on the first day of initial 
     critical year because the increases were adopted (or, if 
     later,

[[Page 16344]]

     took effect) less than 60 months before such first day.

       ``(B) Normal retirement benefits protected.--Except as 
     provided in subparagraph (A)(iv)(III), nothing in this 
     paragraph shall be construed to permit a plan to reduce the 
     level of a participant's accrued benefit payable at normal 
     retirement age.
       ``(C) Notice requirements.--
       ``(i) In general.--No reduction may be made to adjustable 
     benefits under subparagraph (A) unless notice of such 
     reduction has been given at least 30 days before the general 
     effective date of such reduction for all participants and 
     beneficiaries to--

       ``(I) plan participants and beneficiaries,
       ``(II) each employer who has an obligation to contribute 
     (within the meaning of section 4212(a)) under the plan, and
       ``(III) each employee organization which, for purposes of 
     collective bargaining, represents plan participants employed 
     by such an employer.

       ``(ii) Content of notice.--The notice under clause (i) 
     shall contain--

       ``(I) sufficient information to enable participants and 
     beneficiaries to understand the effect of any reduction on 
     their benefits, including an estimate (on an annual or 
     monthly basis) of any affected adjustable benefit that a 
     participant or beneficiary would otherwise have been eligible 
     for as of the general effective date described in clause (i), 
     and
       ``(II) information as to the rights and remedies of plan 
     participants and beneficiaries as well as how to contact the 
     Department of Labor for further information and assistance 
     where appropriate.

       ``(iii) Form and manner.--Any notice under clause (i)--

       ``(I) shall be provided in a form and manner prescribed in 
     regulations of the Secretary,
       ``(II) shall be written in a manner so as to be understood 
     by the average plan participant, and
       ``(III) may be provided in written, electronic, or other 
     appropriate form to the extent such form is reasonably 
     accessible to persons to whom the notice is required to be 
     provided.

     The Secretary shall in the regulations prescribed under 
     subclause (I) establish a model notice that a plan sponsor 
     may use to meet the requirements of this subparagraph.
       ``(9) Adjustments disregarded in withdrawal liability 
     determination.--
       ``(A) Benefit reductions.--Any benefit reductions under 
     this subsection shall be disregarded in determining a plan's 
     unfunded vested benefits for purposes of determining an 
     employer's withdrawal liability under section 4201.
       ``(B) Surcharges.--Any surcharges under paragraph (7) shall 
     be disregarded in determining an employer's withdrawal 
     liability under section 4211, except for purposes of 
     determining the unfunded vested benefits attributable to an 
     employer under section 4211(c)(4) or a comparable method 
     approved under section 4211(c)(5).
       ``(C) Simplified calculations.--The Pension Benefit 
     Guaranty Corporation shall prescribe simplified methods for 
     the application of this paragraph in determining withdrawal 
     liability.
       ``(f) Rules for Operation of Plan During Adoption and 
     Rehabilitation Period.--
       ``(1) Compliance with rehabilitation plan.--
       ``(A) In general.--A plan may not be amended after the date 
     of the adoption of a rehabilitation plan under subsection (e) 
     so as to be inconsistent with the rehabilitation plan.
       ``(B) Special rules for benefit increases.--A plan may not 
     be amended after the date of the adoption of a rehabilitation 
     plan under subsection (e) so as to increase benefits, 
     including future benefit accruals, unless the plan actuary 
     certifies that such increase is paid for out of additional 
     contributions not contemplated by the rehabilitation plan, 
     and, after taking into account the benefit increase, the 
     multiemployer plan still is reasonably expected to emerge 
     from critical status by the end of the rehabilitation period 
     on the schedule contemplated in the rehabilitation plan.
       ``(2) Restriction on lump sums and similar benefits.--
       ``(A) In general.--Effective on the date the notice of 
     certification of the plan's critical status for the initial 
     critical year under subsection (b)(3)(D) is sent, and 
     notwithstanding section 204(g), the plan shall not pay--
       ``(i) any payment, in excess of the monthly amount paid 
     under a single life annuity (plus any social security 
     supplements described in the last sentence of section 
     204(b)(1)(G)),
       ``(ii) any payment for the purchase of an irrevocable 
     commitment from an insurer to pay benefits, and
       ``(iii) any other payment specified by the Secretary of the 
     Treasury by regulations.
       ``(B) Exception.--Subparagraph (A) shall not apply to a 
     benefit which under section 203(e) may be immediately 
     distributed without the consent of the participant or to any 
     makeup payment in the case of a retroactive annuity starting 
     date or any similar payment of benefits owed with respect to 
     a prior period.
       ``(3) Adjustments disregarded in withdrawal liability 
     determination.--Any benefit reductions under this subsection 
     shall be disregarded in determining a plan's unfunded vested 
     benefits for purposes of determining an employer's withdrawal 
     liability under section 4201.
       ``(4) Special rules for plan adoption period.--During the 
     rehabilitation plan adoption period--
       ``(A) the plan sponsor may not accept a collective 
     bargaining agreement or participation agreement with respect 
     to the multiemployer plan that provides for--
       ``(i) a reduction in the level of contributions for any 
     participants,
       ``(ii) a suspension of contributions with respect to any 
     period of service, or
       ``(iii) any new direct or indirect exclusion of younger or 
     newly hired employees from plan participation, and
       ``(B) no amendment of the plan which increases the 
     liabilities of the plan by reason of any increase in 
     benefits, any change in the accrual of benefits, or any 
     change in the rate at which benefits become nonforfeitable 
     under the plan may be adopted unless the amendment is 
     required as a condition of qualification under part I of 
     subchapter D of chapter 1 of the Internal Revenue Code of 
     1986 or to comply with other applicable law.
       ``(g) Expedited Resolution of Plan Sponsor Decisions.--If, 
     within 60 days of the due date for adoption of a funding 
     improvement plan or a rehabilitation plan under subsection 
     (e), the plan sponsor of a plan in endangered status or a 
     plan in critical status has not agreed on a funding 
     improvement plan or rehabilitation plan, then any member of 
     the board or group that constitutes the plan sponsor may 
     require that the plan sponsor enter into an expedited dispute 
     resolution procedure for the development and adoption of a 
     funding improvement plan or rehabilitation plan.
       ``(h) Nonbargained Participation.--
       ``(1) Both bargained and nonbargained employee-
     participants.--In the case of an employer that contributes to 
     a multiemployer plan with respect to both employees who are 
     covered by one or more collective bargaining agreements and 
     employees who are not so covered, if the plan is in 
     endangered status or in critical status, benefits of and 
     contributions for the nonbargained employees, including 
     surcharges on those contributions, shall be determined as if 
     those nonbargained employees were covered under the first to 
     expire of the employer's collective bargaining agreements in 
     effect when the plan entered endangered or critical status.
       ``(2) Nonbargained employees only.--In the case of an 
     employer that contributes to a multiemployer plan only with 
     respect to employees who are not covered by a collective 
     bargaining agreement, this section shall be applied as if the 
     employer were the bargaining party, and its participation 
     agreement with the plan were a collective bargaining 
     agreement with a term ending on the first day of the plan 
     year beginning after the employer is provided the schedule or 
     schedules described in subsections (c) and (e).
       ``(i) Definitions; Actuarial Method.--For purposes of this 
     section--
       ``(1) Bargaining party.--The term `bargaining party' 
     means--
       ``(A)(i) except as provided in clause (ii), an employer who 
     has an obligation to contribute under the plan; or
       ``(ii) in the case of a plan described under section 404(c) 
     of the Internal Revenue Code of 1986, or a continuation of 
     such a plan, the association of employers that is the 
     employer settlor of the plan; and
       ``(B) an employee organization which, for purposes of 
     collective bargaining, represents plan participants employed 
     by an employer who has an obligation to contribute under the 
     plan.
       ``(2) Funded percentage.--The term `funded percentage' 
     means the percentage equal to a fraction--
       ``(A) the numerator of which is the value of the plan's 
     assets, as determined under section 304(c)(2), and
       ``(B) the denominator of which is the accrued liability of 
     the plan, determined using actuarial assumptions described in 
     section 304(c)(3).
       ``(3) Accumulated funding deficiency.--The term 
     `accumulated funding deficiency' has the meaning given such 
     term in section 304(a).
       ``(4) Active participant.--The term `active participant' 
     means, in connection with a multiemployer plan, a participant 
     who is in covered service under the plan.
       ``(5) Inactive participant.--The term `inactive 
     participant' means, in connection with a multiemployer plan, 
     a participant, or the beneficiary or alternate payee of a 
     participant, who--
       ``(A) is not in covered service under the plan, and
       ``(B) is in pay status under the plan or has a 
     nonforfeitable right to benefits under the plan.
       ``(6) Pay status.--A person is in pay status under a 
     multiemployer plan if--
       ``(A) at any time during the current plan year, such person 
     is a participant or beneficiary under the plan and is paid an 
     early, late, normal, or disability retirement benefit under 
     the plan (or a death benefit under the plan related to a 
     retirement benefit), or
       ``(B) to the extent provided in regulations of the 
     Secretary of the Treasury, such person is entitled to such a 
     benefit under the plan.

[[Page 16345]]

       ``(7) Obligation to contribute.--The term `obligation to 
     contribute' has the meaning given such term under section 
     4212(a).
       ``(8) Actuarial method.--Notwithstanding any other 
     provision of this section, the actuary's determinations with 
     respect to a plan's normal cost, actuarial accrued liability, 
     and improvements in a plan's funded percentage under this 
     section shall be based upon the unit credit funding method 
     (whether or not that method is used for the plan's actuarial 
     valuation).
       ``(9) Plan sponsor.--In the case of a plan described under 
     section 404(c) of the Internal Revenue Code of 1986, or a 
     continuation of such a plan, the term `plan sponsor' means 
     the bargaining parties described under paragraph (1).
       ``(10) Benefit commencement date.--The term `benefit 
     commencement date' means the annuity starting date (or in the 
     case of a retroactive annuity starting date, the date on 
     which benefit payments begin).''.
       (b) Enforcement.--Section 502 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1132) is amended--
       (1) in subsection (a)(6) by striking ``(6), or (7)'' and 
     inserting ``(6), (7), or (8)'';
       (2) by redesignating subsection (c)(8) as subsection 
     (c)(9); and
       (3) by inserting after subsection (c)(7) the following new 
     paragraph:
       ``(8) The Secretary may assess against any plan sponsor of 
     a multiemployer plan a civil penalty of not more than $1,100 
     per day--
       ``(A) for each violation by such sponsor of the requirement 
     under section 305 to adopt by the deadline established in 
     that section a funding improvement plan or rehabilitation 
     plan with respect to a multiemployer which is in endangered 
     or critical status, or
       ``(B) in the case of a plan in endangered status which is 
     not in seriously endangered status, for failure by the plan 
     to meet the applicable benchmarks under section 305 by the 
     end of the funding improvement period with respect to the 
     plan.''.
       (c) Cause of Action To Compel Adoption or Implementation of 
     Funding Improvement or Rehabilitation Plan.--Section 502(a) 
     of the Employee Retirement Income Security Act of 1974 is 
     amended by striking ``or'' at the end of paragraph (8), by 
     striking the period at the end of paragraph (9) and inserting 
     ``; or'' and by adding at the end the following:
       ``(10) in the case of a multiemployer plan that has been 
     certified by the actuary to be in endangered or critical 
     status under section 305, if the plan sponsor--
       ``(A) has not adopted a funding improvement or 
     rehabilitation plan under that section by the deadline 
     established in such section, or
       ``(B) fails to update or comply with the terms of the 
     funding improvement or rehabilitation plan in accordance with 
     the requirements of such section,

     by an employer that has an obligation to contribute with 
     respect to the multiemployer plan or an employee organization 
     that represents active participants in the multiemployer 
     plan, for an order compelling the plan sponsor to adopt a 
     funding improvement or rehabilitation plan or to update or 
     comply with the terms of the funding improvement or 
     rehabilitation plan in accordance with the requirements of 
     such section and the funding improvement or rehabilitation 
     plan.''.
       (d) No Additional Contributions Required.--Section 302(b) 
     of the Employee Retirement Income Security Act of 1974, as 
     amended by this Act, is amended by adding at the end the 
     following new paragraph:
       ``(3) Multiemployer plans in critical status.--Paragraph 
     (1) shall not apply in the case of a multiemployer plan for 
     any plan year in which the plan is in critical status 
     pursuant to section 305. This paragraph shall only apply if 
     the plan adopts a rehabilitation plan in accordance with 
     section 305(e) and complies with the terms of such 
     rehabilitation plan (and any updates or modifications of the 
     plan).''.
       (e) Conforming Amendment.--The table of contents in section 
     1 of such Act (as amended by the preceding provisions of this 
     Act) is amended by inserting after the item relating to 
     section 304 the following new item:

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

       (f) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply with respect to plan years beginning after 2007.
       (2) Special rule for certain notices.--In any case in which 
     a plan's actuary certifies that it is reasonably expected 
     that a multiemployer plan will be in critical status under 
     section 305(b)(3) of the Employee Retirement Income Security 
     Act of 1974, as added by this section, with respect to the 
     first plan year beginning after 2007, the notice required 
     under subparagraph (D) of such section may be provided at any 
     time after the date of enactment, so long as it is provided 
     on or before the last date for providing the notice under 
     such subparagraph.
       (3) Special rule for certain restored benefits.--In the 
     case of a multiemployer plan--
       (A) with respect to which benefits were reduced pursuant to 
     a plan amendment adopted on or after January 1, 2002, and 
     before June 30, 2005, and
       (B) which, pursuant to the plan document, the trust 
     agreement, or a formal written communication from the plan 
     sponsor to participants provided before June 30, 2005, 
     provided for the restoration of such benefits,
     the amendments made by this section shall not apply to such 
     benefit restorations to the extent that any restriction on 
     the providing or accrual of such benefits would otherwise 
     apply by reason of such amendments.

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

       (a) Advance Determination of Impending Insolvency Over 5 
     Years.--Section 4245(d)(1) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1426(d)(1)) is amended--
       (1) by striking ``3 plan years'' the second place it 
     appears and inserting ``5 plan years''; and
       (2) by adding at the end the following new sentence: ``If 
     the plan sponsor makes such a determination that the plan 
     will be insolvent in any of the next 5 plan years, the plan 
     sponsor shall make the comparison under this paragraph at 
     least annually until the plan sponsor makes a determination 
     that the plan will not be insolvent in any of the next 5 plan 
     years.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply with respect to determinations made in plan years 
     beginning after 2007.

     SEC. 204. WITHDRAWAL LIABILITY REFORMS.

       (a) Update of Rules Relating to Limitations on Withdrawal 
     Liability.--
       (1) Increase in limits.--Section 4225(a)(2) of such Act (29 
     U.S.C. 1405(a)(2)) is amended by striking the table contained 
     therein and inserting the following new table:


------------------------------------------------------------------------
  ``If the liquidation or distribution
value of the employer after the sale or          The portion is--
             exchange is--
------------------------------------------------------------------------
Not more than $5,000,000...............  30 percent of the amount.
More than $5,000,000, but not more than  $1,500,000, plus 35 percent of
 $10,000,000.                             the amount in excess of
                                          $5,000,000.
More than $10,000,000, but not more      $3,250,000, plus 40 percent of
 than $15,000,000.                        the amount in excess of
                                          $10,000,000.
More than $15,000,000, but not more      $5,250,000, plus 45 percent of
 than $17,500,000.                        the amount in excess of
                                          $15,000,000.
More than $17,500,000, but not more      $6,375,000, plus 50 percent of
 than $20,000,000.                        the amount in excess of
                                          $17,500,000.
More than $20,000,000, but not more      $7,625,000, plus 60 percent of
 than $22,500,000.                        the amount in excess of
                                          $20,000,000.
More than $22,500,000, but not more      $9,125,000, plus 70 percent of
 than $25,000,000.                        the amount in excess of
                                          $22,500,000.
More than $25,000,000..................  $10,875,000, plus 80 percent of
                                          the amount in excess of
                                          $25,000,000.''.
------------------------------------------------------------------------

       (2) Plans using attributable method.--Section 4225(a)(1)(B) 
     of such Act (29 U.S.C. 1405(a)(1)(B)) is amended to read as 
     follows:
       ``(B) in the case of a plan using the attributable method 
     of allocating withdrawal liability, the unfunded vested 
     benefits attributable to employees of the employer.''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to sales occurring on or after January 1, 2007.
       (b) Withdrawal Liability Continues if Work Contracted 
     Out.--
       (1) In general.--Clause (i) of section 4205(b)(2)(A) of 
     such Act (29 U.S.C. 1385(b)(2)(A)) is amended by inserting 
     ``or to an entity or entities owned or controlled by the 
     employer'' after ``to another location''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply with respect to work transferred on or after the 
     date of the enactment of this Act.
       (c) Application of Rules to Plans Primarily Covering 
     Employees in the Building and Construction Industry.--
       (1) In general.--Section 4210(b) of such Act (29 U.S.C. 
     1390(b)) is amended--
       (A) by striking paragraph (1); and
       (B) by redesignating paragraphs (2) through (4) as 
     paragraphs (1) through (3), respectively.
       (2) Fresh start option.--Section 4211(c)(5) of such Act (29 
     U.S.C. 1391(c)(5)) is amended by adding at the end the 
     following new subparagraph:
       ``(E) Fresh start option.--Notwithstanding paragraph (1), a 
     plan may be amended to provide that the withdrawal liability 
     method described in subsection (b) shall be applied by 
     substituting the plan year which is specified in the 
     amendment

[[Page 16346]]

     and for which the plan has no unfunded vested benefits for 
     the plan year ending before September 26, 1980.''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply with respect to plan withdrawals occurring on or 
     after January 1, 2007.
       (d) Procedures Applicable to Disputes Involving Pension 
     Plan Withdrawal Liability.--
       (1) In general.--Section 4221 of Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1401) is amended by adding at 
     the end the following:
       ``(g) Procedures Applicable to Certain Disputes.--
       ``(1) In general.--If--
       ``(A) a plan sponsor of a plan determines that--
       ``(i) a complete or partial withdrawal of an employer has 
     occurred, or
       ``(ii) an employer is liable for withdrawal liability 
     payments with respect to such complete or partial withdrawal, 
     and
       ``(B) such determination is based in whole or in part on a 
     finding by the plan sponsor under section 4212(c) that a 
     principal purpose of any transaction which occurred after 
     December 31, 1998, and at least 5 years (2 years in the case 
     of a small employer) before the date of the complete or 
     partial withdrawal was to evade or avoid withdrawal liability 
     under this subtitle,

     then the person against which the withdrawal liability is 
     assessed based solely on the application of section 4212(c) 
     may elect to use the special rule under paragraph (2) in 
     applying subsection (d) of this section and section 4219(c) 
     to such person.
       ``(2) Special rule.--Notwithstanding subsection (d) and 
     section 4219(c), if an electing person contests the plan 
     sponsor's determination with respect to withdrawal liability 
     payments under paragraph (1) through an arbitration 
     proceeding pursuant to subsection (a), through an action 
     brought in a court of competent jurisdiction for review of 
     such an arbitration decision, or as otherwise permitted by 
     law, the electing person shall not be obligated to make the 
     withdrawal liability payments until a final decision in the 
     arbitration proceeding, or in court, upholds the plan 
     sponsor's determination, but only if the electing person--
       ``(A) provides notice to the plan sponsor of its election 
     to apply the special rule in this paragraph within 90 days 
     after the plan sponsor notifies the electing person of its 
     liability by reason of the application of section 4212(c); 
     and
       ``(B) if a final decision in the arbitration proceeding, or 
     in court, of the withdrawal liability dispute has not been 
     rendered within 12 months from the date of such notice, the 
     electing person provides to the plan, effective as of the 
     first day following the 12-month period, a bond issued by a 
     corporate surety company that is an acceptable surety for 
     purposes of section 412 of this Act, or an amount held in 
     escrow by a bank or similar financial institution 
     satisfactory to the plan, in an amount equal to the sum of 
     the withdrawal liability payments that would otherwise be due 
     under subsection (d) and section 4219(c) for the 12-month 
     period beginning with the first anniversary of such notice. 
     Such bond or escrow shall remain in effect until there is a 
     final decision in the arbitration proceeding, or in court, of 
     the withdrawal liability dispute, at which time such bond or 
     escrow shall be paid to the plan if such final decision 
     upholds the plan sponsor's determination.
       ``(3) Definition of small employer.--For purposes of this 
     subsection--
       ``(A) In general.--The term `small employer' means any 
     employer which, for the calendar year in which the 
     transaction referred to in paragraph (1)(B) occurred and for 
     each of the 3 preceding years, on average--
       ``(i) employs not more than 500 employees, and
       ``(ii) is required to make contributions to the plan for 
     not more than 250 employees.
       ``(B) Controlled group.--Any group treated as a single 
     employer under subsection (b)(1) of section 4001, without 
     regard to any transaction that was a basis for the plan's 
     finding under section 4212, shall be treated as a single 
     employer for purposes of this subparagraph.
       ``(4) Additional security pending resolution of dispute.--
     If a withdrawal liability dispute to which this subsection 
     applies is not concluded by 12 months after the electing 
     person posts the bond or escrow described in paragraph (2), 
     the electing person shall, at the start of each succeeding 
     12-month period, provide an additional bond or amount held in 
     escrow equal to the sum of the withdrawal liability payments 
     that would otherwise be payable to the plan during that 
     period.
       ``(5) The liability of the party furnishing a bond or 
     escrow under this subsection shall be reduced, upon the 
     payment of the bond or escrow to the plan, by the amount 
     thereof.''
       (2) Effective date.--The amendments made by this subsection 
     shall apply to any person that receives a notification under 
     section 4219(b)(1) of the Employee Retirement Income Security 
     Act of 1974 on or after the date of enactment of this Act 
     with respect to a transaction that occurred after December 
     31, 1998.

     SEC. 205. PROHIBITION ON RETALIATION AGAINST EMPLOYERS 
                   EXERCISING THEIR RIGHTS TO PETITION THE FEDERAL 
                   GOVERNMENT.

       Section 510 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1140) is amended by inserting before the 
     last sentence thereof the following new sentence:``In the 
     case of a multiemployer plan, it shall be unlawful for the 
     plan sponsor or any other person to discriminate against any 
     contributing employer for exercising rights under this Act or 
     for giving information or testifying in any inquiry or 
     proceeding relating to this Act before Congress.''

     SEC. 206. SPECIAL RULE FOR CERTAIN BENEFITS FUNDED UNDER AN 
                   AGREEMENT APPROVED BY THE PENSION BENEFIT 
                   GUARANTY CORPORATION.

       In the case of a multiemployer plan that is a party to an 
     agreement that was approved by the Pension Benefit Guaranty 
     Corporation prior to June 30, 2005, and that--
       (1) increases benefits, and
       (2) provides for special withdrawal liability rules under 
     section 4203(f) of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1383),

     the amendments made by sections 201, 202, 211, and 212 of 
     this Act shall not apply to the benefit increases under any 
     plan amendment adopted prior to June 30, 2005, that are 
     funded pursuant to such agreement if the plan is funded in 
     compliance with such agreement (and any amendments thereto).

        Subtitle B--Amendments to Internal Revenue Code of 1986

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

       (a) In General.--Subpart A of part III of subchapter D of 
     chapter 1 of the Internal Revenue Code of 1986 (as added by 
     this Act) is amended by inserting after section 430 the 
     following new section:

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

       ``(a) In General.--For purposes of section 412, the 
     accumulated funding deficiency of a multiemployer plan for 
     any plan year is--
       ``(1) except as provided in paragraph (2), the amount, 
     determined as of the end of the plan year, equal to the 
     excess (if any) of the total charges to the funding standard 
     account of the plan for all plan years (beginning with the 
     first plan year for which this part applies to the plan) over 
     the total credits to such account for such years, and
       ``(2) if the multiemployer plan is in reorganization for 
     any plan year, the accumulated funding deficiency of the plan 
     determined under section 4243 of the Employee Retirement 
     Income Security Act of 1974.
       ``(b) Funding Standard Account.--
       ``(1) Account required.--Each multiemployer plan to which 
     this part applies shall establish and maintain a funding 
     standard account. Such account shall be credited and charged 
     solely as provided in this section.
       ``(2) Charges to account.--For a plan year, the funding 
     standard account shall be charged with the sum of--
       ``(A) the normal cost of the plan for the plan year,
       ``(B) the amounts necessary to amortize in equal annual 
     installments (until fully amortized)--
       ``(i) in the case of a plan which comes into existence on 
     or after January 1, 2008, the unfunded past service liability 
     under the plan on the first day of the first plan year to 
     which this section applies, over a period of 15 plan years,
       ``(ii) separately, with respect to each plan year, the net 
     increase (if any) in unfunded past service liability under 
     the plan arising from plan amendments adopted in such year, 
     over a period of 15 plan years,
       ``(ii) separately, with respect to each plan year, the net 
     increase (if any) in unfunded past service liability under 
     the plan arising from plan amendments adopted in such year, 
     over a period of 15 plan years,
       ``(iii) separately, with respect to each plan year, the net 
     experience loss (if any) under the plan, over a period of 15 
     plan years, and
       ``(iv) separately, with respect to each plan year, the net 
     loss (if any) resulting from changes in actuarial assumptions 
     used under the plan, over a period of 15 plan years,
       ``(C) the amount necessary to amortize each waived funding 
     deficiency (within the meaning of section 412(c)(3)) for each 
     prior plan year in equal annual installments (until fully 
     amortized) over a period of 15 plan years,
       ``(D) the amount necessary to amortize in equal annual 
     installments (until fully amortized) over a period of 5 plan 
     years any amount credited to the funding standard account 
     under section 412(b)(3)(D) (as in effect on the day before 
     the date of the enactment of the Pension Protection Act of 
     2006), and
       ``(E) the amount necessary to amortize in equal annual 
     installments (until fully amortized) over a period of 20 
     years the contributions which would be required to be made 
     under the plan but for the provisions of section 
     412(c)(7)(A)(i)(I) (as in effect on the day before the date 
     of the enactment of the Pension Protection Act of 2006).
       ``(3) Credits to account.--For a plan year, the funding 
     standard account shall be credited with the sum of--
       ``(A) the amount considered contributed by the employer to 
     or under the plan for the plan year,
       ``(B) the amount necessary to amortize in equal annual 
     installments (until fully amortized)--

[[Page 16347]]

       ``(i) separately, with respect to each plan year, the net 
     decrease (if any) in unfunded past service liability under 
     the plan arising from plan amendments adopted in such year, 
     over a period of 15 plan years,
       ``(ii) separately, with respect to each plan year, the net 
     experience gain (if any) under the plan, over a period of 15 
     plan years, and
       ``(iii) separately, with respect to each plan year, the net 
     gain (if any) resulting from changes in actuarial assumptions 
     used under the plan, over a period of 15 plan years,
       ``(C) the amount of the waived funding deficiency (within 
     the meaning of section 412(c)(3)) for the plan year, and
       ``(D) in the case of a plan year for which the accumulated 
     funding deficiency is determined under the funding standard 
     account if such plan year follows a plan year for which such 
     deficiency was determined under the alternative minimum 
     funding standard under section 412(g) (as in effect on the 
     day before the date of the enactment of the Pension 
     Protection Act of 2006), the excess (if any) of any debit 
     balance in the funding standard account (determined without 
     regard to this subparagraph) over any debit balance in the 
     alternative minimum funding standard account.
       ``(4) Special rule for amounts first amortized in plan 
     years before 2008.--In the case of any amount amortized under 
     section 412(b) (as in effect on the day before the date of 
     the enactment of the Pension Protection Act of 2006) over any 
     period beginning with a plan year beginning before 2008 in 
     lieu of the amortization described in paragraphs (2)(B) and 
     (3)(B), such amount shall continue to be amortized under such 
     section as so in effect.
       ``(5) Combining and offsetting amounts to be amortized.--
     Under regulations prescribed by the Secretary, amounts 
     required to be amortized under paragraph (2) or paragraph 
     (3), as the case may be--
       ``(A) may be combined into one amount under such paragraph 
     to be amortized over a period determined on the basis of the 
     remaining amortization period for all items entering into 
     such combined amount, and
       ``(B) may be offset against amounts required to be 
     amortized under the other such paragraph, with the resulting 
     amount to be amortized over a period determined on the basis 
     of the remaining amortization periods for all items entering 
     into whichever of the two amounts being offset is the 
     greater.
       ``(6) Interest.--The funding standard account (and items 
     therein) shall be charged or credited (as determined under 
     regulations prescribed by the Secretary of the Treasury) with 
     interest at the appropriate rate consistent with the rate or 
     rates of interest used under the plan to determine costs.
       ``(7) Special rules relating to charges and credits to 
     funding standard account.--For purposes of this part--
       ``(A) Withdrawal liability.--Any amount received by a 
     multiemployer plan in payment of all or part of an employer's 
     withdrawal liability under part 1 of subtitle E of title IV 
     of the Employee Retirement Income Security Act of 1974 shall 
     be considered an amount contributed by the employer to or 
     under the plan. The Secretary may prescribe by regulation 
     additional charges and credits to a multiemployer plan's 
     funding standard account to the extent necessary to prevent 
     withdrawal liability payments from being unduly reflected as 
     advance funding for plan liabilities.
       ``(B) Adjustments when a multiemployer plan leaves 
     reorganization.--If a multiemployer plan is not in 
     reorganization in the plan year but was in reorganization in 
     the immediately preceding plan year, any balance in the 
     funding standard account at the close of such immediately 
     preceding plan year--
       ``(i) shall be eliminated by an offsetting credit or charge 
     (as the case may be), but
       ``(ii) shall be taken into account in subsequent plan years 
     by being amortized in equal annual installments (until fully 
     amortized) over 30 plan years.
     The preceding sentence shall not apply to the extent of any 
     accumulated funding deficiency under section 4243(a) of such 
     Act as of the end of the last plan year that the plan was in 
     reorganization.
       ``(C) Plan payments to supplemental program or withdrawal 
     liability payment fund.--Any amount paid by a plan during a 
     plan year to the Pension Benefit Guaranty Corporation 
     pursuant to section 4222 of such Act or to a fund exempt 
     under section 501(c)(22) pursuant to section 4223 of such Act 
     shall reduce the amount of contributions considered received 
     by the plan for the plan year.
       ``(D) Interim withdrawal liability payments.--Any amount 
     paid by an employer pending a final determination of the 
     employer's withdrawal liability under part 1 of subtitle E of 
     title IV of such Act and subsequently refunded to the 
     employer by the plan shall be charged to the funding standard 
     account in accordance with regulations prescribed by the 
     Secretary.
       ``(E) Election for deferral of charge for portion of net 
     experience loss.--If an election is in effect under section 
     412(b)(7)(F) (as in effect on the day before the date of the 
     enactment of the Pension Protection Act of 2006) for any plan 
     year, the funding standard account shall be charged in the 
     plan year to which the portion of the net experience loss 
     deferred by such election was deferred with the amount so 
     deferred (and paragraph (2)(B)(iii) shall not apply to the 
     amount so charged).
       ``(F) Financial assistance.--Any amount of any financial 
     assistance from the Pension Benefit Guaranty Corporation to 
     any plan, and any repayment of such amount, shall be taken 
     into account under this section and section 412 in such 
     manner as is determined by the Secretary.
       ``(G) Short-term benefits.--To the extent that any plan 
     amendment increases the unfunded past service liability under 
     the plan by reason of an increase in benefits which are not 
     payable as a life annuity but are payable under the terms of 
     the plan for a period that does not exceed 14 years from the 
     effective date of the amendment, paragraph (2)(B)(ii) shall 
     be applied separately with respect to such increase in 
     unfunded past service liability by substituting the number of 
     years of the period during which such benefits are payable 
     for `15'.
       ``(c) Additional Rules.--
       ``(1) Determinations to be made under funding method.--For 
     purposes of this part, normal costs, accrued liability, past 
     service liabilities, and experience gains and losses shall be 
     determined under the funding method used to determine costs 
     under the plan.
       ``(2) Valuation of assets.--
       ``(A) In general.--For purposes of this part, the value of 
     the plan's assets shall be determined on the basis of any 
     reasonable actuarial method of valuation which takes 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

[[Page 16348]]

     under the plan after the termination of the plan (taking into 
     consideration section 411(d)(3)).
       ``(D) Current liability.--For purposes of this paragraph--
       ``(i) In general.--The term `current liability' means all 
     liabilities to employees and their beneficiaries under the 
     plan.
       ``(ii) Treatment of unpredictable contingent event 
     benefits.--For purposes of clause (i), any benefit contingent 
     on an event other than--

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

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

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

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

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

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

       ``(I) In general.--Except as provided in subclause (II), 
     the term `permissible range' means a rate of interest which 
     is not more than 5 percent above, and not more than 10 
     percent below, the weighted average of the rates of interest 
     on 30-year Treasury securities during the 4-year period 
     ending on the last day before the beginning of the plan year.

       ``(II) Secretarial authority.--If the Secretary finds that 
     the lowest rate of interest permissible under subclause (I) 
     is unreasonably high, the Secretary may prescribe a lower 
     rate of interest, except that such rate may not be less than 
     80 percent of the average rate determined under such 
     subclause.

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

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

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

     the Secretary shall extend the amortization period for the 
     period of time (not in excess of 5 years) specified in the 
     application. Such extension shall be in addition to any 
     extension under paragraph (2).
       ``(B) Criteria.--A certification with respect to a 
     multiemployer plan is described in this subparagraph if the 
     plan's actuary certifies that, based on reasonable 
     assumptions--
       ``(i) absent the extension under subparagraph (A), the plan 
     would have an accumulated funding deficiency in the current 
     plan year or any of the 9 succeeding plan years,
       ``(ii) the plan sponsor has adopted a plan to improve the 
     plan's funding status,
       ``(iii) the plan is projected to have sufficient assets to 
     timely pay expected benefits and anticipated expenditures 
     over the amortization period as extended, and
       ``(iv) the notice required under paragraph (3)(A) has been 
     provided.
       ``(C) Termination.--The preceding provisions of this 
     paragraph shall not apply with respect to any application 
     submitted after December 31, 2014.
       ``(2) Alternative extension.--
       ``(A) In general.--If the plan sponsor of a multiemployer 
     plan submits to the Secretary an application for an extension 
     of the period of years required to amortize any unfunded 
     liability described in any clause of subsection (b)(2)(B) or 
     described in subsection (b)(4), the Secretary may extend the 
     amortization period for a period of time (not in excess of 10 
     years reduced by the number of years of any extension under 
     paragraph (1) with respect to such unfunded liability) if the 
     Secretary makes the determination described in subparagraph 
     (B). Such extension shall be in addition to any extension 
     under paragraph (1).
       ``(B) Determination.--The Secretary may grant an extension 
     under subparagraph (A) if the Secretary determines that--
       ``(i) such extension would carry out the purposes of this 
     Act and would provide adequate protection for participants 
     under the plan and their beneficiaries, and
       ``(ii) the failure to permit such extension would--

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

       ``(C) Action by secretary.--The Secretary shall act upon 
     any application for an extension under this paragraph within 
     180 days of the submission of such application. If the 
     Secretary rejects the application for an extension under this 
     paragraph, the Secretary shall provide notice to the plan 
     detailing the specific reasons for the rejection, including 
     references to the criteria set forth above.
       ``(3) Advance notice.--
       ``(A) In general.--The Secretary shall, before granting an 
     extension under this subsection, require each applicant to 
     provide evidence satisfactory to such Secretary that the 
     applicant has provided notice of the filing of the 
     application for such extension to each affected party (as 
     defined in section 4001(a)(21) of the Employee Retirement 
     Income Security Act of 1974) with respect to

[[Page 16349]]

     the affected plan. Such notice shall include a description of 
     the extent to which the plan is funded for benefits which are 
     guaranteed under title IV of such Act and for benefit 
     liabilities.
       ``(B) Consideration of relevant information.--The Secretary 
     shall consider any relevant information provided by a person 
     to whom notice was given under paragraph (1).''.
       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to plan years beginning after 2007.
       (2) Special rule for certain amortization extensions.--If 
     the Secretary of the Treasury grants an extension under 
     section 304 of the Employee Retirement Income Security Act of 
     1974 and section 412(e) of the Internal Revenue Code of 1986 
     with respect to any application filed with the Secretary of 
     the Treasury on or before June 30, 2005, the extension (and 
     any modification thereof) shall be applied and administered 
     under the rules of such sections as in effect before the 
     enactment of this Act, including the use of the rate of 
     interest determined under section 6621(b) of such Code.

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

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

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

       ``(a) General Rule.--For purposes of this part, in the case 
     of a multiemployer plan in effect on July 16, 2006--
       ``(1) if the plan is in endangered status--
       ``(A) the plan sponsor shall adopt and implement a funding 
     improvement plan in accordance with the requirements of 
     subsection (c), and
       ``(B) the requirements of subsection (d) shall apply during 
     the funding plan adoption period and the funding improvement 
     period, and
       ``(2) if the plan is in critical status--
       ``(A) the plan sponsor shall adopt and implement a 
     rehabilitation plan in accordance with the requirements of 
     subsection (e), and
       ``(B) the requirements of subsection (f) shall apply during 
     the rehabilitation plan adoption period and the 
     rehabilitation period.
       ``(b) Determination of Endangered and Critical Status.--For 
     purposes of this section--
       ``(1) Endangered status.--A multiemployer plan is in 
     endangered status for a plan year if, as determined by the 
     plan actuary under paragraph (3), the plan is not in critical 
     status for the plan year and, as of the beginning of the plan 
     year, either--
       ``(A) the plan's funded percentage for such plan year is 
     less than 80 percent, or
       ``(B) the plan has an accumulated funding deficiency for 
     such plan year, or is projected to have such an accumulated 
     funding deficiency for any of the 6 succeeding plan years, 
     taking into account any extension of amortization periods 
     under section 431(d).

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

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

     is less than the present value of all nonforfeitable benefits 
     projected to be payable under the plan during the current 
     plan year and each of the 6 succeeding plan years (plus 
     administrative expenses for such plan years).
       ``(B) A plan is described in this subparagraph if--
       ``(i) the plan has an accumulated funding deficiency for 
     the current plan year, not taking into account any extension 
     of amortization periods under section 431(d), or
       ``(ii) the plan is projected to have an accumulated funding 
     deficiency for any of the 3 succeeding plan years (4 
     succeeding plan years if the funded percentage of the plan is 
     65 percent or less), not taking into account any extension of 
     amortization periods under section 431(d).
       ``(C) A plan is described in this subparagraph if--
       ``(i)(I) the plan's normal cost for the current plan year, 
     plus interest (determined at the rate used for determining 
     costs under the plan) for the current plan year on the amount 
     of unfunded benefit liabilities under the plan as of the last 
     date of the preceding plan year, exceeds
       ``(II) the present value of the reasonably anticipated 
     employer and employee contributions for the current plan 
     year,
       ``(ii) the present value, as of the beginning of the 
     current plan year, of nonforfeitable benefits of inactive 
     participants is greater than the present value of 
     nonforfeitable benefits of active participants, and
       ``(iii) the plan has an accumulated funding deficiency for 
     the current plan year, or is projected to have such a 
     deficiency for any of the 4 succeeding plan years, not taking 
     into account any extension of amortization periods under 
     section 431(d).
       ``(D) A plan is described in this subparagraph if the sum 
     of--
       ``(i) the fair market value of plan assets, plus
       ``(ii) the present value of the reasonably anticipated 
     employer contributions for the current plan year and each of 
     the 4 succeeding plan years, assuming that the terms of all 
     collective bargaining agreements pursuant to which the plan 
     is maintained for the current plan year continue in effect 
     for succeeding plan years,

     is less than the present value of all benefits projected to 
     be payable under the plan during the current plan year and 
     each of the 4 succeeding plan years (plus administrative 
     expenses for such plan years).
       ``(3) Annual certification by plan actuary.--
       ``(A) In general.--Not later than the 90th day of each plan 
     year of a multiemployer plan, the plan actuary shall certify 
     to the Secretary and to the plan sponsor--
       ``(i) whether or not the plan is in endangered status for 
     such plan year and whether or not the plan is or will be in 
     critical status for such plan year, and
       ``(ii) in the case of a plan which is in a funding 
     improvement or rehabilitation period, whether or not the plan 
     is making the scheduled progress in meeting the requirements 
     of its funding improvement or rehabilitation plan.
       ``(B) Actuarial projections of assets and liabilities.--
       ``(i) In general.--In making the determinations and 
     projections under this subsection, the plan actuary shall 
     make projections required for the current and succeeding plan 
     years of the current value of the assets of the plan and the 
     present value of all liabilities to participants and 
     beneficiaries under the plan for the current plan year as of 
     the beginning of such year. The actuary's projections shall 
     be based on reasonable actuarial estimates, assumptions, and 
     methods that, except as provided in clause (iii), offer the 
     actuary's best estimate of anticipated experience under the 
     plan. The projected present value of liabilities as of the 
     beginning of such year shall be determined based on the most 
     recent of either--

       ``(I) the actuarial statement required under section 103(d) 
     of the Employee Retirement Income Security Act of 1974 with 
     respect to the most recently filed annual report, or
       ``(II) the actuarial valuation for the preceding plan year.

       ``(ii) Determinations of future contributions.--Any 
     actuarial projection of plan assets shall assume--

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

       ``(iii) Projected industry activity.--Any projection of 
     activity in the industry or industries covered by the plan, 
     including future covered employment and contribution levels, 
     shall be based on information provided by the plan sponsor, 
     which shall act reasonably and in good faith.
       ``(C) Penalty for failure to secure timely actuarial 
     certification.--Any failure of the plan's actuary to certify 
     the plan's status under this subsection by the date specified 
     in subparagraph (A) shall be treated for purposes of section 
     502(c)(2) of the Employee Retirement Income Security Act of 
     1974 as a failure or refusal by the plan administrator to 
     file the annual report required to be filed with the 
     Secretary under section 101(b)(4) of such Act.
       ``(D) Notice.--
       ``(i) In general.--In any case in which it is certified 
     under subparagraph (A) that a multiemployer plan is or will 
     be in endangered or critical status for a plan year, the plan 
     sponsor shall, not later than 30 days after the date of the 
     certification, provide notification of the endangered or 
     critical status to the participants and beneficiaries, the 
     bargaining parties, the Pension Benefit Guaranty Corporation, 
     and the Secretary of Labor.
       ``(ii) Plans in critical status.--If it is certified under 
     subparagraph (A) that a multiemployer plan is or will be in 
     critical status, the plan sponsor shall include in the notice 
     under clause (i) an explanation of the possibility that--

[[Page 16350]]

       ``(I) adjustable benefits (as defined in subsection (e)(8)) 
     may be reduced, and
       ``(II) such reductions may apply to participants and 
     beneficiaries whose benefit commencement date is on or after 
     the date such notice is provided for the first plan year in 
     which the plan is in critical status.

       ``(iii) Model notice.--The Secretary of Labor shall 
     prescribe a model notice that a multiemployer plan may use to 
     satisfy the requirements under clause (ii).
       ``(c) Funding Improvement Plan Must Be Adopted for 
     Multiemployer Plans in Endangered Status.--
       ``(1) In general.--In any case in which a multiemployer 
     plan is in endangered status for a plan year, the plan 
     sponsor, in accordance with this subsection--
       ``(A) shall adopt a funding improvement plan not later than 
     240 days following the required date for the actuarial 
     certification of endangered status under subsection 
     (b)(3)(A), and
       ``(B) within 30 days after the adoption of the funding 
     improvement plan--
       ``(i) shall provide to the bargaining parties 1 or more 
     schedules showing revised benefit structures, revised 
     contribution structures, or both, which, if adopted, may 
     reasonably be expected to enable the multiemployer plan to 
     meet the applicable benchmarks in accordance with the funding 
     improvement plan, including--

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

       ``(ii) may, if the plan sponsor deems appropriate, prepare 
     and provide the bargaining parties with additional 
     information relating to contribution rates or benefit 
     reductions, alternative schedules, or other information 
     relevant to achieving the applicable benchmarks in accordance 
     with the funding improvement plan.

     For purposes of this section, the term `applicable 
     benchmarks' means the requirements applicable to the 
     multiemployer plan under paragraph (3) (as modified by 
     paragraph (5)).
       ``(2) Exception for years after process begins.--Paragraph 
     (1) shall not apply to a plan year if such year is in a 
     funding plan adoption period or funding improvement period by 
     reason of the plan being in endangered status for a preceding 
     plan year. For purposes of this section, such preceding plan 
     year shall be the initial determination year with respect to 
     the funding improvement plan to which it relates.
       ``(3) Funding improvement plan.--For purposes of this 
     section--
       ``(A) In general.--A funding improvement plan is a plan 
     which consists of the actions, including options or a range 
     of options to be proposed to the bargaining parties, 
     formulated to provide, based on reasonably anticipated 
     experience and reasonable actuarial assumptions, for the 
     attainment by the plan during the funding improvement period 
     of the following requirements:
       ``(i) Increase in plan's funding percentage.--The plan's 
     funded percentage as of the close of the funding improvement 
     period equals or exceeds a percentage equal to the sum of--

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

       ``(ii) Avoidance of accumulated funding deficiencies.--No 
     accumulated funding deficiency for any plan year during the 
     funding improvement period (taking into account any extension 
     of amortization periods under section 304(d)).
       ``(B) Seriously endangered plans.--In the case of a plan in 
     seriously endangered status, except as provided in paragraph 
     (5), subparagraph (A)(i)(II) shall be applied by substituting 
     `20 percent' for `33 percent'.
       ``(4) Funding improvement period.--For purposes of this 
     section--
       ``(A) In general.--The funding improvement period for any 
     funding improvement plan adopted pursuant to this subsection 
     is the 10-year period beginning on the first day of the first 
     plan year of the multiemployer plan beginning after the 
     earlier of--
       ``(i) the second anniversary of the date of the adoption of 
     the funding improvement plan, or
       ``(ii) the expiration of the collective bargaining 
     agreements in effect on the due date for the actuarial 
     certification of endangered status for the initial 
     determination year under subsection (b)(3)(A) and covering, 
     as of such due date, at least 75 percent of the active 
     participants in such multiemployer plan.
       ``(B) Seriously endangered plans.--In the case of a plan in 
     seriously endangered status, except as provided in paragraph 
     (5), subparagraph (A) shall be applied by substituting `15-
     year period' for `10-year period'.
       ``(C) Coordination with changes in status.--
       ``(i) Plans no longer in endangered status.--If the plan's 
     actuary certifies under subsection (b)(3)(A) for a plan year 
     in any funding plan adoption period or funding improvement 
     period that the plan is no longer in endangered status and is 
     not in critical status, the funding plan adoption period or 
     funding improvement period, whichever is applicable, shall 
     end as of the close of the preceding plan year.
       ``(ii) Plans in critical status.--If the plan's actuary 
     certifies under subsection (b)(3)(A) for a plan year in any 
     funding plan adoption period or funding improvement period 
     that the plan is in critical status, the funding plan 
     adoption period or funding improvement period, whichever is 
     applicable, shall end as of the close of the plan year 
     preceding the first plan year in the rehabilitation period 
     with respect to such status.
       ``(D) Plans in endangered status at end of period.--If the 
     plan's actuary certifies under subsection (b)(3)(A) for the 
     first plan year following the close of the period described 
     in subparagraph (A) that the plan is in endangered status, 
     the provisions of this subsection and subsection (d) shall be 
     applied as if such first plan year were an initial 
     determination year, except that the plan may not be amended 
     in a manner inconsistent with the funding improvement plan in 
     effect for the preceding plan year until a new funding 
     improvement plan is adopted.
       ``(5) Special rules for seriously endangered plans more 
     than 70 percent funded.--
       ``(A) In general.--If the funded percentage of a plan in 
     seriously endangered status was more than 70 percent as of 
     the beginning of the initial determination year--
       ``(i) paragraphs (3)(B) and (4)(B) shall apply only if the 
     plan's actuary certifies, within 30 days after the 
     certification under subsection (b)(3)(A) for the initial 
     determination year, that, based on the terms of the plan and 
     the collective bargaining agreements in effect at the time of 
     such certification, the plan is not projected to meet the 
     requirements of paragraph (3)(A) (without regard to 
     paragraphs (3)(B) and (4)(B)), and
       ``(ii) if there is a certification under clause (i), the 
     plan may, in formulating its funding improvement plan, only 
     take into account the rules of paragraph (3)(B) and (4)(B) 
     for plan years in the funding improvement period beginning on 
     or before the date on which the last of the collective 
     bargaining agreements described in paragraph (4)(A)(ii) 
     expires.
       ``(B) Special rule after expiration of agreements.--
     Notwithstanding subparagraph (A)(ii), if, for any plan year 
     ending after the date described in subparagraph (A)(ii), the 
     plan actuary certifies (at the time of the annual 
     certification under subsection (b)(3)(A) for such plan year) 
     that, based on the terms of the plan and collective 
     bargaining agreements in effect at the time of that annual 
     certification, the plan is not projected to be able to meet 
     the requirements of paragraph (3)(A) (without regard to 
     paragraphs (3)(B) and (4)(B)), paragraphs (3)(B) and (4)(B) 
     shall continue to apply for such year.
       ``(6) Updates to funding improvement plans and schedules.--
       ``(A) Funding improvement plan.--The plan sponsor shall 
     annually update the funding improvement plan and shall file 
     the update with the plan's annual report under section 104 of 
     the Employee Retirement Income Security Act of 1974.
       ``(B) Schedules.--The plan sponsor shall annually update 
     any schedule of contribution rates provided under this 
     subsection to reflect the experience of the plan.
       ``(C) Duration of schedule.--A schedule of contribution 
     rates provided by the plan sponsor and relied upon by 
     bargaining parties in negotiating a collective bargaining 
     agreement shall remain in effect for the duration of that 
     collective bargaining agreement.
       ``(7) Imposition of default schedule where failure to adopt 
     funding improvement plan.--
       ``(A) In general.--If--
       ``(i) a collective bargaining agreement providing for 
     contributions under a multiemployer plan that was in effect 
     at the time the plan entered endangered status expires, and
       ``(ii) after receiving one or more schedules from the plan 
     sponsor under paragraph (1)(B), the bargaining parties with 
     respect to such agreement fail to agree on changes to 
     contribution or benefit schedules necessary to meet the 
     applicable benchmarks in accordance with the funding 
     improvement plan,

     the plan sponsor shall implement the schedule described in 
     paragraph (1)(B)(i)(I) beginning on the date specified in 
     subparagraph (B).
       ``(B) Date of implementation.--The date specified in this 
     subparagraph is the earlier of the date--
       ``(i) on which the Secretary of Labor certifies that the 
     parties are at an impasse, or
       ``(ii) which is 180 days after the date on which the 
     collective bargaining agreement described in subparagraph (A) 
     expires.
       ``(8) Funding plan adoption period.--For purposes of this 
     section, the term `funding plan adoption period' means the 
     period beginning on the date of the certification

[[Page 16351]]

     under subsection (b)(3)(A) for the initial determination year 
     and ending on the day before the first day of the funding 
     improvement period.
       ``(d) Rules for Operation of Plan During Adoption and 
     Improvement Periods.--
       ``(1) Special rules for plan adoption period.--During the 
     funding plan adoption period--
       ``(A) the plan sponsor may not accept a collective 
     bargaining agreement or participation agreement with respect 
     to the multiemployer plan that provides for--
       ``(i) a reduction in the level of contributions for any 
     participants,
       ``(ii) a suspension of contributions with respect to any 
     period of service, or
       ``(iii) any new direct or indirect exclusion of younger or 
     newly hired employees from plan participation,
       ``(B) no amendment of the plan which increases the 
     liabilities of the plan by reason of any increase in 
     benefits, any change in the accrual of benefits, or any 
     change in the rate at which benefits become nonforfeitable 
     under the plan may be adopted unless the amendment is 
     required as a condition of qualification under part I of 
     subchapter D of chapter 1 or to comply with other applicable 
     law, and
       ``(C) in the case of a plan in seriously endangered status, 
     the plan sponsor shall take all reasonable actions which are 
     consistent with the terms of the plan and applicable law and 
     which are expected, based on reasonable assumptions, to 
     achieve--
       ``(i) an increase in the plan's funded percentage, and
       ``(ii) postponement of an accumulated funding deficiency 
     for at least 1 additional plan year.

     Actions under subparagraph (C) include applications for 
     extensions of amortization periods under section 431(d), use 
     of the shortfall funding method in making funding standard 
     account computations, amendments to the plan's benefit 
     structure, reductions in future benefit accruals, and other 
     reasonable actions consistent with the terms of the plan and 
     applicable law.
       ``(2) Compliance with funding improvement plan.--
       ``(A) In general.--A plan may not be amended after the date 
     of the adoption of a funding improvement plan so as to be 
     inconsistent with the funding improvement plan.
       ``(B) No reduction in contributions.--A plan sponsor may 
     not during any funding improvement period accept a collective 
     bargaining agreement or participation agreement with respect 
     to the multiemployer plan that provides for--
       ``(i) a reduction in the level of contributions for any 
     participants,
       ``(ii) a suspension of contributions with respect to any 
     period of service, or
       ``(iii) any new direct or indirect exclusion of younger or 
     newly hired employees from plan participation.
       ``(C) Special rules for benefit increases.--A plan may not 
     be amended after the date of the adoption of a funding 
     improvement plan so as to increase benefits, including future 
     benefit accruals, unless the plan actuary certifies that the 
     benefit increase is consistent with the funding improvement 
     plan and is paid for out of contributions not required by the 
     funding improvement plan to meet the applicable benchmark in 
     accordance with the schedule contemplated in the funding 
     improvement plan.
       ``(e) Rehabilitation Plan Must Be Adopted for Multiemployer 
     Plans in Critical Status.--
       ``(1) In general.--In any case in which a multiemployer 
     plan is in critical status for a plan year, the plan sponsor, 
     in accordance with this subsection--
       ``(A) shall adopt a rehabilitation plan not later than 240 
     days following the required date for the actuarial 
     certification of critical status under subsection (b)(3)(A), 
     and
       ``(B) within 30 days after the adoption of the 
     rehabilitation plan--
       ``(i) shall provide to the bargaining parties 1 or more 
     schedules showing revised benefit structures, revised 
     contribution structures, or both, which, if adopted, may 
     reasonably be expected to enable the multiemployer plan to 
     emerge from critical status in accordance with the 
     rehabilitation plan, and
       ``(ii) may, if the plan sponsor deems appropriate, prepare 
     and provide the bargaining parties with additional 
     information relating to contribution rates or benefit 
     reductions, alternative schedules, or other information 
     relevant to emerging from critical status in accordance with 
     the rehabilitation plan.

     The schedule or schedules described in subparagraph (B)(i) 
     shall reflect reductions in future benefit accruals and 
     adjustable benefits, and increases in contributions, that the 
     plan sponsor determines are reasonably necessary to emerge 
     from critical status. One schedule shall be designated as the 
     default schedule and such schedule shall assume that there 
     are no increases in contributions under the plan other than 
     the increases necessary to emerge from critical status after 
     future benefit accruals and other benefits (other than 
     benefits the reduction or elimination of which are not 
     permitted under section 411(d)(6)) have been reduced to the 
     maximum extent permitted by law.
       ``(2) Exception for years after process begins.--Paragraph 
     (1) shall not apply to a plan year if such year is in a 
     rehabilitation plan adoption period or rehabilitation period 
     by reason of the plan being in critical status for a 
     preceding plan year. For purposes of this section, such 
     preceding plan year shall be the initial critical year with 
     respect to the rehabilitation plan to which it relates.
       ``(3) Rehabilitation plan.--For purposes of this section--
       ``(A) In general.--A rehabilitation plan is a plan which 
     consists of--
       ``(i) actions, including options or a range of options to 
     be proposed to the bargaining parties, formulated, based on 
     reasonably anticipated experience and reasonable actuarial 
     assumptions, to enable the plan to cease to be in critical 
     status by the end of the rehabilitation period and may 
     include reductions in plan expenditures (including plan 
     mergers and consolidations), reductions in future benefit 
     accruals or increases in contributions, if agreed to by the 
     bargaining parties, or any combination of such actions, or
       ``(ii) if the plan sponsor determines that, based on 
     reasonable actuarial assumptions and upon exhaustion of all 
     reasonable measures, the plan can not reasonably be expected 
     to emerge from critical status by the end of the 
     rehabilitation period, reasonable measures to emerge from 
     critical status at a later time or to forestall possible 
     insolvency (within the meaning of section 4245 of the 
     Employee Retirement Income Security Act of 1974).
     A rehabilitation plan must provide annual standards for 
     meeting the requirements of such rehabilitation plan. Such 
     plan shall also include the schedules required to be provided 
     under paragraph (1)(B)(i) and if clause (ii) applies, shall 
     set forth the alternatives considered, explain why the plan 
     is not reasonably expected to emerge from critical status by 
     the end of the rehabilitation period, and specify when, if 
     ever, the plan is expected to emerge from critical status in 
     accordance with the rehabilitation plan.
       ``(B) Updates to rehabilitation plan and schedules.--
       ``(i) Rehabilitation plan.--The plan sponsor shall annually 
     update the rehabilitation plan and shall file the update with 
     the plan's annual report under section 104 of the Employee 
     Retirement Income Security Act of 1974.
       ``(ii) Schedules.--The plan sponsor shall annually update 
     any schedule of contribution rates provided under this 
     subsection to reflect the experience of the plan.
       ``(iii) Duration of schedule.--A schedule of contribution 
     rates provided by the plan sponsor and relied upon by 
     bargaining parties in negotiating a collective bargaining 
     agreement shall remain in effect for the duration of that 
     collective bargaining agreement.
       ``(C) Imposition of default schedule where failure to adopt 
     rehabilitation plan.--
       ``(i) In general.--If--

       ``(I) a collective bargaining agreement providing for 
     contributions under a multiemployer plan that was in effect 
     at the time the plan entered critical status expires, and
       ``(II) after receiving one or more schedules from the plan 
     sponsor under paragraph (1)(B), the bargaining parties with 
     respect to such agreement fail to adopt a contribution or 
     benefit schedules with terms consistent with the 
     rehabilitation plan and the schedule from the plan sponsor 
     under paragraph (1)(B)(i),

     the plan sponsor shall implement the default schedule 
     described in the last sentence of paragraph (1) beginning on 
     the date specified in clause (ii).
       ``(ii) Date of implementation.--The date specified in this 
     clause is the earlier of the date--

       ``(I) on which the Secretary of Labor certifies that the 
     parties are at an impasse, or
       ``(II) which is 180 days after the date on which the 
     collective bargaining agreement described in clause (i) 
     expires.

       ``(4) Rehabilitation period.--For purposes of this 
     section--
       ``(A) In general.--The rehabilitation period for a plan in 
     critical status is the 10-year period beginning on the first 
     day of the first plan year of the multiemployer plan 
     following the earlier of--
       ``(i) the second anniversary of the date of the adoption of 
     the rehabilitation plan, or
       ``(ii) the expiration of the collective bargaining 
     agreements in effect on the date of the due date for the 
     actuarial certification of critical status for the initial 
     critical year under subsection (a)(1) and covering, as of 
     such date at least 75 percent of the active participants in 
     such multiemployer plan.

     If a plan emerges from critical status as provided under 
     subparagraph (B) before the end of such 10-year period, the 
     rehabilitation period shall end with the plan year preceding 
     the plan year for which the determination under subparagraph 
     (B) is made.
       ``(B) Emergence.--A plan in critical status shall remain in 
     such status until a plan year for which the plan actuary 
     certifies, in accordance with subsection (b)(3)(A), that the 
     plan is not projected to have an accumulated funding 
     deficiency for the plan year or any of the 9 succeeding plan 
     years, without regard to the use of the shortfall method and 
     taking into account any extension of amortization periods 
     under section 431(d).

[[Page 16352]]

       ``(5) Rehabilitation plan adoption period.--For purposes of 
     this section, the term `rehabilitation plan adoption period' 
     means the period beginning on the date of the certification 
     under subsection (b)(3)(A) for the initial critical year and 
     ending on the day before the first day of the rehabilitation 
     period.
       ``(6) Limitation on reduction in rates of future 
     accruals.--Any reduction in the rate of future accruals under 
     the default schedule described in paragraph (1)(B)(i) shall 
     not reduce the rate of future accruals below--
       ``(A) a monthly benefit (payable as a single life annuity 
     commencing at the participant's normal retirement age) equal 
     to 1 percent of the contributions required to be made with 
     respect to a participant, or the equivalent standard accrual 
     rate for a participant or group of participants under the 
     collective bargaining agreements in effect as of the first 
     day of the initial critical year, or
       ``(B) if lower, the accrual rate under the plan on such 
     first day.

     The equivalent standard accrual rate shall be determined by 
     the plan sponsor based on the standard or average 
     contribution base units which the plan sponsor determines to 
     be representative for active participants and such other 
     factors as the plan sponsor determines to be relevant. 
     Nothing in this paragraph shall be construed as limiting the 
     ability of the plan sponsor to prepare and provide the 
     bargaining parties with alternative schedules to the default 
     schedule that established lower or higher accrual and 
     contribution rates than the rates otherwise described in this 
     paragraph.
       ``(7) Automatic employer surcharge.--
       ``(A) Imposition of surcharge.--Each employer otherwise 
     obligated to make a contribution for the initial critical 
     year shall be obligated to pay to the plan for such year a 
     surcharge equal to 5 percent of the contribution otherwise 
     required under the applicable collective bargaining agreement 
     (or other agreement pursuant to which the employer 
     contributes). For each succeeding plan year in which the plan 
     is in critical status for a consecutive period of years 
     beginning with the initial critical year, the surcharge shall 
     be 10 percent of the contribution otherwise so required.
       ``(B) Enforcement of surcharge.--The surcharges under 
     subparagraph (A) shall be due and payable on the same 
     schedule as the contributions on which the surcharges are 
     based. Any failure to make a surcharge payment shall be 
     treated as a delinquent contribution under section 515 of the 
     Employee Retirement Income Security Act of 1974 and shall be 
     enforceable as such.
       ``(C) Surcharge to terminate upon collective bargaining 
     agreement renegotiation.--The surcharge under this paragraph 
     shall cease to be effective with respect to employees covered 
     by a collective bargaining agreement (or other agreement 
     pursuant to which the employer contributes), beginning on the 
     effective date of a collective bargaining agreement (or other 
     such agreement) that includes terms consistent with a 
     schedule presented by the plan sponsor under paragraph 
     (1)(B)(i), as modified under subparagraph (B) of paragraph 
     (3).
       ``(D) Surcharge not to apply until employer receives 
     notice.--The surcharge under this paragraph shall not apply 
     to an employer until 30 days after the employer has been 
     notified by the plan sponsor that the plan is in critical 
     status and that the surcharge is in effect.
       ``(E) Surcharge not to generate increased benefit 
     accruals.--Notwithstanding any provision of a plan to the 
     contrary, the amount of any surcharge under this paragraph 
     shall not be the basis for any benefit accrual under the 
     plan.
       ``(8) Benefit adjustments.--
       ``(A) Adjustable benefits.--
       ``(i) In general.--Notwithstanding section 204(g), the plan 
     sponsor shall, subject to the notice requirement under 
     subparagraph (C), make any reductions to adjustable benefits 
     which the plan sponsor deems appropriate, based upon the 
     outcome of collective bargaining over the schedule or 
     schedules provided under paragraph (1)(B)(i).
       ``(ii) Exception for retirees.--Except in the case of 
     adjustable benefits described in clause (iv)(III), the plan 
     sponsor of a plan in critical status shall not reduce 
     adjustable benefits of any participant or beneficiary whose 
     benefit commencement date is before the date on which the 
     plan provides notice to the participant or beneficiary under 
     subsection (b)(3)(D) for the initial critical year.
       ``(iii) Plan sponsor flexibility.--The plan sponsor shall 
     include in the schedules provided to the bargaining parties 
     an allowance for funding the benefits of participants with 
     respect to whom contributions are not currently required to 
     be made, and shall reduce their benefits to the extent 
     permitted under this title and considered appropriate by the 
     plan sponsor based on the plan's then current overall funding 
     status.
       ``(iv) Adjustable benefit defined.--For purposes of this 
     paragraph, the term `adjustable benefit' means--

       ``(I) benefits, rights, and features under the plan, 
     including post-retirement death benefits, 60-month 
     guarantees, disability benefits not yet in pay status, and 
     similar benefits,
       ``(II) any early retirement benefit or retirement-type 
     subsidy (within the meaning of section 411(d)(6)(B)(i)) and 
     any benefit payment option (other than the qualified joint-
     and survivor annuity), and
       ``(III) benefit increases that would not be eligible for a 
     guarantee under section 4022A of the Employee Retirement 
     Income Security Act of 1974 on the first day of initial 
     critical year because the increases were adopted (or, if 
     later, took effect) less than 60 months before such first 
     day.

       ``(B) Normal retirement benefits protected.--Except as 
     provided in subparagraph (A)(iv)(III), nothing in this 
     paragraph shall be construed to permit a plan to reduce the 
     level of a participant's accrued benefit payable at normal 
     retirement age.
       ``(C) Notice requirements.--
       ``(i) In general.--No reduction may be made to adjustable 
     benefits under subparagraph (A) unless notice of such 
     reduction has been given at least 30 days before the general 
     effective date of such reduction for all participants and 
     beneficiaries to--

       ``(I) plan participants and beneficiaries,
       ``(II) each employer who has an obligation to contribute 
     (within the meaning of section 4212(a)) under the plan, and
       ``(III) each employee organization which, for purposes of 
     collective bargaining, represents plan participants employed 
     by such an employer.

       ``(ii) Content of notice.--The notice under clause (i) 
     shall contain--

       ``(I) sufficient information to enable participants and 
     beneficiaries to understand the effect of any reduction on 
     their benefits, including an estimate (on an annual or 
     monthly basis) of any affected adjustable benefit that a 
     participant or beneficiary would otherwise have been eligible 
     for as of the general effective date described in clause (i), 
     and
       ``(II) information as to the rights and remedies of plan 
     participants and beneficiaries as well as how to contact the 
     Department of Labor for further information and assistance 
     where appropriate.

       ``(iii) Form and manner.--Any notice under clause (i)--

       ``(I) shall be provided in a form and manner prescribed in 
     regulations of the Secretary of Labor,
       ``(II) shall be written in a manner so as to be understood 
     by the average plan participant, and
       ``(III) may be provided in written, electronic, or other 
     appropriate form to the extent such form is reasonably 
     accessible to persons to whom the notice is required to be 
     provided.

     The Secretary of Labor shall in the regulations prescribed 
     under subclause (I) establish a model notice that a plan 
     sponsor may use to meet the requirements of this 
     subparagraph.
       ``(9) Adjustments disregarded in withdrawal liability 
     determination.--
       ``(A) Benefit reductions.--Any benefit reductions under 
     this subsection shall be disregarded in determining a plan's 
     unfunded vested benefits for purposes of determining an 
     employer's withdrawal liability under section 4201 of the 
     Employee Retirement Income Security Act of 1974.
       ``(B) Surcharges.--Any surcharges under paragraph (7) shall 
     be disregarded in determining an employer's withdrawal 
     liability under section 4211 of such Act, except for purposes 
     of determining the unfunded vested benefits attributable to 
     an employer under section 4211(c)(4) of such Act or a 
     comparable method approved under section 4211(c)(5) of such 
     Act.
       ``(C) Simplified calculations.--The Pension Benefit 
     Guaranty Corporation shall prescribe simplified methods for 
     the application of this paragraph in determining withdrawal 
     liability.
       ``(f) Rules for Operation of Plan During Adoption and 
     Rehabilitation Period.--
       ``(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

[[Page 16353]]

       ``(iii) any other payment specified by the Secretary by 
     regulations.
       ``(B) Exception.--Subparagraph (A) shall not apply to a 
     benefit which under section 411(a)(11) may be immediately 
     distributed without the consent of the participant or to any 
     makeup payment in the case of a retroactive annuity starting 
     date or any similar payment of benefits owed with respect to 
     a prior period.
       ``(3) Adjustments disregarded in withdrawal liability 
     determination.--Any benefit reductions under this subsection 
     shall be disregarded in determining a plan's unfunded vested 
     benefits for purposes of determining an employer's withdrawal 
     liability under section 4201 of the Employee Retirement 
     Income Security Act of 1974.
       ``(4) Special rules for plan adoption period.--During the 
     rehabilitation plan adoption period--
       ``(A) the plan sponsor may not accept a collective 
     bargaining agreement or participation agreement with respect 
     to the multiemployer plan that provides for--
       ``(i) a reduction in the level of contributions for any 
     participants,
       ``(ii) a suspension of contributions with respect to any 
     period of service, or
       ``(iii) any new direct or indirect exclusion of younger or 
     newly hired employees from plan participation, and
       ``(B) no amendment of the plan which increases the 
     liabilities of the plan by reason of any increase in 
     benefits, any change in the accrual of benefits, or any 
     change in the rate at which benefits become nonforfeitable 
     under the plan may be adopted unless the amendment is 
     required as a condition of qualification under part I of 
     subchapter D of chapter 1 or to comply with other applicable 
     law.
       ``(g) Expedited Resolution of Plan Sponsor Decisions.--If, 
     within 60 days of the due date for adoption of a funding 
     improvement plan or a rehabilitation plan under subsection 
     (e), the plan sponsor of a plan in endangered status or a 
     plan in critical status has not agreed on a funding 
     improvement plan or rehabilitation plan, then any member of 
     the board or group that constitutes the plan sponsor may 
     require that the plan sponsor enter into an expedited dispute 
     resolution procedure for the development and adoption of a 
     funding improvement plan or rehabilitation plan.
       ``(h) Nonbargained Participation.--
       ``(1) Both bargained and nonbargained employee-
     participants.--In the case of an employer that contributes to 
     a multiemployer plan with respect to both employees who are 
     covered by one or more collective bargaining agreements and 
     employees who are not so covered, if the plan is in 
     endangered status or in critical status, benefits of and 
     contributions for the nonbargained employees, including 
     surcharges on those contributions, shall be determined as if 
     those nonbargained employees were covered under the first to 
     expire of the employer's collective bargaining agreements in 
     effect when the plan entered endangered or critical status.
       ``(2) Nonbargained employees only.--In the case of an 
     employer that contributes to a multiemployer plan only with 
     respect to employees who are not covered by a collective 
     bargaining agreement, this section shall be applied as if the 
     employer were the bargaining party, and its participation 
     agreement with the plan were a collective bargaining 
     agreement with a term ending on the first day of the plan 
     year beginning after the employer is provided the schedule or 
     schedules described in subsections (c) and (e).
       ``(i) Definitions; Actuarial Method.--For purposes of this 
     section--
       ``(1) Bargaining party.--The term `bargaining party' 
     means--
       ``(A)(i) except as provided in clause (ii), an employer who 
     has an obligation to contribute under the plan; or
       ``(ii) in the case of a plan described under section 
     404(c), or a continuation of such a plan, the association of 
     employers that is the employer settlor of the plan; and
       ``(B) an employee organization which, for purposes of 
     collective bargaining, represents plan participants employed 
     by an employer who has an obligation to contribute under the 
     plan.
       ``(2) Funded percentage.--The term `funded percentage' 
     means the percentage equal to a fraction--
       ``(A) the numerator of which is the value of the plan's 
     assets, as determined under section 431(c)(2), and
       ``(B) the denominator of which is the accrued liability of 
     the plan, determined using actuarial assumptions described in 
     section 431(c)(3).
       ``(3) Accumulated funding deficiency.--The term 
     `accumulated funding deficiency' has the meaning given such 
     term in section 412(a).
       ``(4) Active participant.--The term `active participant' 
     means, in connection with a multiemployer plan, a participant 
     who is in covered service under the plan.
       ``(5) Inactive participant.--The term `inactive 
     participant' means, in connection with a multiemployer plan, 
     a participant, or the beneficiary or alternate payee of a 
     participant, who--
       ``(A) is not in covered service under the plan, and
       ``(B) is in pay status under the plan or has a 
     nonforfeitable right to benefits under the plan.
       ``(6) Pay status.--A person is in pay status under a 
     multiemployer plan if--
       ``(A) at any time during the current plan year, such person 
     is a participant or beneficiary under the plan and is paid an 
     early, late, normal, or disability retirement benefit under 
     the plan (or a death benefit under the plan related to a 
     retirement benefit), or
       ``(B) to the extent provided in regulations of the 
     Secretary, such person is entitled to such a benefit under 
     the plan.
       ``(7) Obligation to contribute.--The term `obligation to 
     contribute' has the meaning given such term under section 
     4212(a) of the Employee Retirement Income Security Act of 
     1974.
       ``(8) Actuarial method.--Notwithstanding any other 
     provision of this section, the actuary's determinations with 
     respect to a plan's normal cost, actuarial accrued liability, 
     and improvements in a plan's funded percentage under this 
     section shall be based upon the unit credit funding method 
     (whether or not that method is used for the plan's actuarial 
     valuation).
       ``(9) Plan sponsor.--In the case of a plan described under 
     section 404(c), or a continuation of such a plan, the term 
     `plan sponsor' means the bargaining parties described under 
     paragraph (1).
       ``(10) Benefit commencement date.--The term `benefit 
     commencement date' means the annuity starting date (or in the 
     case of a retroactive annuity starting date, the date on 
     which benefit payments begin).''
       (b) Excise Taxes on Failures Relating to Multiemployer 
     Plans in Endangered or Critical Status.--
       (1) In general.--Section 4971 of the Internal Revenue Code 
     of 1986 is amended by redesignating subsection (g) as 
     subsection (h) and by inserting after subsection (f) the 
     following:
       ``(g) Multiemployer Plans in Endangered or Critical 
     Status.--
       ``(1) In general.--Except as provided in this subsection--
       ``(A) no tax shall be imposed under this section for a 
     taxable year with respect to a multiemployer plan if, for the 
     plan years ending with or within the taxable year, the plan 
     is in critical status pursuant to section 432, and
       ``(B) any tax imposed under this subsection for a taxable 
     year with respect to a multiemployer plan if, for the plan 
     years ending with or within the taxable year, the plan is in 
     endangered status pursuant to section 432 shall be in 
     addition to any other tax imposed by this section.
       ``(2) Failure to comply with funding improvement or 
     rehabilitation plan.--
       ``(A) In general.--If any funding improvement plan or 
     rehabilitation plan in effect under section 432 with respect 
     to a multiemployer plan requires an employer to make a 
     contribution to the plan, there is hereby imposed a tax on 
     each failure of the employer to make the required 
     contribution within the time required under such plan.
       ``(B) Amount of tax.--The amount of the tax imposed by 
     subparagraph (A) shall be equal to the amount of the required 
     contribution the employer failed to make in a timely manner.
       ``(C) Liability for tax.--The tax imposed by subparagraph 
     (A) shall be paid by the employer responsible for 
     contributing to or under the rehabilitation plan which fails 
     to make the contribution.
       ``(3) Failure to meet requirements for plans in endangered 
     or critical status.--If--
       ``(A) a plan which is in seriously endangered status fails 
     to meet the applicable benchmarks by the end of the funding 
     improvement period, or
       ``(B) a plan which is in critical status either--
       ``(i) fails to meet the requirements of section 432(e) by 
     the end of the rehabilitation period, or
       ``(ii) has received a certification under section 
     432(b)(3)(A)(ii) for 3 consecutive plan years that the plan 
     is not making the scheduled progress in meeting its 
     requirements under the rehabilitation plan,

     the plan shall be treated as having an accumulated funding 
     deficiency for purposes of this section for the last plan 
     year in such funding improvement, rehabilitation, or 3-
     consecutive year period (and each succeeding plan year until 
     such benchmarks or requirements are met) in an amount equal 
     to the greater of the amount of the contributions necessary 
     to meet such benchmarks or requirements or the amount of such 
     accumulated funding deficiency without regard to this 
     paragraph.
       ``(4) Failure to adopt rehabilitation plan.--
       ``(A) In general.--In the case of a multiemployer plan 
     which is in critical status, there is hereby imposed a tax on 
     the failure of such plan to adopt a rehabilitation plan 
     within the time prescribed under section 432.
       ``(B) Amount of tax.--The amount of the tax imposed under 
     subparagraph (A) with respect to any plan sponsor for any 
     taxable year shall be the greater of--
       ``(i) the amount of tax imposed under subsection (a) for 
     the taxable year (determined without regard to this 
     subsection), or

[[Page 16354]]

       ``(ii) the amount equal to $1,100 multiplied by the number 
     of days during the taxable year which are included in the 
     period beginning on the first day of the 240-day period 
     described in section 432(e)(1)(A) and ending on the day on 
     which the rehabilitation plan is adopted.
       ``(C) Liability for tax.--
       ``(i) In general.--The tax imposed by subparagraph (A) 
     shall be paid by each plan sponsor.
       ``(ii) Plan sponsor.--For purposes of clause (i), the term 
     `plan sponsor' in the case of a multiemployer plan means the 
     association, committee, joint board of trustees, or other 
     similar group of representatives of the parties who establish 
     or maintain the plan.
       ``(5) Waiver.--In the case of a failure described in 
     paragraph (2) or (3) which is due to reasonable cause and not 
     to willful neglect, the Secretary may waive part or all of 
     the tax imposed by this subsection. For purposes of this 
     paragraph, reasonable cause includes unanticipated and 
     material market fluctuations, the loss of a significant 
     contributing employer, or other factors to the extent that 
     the payment of tax under this subsection with respect to the 
     failure would be excessive or otherwise inequitable relative 
     to the failure involved.
       ``(6) Terms used in section 432.--For purposes of this 
     subsection, any term used in this subsection which is also 
     used in section 432 shall have the meaning given such term by 
     section 432.''.
       (2) Controlled groups.--Section 4971(c)(2) of such Code is 
     amended--
       (A) by striking ``In the case of a plan other than a 
     multiemployer plan, if the'' and inserting ``If an'', and
       (B) by striking ``or (f)'' and inserting ``(f), or (g)''.
       (c) No Additional Contribution Required.--Section 412(b) of 
     the Internal Revenue Code of 1986, as amended by this Act, is 
     amended by adding at the end the following new paragraph:
       ``(3) Multiemployer plans in critical status.--Paragraph 
     (1) shall not apply in the case of a multiemployer plan for 
     any plan year in which the plan is in critical status 
     pursuant to section 432. This paragraph shall only apply if 
     the plan adopts a rehabilitation plan in accordance with 
     section 432(e) and complies with such rehabilitation plan 
     (and any modifications of the plan).''.
       (d) Clerical Amendment.--The table of sections for subpart 
     A of part III of subchapter D of chapter 1 of such Code is 
     amended by adding at the end the following new item:

``Sec. 432. Additional funding rules for multiemployer plans in 
              endangered status or critical status.''.
       (e) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply with respect to plan years beginning after 2007.
       (2) Special rule for certain notices.--In any case in which 
     a plan's actuary certifies that it is reasonably expected 
     that a multiemployer plan will be in critical status under 
     section 305(b)(3) of the Employee Retirement Income Security 
     Act of 1974, as added by this section, with respect to the 
     first plan year beginning after 2007, the notice required 
     under subparagraph (D) of such section may be provided at any 
     time after the date of enactment, so long as it is provided 
     on or before the last date for providing the notice under 
     such subparagraph.
       (3) Special rule for certain restored benefits.--In the 
     case of a multiemployer plan--
       (A) with respect to which benefits were reduced pursuant to 
     a plan amendment adopted on or after January 1, 2002, and 
     before June 30, 2005, and
       (B) which, pursuant to the plan document, the trust 
     agreement, or a formal written communication from the plan 
     sponsor to participants provided before June 30, 2005, 
     provided for the restoration of such benefits,

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

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

       (a) Advance Determination of Impending Insolvency Over 5 
     Years.--Section 418E(d)(1) of the Internal Revenue Code of 
     1986 is amended--
       (1) by striking ``3 plan years'' the second place it 
     appears and inserting ``5 plan years''; and
       (2) by adding at the end the following new sentence: ``If 
     the plan sponsor makes such a determination that the plan 
     will be insolvent in any of the next 5 plan years, the plan 
     sponsor shall make the comparison under this paragraph at 
     least annually until the plan sponsor makes a determination 
     that the plan will not be insolvent in any of the next 5 plan 
     years.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply with respect to the determinations made in plan 
     years beginning after 2007.

     SEC. 214. EXEMPTION FROM EXCISE TAXES FOR CERTAIN 
                   MULTIEMPLOYER PENSION PLANS.

       (a) In General.--Notwithstanding any other provision of 
     law, no tax shall be imposed under subsection (a) or (b) of 
     section 4971 of the Internal Revenue Code of 1986 with 
     respect to any accumulated funding deficiency of a plan 
     described in subsection (b) of this section for any taxable 
     year beginning before the earlier of--
       (1) the taxable year in which the plan sponsor adopts a 
     rehabilitation plan under section 305(e) of the Employee 
     Retirement Income Security Act of 1974 and section 432(e) of 
     such Code (as added by this Act); or
       (2) the taxable year that contains January 1, 2009.
       (b) Plan Described.--A plan described under this subsection 
     is a multiemployer pension plan--
       (1) with less than 100 participants;
       (2) with respect to which the contributing employers 
     participated in a Federal fishery capacity reduction program;
       (3) with respect to which employers under the plan 
     participated in the Northeast Fisheries Assistance Program; 
     and
       (4) with respect to which the annual normal cost is less 
     than $100,000 and the plan is experiencing a funding 
     deficiency on the date of enactment of this Act.

             Subtitle C--Sunset of Additional Funding Rules

     SEC. 221. SUNSET OF ADDITIONAL FUNDING RULES.

       (a) Report.--Not later than December 31, 2011, the 
     Secretary of Labor, the Secretary of the Treasury, and the 
     Executive Director of the Pension Benefit Guaranty 
     Corporation shall conduct a study of the effect of the 
     amendments made by this subtitle on the operation and funding 
     status of multiemployer plans and shall report the results of 
     such study, including any recommendations for legislation, to 
     the Congress.
       (b) Matters Included in Study.--The study required under 
     subsection (a) shall include--
       (1) the effect of funding difficulties, funding rules in 
     effect before the date of the enactment of this Act, and the 
     amendments made by this subtitle on small businesses 
     participating in multiemployer plans,
       (2) the effect on the financial status of small employers 
     of--
       (A) funding targets set in funding improvement and 
     rehabilitation plans and associated contribution increases,
       (B) funding deficiencies,
       (C) excise taxes,
       (D) withdrawal liability,
       (E) the possibility of alternatives schedules and 
     procedures for financially-troubled employers, and
       (F) other aspects of the multiemployer system, and
       (3) the role of the multiemployer pension plan system in 
     helping small employers to offer pension benefits.
       (c) Sunset.--
       (1) In general.--Except as provided in this subsection, 
     notwithstanding any other provision of this Act, the 
     provisions of, and the amendments made by, sections 201(b), 
     202, and 212 shall not apply to plan years beginning after 
     December 31, 2014.
       (2) Funding improvement and rehabilitation plans.--If a 
     plan is operating under a funding improvement or 
     rehabilitation plan under section 305 of such Act or 432 of 
     such Code for its last year beginning before January 1, 2015, 
     such plan shall continue to operate under such funding 
     improvement or rehabilitation plan during any period after 
     December 31, 2014, such funding improvement or rehabilitation 
     plan is in effect and all provisions of such Act or Code 
     relating to the operation of such funding improvement or 
     rehabilitation plan shall continue in effect during such 
     period.

                  TITLE III--INTEREST RATE ASSUMPTIONS

     SEC. 301. EXTENSION OF REPLACEMENT OF 30-YEAR TREASURY RATES.

       (a) Amendments of ERISA.--
       (1) Determination of range.--Subclause (II) of section 
     302(b)(5)(B)(ii) of the Employee Retirement Income Security 
     Act of 1974 is amended--
       (A) by striking ``2006'' and inserting ``2008'', and
       (B) by striking ``AND 2005'' in the heading and inserting 
     ``, 2005, 2006, AND 2007''.
       (2) Determination of current liability.--Subclause (IV) of 
     section 302(d)(7)(C)(i) of such Act is amended--
       (A) by striking ``or 2005'' and inserting ``, 2005, 2006, 
     or 2007'', and
       (B) by striking ``AND 2005'' in the heading and inserting 
     ``, 2005, 2006, AND 2007''.
       (3)  PBGC premium rate.--Subclause (V) of section 
     4006(a)(3)(E)(iii) of such Act is amended by striking 
     ``2006'' and inserting ``2008''.
       (b) Amendments of Internal Revenue Code.--
       (1) Determination of range.--Subclause (II) of section 
     412(b)(5)(B)(ii) of the Internal Revenue Code of 1986 is 
     amended--
       (A) by striking ``2006'' and inserting ``2008'', and
       (B) by striking ``AND 2005'' in the heading and inserting 
     ``, 2005, 2006, AND 2007''.
       (2) Determination of current liability.--Subclause (IV) of 
     section 412(l)(7)(C)(i) of such Code is amended--
       (A) by striking ``or 2005'' and inserting ``, 2005, 2006, 
     or 2007'', and
       (B) by striking ``AND 2005'' in the heading and inserting 
     ``, 2005, 2006, AND 2007''.
       (c) Plan Amendments.--Clause (ii) of section 101(c)(2)(A) 
     of the Pension Funding Equity Act of 2004 is amended by 
     striking ``2006'' and inserting ``2008''.

[[Page 16355]]



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

       (a) Amendment to Employee Retirement Income Security Act of 
     1974.--Paragraph (3) of section 205(g) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1055(g)(3)) 
     is amended to read as follows:
       ``(3)(A) For purposes of paragraphs (1) and (2), the 
     present value shall not be less than the present value 
     calculated by using the applicable mortality table and the 
     applicable interest rate.
       ``(B) For purposes of subparagraph (A)--
       ``(i) The term `applicable mortality table' means a 
     mortality table, modified as appropriate by the Secretary of 
     the Treasury, based on the mortality table specified for the 
     plan year under subparagraph (A) of section 303(h)(3) 
     (without regard to subparagraph (C) or (D) of such section).
       ``(ii) The term `applicable interest rate' means the 
     adjusted first, second, and third segment rates applied under 
     rules similar to the rules of section 303(h)(2)(C) for the 
     month before the date of the distribution or such other time 
     as the Secretary of the Treasury may by regulations 
     prescribe.
       ``(iii) For purposes of clause (ii), the adjusted first, 
     second, and third segment rates are the first, second, and 
     third segment rates which would be determined under section 
     303(h)(2)(C) if--
       ``(I) section 303(h)(2)(D) were applied by substituting the 
     average yields for the month described in clause (ii) for the 
     average yields for the 24-month period described in such 
     section,
       ``(II) section 303(h)(2)(G)(i)(II) were applied by 
     substituting `section 205(g)(3)(B)(iii)(II)' for `section 
     302(b)(5)(B)(ii)(II)', and
       ``(III) the applicable percentage under section 
     303(h)(2)(G) were determined in accordance with the following 
     table:
In the case of plan years beginning in:   The applicable percentage is:
  2008.......................................................20 percent
  2009.......................................................40 percent
  2010.......................................................60 percent
  2011...................................................80 percent.''.
       (b) Amendment to Internal Revenue Code of 1986.--Paragraph 
     (3) of section 417(e) of the Internal Revenue Code of 1986 is 
     amended to read as follows:
       ``(3) Determination of present value.--
       ``(A) In general.--For purposes of paragraphs (1) and (2), 
     the present value shall not be less than the present value 
     calculated by using the applicable mortality table and the 
     applicable interest rate.
       ``(B) Applicable mortality table.--For purposes of 
     subparagraph (A), the term `applicable mortality table' means 
     a mortality table, modified as appropriate by the Secretary, 
     based on the mortality table specified for the plan year 
     under subparagraph (A) of section 430(h)(3) (without regard 
     to subparagraph (C) or (D) of such section).
       ``(C) Applicable interest rate.--For purposes of 
     subparagraph (A), the term `applicable interest rate' means 
     the adjusted first, second, and third segment rates applied 
     under rules similar to the rules of section 430(h)(2)(C) for 
     the month before the date of the distribution or such other 
     time as the Secretary may by regulations prescribe.
       ``(D) Applicable segment rates.--For purposes of 
     subparagraph (C), the adjusted first, second, and third 
     segment rates are the first, second, and third segment rates 
     which would be determined under section 430(h)(2)(C) if--
       ``(i) section 430(h)(2)(D) were applied by substituting the 
     average yields for the month described in clause (ii) for the 
     average yields for the 24-month period described in such 
     section,
       ``(ii) section 430(h)(2)(G)(i)(II) were applied by 
     substituting `section 417(e)(3)(A)(ii)(II)' for `section 
     412(b)(5)(B)(ii)(II)', and
       ``(iii) the applicable percentage under section 
     430(h)(2)(G) were determined in accordance with the following 
     table:

In the case of plan years beginning in:   The applicable percentage is:
  2008.......................................................20 percent
  2009.......................................................40 percent
  2010.......................................................60 percent
  2011...................................................80 percent.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to plan years beginning after 
     December 31, 2007.

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

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

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

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

            TITLE IV--PBGC GUARANTEE AND RELATED PROVISIONS

     SEC. 401. PBGC PREMIUMS.

       (a) Variable-Rate Premiums.--
       (1) Conforming amendments related to funding rules for 
     single-employer plans.--Section 4006(a)(3)(E) of the Employee 
     Retirement Income and Security Act of 1974 (29 U.S.C. 
     1306(a)(3)(E)) is amended by striking clauses (iii) and (iv) 
     and inserting the following:
       ``(iii) For purposes of clause (ii), the term `unfunded 
     vested benefits' means, for a plan year, the excess (if any) 
     of--
       ``(I) the funding target of the plan as determined under 
     section 303(d) for the plan year by only taking into account 
     vested benefits and by using the interest rate described in 
     clause (iv), over
       ``(II) the fair market value of plan assets for the plan 
     year which are held by the plan on the valuation date.
       ``(iv) The interest rate used in valuing benefits for 
     purposes of subclause (I) of clause (iii) shall be equal to 
     the first, second, or third segment rate for the month 
     preceding the month in which the plan year begins, which 
     would be determined under section 303(h)(2)(C) if section 
     303(h)(2)(D) were applied by using the monthly yields for the 
     month preceding the month in which the plan year begins on 
     investment grade corporate bonds with varying maturities and 
     in the top 3 quality levels rather than the average of such 
     yields for a 24-month period.''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall apply with respect to plan years beginning after 2007.
       (b) Termination Premiums.--
       (1) Repeal of sunset provision.--Subparagraph (E) of 
     section 4006(a)(7) of such Act is repealed.
       (2) Technical correction.--
       (A) In general.--Section 4006(a)(7)(C)(ii) of such Act is 
     amended by striking ``subparagraph (B)(i)(I)'' and inserting 
     ``subparagraph (B)''.
       (B) Effective date.--The amendment made by this paragraph 
     shall take effect as if included in the provision of the 
     Deficit Reduction Act of 2005 to which it relates.

     SEC. 402. SPECIAL FUNDING RULES FOR CERTAIN PLANS MAINTAINED 
                   BY COMMERCIAL AIRLINES.

       (a) In General.--The plan sponsor of an eligible plan may 
     elect to either--
       (1) have the rules of subsection (b) apply, or
       (2) have section 303 of the Employee Retirement Income 
     Security Act of 1974 and section 430 of the Internal Revenue 
     Code of 1986 applied to its first taxable year beginning in 
     2008 by amortizing the shortfall amortization base for such 
     taxable year over a period of 10 plan years (rather than 7 
     plan years) beginning with such plan year.
       (b) Alternative Funding Schedule.--
       (1) In general.--If an election is made under subsection 
     (a)(1) to have this subsection apply to an eligible plan and 
     the requirements of paragraphs (2) and (3) are met with 
     respect to the plan--
       (A) in the case of any applicable plan year beginning 
     before January 1, 2008, the plan shall not have an 
     accumulated funding deficiency for purposes of section 302 of 
     the Employee Retirement Income Security Act of 1974 and 
     sections 412 and 4971 of the Internal Revenue Code of 1986 if 
     contributions to the plan for the plan year are not less than 
     the minimum required contribution determined under subsection 
     (e) for the plan for the plan year, and
       (B) in the case of any applicable plan year beginning on or 
     after January 1, 2008, the minimum required contribution 
     determined under sections 303 of such Act and 430 of such 
     Code shall, for purposes of sections 302 and 303 of such Act 
     and sections 412, 430, and 4971 of such Code, be equal to the 
     minimum required contribution determined under subsection (e) 
     for the plan for the plan year.
       (2) Accrual restrictions.--
       (A) In general.--The requirements of this paragraph are met 
     if, effective as of the first day of the first applicable 
     plan year and at all times thereafter while an election under 
     this section is in effect, the plan provides that--
       (i) the accrued benefit, any death or disability benefit, 
     and any social security supplement described in the last 
     sentence of section 411(a)(9) of such Code and section 
     204(b)(1)(G) of such Act, of each participant are frozen at 
     the amount of such benefit or supplement immediately before 
     such first day, and
       (ii) all other benefits under the plan are eliminated,

     but only to the extent the freezing or elimination of such 
     benefits would have been permitted under section 411(d)(6) of 
     such Code and section 204(g) of such Act if they had been 
     implemented by a plan amendment adopted immediately before 
     such first day.
       (B) Increases in section 415 limits.--If a plan provides 
     that an accrued benefit of a participant which has been 
     subject to any limitation under section 415 of such Code will 
     be increased if such limitation is increased, the plan shall 
     not be treated as meeting the requirements of this section 
     unless, effective as of the first day of the first applicable 
     plan year (or, if later, the date of the enactment of this 
     Act) and at all times thereafter while an election under this 
     section is in effect, the plan provides that any such 
     increase shall not take effect. A plan shall not fail to meet 
     the requirements of section 411(d)(6) of such Code and 
     section 204(g) of such Act solely because the plan is

[[Page 16356]]

     amended to meet the requirements of this subparagraph.
       (3) Restriction on applicable benefit increases.--
       (A) In general.--The requirements of this paragraph are met 
     if no applicable benefit increase takes effect at any time 
     during the period beginning on July 26, 2005, and ending on 
     the day before the first day of the first applicable plan 
     year.
       (B) Applicable benefit increase.--For purposes of this 
     paragraph, the term ``applicable benefit increase'' means, 
     with respect to any plan year, any increase in liabilities of 
     the plan by plan amendment (or otherwise provided in 
     regulations provided by the Secretary) which, but for this 
     paragraph, would occur during the plan year by reason of--
       (i) any increase in benefits,
       (ii) any change in the accrual of benefits, or
       (iii) any change in the rate at which benefits become 
     nonforfeitable under the plan.
       (4) Exception for imputed disability service.--Paragraphs 
     (2) and (3) shall not apply to any accrual or increase with 
     respect to imputed service provided to a participant during 
     any period of the participant's disability occurring on or 
     after the effective date of the plan amendment providing the 
     restrictions under paragraph (2) (or on or after July 26, 
     2005, in the case of the restrictions under paragraph (3)) if 
     the participant--
       (A) was receiving disability benefits as of such date, or
       (B) was receiving sick pay and subsequently determined to 
     be eligible for disability benefits as of such date.
       (c) Definitions.--For purposes of this section--
       (1) Eligible plan.--The term ``eligible plan'' means a 
     defined benefit plan (other than a multiemployer plan) to 
     which sections 302 of such Act and 412 of such Code applies 
     which is sponsored by an employer--
       (A) which is a commercial airline passenger airline, or
       (B) the principal business of which is providing catering 
     services to a commercial passenger airline.
       (2) Applicable plan year.--The term ``applicable plan 
     year'' means each plan year to which the election under 
     subsection (a)(1) applies under subsection (d)(1)(A).
       (d) Elections and Related Terms.--
       (1) Years for which election made.--
       (A) Alternative funding schedule.--If an election under 
     subsection (a)(1) was made with respect to an eligible plan, 
     the plan sponsor may select either a plan year beginning in 
     2006 or a plan year beginning in 2007 as the first plan year 
     to which such election applies. The election shall apply to 
     such plan year and all subsequent years. The election shall 
     be made--
       (i) not later than December 31, 2006, in the case of an 
     election for a plan year beginning in 2006, or
       (ii) not later than December 31, 2007, in the case of an 
     election for a plan year beginning in 2007.
       (B) 10 year amortization.--An election under subsection 
     (a)(2) shall be made not later than December 31, 2007.
       (C) Election of new plan year for alternative funding 
     schedule.--In the case of an election under subsection 
     (a)(1), the plan sponsor may specify a new plan year in such 
     election and the plan year of the plan may be changed to such 
     new plan year without the approval of the Secretary of the 
     Treasury.
       (2) Manner of election.--A plan sponsor shall make any 
     election under subsection (a) in such manner as the Secretary 
     of the Treasury may prescribe. Such election, once made, may 
     be revoked only with the consent of such Secretary.
       (e) Minimum Required Contribution.--In the case of an 
     eligible plan with respect to which an election is made under 
     subsection (a)(1)--
       (1) In general.--In the case of any applicable plan year 
     during the amortization period, the minimum required 
     contribution shall be the amount necessary to amortize the 
     unfunded liability of the plan, determined as of the first 
     day of the plan year, in equal annual installments (until 
     fully amortized) over the remainder of the amortization 
     period. Such amount shall be separately determined for each 
     applicable plan year.
       (2) Years after amortization period.--In the case of any 
     plan year beginning after the end of the amortization period, 
     section 302(a)(2)(A) of such Act and section 412(a)(2)(A) of 
     such Code shall apply to such plan, but the prefunding 
     balance and funding standard carryover balance as of the 
     first day of the first of such years under section 303(f) of 
     such Act and section 430(f) of such Code shall be zero.
       (3) Definitions.--For purposes of this section--
       (A) Unfunded liability.--The term ``unfunded liability'' 
     means the unfunded accrued liability under the plan, 
     determined under the unit credit funding method.
       (B) Amortization period.--The term ``amortization period'' 
     means the 17-plan year period beginning with the first 
     applicable plan year.
       (4) Other rules.--In determining the minimum required 
     contribution and amortization amount under this subsection--
       (A) the provisions of section 302(c)(3) of such Act and 
     section 412(c)(3) of such Code, as in effect before the date 
     of enactment of this section, shall apply,
       (B) a rate of interest of 8.85 percent shall be used for 
     all calculations requiring an interest rate, and
       (C) the value of plan assets shall be equal to their fair 
     market value.
       (5) Special rule for certain plan spinoffs.--For purposes 
     of subsection (b), if, with respect to any eligible plan to 
     which this subsection applies--
       (A) any applicable plan year includes the date of the 
     enactment of this Act,
       (B) a plan was spun off from the eligible plan during the 
     plan year but before such date of enactment,

     the minimum required contribution under paragraph (1) for the 
     eligible plan for such applicable plan year shall be an 
     aggregate amount determined as if the plans were a single 
     plan for that plan year (based on the full 12-month plan year 
     in effect prior to the spin-off). The employer shall 
     designate the allocation of such aggregate amount between 
     such plans for the applicable plan year.
       (f) Special Rules for Certain Balances and Waivers.--In the 
     case of an eligible plan with respect to which an election is 
     made under subsection (a)(1)--
       (1) Funding standard account and credit balances.--Any 
     charge or credit in the funding standard account under 
     section 302 of such Act or section 412 of such Code, and any 
     prefunding balance or funding standard carryover balance 
     under section 303 of such Act or section 430 of such Code, as 
     of the day before the first day of the first applicable plan 
     year, shall be reduced to zero.
       (2) Waived funding deficiencies.--Any waived funding 
     deficiency under sections 302 and 303 of such Act or section 
     412 of such Code, as in effect before the date of enactment 
     of this section, shall be deemed satisfied as of the first 
     day of the first applicable plan year and the amount of such 
     waived funding deficiency shall be taken into account in 
     determining the plan's unfunded liability under subsection 
     (e)(3)(A). In the case of a plan amendment adopted to satisfy 
     the requirements of subsection (b)(2), the plan shall not be 
     deemed to violate section 304(b) of such Act or section 
     412(f) of such Code, as so in effect, by reason of such 
     amendment or any increase in benefits provided to such plan's 
     participants under a separate plan that is a defined 
     contribution plan or a multiemployer plan.
       (g) Other Rules for Plans Making Election Under This 
     Section.--
       (1) Successor plans to certain plans.--If--
       (A) an election under paragraph (1) or (2) of subsection 
     (a) is in effect with respect to any eligible plan, and
       (B) the eligible plan is maintained by an employer that 
     establishes or maintains 1 or more other defined benefit 
     plans (other than any multiemployer plan), and such other 
     plans in combination provide benefit accruals to any 
     substantial number of successor employees,

     the Secretary of the Treasury may, in the Secretary's 
     discretion, determine that any trust of which any other such 
     plan is a part does not constitute a qualified trust under 
     section 401(a) of the Internal Revenue Code of 1986 unless 
     all benefit obligations of the eligible plan have been 
     satisfied. For purposes of this paragraph, the term 
     ``successor employee'' means any employee who is or was 
     covered by the eligible plan and any employees who perform 
     substantially the same type of work with respect to the same 
     business operations as an employee covered by such eligible 
     plan.
       (2) Special rules for terminations.--
       (A) PBGC liability limited.--Section 4022 of the Employee 
     Retirement Income Security Act of 1974, as amended by this 
     Act, is amended by adding at the end the following new 
     subsection:
       ``(h) Special Rule for Plans Electing Certain Funding 
     Requirements.--If any plan makes an election under section 
     402(a)(1) of the Pension Protection Act of 2006 and is 
     terminated effective before the end of the 10-year period 
     beginning on the first day of the first applicable plan 
     year--
       ``(1) this section shall be applied--
       ``(A) by treating the first day of the first applicable 
     plan year as the termination date of the plan, and
       ``(B) by determining the amount of guaranteed benefits on 
     the basis of plan assets and liabilities as of such assumed 
     termination date, and
       ``(2) notwithstanding section 4044(a), plan assets shall 
     first be allocated to pay the amount, if any, by which--
       ``(A) the amount of guaranteed benefits under this section 
     (determined without regard to paragraph (1) and on the basis 
     of plan assets and liabilities as of the actual date of plan 
     termination), exceeds
       ``(B) the amount determined under paragraph (1).''.
       (B) Termination premium.--In applying section 4006(a)(7)(A) 
     of the Employee Retirement Income Security Act of 1974 to an 
     eligible plan during any period in which an election under 
     subsection (a)(1) is in effect--
       (i) ``$2,500'' shall be substituted for ``$1,250'' in such 
     section if such plan terminates during the 5-year period 
     beginning on the first day of the first applicable plan year 
     with respect to such plan, and

[[Page 16357]]

       (ii) such section shall be applied without regard to 
     subparagraph (B) of section 8101(d)(2) of the Deficit 
     Reduction Act of 2005 (relating to special rule for plans 
     terminated in bankruptcy).

     The substitution described in clause (i) shall not apply with 
     respect to any plan if the Secretary of Labor determines that 
     such plan terminated as a result of extraordinary 
     circumstances such as a terrorist attack or other similar 
     event.
       (3) Limitation on deductions under certain plans.--Section 
     404(a)(7)(C)(iv) of the Internal Revenue Code of 1986, as 
     added by this Act, shall not apply with respect to any 
     taxable year of a plan sponsor of an eligible plan if any 
     applicable plan year with respect to such plan ends with or 
     within such taxable year.
       (4) Notice.--In the case of a plan amendment adopted in 
     order to comply with this section, any notice required under 
     section 204(h) of such Act or section 4980F(e) of such Code 
     shall be provided within 15 days of the effective date of 
     such plan amendment. This subsection shall not apply to any 
     plan unless such plan is maintained pursuant to one or more 
     collective bargaining agreements between employee 
     representatives and 1 or more employers.
       (h) Exclusion of Certain Employees From Minimum Coverage 
     Requirements.--
       (1) In general.--Section 410(b)(3) of such Code is amended 
     by striking the last sentence and inserting the following: 
     ``For purposes of subparagraph (B), management pilots who are 
     not represented in accordance with title II of the Railway 
     Labor Act shall be treated as covered by a collective 
     bargaining agreement described in such subparagraph if the 
     management pilots manage the flight operations of air pilots 
     who are so represented and the management pilots are, 
     pursuant to the terms of the agreement, included in the group 
     of employees benefitting under the trust described in such 
     subparagraph. Subparagraph (B) shall not apply in the case of 
     a plan which provides contributions or benefits for employees 
     whose principal duties are not customarily performed aboard 
     an aircraft in flight (other than management pilots described 
     in the preceding sentence).''
       (2) Effective date.--The amendment made by this subsection 
     shall apply to years beginning before, on, or after the date 
     of the enactment of this Act.
       (i) Extension of Special Rule for Additional Funding 
     Requirements.--In the case of an employer which is a 
     commercial passenger airline, section 302(d)(12) of the 
     Employee Retirement Income Security Act of 1974 and section 
     412(l)(12) of the Internal Revenue Code of 1986, as in effect 
     before the date of the enactment of this Act, shall each be 
     applied--
       (1) by substituting ``December 28, 2007'' for ``December 
     28, 2005'' in subparagraph (D)(i) thereof, and
       (2) without regard to subparagraph (D)(ii).
       (j) Effective Date.--Except as otherwise provided in this 
     section, the provisions of and amendments made by this 
     section shall apply to plan years ending after the date of 
     the enactment of this Act.

     SEC. 403. LIMITATION ON PBGC GUARANTEE OF SHUTDOWN AND OTHER 
                   BENEFITS.

       (a) In General.--Section 4022(b) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1322(b)) is amended by 
     adding at the end the following:
       ``(8) If an unpredictable contingent event benefit (as 
     defined in section 206(g)(1)) is payable by reason of the 
     occurrence of any event, this section shall be applied as if 
     a plan amendment had been adopted on the date such event 
     occurred.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to benefits that become payable as a result of an 
     event which occurs after July 26, 2005.

     SEC. 404. RULES RELATING TO BANKRUPTCY OF EMPLOYER.

       (a) Guarantee.--Section 4022 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1322) is amended by 
     adding at the end the following:
       ``(g) Bankruptcy Filing Substituted for Termination Date.--
     If a contributing sponsor of a plan has filed or has had 
     filed against such person a petition seeking liquidation or 
     reorganization in a case under title 11, United States Code, 
     or under any similar Federal law or law of a State or 
     political subdivision, and the case has not been dismissed as 
     of the termination date of the plan, then this section shall 
     be applied by treating the date such petition was filed as 
     the termination date of the plan.''.
       (b) Allocation of Assets Among Priority Groups in 
     Bankruptcy Proceedings.--Section 4044 of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1344) is 
     amended by adding at the end the following:
       ``(e) Bankruptcy Filing Substituted for Termination Date.--
     If a contributing sponsor of a plan has filed or has had 
     filed against such person a petition seeking liquidation or 
     reorganization in a case under title 11, United States Code, 
     or under any similar Federal law or law of a State or 
     political subdivision, and the case has not been dismissed as 
     of the termination date of the plan, then subsection (a)(3) 
     shall be applied by treating the date such petition was filed 
     as the termination date of the plan.''.
       (c) Effective Date.--The amendments made this section shall 
     apply with respect to proceedings initiated under title 11, 
     United States Code, or under any similar Federal law or law 
     of a State or political subdivision, on or after the date 
     that is 30 days after the date of enactment of this Act.

     SEC. 405. PBGC PREMIUMS FOR SMALL PLANS.

       (a) Small Plans.--Paragraph (3) of section 4006(a) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1306(a)) is amended--
       (1) by striking ``The additional'' in subparagraph (E)(i) 
     and inserting ``Except as provided in subparagraph (H), the 
     additional'', and
       (2) by inserting after subparagraph (G) the following new 
     subparagraph:
       ``(H)(i) In the case of an employer who has 25 or fewer 
     employees on the first day of the plan year, the additional 
     premium determined under subparagraph (E) for each 
     participant shall not exceed $5 multiplied by the number of 
     participants in the plan as of the close of the preceding 
     plan year.
       ``(ii) For purposes of clause (i), whether an employer has 
     25 or fewer employees on the first day of the plan year is 
     determined by taking into consideration all of the employees 
     of all members of the contributing sponsor's controlled 
     group. In the case of a plan maintained by two or more 
     contributing sponsors, the employees of all contributing 
     sponsors and their controlled groups shall be aggregated for 
     purposes of determining whether the 25-or-fewer-employees 
     limitation has been satisfied.''
       (b) Effective Dates.--The amendment made by this section 
     shall apply to plan years beginning after December 31, 2006.

     SEC. 406. AUTHORIZATION FOR PBGC TO PAY INTEREST ON PREMIUM 
                   OVERPAYMENT REFUNDS.

       (a) In General.--Section 4007(b) of the Employment 
     Retirement Income Security Act of 1974 (29 U.S.C. 1307(b)) is 
     amended--
       (1) by striking ``(b)'' and inserting ``(b)(1)'', and
       (2) by inserting at the end the following new paragraph:
       ``(2) The corporation is authorized to pay, subject to 
     regulations prescribed by the corporation, interest on the 
     amount of any overpayment of premium refunded to a designated 
     payor. Interest under this paragraph shall be calculated at 
     the same rate and in the same manner as interest is 
     calculated for underpayments under paragraph (1).''
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to interest accruing for periods beginning not 
     earlier than the date of the enactment of this Act.

     SEC. 407. RULES FOR SUBSTANTIAL OWNER BENEFITS IN TERMINATED 
                   PLANS.

       (a) Modification of Phase-In of Guarantee.--Section 
     4022(b)(5) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1322(b)(5)) is amended to read as follows:
       ``(5)(A) For purposes of this paragraph, the term `majority 
     owner' means an individual who, at any time during the 60-
     month period ending on the date the determination is being 
     made--
       ``(i) owns the entire interest in an unincorporated trade 
     or business,
       ``(ii) in the case of a partnership, is a partner who owns, 
     directly or indirectly, 50 percent or more of either the 
     capital interest or the profits interest in such partnership, 
     or
       ``(iii) in the case of a corporation, owns, directly or 
     indirectly, 50 percent or more in value of either the voting 
     stock of that corporation or all the stock of that 
     corporation.
     For purposes of clause (iii), the constructive ownership 
     rules of section 1563(e) of the Internal Revenue Code of 1986 
     (other than paragraph (3)(C) thereof) shall apply, including 
     the application of such rules under section 414(c) of such 
     Code.
       ``(B) In the case of a participant who is a majority owner, 
     the amount of benefits guaranteed under this section shall 
     equal the product of--
       ``(i) a fraction (not to exceed 1) the numerator of which 
     is the number of years from the later of the effective date 
     or the adoption date of the plan to the termination date, and 
     the denominator of which is 10, and
       ``(ii) the amount of benefits that would be guaranteed 
     under this section if the participant were not a majority 
     owner.''
       (b) Modification of Allocation of Assets.--
       (1) Section 4044(a)(4)(B) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1344(a)(4)(B)) is amended by 
     striking ``section 4022(b)(5)'' and inserting ``section 
     4022(b)(5)(B)''.
       (2) Section 4044(b) of such Act (29 U.S.C. 1344(b)) is 
     amended--
       (A) by striking ``(5)'' in paragraph (2) and inserting 
     ``(4), (5),'', and
       (B) by redesignating paragraphs (3) through (6) as 
     paragraphs (4) through (7), respectively, and by inserting 
     after paragraph (2) the following new paragraph:
       ``(3) If assets available for allocation under paragraph 
     (4) of subsection (a) are insufficient to satisfy in full the 
     benefits of all individuals who are described in that 
     paragraph, the assets shall be allocated first to benefits 
     described in subparagraph (A) of that paragraph. Any 
     remaining assets shall then be allocated to benefits 
     described in

[[Page 16358]]

     subparagraph (B) of that paragraph. If assets allocated to 
     such subparagraph (B) are insufficient to satisfy in full the 
     benefits described in that subparagraph, the assets shall be 
     allocated pro rata among individuals on the basis of the 
     present value (as of the termination date) of their 
     respective benefits described in that subparagraph.''
       (c) Conforming Amendments.--
       (1) Section 4021 of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1321) is amended--
       (A) in subsection (b)(9), by striking ``as defined in 
     section 4022(b)(6)'', and
       (B) by adding at the end the following new subsection:
       ``(d) For purposes of subsection (b)(9), the term 
     `substantial owner' means an individual who, at any time 
     during the 60-month period ending on the date the 
     determination is being made--
       ``(1) owns the entire interest in an unincorporated trade 
     or business,
       ``(2) in the case of a partnership, is a partner who owns, 
     directly or indirectly, more than 10 percent of either the 
     capital interest or the profits interest in such partnership, 
     or
       ``(3) in the case of a corporation, owns, directly or 
     indirectly, more than 10 percent in value of either the 
     voting stock of that corporation or all the stock of that 
     corporation.
     For purposes of paragraph (3), the constructive ownership 
     rules of section 1563(e) of the Internal Revenue Code of 1986 
     (other than paragraph (3)(C) thereof) shall apply, including 
     the application of such rules under section 414(c) of such 
     Code.''
       (2) Section 4043(c)(7) of such Act (29 U.S.C. 1343(c)(7)) 
     is amended by striking ``section 4022(b)(6)'' and inserting 
     ``section 4021(d)''.
       (d) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to plan 
     terminations--
       (A) under section 4041(c) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1341(c)) with respect to 
     which notices of intent to terminate are provided under 
     section 4041(a)(2) of such Act (29 U.S.C. 1341(a)(2)) after 
     December 31, 2005, and
       (B) under section 4042 of such Act (29 U.S.C. 1342) with 
     respect to which notices of determination are provided under 
     such section after such date.
       (2) Conforming amendments.--The amendments made by 
     subsection (c) shall take effect on January 1, 2006.

     SEC. 408. ACCELERATION OF PBGC COMPUTATION OF BENEFITS 
                   ATTRIBUTABLE TO RECOVERIES FROM EMPLOYERS.

       (a) Modification of Average Recovery Percentage of 
     Outstanding Amount of Benefit Liabilities Payable by 
     Corporation to Participants and Beneficiaries.--Section 
     4022(c)(3)(B)(ii) of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1322(c)(3)(B)(ii)) is amended to read 
     as follows:
       ``(ii) notices of intent to terminate were provided (or in 
     the case of a termination by the corporation, a notice of 
     determination under section 4042 was issued) during the 5-
     Federal fiscal year period ending with the third fiscal year 
     preceding the fiscal year in which occurs the date of the 
     notice of intent to terminate (or the notice of determination 
     under section 4042) with respect to the plan termination for 
     which the recovery ratio is being determined.''
       (b) Valuation of Section 4062(c) Liability for Determining 
     Amounts Payable by Corporation to Participants and 
     Beneficiaries.--
       (1) Single-employer plan benefits guaranteed.--Section 
     4022(c)(3)(A) of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 13) is amended to read as follows:
       ``(A) In general.--Except as provided in subparagraph (C), 
     the term `recovery ratio' means the ratio which--
       ``(i) the sum of the values of all recoveries under section 
     4062, 4063, or 4064, determined by the corporation in 
     connection with plan terminations described under 
     subparagraph (B), bears to
       ``(ii) the sum of all unfunded benefit liabilities under 
     such plans as of the termination date in connection with any 
     such prior termination.''.
       (2) Allocation of assets.--Section 4044 of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1362) is 
     amended by adding at the end the following new subsection:
       ``(e) Valuation of Section 4062(c) Liability for 
     Determining Amounts Payable by Corporation to Participants 
     and Beneficiaries.--
       ``(1) In general.--In the case of a terminated plan, the 
     value of the recovery of liability under section 4062(c) 
     allocable as a plan asset under this section for purposes of 
     determining the amount of benefits payable by the corporation 
     shall be determined by multiplying--
       ``(A) the amount of liability under section 4062(c) as of 
     the termination date of the plan, by
       ``(B) the applicable section 4062(c) recovery ratio.
       ``(2) Section 4062(c) recovery ratio.--For purposes of this 
     subsection--
       ``(A) In general.--Except as provided in subparagraph (C), 
     the term `section 4062(c) recovery ratio' means the ratio 
     which--
       ``(i) the sum of the values of all recoveries under section 
     4062(c) determined by the corporation in connection with plan 
     terminations described under subparagraph (B), bears to
       ``(ii) the sum of all the amounts of liability under 
     section 4062(c) with respect to such plans as of the 
     termination date in connection with any such prior 
     termination.
       ``(B) Prior terminations.--A plan termination described in 
     this subparagraph is a termination with respect to which--
       ``(i) the value of recoveries under section 4062(c) have 
     been determined by the corporation, and
       ``(ii) notices of intent to terminate were provided (or in 
     the case of a termination by the corporation, a notice of 
     determination under section 4042 was issued) during the 5-
     Federal fiscal year period ending with the third fiscal year 
     preceding the fiscal year in which occurs the date of the 
     notice of intent to terminate (or the notice of determination 
     under section 4042) with respect to the plan termination for 
     which the recovery ratio is being determined.
       ``(C) Exception.--In the case of a terminated plan with 
     respect to which the outstanding amount of benefit 
     liabilities exceeds $20,000,000, the term `section 4062(c) 
     recovery ratio' means, with respect to the termination of 
     such plan, the ratio of--
       ``(i) the value of the recoveries on behalf of the plan 
     under section 4062(c), to
       ``(ii) the amount of the liability owed under section 
     4062(c) as of the date of plan termination to the trustee 
     appointed under section 4042 (b) or (c).
       ``(3) Subsection not to apply.--This subsection shall not 
     apply with respect to the determination of--
       ``(A) whether the amount of outstanding benefit liabilities 
     exceeds $20,000,000, or
       ``(B) the amount of any liability under section 4062 to the 
     corporation or the trustee appointed under section 4042 (b) 
     or (c).
       ``(4) Determinations.--Determinations under this subsection 
     shall be made by the corporation. Such determinations shall 
     be binding unless shown by clear and convincing evidence to 
     be unreasonable.''
       (c) Effective Date.--The amendments made by this section 
     shall apply for any termination for which notices of intent 
     to terminate are provided (or in the case of a termination by 
     the corporation, a notice of determination under section 4042 
     under the Employee Retirement Income Security Act of 1974 is 
     issued) on or after the date which is 30 days after the date 
     of enactment of this section.

     SEC. 409. TREATMENT OF CERTAIN PLANS WHERE CESSATION OR 
                   CHANGE IN MEMBERSHIP OF A CONTROLLED GROUP.

       (a) In General.--Section 4041(b) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1341(b)) is amended by 
     adding at the end the following new paragraph:
       ``(5) Special rule for certain plans where cessation or 
     change in membership of a controlled group.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     if--
       ``(i) there is transaction or series of transactions which 
     result in a person ceasing to be a member of a controlled 
     group, and
       ``(ii) such person immediately before the transaction or 
     series of transactions maintained a single-employer plan 
     which is a defined benefit plan which is fully funded,

     then the interest rate used in determining whether the plan 
     is sufficient for benefit liabilities or to otherwise assess 
     plan liabilities for purposes of this subsection or section 
     4042(a)(4) shall be not less than the interest rate used in 
     determining whether the plan is fully funded.
       ``(B) Limitations.--Subparagraph (A) shall not apply to any 
     transaction or series of transactions unless--
       ``(i) any employer maintaining the plan immediately before 
     or after such transaction or series of transactions--

       ``(I) has an outstanding senior unsecured debt instrument 
     which is rated investment grade by each of the nationally 
     recognized statistical rating organizations for corporate 
     bonds that has issued a credit rating for such instrument, or
       ``(II) if no such debt instrument of such employer has been 
     rated by such an organization but 1 or more of such 
     organizations has made an issuer credit rating for such 
     employer, all such organizations which have so rated the 
     employer have rated such employer investment grade, and

       ``(ii) the employer maintaining the plan after the 
     transaction or series of transactions employs at least 20 
     percent of the employees located in the United States who 
     were employed by such employer immediately before the 
     transaction or series of transactions.
       ``(C) Fully funded.--For purposes of subparagraph (A), a 
     plan shall be treated as fully funded with respect to any 
     transaction or series of transactions if--
       ``(i) in the case of a transaction or series of 
     transactions which occur in a plan year beginning before 
     January 1, 2008, the funded current liability percentage 
     determined under section 302(d) for the plan year is at least 
     100 percent, and
       ``(ii) in the case of a transaction or series of 
     transactions which occur in a plan year beginning on or after 
     such date, the funding

[[Page 16359]]

     target attainment percentage determined under section 303 is, 
     as of the valuation date for such plan year, at least 100 
     percent.
       ``(D) 2 year limitation.--Subparagraph (A) shall not apply 
     to any transaction or series of transaction if the plan 
     referred to in subparagraph (A)(ii) is terminated under 
     section 4041(c) or 4042 after the close of the 2-year period 
     beginning on the date on which the first such transaction 
     occurs.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to any transaction or series of transactions 
     occurring on and after the date of the enactment of this Act.

     SEC. 410. MISSING PARTICIPANTS.

       (a) In General.--Section 4050 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1350) is amended by 
     redesignating subsection (c) as subsection (e) and by 
     inserting after subsection (b) the following new subsections:
       ``(c) Multiemployer Plans.--The corporation shall prescribe 
     rules similar to the rules in subsection (a) for 
     multiemployer plans covered by this title that terminate 
     under section 4041A.
       ``(d) Plans Not Otherwise Subject to Title.--
       ``(1) Transfer to corporation.--The plan administrator of a 
     plan described in paragraph (4) may elect to transfer a 
     missing participant's benefits to the corporation upon 
     termination of the plan.
       ``(2) Information to the corporation.--To the extent 
     provided in regulations, the plan administrator of a plan 
     described in paragraph (4) shall, upon termination of the 
     plan, provide the corporation information with respect to 
     benefits of a missing participant if the plan transfers such 
     benefits--
       ``(A) to the corporation, or
       ``(B) to an entity other than the corporation or a plan 
     described in paragraph (4)(B)(ii).
       ``(3) Payment by the corporation.--If benefits of a missing 
     participant were transferred to the corporation under 
     paragraph (1), the corporation shall, upon location of the 
     participant or beneficiary, pay to the participant or 
     beneficiary the amount transferred (or the appropriate 
     survivor benefit) either--
       ``(A) in a single sum (plus interest), or
       ``(B) in such other form as is specified in regulations of 
     the corporation.
       ``(4) Plans described.--A plan is described in this 
     paragraph if--
       ``(A) the plan is a pension plan (within the meaning of 
     section 3(2))--
       ``(i) to which the provisions of this section do not apply 
     (without regard to this subsection), and
       ``(ii) which is not a plan described in paragraphs (2) 
     through (11) of section 4021(b), and
       ``(B) at the time the assets are to be distributed upon 
     termination, the plan--
       ``(i) has missing participants, and
       ``(ii) has not provided for the transfer of assets to pay 
     the benefits of all missing participants to another pension 
     plan (within the meaning of section 3(2)).
       ``(5) Certain provisions not to apply.--Subsections (a)(1) 
     and (a)(3) shall not apply to a plan described in paragraph 
     (4).''.
       (b) Conforming Amendments.--Section 206(f) of such Act (29 
     U.S.C. 1056(f)) is amended--
       (1) by striking ``title IV'' and inserting ``section 
     4050''; and
       (2) by striking ``the plan shall provide that,''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions made after final regulations 
     implementing subsections (c) and (d) of section 4050 of the 
     Employee Retirement Income Security Act of 1974 (as added by 
     subsection (a)), respectively, are prescribed.

     SEC. 411. DIRECTOR OF THE PENSION BENEFIT GUARANTY 
                   CORPORATION.

       (a) In General.--Title IV of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1301 et seq.) is amended--
       (1) by striking the second sentence of section 4002(a) and 
     inserting the following: ``In carrying out its functions 
     under this title, the corporation shall be administered by a 
     Director, who shall be appointed by the President, by and 
     with the advice and consent of the Senate, and who shall act 
     in accordance with the policies established by the board.''; 
     and
       (2) in section 4003(b), by--
       (A) striking ``under this title, any member'' and inserting 
     ``under this title, the Director, any member''; and
       (B) striking ``designated by the chairman'' and inserting 
     ``designated by the Director or chairman''.
       (b) Compensation of Director.--Section 5314 of title 5, 
     United States Code, is amended by adding at the end the 
     following new item:
     ``Director, Pension Benefit Guaranty Corporation.''.
       (c) Jurisdiction of Nomination.--
       (1) In general.--The Committee on Finance of the Senate and 
     the Committee on Health, Education, Labor, and Pensions of 
     the Senate shall have joint jurisdiction over the nomination 
     of a person nominated by the President to fill the position 
     of Director of the Pension Benefit Guaranty Corporation under 
     section 4002 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1302) (as amended by this Act), and if one 
     committee votes to order reported such a nomination, the 
     other shall report within 30 calendar days, or be 
     automatically discharged.
       (2) Rulemaking of the senate.--This subsection is enacted 
     by Congress--
       (A) as an exercise of rulemaking power of the Senate, and 
     as such it is deemed a part of the rules of the Senate, but 
     applicable only with respect to the procedure to be followed 
     in the Senate in the case of a nomination described in such 
     sentence, and it supersedes other rules only to the extent 
     that it is inconsistent with such rules; and
       (B) with full recognition of the constitutional right of 
     the Senate to change the rules (so far as relating to the 
     procedure of the Senate) at any time, in the same manner and 
     to the same extent as in the case of any other rule of the 
     Senate.
       (d) Transition.--The term of the individual serving as 
     Executive Director of the Pension Benefit Guaranty 
     Corporation on the date of enactment of this Act shall expire 
     on such date of enactment. Such individual, or any other 
     individual, may serve as interim Director of such Corporation 
     until an individual is appointed as Director of such 
     Corporation under section 4002 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1302) (as amended by 
     this Act).

     SEC. 412. INCLUSION OF INFORMATION IN THE PBGC ANNUAL REPORT.

       Section 4008 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1308) is amended by--
       (1) striking ``As soon as practicable'' and inserting ``(a) 
     As soon as practicable''; and
       (2) adding at the end the following:
       ``(b) The report under subsection (a) shall include--
       ``(1) a summary of the Pension Insurance Modeling System 
     microsimulation model, including the specific simulation 
     parameters, specific initial values, temporal parameters, and 
     policy parameters used to calculate the financial statements 
     for the corporation;
       ``(2) a comparison of--
       ``(A) the average return on investments earned with respect 
     to assets invested by the corporation for the year to which 
     the report relates; and
       ``(B) an amount equal to 60 percent of the average return 
     on investment for such year in the Standard & Poor's 500 
     Index, plus 40 percent of the average return on investment 
     for such year in the Lehman Aggregate Bond Index (or in a 
     similar fixed income index); and
       ``(3) a statement regarding the deficit or surplus for such 
     year that the corporation would have had if the corporation 
     had earned the return described in paragraph (2)(B) with 
     respect to assets invested by the corporation.''.

                          TITLE V--DISCLOSURE

     SEC. 501. DEFINED BENEFIT PLAN FUNDING NOTICE.

       (a) In General.--Section 101(f) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1021(f)) is amended to 
     read as follows:
       ``(f) Defined Benefit Plan Funding Notices.--
       ``(1) In general.--The administrator of a defined benefit 
     plan to which title IV applies shall for each plan year 
     provide a plan funding notice to the Pension Benefit Guaranty 
     Corporation, to each plan participant and beneficiary, to 
     each labor organization representing such participants or 
     beneficiaries, and, in the case of a multiemployer plan, to 
     each employer that has an obligation to contribute to the 
     plan.
       ``(2) Information contained in notices.--
       ``(A) Identifying information.--Each notice required under 
     paragraph (1) shall contain identifying information, 
     including the name of the plan, the address and phone number 
     of the plan administrator and the plan's principal 
     administrative officer, each plan sponsor's employer 
     identification number, and the plan number of the plan.
       ``(B) Specific information.--A plan funding notice under 
     paragraph (1) shall include--
       ``(i)(I) in the case of a single-employer plan, a statement 
     as to whether the plan's funding target attainment percentage 
     (as defined in section 303(d)(2)) for the plan year to which 
     the notice relates, and for the 2 preceding plan years, is at 
     least 100 percent (and, if not, the actual percentages), or
       ``(II) in the case of a multiemployer plan, a statement as 
     to whether the plan's funded percentage (as defined in 
     section 305(i)) for the plan year to which the notice 
     relates, and for the 2 preceding plan years, is at least 100 
     percent (and, if not, the actual percentages),
       ``(ii)(I) in the case of a single-employer plan, a 
     statement of--

       ``(aa) the total assets (separately stating the prefunding 
     balance and the funding standard carryover balance) and 
     liabilities of the plan, determined in the same manner as 
     under section 303, for the plan year for which the latest 
     annual report filed under section 104(a) was filed and for 
     the 2 preceding plan years, as reported in the annual report 
     for each such plan year, and
       ``(bb) the value of the plan's assets and liabilities for 
     the plan year to which the notice relates as of the last day 
     of the plan year to which the notice relates determined

[[Page 16360]]

     using the asset valuation under subclause (II) of section 
     4006(a)(3)(E)(iii) and the interest rate under section 
     4006(a)(3)(E)(iv), and

       ``(II) in the case of a multiemployer plan, a statement of 
     the value of the plan's assets and liabilities for the plan 
     year to which the notice relates as the last day of such plan 
     year and the preceding 2 plan years,
       ``(iii) a statement of the number of participants who are--

       ``(I) retired or separated from service and are receiving 
     benefits,
       ``(II) retired or separated participants entitled to future 
     benefits, and
       ``(III) active participants under the plan,

       ``(iv) a statement setting forth the funding policy of the 
     plan and the asset allocation of investments under the plan 
     (expressed as percentages of total assets) as of the end of 
     the plan year to which the notice relates,
       ``(v) in the case of a multiemployer plan, whether the plan 
     was in critical or endangered status under section 305 for 
     such plan year and, if so--

       ``(I) a statement describing how a person may obtain a copy 
     of the plan's funding improvement or rehabilitation plan, as 
     appropriate, adopted under section 305 and the actuarial and 
     financial data that demonstrate any action taken by the plan 
     toward fiscal improvement, and
       ``(II) a summary of any funding improvement plan, 
     rehabilitation plan, or modification thereof adopted under 
     section 305 during the plan year to which the notice relates,

       ``(vi) in the case of any plan amendment, scheduled benefit 
     increase or reduction, or other known event taking effect in 
     the current plan year and having a material effect on plan 
     liabilities or assets for the year (as defined in regulations 
     by the Secretary), an explanation of the amendment, schedule 
     increase or reduction, or event, and a projection to the end 
     of such plan year of the effect of the amendment, scheduled 
     increase or reduction, or event on plan liabilities,
       ``(vii)(I) in the case of a single-employer plan, a summary 
     of the rules governing termination of single-employer plans 
     under subtitle C of title IV, or
       ``(II) in the case of a multiemployer plan, a summary of 
     the rules governing reorganization or insolvency, including 
     the limitations on benefit payments,
       ``(viii) a general description of the benefits under the 
     plan which are eligible to be guaranteed by the Pension 
     Benefit Guaranty Corporation, along with an explanation of 
     the limitations on the guarantee and the circumstances under 
     which such limitations apply,
       ``(ix) a statement that a person may obtain a copy of the 
     annual report of the plan filed under section 104(a) upon 
     request, through the Internet website of the Department of 
     Labor, or through an Intranet website maintained by the 
     applicable plan sponsor (or plan administrator on behalf of 
     the plan sponsor), and
       ``(x) if applicable, a statement that each contributing 
     sponsor, and each member of the contributing sponsor's 
     controlled group, of the single-employer plan was required to 
     provide the information under section 4010 for the plan year 
     to which the notice relates.
       ``(C) Other information.--Each notice under paragraph (1) 
     shall include--
       ``(i) in the case of a multiemployer plan, a statement that 
     the plan administrator shall provide, upon written request, 
     to any labor organization representing plan participants and 
     beneficiaries and any employer that has an obligation to 
     contribute to the plan, a copy of the annual report filed 
     with the Secretary under section 104(a), and
       ``(ii) any additional information which the plan 
     administrator elects to include to the extent not 
     inconsistent with regulations prescribed by the Secretary.
       ``(3) Time for providing notice.--
       ``(A) In general.--Any notice under paragraph (1) shall be 
     provided not later than 120 days after the end of the plan 
     year to which the notice relates.
       ``(B) Exception for small plans.--In the case of a small 
     plan (as such term is used under section 303(g)(2)(B)) any 
     notice under paragraph (1) shall be provided upon filing of 
     the annual report under section 104(a).
       ``(4) Form and manner.--Any notice under paragraph (1)--
       ``(A) shall be provided in a form and manner prescribed in 
     regulations of the Secretary,
       ``(B) shall be written in a manner so as to be understood 
     by the average plan participant, and
       ``(C) may be provided in written, electronic, or other 
     appropriate form to the extent such form is reasonably 
     accessible to persons to whom the notice is required to be 
     provided.''.
       (b) Repeal of Notice to Participants of Funding Status.--
       (1) In general.--Title IV of such Act (29 U.S.C. 1301 et 
     seq.) is amended by striking section 4011.
       (2) Clerical amendment.--Section 1 of such Act is amended 
     in the table of contents by striking the item relating to 
     section 4011.
       (c) Model Notice.--Not later than 1 year after the date of 
     the enactment of this Act, the Secretary of Labor shall 
     publish a model version of the notice required by section 
     101(f) of the Employee Retirement Income Security Act of 
     1974. The Secretary of Labor may promulgate any interim final 
     rules as the Secretary determines appropriate to carry out 
     the provisions of this subsection.
       (d) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to plan years beginning after December 31, 2007, except 
     that the amendment made by subsection (b) shall apply to plan 
     years beginning after December 31, 2006.
       (2) Transition rule.--Any requirement under section 101(f) 
     of the Employee Retirement Income Security Act of 1974 (as 
     amended by this section) to report the funding target 
     attainment percentage or funded percentage of a plan with 
     respect to any plan year beginning before January 1, 2008, 
     shall be treated as met if the plan reports--
       (A) in the case of a plan year beginning in 2006, the 
     funded current liability percentage (as defined in section 
     302(d)(8) of such Act) of the plan for such plan year, and
       (B) in the case of a plan year beginning in 2007, the 
     funding target attainment percentage or funded percentage as 
     determined using such methods of estimation as the Secretary 
     of the Treasury may provide.

     SEC. 502. ACCESS TO MULTIEMPLOYER PENSION PLAN INFORMATION.

       (a) Financial Information With Respect to Multiemployer 
     Plans.--
       (1) In general.--Section 101 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1021), as amended by 
     section 103, is amended--
       (A) by redesignating subsection (k) as subsection (l); and
       (B) by inserting after subsection (j) the following new 
     subsection:
       ``(k) Multiemployer Plan Information Made Available on 
     Request.--
       ``(1) In general.--Each administrator of a multiemployer 
     plan shall, upon written request, furnish to any plan 
     participant or beneficiary, employee representative, or any 
     employer that has an obligation to contribute to the plan--
       ``(A) a copy of any periodic actuarial report (including 
     any sensitivity testing) received by the plan for any plan 
     year which has been in the plan's possession for at least 30 
     days,
       ``(B) a copy of any quarterly, semi-annual, or annual 
     financial report prepared for the plan by any plan investment 
     manager or advisor or other fiduciary which has been in the 
     plan's possession for at least 30 days, and
       ``(C) a copy of any application filed with the Secretary of 
     the Treasury requesting an extension under section 304 of 
     this Act or section 431(d) of the Internal Revenue Code of 
     1986 and the determination of such Secretary pursuant to such 
     application.
       ``(2) Compliance.--Information required to be provided 
     under paragraph (1) --
       ``(A) shall be provided to the requesting participant, 
     beneficiary, or employer within 30 days after the request in 
     a form and manner prescribed in regulations of the Secretary,
       ``(B) may be provided in written, electronic, or other 
     appropriate form to the extent such form is reasonably 
     accessible to persons to whom the information is required to 
     be provided, and
       ``(C) shall not--
       ``(i) include any individually identifiable information 
     regarding any plan participant, beneficiary, employee, 
     fiduciary, or contributing employer, or
       ``(ii) reveal any proprietary information regarding the 
     plan, any contributing employer, or entity providing services 
     to the plan.
       ``(3) Limitations.--In no case shall a participant, 
     beneficiary, or employer be entitled under this subsection to 
     receive more than one copy of any report or application 
     described in paragraph (1) during any one 12-month period. 
     The administrator may make a reasonable charge to cover 
     copying, mailing, and other costs of furnishing copies of 
     information pursuant to paragraph (1). The Secretary may by 
     regulations prescribe the maximum amount which will 
     constitute a reasonable charge under the preceding 
     sentence.''.
       (2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C. 
     1132(c)(4)) is amended by striking ``section 101(j)'' and 
     inserting ``subsection (j) or (k) of section 101''.
       (3) Regulations.--The Secretary shall prescribe regulations 
     under section 101(k)(2) of the Employee Retirement Income 
     Security Act of 1974 (as added by paragraph (1)) not later 
     than 1 year after the date of the enactment of this Act.
       (b) Notice of Potential Withdrawal Liability to 
     Multiemployer Plans.--
       (1) In general.--Section 101 of such Act (as amended by 
     subsection (a)) is amended--
       (A) by redesignating subsection (l) as subsection (m); and
       (B) by inserting after subsection (k) the following new 
     subsection:
       ``(l) Notice of Potential Withdrawal Liability.--
       ``(1) In general.--The plan sponsor or administrator of a 
     multiemployer plan shall, upon written request, furnish to 
     any employer who has an obligation to contribute to the plan 
     a notice of--
       ``(A) the estimated amount which would be the amount of 
     such employer's withdrawal liability under part 1 of subtitle 
     E of title IV if such employer withdrew on the last day of 
     the plan year preceding the date of the request, and

[[Page 16361]]

       ``(B) an explanation of how such estimated liability amount 
     was determined, including the actuarial assumptions and 
     methods used to determine the value of the plan liabilities 
     and assets, the data regarding employer contributions, 
     unfunded vested benefits, annual changes in the plan's 
     unfunded vested benefits, and the application of any relevant 
     limitations on the estimated withdrawal liability.

     For purposes of subparagraph (B), the term `employer 
     contribution' means, in connection with a participant, a 
     contribution made by an employer as an employer of such 
     participant.
       ``(2) Compliance.--Any notice required to be provided under 
     paragraph (1)--
       ``(A) shall be provided in a form and manner prescribed in 
     regulations of the Secretary to the requesting employer 
     within--
       ``(i) 180 days after the request, or
       ``(ii) subject to regulations of the Secretary, such longer 
     time as may be necessary in the case of a plan that 
     determines withdrawal liability based on any method described 
     under paragraph (4) or (5) of section 4211(c); and
       ``(B) may be provided in written, electronic, or other 
     appropriate form to the extent such form is reasonably 
     accessible to employers to whom the information is required 
     to be provided.
       ``(3) Limitations.--In no case shall an employer be 
     entitled under this subsection to receive more than one 
     notice described in paragraph (1) during any one 12-month 
     period. The person required to provide such notice may make a 
     reasonable charge to cover copying, mailing, and other costs 
     of furnishing such notice pursuant to paragraph (1). The 
     Secretary may by regulations prescribe the maximum amount 
     which will constitute a reasonable charge under the preceding 
     sentence.''.
       (2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C. 
     1132(c)(4)) is amended by striking ``section 101(j) or (k)'' 
     and inserting ``subsection (j), (k), or (l) of section 101''.
       (c) Notice of Amendment Reducing Future Accruals.--
       (1) Amendment of erisa.--Section 204(h)(1) of such Act (29 
     U.S.C. 1054(h)(1)) is amended by inserting at the end before 
     the period the following: ``and to each employer who has an 
     obligation to contribute to the plan.''.
       (2) Amendment of internal revenue code.--Section 
     4980F(e)(1) of such Code is amended by adding at the end 
     before the period the following: ``and to each employer who 
     has an obligation to contribute to the plan.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2007.

     SEC. 503. ADDITIONAL ANNUAL REPORTING REQUIREMENTS.

       (a) Additional Annual Reporting Requirements With Respect 
     to Defined Benefit Plans.--
       (1) In general.--Section 103 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1023) is amended--
       (A) in subsection (a)(1)(B), by striking ``subsections (d) 
     and (e)'' and inserting ``subsections (d), (e), and (f)''; 
     and
       (B) by adding at the end the following new subsection:
       ``(f) Additional Information With Respect to Defined 
     Benefit Plans.--
       ``(1) Liabilities under 2 or more plans.--
       ``(A) In general.--In any case in which any liabilities to 
     participants or their beneficiaries under a defined benefit 
     plan as of the end of a plan year consist (in whole or in 
     part) of liabilities to such participants and beneficiaries 
     under 2 or more pension plans as of immediately before such 
     plan year, an annual report under this section for such plan 
     year shall include the funded percentage of each of such 2 or 
     more pension plans as of the last day of such plan year and 
     the funded percentage of the plan with respect to which the 
     annual report is filed as of the last day of such plan year.
       ``(B) Funded percentage.--For purposes of this paragraph, 
     the term `funded percentage'--
       ``(i) in the case of a single-employer plan, means the 
     funding target attainment percentage, as defined in section 
     303(d)(2), and
       ``(ii) in the case of a multiemployer plan, has the meaning 
     given such term in section 305(i)(2).
       ``(2) Additional information for multiemployer plans.--With 
     respect to any defined benefit plan which is a multiemployer 
     plan, an annual report under this section for a plan year 
     shall include, in addition to the information required under 
     paragraph (1), the following, as of the end of the plan year 
     to which the report relates:
       ``(A) The number of employers obligated to contribute to 
     the plan.
       ``(B) A list of the employers that contributed more than 5 
     percent of the total contributions to the plan during such 
     plan year.
       ``(C) The number of participants under the plan on whose 
     behalf no contributions were made by an employer as an 
     employer of the participant for such plan year and for each 
     of the 2 preceding plan years.
       ``(D) The ratios of--
       ``(i) the number of participants under the plan on whose 
     behalf no employer had an obligation to make an employer 
     contribution during the plan year, to
       ``(ii) the number of participants under the plan on whose 
     behalf no employer had an obligation to make an employer 
     contribution during each of the 2 preceding plan years.
       ``(E) Whether the plan received an amortization extension 
     under section 304(d) of this Act or section 431(d) of the 
     Internal Revenue Code of 1986 for such plan year and, if so, 
     the amount of the difference between the minimum required 
     contribution for the year and the minimum required 
     contribution which would have been required without regard to 
     the extension, and the period of such extension.
       ``(F) Whether the plan used the shortfall funding method 
     (as such term is used in section 305) for such plan year and, 
     if so, the amount of the difference between the minimum 
     required contribution for the year and the minimum required 
     contribution which would have been required without regard to 
     the use of such method, and the period of use of such method.
       ``(G) Whether the plan was in critical or endangered status 
     under section 305 for such plan year, and if so, a summary of 
     any funding improvement or rehabilitation plan (or 
     modification thereto) adopted during the plan year, and the 
     funded percentage of the plan.
       ``(H) The number of employers that withdrew from the plan 
     during the preceding plan year and the aggregate amount of 
     withdrawal liability assessed, or estimated to be assessed, 
     against such withdrawn employers.
       ``(I) In the case of a multiemployer plan that has merged 
     with another plan or to which assets and liabilities have 
     been transferred, the actuarial valuation of the assets and 
     liabilities of each affected plan during the year preceding 
     the effective date of the merger or transfer, based upon the 
     most recent data available as of the day before the first day 
     of the plan year, or other valuation method performed under 
     standards and procedures as the Secretary may prescribe by 
     regulation.''.
       (2) Guidance by secretary of labor.--Not later than 1 year 
     after the date of enactment of this Act, the Secretary of 
     Labor shall publish guidance to assist multiemployer defined 
     benefit plans to--
       (A) identify and enumerate plan participants for whom there 
     is no employer with an obligation to make an employer 
     contribution under the plan; and
       (B) report such information under section 103(f)(2)(D) of 
     the Employee Retirement Income Security Act of 1974 (as added 
     by this section).
       (b) Additional Information in Annual Actuarial Statement 
     Regarding Plan Retirement Projections.--Section 103(d) of 
     such Act (29 U.S.C. 1023(d)) is amended--
       (1) by redesignating paragraphs (12) and (13) as paragraphs 
     (13) and (14), respectively; and
       (2) by inserting after paragraph (11) the following new 
     paragraph:
       ``(12) A statement explaining the actuarial assumptions and 
     methods used in projecting future retirements and forms of 
     benefit distributions under the plan.''.
       (c) Repeal of Summary Annual Report Requirement for Defined 
     Benefit Plans.--
       (1) In general.--Section 104(b)(3) of such Act (29 U.S.C. 
     1024(b)(3)) is amended by inserting ``(other than an 
     administrator of a defined benefit plan to which the 
     requirements of section 103(f) applies)'' after ``the 
     administrators''.
       (2) Conforming amendments.--Section 101(a)(2) of such Act 
     (29 U.S.C. 1021(a)(2)) is amended by inserting ``subsection 
     (f) and'' before ``sections 104(b)(3) and 105(a) and (c)''.
       (d) Furnishing Summary Plan Information to Employers and 
     Employee Representatives of Multiemployer Plans.--Section 104 
     of such Act (29 U.S.C. 1024) is amended--
       (1) in the header, by striking ``PARTICIPANTS'' and 
     inserting ``PARTICIPANTS AND CERTAIN EMPLOYERS'';
       (2) redesignating subsection (d) as subsection (e); and
       (3) inserting after subsection (c) the following:
       ``(d) Furnishing Summary Plan Information to Employers and 
     Employee Representatives of Multiemployer Plans.--
       ``(1) In general.--With respect to a multiemployer plan 
     subject to this section, within 30 days after the due date 
     under subsection (a)(1) for the filing of the annual report 
     for the fiscal year of the plan, the administrators shall 
     furnish to each employee organization and to each employer 
     with an obligation to contribute to the plan a report that 
     contains--
       ``(A) a description of the contribution schedules and 
     benefit formulas under the plan, and any modification to such 
     schedules and formulas, during such plan year;
       ``(B) the number of employers obligated to contribute to 
     the plan;
       ``(C) a list of the employers that contributed more than 5 
     percent of the total contributions to the plan during such 
     plan year;
       ``(D) the number of participants under the plan on whose 
     behalf no contributions were made by an employer as an 
     employer of the participant for such plan year and for each 
     of the 2 preceding plan years;
       ``(E) whether the plan was in critical or endangered status 
     under section 305 for such plan year and, if so, include--

[[Page 16362]]

       ``(i) a list of the actions taken by the plan to improve 
     its funding status; and
       ``(ii) a statement describing how a person may obtain a 
     copy of the plan's improvement or rehabilitation plan, as 
     applicable, adopted under section 305 and the actuarial and 
     financial data that demonstrate any action taken by the plan 
     toward fiscal improvement;
       ``(F) the number of employers that withdrew from the plan 
     during the preceding plan year and the aggregate amount of 
     withdrawal liability assessed, or estimated to be assessed, 
     against such withdrawn employers, as reported on the annual 
     report for the plan year to which the report under this 
     subsection relates;
       ``(G) in the case of a multiemployer plan that has merged 
     with another plan or to which assets and liabilities have 
     been transferred, the actuarial valuation of the assets and 
     liabilities of each affected plan during the year preceding 
     the effective date of the merger or transfer, based upon the 
     most recent data available as of the day before the first day 
     of the plan year, or other valuation method performed under 
     standards and procedures as the Secretary may prescribe by 
     regulation;
       ``(H) a description as to whether the plan--
       ``(i) sought or received an amortization extension under 
     section 304(d) of this Act or section 431(d) of the Internal 
     Revenue Code of 1986 for such plan year; or
       ``(ii) used the shortfall funding method (as such term is 
     used in section 305) for such plan year; and
       ``(I) notification of the right under this section of the 
     recipient to a copy of the annual report filed with the 
     Secretary under subsection (a), summary plan description, 
     summary of any material modification of the plan, upon 
     written request, but that--
       ``(i) in no case shall a recipient be entitled to receive 
     more than one copy of any such document described during any 
     one 12-month period; and
       ``(ii) the administrator may make a reasonable charge to 
     cover copying, mailing, and other costs of furnishing copies 
     of information pursuant to this subparagraph.
       ``(2) Effect of subsection.--Nothing in this subsection 
     waives any other provision under this title requiring plan 
     administrators to provide, upon request, information to 
     employers that have an obligation to contribute under the 
     plan.''.
       (e) Model Form.--Not later than 1 year after the date of 
     the enactment of this Act, the Secretary of Labor shall 
     publish a model form for providing the statements, schedules, 
     and other material required to be provided under section 
     101(f) of the Employee Retirement Income Security Act of 
     1974, as amended by this section. The Secretary of Labor may 
     promulgate any interim final rules as the Secretary 
     determines appropriate to carry out the provisions of this 
     subsection.
       (f) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2007.

     SEC. 504. ELECTRONIC DISPLAY OF ANNUAL REPORT INFORMATION.

       (a) Electronic Display of Information.--Section 104(b) of 
     such Act (29 U.S.C. 1024(b)) is amended by adding at the end 
     the following:
       ``(5) Identification and basic plan information and 
     actuarial information included in the annual report for any 
     plan year shall be filed with the Secretary in an electronic 
     format which accommodates display on the Internet, in 
     accordance with regulations which shall be prescribed by the 
     Secretary. The Secretary shall provide for display of such 
     information included in the annual report, within 90 days 
     after the date of the filing of the annual report, on an 
     Internet website maintained by the Secretary and other 
     appropriate media. Such information shall also be displayed 
     on any Intranet website maintained by the plan sponsor (or by 
     the plan administrator on behalf of the plan sponsor) for the 
     purpose of communicating with employees and not the public, 
     in accordance with regulations which shall be prescribed by 
     the Secretary.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2007.

     SEC. 505. SECTION 4010 FILINGS WITH THE PBGC.

       (a) Change in Criteria for Persons Required To Provide 
     Information to PBGC.--Section 4010(b) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1310(b)) is 
     amended by striking paragraph (1) and inserting the 
     following:
       ``(1) the funding target attainment percentage (as defined 
     in subsection (d)) at the end of the preceding plan year of a 
     plan maintained by the contributing sponsor or any member of 
     its controlled group is less than 80 percent;''.
       (b) Additional Information Required.--Section 4010 of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1310) is amended by adding at the end the following new 
     subsection:
       ``(d) Additional Information Required.--
       ``(1) In general.--The information submitted to the 
     corporation under subsection (a) shall include--
       ``(A) the amount of benefit liabilities under the plan 
     determined using the assumptions used by the corporation in 
     determining liabilities;
       ``(B) the funding target of the plan determined as if the 
     plan has been in at-risk status for at least 5 plan years; 
     and
       ``(C) the funding target attainment percentage of the plan.
       ``(2) Definitions.--For purposes of this subsection:
       ``(A) Funding target.--The term `funding target' has the 
     meaning provided under section 303(d)(1).
       ``(B) Funding target attainment percentage.--The term 
     `funding target attainment percentage' has the meaning 
     provided under section 302(d)(2).
       ``(C) At-risk status.--The term `at-risk status' has the 
     meaning provided in section 303(i)(4).
       ``(e) Notice to Congress.--The corporation shall, on an 
     annual basis, submit to the Committee on Health, Education, 
     Labor, and Pensions and the Committee on Finance of the 
     Senate and the Committee on Education and the Workforce and 
     the Committee on Ways and Means of the House of 
     Representatives, a summary report in the aggregate of the 
     information submitted to the corporation under this 
     section.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to years beginning after 2007.

     SEC. 506. DISCLOSURE OF TERMINATION INFORMATION TO PLAN 
                   PARTICIPANTS.

       (a) Distress Terminations.--
       (1) In general.--Section 4041(c)(2) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1341(c)(2)) 
     is amended by adding at the end the following:
       ``(D) Disclosure of termination information.--
       ``(i) In general.--A plan administrator that has filed a 
     notice of intent to terminate under subsection (a)(2) shall 
     provide to an affected party any information provided to the 
     corporation under subsection (a)(2) not later than 15 days 
     after--

       ``(I) receipt of a request from the affected party for the 
     information; or
       ``(II) the provision of new information to the corporation 
     relating to a previous request.

       ``(ii) Confidentiality.--

       ``(I) In general.--The plan administrator shall not provide 
     information under clause (i) in a form that includes any 
     information that may directly or indirectly be associated 
     with, or otherwise identify, an individual participant or 
     beneficiary.
       ``(II) Limitation.--A court may limit disclosure under this 
     subparagraph of confidential information described in section 
     552(b) of title 5, United States Code, to any authorized 
     representative of the participants or beneficiaries that 
     agrees to ensure the confidentiality of such information.

       ``(iii) Form and manner of information; charges.--

       ``(I) Form and manner.--The corporation may prescribe the 
     form and manner of the provision of information under this 
     subparagraph, which shall include delivery in written, 
     electronic, or other appropriate form to the extent that such 
     form is reasonably accessible to individuals to whom the 
     information is required to be provided.
       ``(II) Reasonable charges.--A plan administrator may charge 
     a reasonable fee for any information provided under this 
     subparagraph in other than electronic form.

       ``(iv) Authorized representative.--For purposes of this 
     subparagraph, the term `authorized representative' means any 
     employee organization representing participants in the 
     pension plan.''.
       (2) Conforming amendment.--Section 4041(c)(1) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1341(c)(1)) is amended in subparagraph (C) by striking 
     ``subparagraph (B)'' and inserting ``subparagraphs (B) and 
     (D)''.
       (b) Involuntary Terminations.--
       (1) In general.--Section 4042(c) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1342(c)) is amended 
     by--
       (A) striking ``(c) If the'' and inserting ``(c)(1) If 
     the'';
       (B) redesignating paragraph (3) as paragraph (2); and
       (C) adding at the end the following:
       ``(3) Disclosure of termination information.--
       ``(A) In general.--
       ``(i) Information from plan sponsor or administrator.--A 
     plan sponsor or plan administrator of a single-employer plan 
     that has received a notice from the corporation of a 
     determination that the plan should be terminated under this 
     section shall provide to an affected party any information 
     provided to the corporation in connection with the plan 
     termination.
       ``(ii) Information from corporation.--The corporation shall 
     provide a copy of the administrative record, including the 
     trusteeship decision record of a termination of a plan 
     described under clause (i).
       ``(B) Timing of disclosure.--The plan sponsor, plan 
     administrator, or the corporation, as applicable, shall 
     provide the information described in subparagraph (A) not 
     later than 15 days after--
       ``(i) receipt of a request from an affected party for such 
     information; or
       ``(ii) in the case of information described under 
     subparagraph (A)(i), the provision of

[[Page 16363]]

     any new information to the corporation relating to a previous 
     request by an affected party.
       ``(C) Confidentiality.--
       ``(i) In general.--The plan administrator and plan sponsor 
     shall not provide information under subparagraph (A)(i) in a 
     form which includes any information that may directly or 
     indirectly be associated with, or otherwise identify, an 
     individual participant or beneficiary.
       ``(ii) Limitation.--A court may limit disclosure under this 
     paragraph of confidential information described in section 
     552(b) of title 5, United States Code, to authorized 
     representatives (within the meaning of section 
     4041(c)(2)(D)(iv)) of the participants or beneficiaries that 
     agree to ensure the confidentiality of such information.
       ``(D) Form and manner of information; charges.--
       ``(i) Form and manner.--The corporation may prescribe the 
     form and manner of the provision of information under this 
     paragraph, which shall include delivery in written, 
     electronic, or other appropriate form to the extent that such 
     form is reasonably accessible to individuals to whom the 
     information is required to be provided.
       ``(ii) Reasonable charges.--A plan sponsor may charge a 
     reasonable fee for any information provided under this 
     paragraph in other than electronic form.''.
       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to any plan termination under title IV of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1301 et 
     seq.) with respect to which the notice of intent to terminate 
     (or in the case of a termination by the Pension Benefit 
     Guaranty Corporation, a notice of determination under section 
     4042 of such Act (29 U.S.C. 1342)) occurs after the date of 
     enactment of this Act.
       (2) Transition rule.--If notice under section 4041(c)(2)(D) 
     or 4042(c)(3) of the Employee Retirement Income Security Act 
     of 1974 (as added by this section) would otherwise be 
     required to be provided before the 90th day after the date of 
     the enactment of this Act, such notice shall not be required 
     to be provided until such 90th day.

     SEC. 507. NOTICE OF FREEDOM TO DIVEST EMPLOYER SECURITIES.

       (a) In General.--Section 101 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1021), as amended by 
     this Act, is amended by redesignating subsection (m) as 
     subsection (n) and by inserting after subsection (l) the 
     following:
       ``(m) Notice of Right To Divest.--Not later than 30 days 
     before the first date on which an applicable individual of an 
     applicable individual account plan is eligible to exercise 
     the right under section 204(j) to direct the proceeds from 
     the divestment of employer securities with respect to any 
     type of contribution, the administrator shall provide to such 
     individual a notice--
       ``(1) setting forth such right under such section, and
       ``(2) describing the importance of diversifying the 
     investment of retirement account assets.

     The notice required by this subsection shall be written in a 
     manner calculated to be understood by the average plan 
     participant and may be delivered in written, electronic, or 
     other appropriate form to the extent that such form is 
     reasonably accessible to the recipient.''
       (b) Penalties.--Section 502(c)(7) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1132(c)(7)) 
     is amended by striking ``section 101(i)'' and inserting 
     ``subsection (i) or (m) of section 101''.
       (c) Model Notice.--The Secretary of the Treasury shall, 
     within 180 days after the date of the enactment of this 
     subsection, prescribe a model notice for purposes of 
     satisfying the requirements of the amendments made by this 
     section.
       (d) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to plan years beginning after December 31, 2006.
       (2) Transition rule.--If notice under section 101(m) of the 
     Employee Retirement Income Security Act of 1974 (as added by 
     this section) would otherwise be required to be provided 
     before the 90th day after the date of the enactment of this 
     Act, such notice shall not be required to be provided until 
     such 90th day.

     SEC. 508. PERIODIC PENSION BENEFIT STATEMENTS.

       (a) Amendments of ERISA.--
       (1) In general.--Section 105(a) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1025(a)) is amended to 
     read as follows:
       ``(a) Requirements To Provide Pension Benefit Statements.--
       ``(1) Requirements.--
       ``(A) Individual account plan.--The administrator of an 
     individual account plan (other than a one-participant 
     retirement plan described in section 101(i)(8)(B)) shall 
     furnish a pension benefit statement--
       ``(i) at least once each calendar quarter to a participant 
     or beneficiary who has the right to direct the investment of 
     assets in his or her account under the plan,
       ``(ii) at least once each calendar year to a participant or 
     beneficiary who has his or her own account under the plan but 
     does not have the right to direct the investment of assets in 
     that account, and
       ``(iii) upon written request to a plan beneficiary not 
     described in clause (i) or (ii).
       ``(B) Defined benefit plan.--The administrator of a defined 
     benefit plan (other than a one-participant retirement plan 
     described in section 101(i)(8)(B)) shall furnish a pension 
     benefit statement--
       ``(i) at least once every 3 years to each participant with 
     a nonforfeitable accrued benefit and who is employed by the 
     employer maintaining the plan at the time the statement is to 
     be furnished, and
       ``(ii) to a participant or beneficiary of the plan upon 
     written request.

     Information furnished under clause (i) to a participant may 
     be based on reasonable estimates determined under regulations 
     prescribed by the Secretary, in consultation with the Pension 
     Benefit Guaranty Corporation.
       ``(2) Statements.--
       ``(A) In general.--A pension benefit statement under 
     paragraph (1)--
       ``(i) shall indicate, on the basis of the latest available 
     information--

       ``(I) the total benefits accrued, and
       ``(II) the nonforfeitable pension benefits, if any, which 
     have accrued, or the earliest date on which benefits will 
     become nonforfeitable,

       ``(ii) shall include an explanation of any permitted 
     disparity under section 401(l) of the Internal Revenue Code 
     of 1986 or any floor-offset arrangement that may be applied 
     in determining any accrued benefits described in clause (i),
       ``(iii) shall be written in a manner calculated to be 
     understood by the average plan participant, and
       ``(iv) may be delivered in written, electronic, or other 
     appropriate form to the extent such form is reasonably 
     accessible to the participant or beneficiary.
       ``(B) Additional information.--In the case of an individual 
     account plan, any pension benefit statement under clause (i) 
     or (ii) of paragraph (1)(A) shall include--
       ``(i) the value of each investment to which assets in the 
     individual account have been allocated, determined as of the 
     most recent valuation date under the plan, including the 
     value of any assets held in the form of employer securities, 
     without regard to whether such securities were contributed by 
     the plan sponsor or acquired at the direction of the plan or 
     of the participant or beneficiary, and
       ``(ii) in the case of a pension benefit statement under 
     paragraph (1)(A)(i)--

       ``(I) an explanation of any limitations or restrictions on 
     any right of the participant or beneficiary under the plan to 
     direct an investment,
       ``(II) an explanation, written in a manner calculated to be 
     understood by the average plan participant, of the 
     importance, for the long-term retirement security of 
     participants and beneficiaries, of a well-balanced and 
     diversified investment portfolio, including a statement of 
     the risk that holding more than 20 percent of a portfolio in 
     the security of one entity (such as employer securities) may 
     not be adequately diversified, and
       ``(III) a notice directing the participant or beneficiary 
     to the Internet website of the Department of Labor for 
     sources of information on individual investing and 
     diversification.

       ``(C) Alternative notice.--The requirements of subparagraph 
     (A)(i)(II) are met if, at least annually and in accordance 
     with requirements of the Secretary, the plan--
       ``(i) updates the information described in such paragraph 
     which is provided in the pension benefit statement, or
       ``(ii) provides in a separate statement such information as 
     is necessary to enable a participant or beneficiary to 
     determine their nonforfeitable vested benefits.
       ``(3) Defined benefit plans.--
       ``(A) Alternative notice.--In the case of a defined benefit 
     plan, the requirements of paragraph (1)(B)(i) shall be 
     treated as met with respect to a participant if at least once 
     each year the administrator provides to the participant 
     notice of the availability of the pension benefit statement 
     and the ways in which the participant may obtain such 
     statement. Such notice may be delivered in written, 
     electronic, or other appropriate form to the extent such form 
     is reasonably accessible to the participant.
       ``(B) Years in which no benefits accrue.--The Secretary may 
     provide that years in which no employee or former employee 
     benefits (within the meaning of section 410(b) of the 
     Internal Revenue Code of 1986) under the plan need not be 
     taken into account in determining the 3-year period under 
     paragraph (1)(B)(i).''
       (2) Conforming amendments.--
       (A) Section 105 of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1025) is amended by striking 
     subsection (d).
       (B) Section 105(b) of such Act (29 U.S.C. 1025(b)) is 
     amended to read as follows:
       ``(b) Limitation on Number of Statements.--In no case shall 
     a participant or beneficiary of a plan be entitled to more 
     than 1 statement described in subparagraph (A)(iii) or 
     (B)(ii) of subsection (a)(1), whichever is applicable, in any 
     12-month period.''
       (C) Section 502(c)(1) of such Act (29 U.S.C. 1132(c)(1)) is 
     amended by striking ``or section

[[Page 16364]]

     101(f)'' and inserting ``section 101(f), or section 105(a)''.
       (b) Model Statements.--
       (1) In general.--The Secretary of Labor shall, within 1 
     year after the date of the enactment of this section, develop 
     1 or more model benefit statements that are written in a 
     manner calculated to be understood by the average plan 
     participant and that may be used by plan administrators in 
     complying with the requirements of section 105 of the 
     Employee Retirement Income Security Act of 1974.
       (2) Interim final rules.--The Secretary of Labor may 
     promulgate any interim final rules as the Secretary 
     determines appropriate to carry out the provisions of this 
     subsection.
       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to plan years beginning after December 31, 2006.
       (2) Special rule for collectively bargained agreements.--In 
     the case of a plan maintained pursuant to 1 or more 
     collective bargaining agreements between employee 
     representatives and 1 or more employers ratified on or before 
     the date of the enactment of this Act, paragraph (1) shall be 
     applied to benefits pursuant to, and individuals covered by, 
     any such agreement by substituting for ``December 31, 2006'' 
     the earlier of--
       (A) the later of--
       (i) December 31, 2007, or
       (ii) the date on which the last of such collective 
     bargaining agreements terminates (determined without regard 
     to any extension thereof after such date of enactment), or
       (B) December 31, 2008.

     SEC. 509. NOTICE TO PARTICIPANTS OR BENEFICIARIES OF BLACKOUT 
                   PERIODS.

       (a) In General.--Section 101(i)(8)(B) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 
     1021(i)(8)(B)) is amended by striking clauses (i) through 
     (iv), by redesignating clause (v) as clause (ii), and by 
     inserting before clause (ii), as so redesignated, the 
     following new clause:
       ``(i) on the first day of the plan year--

       ``(I) covered only one individual (or the individual and 
     the individual's spouse) and the individual (or the 
     individual and the individual's spouse) owned 100 percent of 
     the plan sponsor (whether or not incorporated), or
       ``(II) covered only one or more partners (or partners and 
     their spouses) in the plan sponsor, and''.

       (b) Effective Date.--The amendments made by this subsection 
     shall take effect as if included in the provisions of section 
     306 of Public Law 107-204 (116 Stat. 745 et seq.).

  TITLE VI--INVESTMENT ADVICE, PROHIBITED TRANSACTIONS, AND FIDUCIARY 
                                 RULES

                     Subtitle A--Investment Advice

     SEC. 601. PROHIBITED TRANSACTION EXEMPTION FOR PROVISION OF 
                   INVESTMENT ADVICE.

       (a) Amendments to the Employee Retirement Income Security 
     Act of 1974.--
       (1) Exemption from prohibited transactions.--Section 408(b) 
     of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1108(b)) is amended by adding at the end the following 
     new paragraph:
       ``(14) Any transaction in connection with the provision of 
     investment advice described in section 3(21)(A)(ii) to a 
     participant or beneficiary of an individual account plan that 
     permits such participant or beneficiary to direct the 
     investment of assets in their individual account, if--
       ``(A) the transaction is--
       ``(i) the provision of the investment advice to the 
     participant or beneficiary of the plan with respect to a 
     security or other property available as an investment under 
     the plan,
       ``(ii) the acquisition, holding, or sale of a security or 
     other property available as an investment under the plan 
     pursuant to the investment advice, or
       ``(iii) the direct or indirect receipt of fees or other 
     compensation by the fiduciary adviser or an affiliate thereof 
     (or any employee, agent, or registered representative of the 
     fiduciary adviser or affiliate) in connection with the 
     provision of the advice or in connection with an acquisition, 
     holding, or sale of a security or other property available as 
     an investment under the plan pursuant to the investment 
     advice; and
       ``(B) the requirements of subsection (g) are met.''.
       (2) Requirements.--Section 408 of such Act is amended 
     further by adding at the end the following new subsection:
       ``(g) Provision of Investment Advice to Participant and 
     Beneficiaries.--
       ``(1) In general.--The prohibitions provided in section 406 
     shall not apply to transactions described in subsection 
     (b)(14) if the investment advice provided by a fiduciary 
     adviser is provided under an eligible investment advice 
     arrangement.
       ``(2) Eligible investment advice arrangement.--For purposes 
     of this subsection, the term `eligible investment advice 
     arrangement' means an arrangement--
       ``(A) which either--
       ``(i) provides that any fees (including any commission or 
     other compensation) received by the fiduciary adviser for 
     investment advice or with respect to the sale, holding, or 
     acquisition of any security or other property for purposes of 
     investment of plan assets do not vary depending on the basis 
     of any investment option selected, or
       ``(ii) uses a computer model under an investment advice 
     program meeting the requirements of paragraph (3) in 
     connection with the provision of investment advice by a 
     fiduciary adviser to a participant or beneficiary, and
       ``(B) with respect to which the requirements of paragraph 
     (4), (5), (6), (7), (8), and (9) are met.
       ``(3) Investment advice program using computer model.--
       ``(A) In general.--An investment advice program meets the 
     requirements of this paragraph if the requirements of 
     subparagraphs (B), (C), and (D) are met.
       ``(B) Computer model.--The requirements of this 
     subparagraph are met if the investment advice provided under 
     the investment advice program is provided pursuant to a 
     computer model that--
       ``(i) applies generally accepted investment theories that 
     take into account the historic returns of different asset 
     classes over defined periods of time,
       ``(ii) utilizes relevant information about the participant, 
     which may include age, life expectancy, retirement age, risk 
     tolerance, other assets or sources of income, and preferences 
     as to certain types of investments,
       ``(iii) utilizes prescribed objective criteria to provide 
     asset allocation portfolios comprised of investment options 
     available under the plan,
       ``(iv) operates in a manner that is not biased in favor of 
     investments offered by the fiduciary adviser or a person with 
     a material affiliation or contractual relationship with the 
     fiduciary adviser, and
       ``(v) takes into account all investment options under the 
     plan in specifying how a participant's account balance should 
     be invested and is not inappropriately weighted with respect 
     to any investment option.
       ``(C) Certification.--
       ``(i) In general.--The requirements of this subparagraph 
     are met with respect to any investment advice program if an 
     eligible investment expert certifies, prior to the 
     utilization of the computer model and in accordance with 
     rules prescribed by the Secretary, that the computer model 
     meets the requirements of subparagraph (B).
       ``(ii) Renewal of certifications.--If, as determined under 
     regulations prescribed by the Secretary, there are material 
     modifications to a computer model, the requirements of this 
     subparagraph are met only if a certification described in 
     clause (i) is obtained with respect to the computer model as 
     so modified.
       ``(iii) Eligible investment expert.--The term `eligible 
     investment expert' means any person--

       ``(I) which meets such requirements as the Secretary may 
     provide, and
       ``(II) does not bear any material affiliation or 
     contractual relationship with any investment adviser or a 
     related person thereof (or any employee, agent, or registered 
     representative of the investment adviser or related person).

       ``(D) Exclusivity of recommendation.--The requirements of 
     this subparagraph are met with respect to any investment 
     advice program if--
       ``(i) the only investment advice provided under the program 
     is the advice generated by the computer model described in 
     subparagraph (B), and
       ``(ii) any transaction described in subsection 
     (b)(14)(B)(ii) occurs solely at the direction of the 
     participant or beneficiary.

     Nothing in the preceding sentence shall preclude the 
     participant or beneficiary from requesting investment advice 
     other than that described in subparagraph (A), but only if 
     such request has not been solicited by any person connected 
     with carrying out the arrangement.
       ``(4) Express authorization by separate fiduciary.--The 
     requirements of this paragraph are met with respect to an 
     arrangement if the arrangement is expressly authorized by a 
     plan fiduciary other than the person offering the investment 
     advice program, any person providing investment options under 
     the plan, or any affiliate of either.
       ``(5) Annual audit.--The requirements of this paragraph are 
     met if an independent auditor, who has appropriate technical 
     training or experience and proficiency and so represents in 
     writing--
       ``(A) conducts an annual audit of the arrangement for 
     compliance with the requirements of this subsection, and
       ``(B) following completion of the annual audit, issues a 
     written report to the fiduciary who authorized use of the 
     arrangement which presents its specific findings regarding 
     compliance of the arrangement with the requirements of this 
     subsection.

     For purposes of this paragraph, an auditor is considered 
     independent if it is not related to the person offering the 
     arrangement to the plan and is not related to any person 
     providing investment options under the plan.
       ``(6) Disclosure.--The requirements of this paragraph are 
     met if--
       ``(A) the fiduciary adviser provides to a participant or a 
     beneficiary before the initial

[[Page 16365]]

     provision of the investment advice with regard to any 
     security or other property offered as an investment option, a 
     written notification (which may consist of notification by 
     means of electronic communication)--
       ``(i) of the role of any party that has a material 
     affiliation or contractual relationship with the financial 
     adviser in the development of the investment advice program 
     and in the selection of investment options available under 
     the plan,
       ``(ii) of the past performance and historical rates of 
     return of the investment options available under the plan,
       ``(iii) of all fees or other compensation relating to the 
     advice that the fiduciary adviser or any affiliate thereof is 
     to receive (including compensation provided by any third 
     party) in connection with the provision of the advice or in 
     connection with the sale, acquisition, or holding of the 
     security or other property,
       ``(iv) of any material affiliation or contractual 
     relationship of the fiduciary adviser or affiliates thereof 
     in the security or other property,
       ``(v) the manner, and under what circumstances, any 
     participant or beneficiary information provided under the 
     arrangement will be used or disclosed,
       ``(vi) of the types of services provided by the fiduciary 
     adviser in connection with the provision of investment advice 
     by the fiduciary adviser,
       ``(vii) that the adviser is acting as a fiduciary of the 
     plan in connection with the provision of the advice, and
       ``(viii) that a recipient of the advice may separately 
     arrange for the provision of advice by another adviser, that 
     could have no material affiliation with and receive no fees 
     or other compensation in connection with the security or 
     other property, and
       ``(B) at all times during the provision of advisory 
     services to the participant or beneficiary, the fiduciary 
     adviser--
       ``(i) maintains the information described in subparagraph 
     (A) in accurate form and in the manner described in paragraph 
     (8),
       ``(ii) provides, without charge, accurate information to 
     the recipient of the advice no less frequently than annually,
       ``(iii) provides, without charge, accurate information to 
     the recipient of the advice upon request of the recipient, 
     and
       ``(iv) provides, without charge, accurate information to 
     the recipient of the advice concerning any material change to 
     the information required to be provided to the recipient of 
     the advice at a time reasonably contemporaneous to the change 
     in information.
       ``(7) Other conditions.--The requirements of this paragraph 
     are met if--
       ``(A) the fiduciary adviser provides appropriate 
     disclosure, in connection with the sale, acquisition, or 
     holding of the security or other property, in accordance with 
     all applicable securities laws,
       ``(B) the sale, acquisition, or holding occurs solely at 
     the direction of the recipient of the advice,
       ``(C) the compensation received by the fiduciary adviser 
     and affiliates thereof in connection with the sale, 
     acquisition, or holding of the security or other property is 
     reasonable, and
       ``(D) the terms of the sale, acquisition, or holding of the 
     security or other property are at least as favorable to the 
     plan as an arm's length transaction would be.
       ``(8) Standards for presentation of information.--
       ``(A) In general.--The requirements of this paragraph are 
     met if the notification required to be provided to 
     participants and beneficiaries under paragraph (6)(A) is 
     written in a clear and conspicuous manner and in a manner 
     calculated to be understood by the average plan participant 
     and is sufficiently accurate and comprehensive to reasonably 
     apprise such participants and beneficiaries of the 
     information required to be provided in the notification.
       ``(B) Model form for disclosure of fees and other 
     compensation.--The Secretary shall issue a model form for the 
     disclosure of fees and other compensation required in 
     paragraph (6)(A)(iii) which meets the requirements of 
     subparagraph (A).
       ``(9) Maintenance for 6 years of evidence of compliance.--
     The requirements of this paragraph are met if a fiduciary 
     adviser who has provided advice referred to in paragraph (1) 
     maintains, for a period of not less than 6 years after the 
     provision of the advice, any records necessary for 
     determining whether the requirements of the preceding 
     provisions of this subsection and of subsection (b)(14) have 
     been met. A transaction prohibited under section 406 shall 
     not be considered to have occurred solely because the records 
     are lost or destroyed prior to the end of the 6-year period 
     due to circumstances beyond the control of the fiduciary 
     adviser.
       ``(10) Exemption for plan sponsor and certain other 
     fiduciaries.--
       ``(A) In general.--Subject to subparagraph (B), a plan 
     sponsor or other person who is a fiduciary (other than a 
     fiduciary adviser) shall not be treated as failing to meet 
     the requirements of this part solely by reason of the 
     provision of investment advice referred to in section 
     3(21)(A)(ii) (or solely by reason of contracting for or 
     otherwise arranging for the provision of the advice), if--
       ``(i) the advice is provided by a fiduciary adviser 
     pursuant to an eligible investment advice arrangement between 
     the plan sponsor or other fiduciary and the fiduciary adviser 
     for the provision by the fiduciary adviser of investment 
     advice referred to in such section,
       ``(ii) the terms of the eligible investment advice 
     arrangement require compliance by the fiduciary adviser with 
     the requirements of this subsection, and
       ``(iii) the terms of the eligible investment advice 
     arrangement include a written acknowledgment by the fiduciary 
     adviser that the fiduciary adviser is a fiduciary of the plan 
     with respect to the provision of the advice.
       ``(B) Continued duty of prudent selection of adviser and 
     periodic review.--Nothing in subparagraph (A) shall be 
     construed to exempt a plan sponsor or other person who is a 
     fiduciary from any requirement of this part for the prudent 
     selection and periodic review of a fiduciary adviser with 
     whom the plan sponsor or other person enters into an eligible 
     investment advice arrangement for the provision of investment 
     advice referred to in section 3(21)(A)(ii). The plan sponsor 
     or other person who is a fiduciary has no duty under this 
     part to monitor the specific investment advice given by the 
     fiduciary adviser to any particular recipient of the advice.
       ``(C) Availability of plan assets for payment for advice.--
     Nothing in this part shall be construed to preclude the use 
     of plan assets to pay for reasonable expenses in providing 
     investment advice referred to in section 3(21)(A)(ii).
       ``(11) Definitions.--For purposes of this subsection and 
     subsection (b)(14)--
       ``(A) Fiduciary adviser.--The term `fiduciary adviser' 
     means, with respect to a plan, a person who is a fiduciary of 
     the plan by reason of the provision of investment advice 
     referred to in section 3(21)(A)(ii) by the person to the 
     participant or beneficiary of the plan and who is--
       ``(i) registered as an investment adviser under the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) or 
     under the laws of the State in which the fiduciary maintains 
     its principal office and place of business,
       ``(ii) a bank or similar financial institution referred to 
     in section 408(b)(4) or a savings association (as defined in 
     section 3(b)(1) of the Federal Deposit Insurance Act (12 
     U.S.C. 1813(b)(1)), but only if the advice is provided 
     through a trust department of the bank or similar financial 
     institution or savings association which is subject to 
     periodic examination and review by Federal or State banking 
     authorities,
       ``(iii) an insurance company qualified to do business under 
     the laws of a State,
       ``(iv) a person registered as a broker or dealer under the 
     Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
       ``(v) an affiliate of a person described in any of clauses 
     (i) through (iv), or
       ``(vi) an employee, agent, or registered representative of 
     a person described in clauses (i) through (v) who satisfies 
     the requirements of applicable insurance, banking, and 
     securities laws relating to the provision of the advice.

     For purposes of this part, a person who develops the computer 
     model described in paragraph (3)(B) or markets the investment 
     advice program or computer model shall be treated as a person 
     who is a fiduciary of the plan by reason of the provision of 
     investment advice referred to in section 3(21)(A)(ii) to the 
     participant or beneficiary and shall be treated as a 
     fiduciary adviser for purposes of this subsection and 
     subsection (b)(14), except that the Secretary may prescribe 
     rules under which only 1 fiduciary adviser may elect to be 
     treated as a fiduciary with respect to the plan.
       ``(B) Affiliate.--The term `affiliate' of another entity 
     means an affiliated person of the entity (as defined in 
     section 2(a)(3) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-2(a)(3))).
       ``(C) Registered representative.--The term `registered 
     representative' of another entity means a person described in 
     section 3(a)(18) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78c(a)(18)) (substituting the entity for the broker or 
     dealer referred to in such section) or a person described in 
     section 202(a)(17) of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-2(a)(17)) (substituting the entity for the 
     investment adviser referred to in such section).''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply with respect to advice referred to in section 
     3(21)(A)(ii) of the Employee Retirement Income Security Act 
     of 1974 provided after December 31, 2006.
       (b) Amendments to Internal Revenue Code of 1986.--
       (1) Exemption from prohibited transactions.--Subsection (d) 
     of section 4975 of the Internal Revenue Code of 1986 
     (relating to exemption from tax on prohibited transactions) 
     is amended--
       (A) in paragraph (15), by striking ``or'' at the end;
       (B) in paragraph (16), by striking the period at the end 
     and inserting ``;or''; and
       (C) by adding at the end the following new paragraph:
       ``(17) Any transaction in connection with the provision of 
     investment advice described

[[Page 16366]]

     in subsection (e)(3)(B) to a participant or beneficiary in a 
     plan and that permits such participant or beneficiary to 
     direct the investment of plan assets in an individual 
     account, if--
       ``(A) the transaction is--
       ``(i) the provision of the investment advice to the 
     participant or beneficiary of the plan with respect to a 
     security or other property available as an investment under 
     the plan,
       ``(ii) the acquisition, holding, or sale of a security or 
     other property available as an investment under the plan 
     pursuant to the investment advice, or
       ``(iii) the direct or indirect receipt of fees or other 
     compensation by the fiduciary adviser or an affiliate thereof 
     (or any employee, agent, or registered representative of the 
     fiduciary adviser or affiliate) in connection with the 
     provision of the advice or in connection with an acquisition, 
     holding, or sale of a security or other property available as 
     an investment under the plan pursuant to the investment 
     advice; and
       ``(B) the requirements of subsection (f)(8) are met.''.
       (2) Requirements.--Subsection (f) of such section 4975 
     (relating to other definitions and special rules) is amended 
     by adding at the end the following new paragraph:
       ``(8) Provision of investment advice to participant and 
     beneficiaries.--
       ``(A) In general.--The prohibitions provided in subsection 
     (c) shall not apply to transactions described in subsection 
     (b)(14) if the investment advice provided by a fiduciary 
     adviser is provided under an eligible investment advice 
     arrangement.
       ``(B) Eligible investment advice arrangement.--For purposes 
     of this paragraph, the term `eligible investment advice 
     arrangement' means an arrangement--
       ``(i) which either--

       ``(I) provides that any fees (including any commission or 
     other compensation) received by the fiduciary adviser for 
     investment advice or with respect to the sale, holding, or 
     acquisition of any security or other property for purposes of 
     investment of plan assets do not vary depending on the basis 
     of any investment option selected, or
       ``(II) uses a computer model under an investment advice 
     program meeting the requirements of subparagraph (C) in 
     connection with the provision of investment advice by a 
     fiduciary adviser to a participant or beneficiary, and

       ``(ii) with respect to which the requirements of 
     subparagraphs (D), (E), (F), (G), (H), and (I) are met.
       ``(C) Investment advice program using computer model.--
       ``(i) In general.--An investment advice program meets the 
     requirements of this subparagraph if the requirements of 
     clauses (ii), (iii), and (iv) are met.
       ``(ii) Computer model.--The requirements of this clause are 
     met if the investment advice provided under the investment 
     advice program is provided pursuant to a computer model 
     that--

       ``(I) applies generally accepted investment theories that 
     take into account the historic returns of different asset 
     classes over defined periods of time,
       ``(II) utilizes relevant information about the participant, 
     which may include age, life expectancy, retirement age, risk 
     tolerance, other assets or sources of income, and preferences 
     as to certain types of investments,
       ``(III) utilizes prescribed objective criteria to provide 
     asset allocation portfolios comprised of investment options 
     available under the plan,
       ``(IV) operates in a manner that is not biased in favor of 
     investments offered by the fiduciary adviser or a person with 
     a material affiliation or contractual relationship with the 
     fiduciary adviser, and
       ``(V) takes into account all investment options under the 
     plan in specifying how a participant's account balance should 
     be invested and is not inappropriately weighted with respect 
     to any investment option.

       ``(iii) Certification.--

       ``(I) In general.--The requirements of this clause are met 
     with respect to any investment advice program if an eligible 
     investment expert certifies, prior to the utilization of the 
     computer model and in accordance with rules prescribed by the 
     Secretary of Labor, that the computer model meets the 
     requirements of clause (ii).
       ``(II) Renewal of certifications.--If, as determined under 
     regulations prescribed by the Secretary of Labor, there are 
     material modifications to a computer model, the requirements 
     of this clause are met only if a certification described in 
     subclause (I) is obtained with respect to the computer model 
     as so modified.
       ``(III) Eligible investment expert.--The term `eligible 
     investment expert' means any person which meets such 
     requirements as the Secretary of Labor may provide and which 
     does not bear any material affiliation or contractual 
     relationship with any investment adviser or a related person 
     thereof (or any employee, agent, or registered representative 
     of the investment adviser or related person).

       ``(iv) Exclusivity of recommendation.--The requirements of 
     this clause are met with respect to any investment advice 
     program if--

       ``(I) the only investment advice provided under the program 
     is the advice generated by the computer model described in 
     clause (ii), and
       ``(II) any transaction described in subsection 
     (b)(14)(B)(ii) occurs solely at the direction of the 
     participant or beneficiary.

     Nothing in the preceding sentence shall preclude the 
     participant or beneficiary from requesting investment advice 
     other than that described in clause (i), but only if such 
     request has not been solicited by any person connected with 
     carrying out the arrangement.
       ``(D) Express authorization by separate fiduciary.--The 
     requirements of this subparagraph are met with respect to an 
     arrangement if the arrangement is expressly authorized by a 
     plan fiduciary other than the person offering the investment 
     advice program, any person providing investment options under 
     the plan, or any affiliate of either.
       ``(E) Audits.--
       ``(i) In general.--The requirements of this subparagraph 
     are met if an independent auditor, who has appropriate 
     technical training or experience and proficiency and so 
     represents in writing--

       ``(I) conducts an annual audit of the arrangement for 
     compliance with the requirements of this paragraph, and
       ``(II) following completion of the annual audit, issues a 
     written report to the fiduciary who authorized use of the 
     arrangement which presents its specific findings regarding 
     compliance of the arrangement with the requirements of this 
     paragraph.

       ``(ii) Special rule for individual retirement and similar 
     plans.--In the case of a plan described in subparagraphs (B) 
     through (F) (and so much of subparagraph (G) as relates to 
     such subparagraphs) of subsection (e)(1), in lieu of the 
     requirements of clause (i), audits of the arrangement shall 
     be conducted at such times and in such manner as the 
     Secretary of Labor may prescribe.
       ``(iii) Independent auditor.--For purposes of this 
     subparagraph, an auditor is considered independent if it is 
     not related to the person offering the arrangement to the 
     plan and is not related to any person providing investment 
     options under the plan.
       ``(F) Disclosure.--The requirements of this subparagraph 
     are met if--
       ``(i) the fiduciary adviser provides to a participant or a 
     beneficiary before the initial provision of the investment 
     advice with regard to any security or other property offered 
     as an investment option, a written notification (which may 
     consist of notification by means of electronic 
     communication)--

       ``(I) of the role of any party that has a material 
     affiliation or contractual relationship with the financial 
     adviser in the development of the investment advice program 
     and in the selection of investment options available under 
     the plan,
       ``(II) of the past performance and historical rates of 
     return of the investment options available under the plan,
       ``(III) of all fees or other compensation relating to the 
     advice that the fiduciary adviser or any affiliate thereof is 
     to receive (including compensation provided by any third 
     party) in connection with the provision of the advice or in 
     connection with the sale, acquisition, or holding of the 
     security or other property,
       ``(IV) of any material affiliation or contractual 
     relationship of the fiduciary adviser or affiliates thereof 
     in the security or other property,
       ``(V) the manner, and under what circumstances, any 
     participant or beneficiary information provided under the 
     arrangement will be used or disclosed,
       ``(VI) of the types of services provided by the fiduciary 
     adviser in connection with the provision of investment advice 
     by the fiduciary adviser,
       ``(VII) that the adviser is acting as a fiduciary of the 
     plan in connection with the provision of the advice, and
       ``(VIII) that a recipient of the advice may separately 
     arrange for the provision of advice by another adviser, that 
     could have no material affiliation with and receive no fees 
     or other compensation in connection with the security or 
     other property, and

       ``(ii) at all times during the provision of advisory 
     services to the participant or beneficiary, the fiduciary 
     adviser--

       ``(I) maintains the information described in clause (i) in 
     accurate form and in the manner described in subparagraph 
     (H),
       ``(II) provides, without charge, accurate information to 
     the recipient of the advice no less frequently than annually,
       ``(III) provides, without charge, accurate information to 
     the recipient of the advice upon request of the recipient, 
     and
       ``(IV) provides, without charge, accurate information to 
     the recipient of the advice concerning any material change to 
     the information required to be provided to the recipient of 
     the advice at a time reasonably contemporaneous to the change 
     in information.

       ``(G) Other conditions.--The requirements of this 
     subparagraph are met if--
       ``(i) the fiduciary adviser provides appropriate 
     disclosure, in connection with the sale, acquisition, or 
     holding of the security or other property, in accordance with 
     all applicable securities laws,
       ``(ii) the sale, acquisition, or holding occurs solely at 
     the direction of the recipient of the advice,

[[Page 16367]]

       ``(iii) the compensation received by the fiduciary adviser 
     and affiliates thereof in connection with the sale, 
     acquisition, or holding of the security or other property is 
     reasonable, and
       ``(iv) the terms of the sale, acquisition, or holding of 
     the security or other property are at least as favorable to 
     the plan as an arm's length transaction would be.
       ``(H) Standards for presentation of information.--
       ``(i) In general.--The requirements of this subparagraph 
     are met if the notification required to be provided to 
     participants and beneficiaries under subparagraph (F)(i) is 
     written in a clear and conspicuous manner and in a manner 
     calculated to be understood by the average plan participant 
     and is sufficiently accurate and comprehensive to reasonably 
     apprise such participants and beneficiaries of the 
     information required to be provided in the notification.
       ``(ii) Model form for disclosure of fees and other 
     compensation.--The Secretary of Labor shall issue a model 
     form for the disclosure of fees and other compensation 
     required in subparagraph (F)(i)(III) which meets the 
     requirements of clause (i).
       ``(I) Maintenance for 6 years of evidence of compliance.--
     The requirements of this subparagraph are met if a fiduciary 
     adviser who has provided advice referred to in subparagraph 
     (A) maintains, for a period of not less than 6 years after 
     the provision of the advice, any records necessary for 
     determining whether the requirements of the preceding 
     provisions of this paragraph and of subsection (d)(17) have 
     been met. A transaction prohibited under section 406 shall 
     not be considered to have occurred solely because the records 
     are lost or destroyed prior to the end of the 6-year period 
     due to circumstances beyond the control of the fiduciary 
     adviser.
       ``(J) Definitions.--For purposes of this paragraph and 
     subsection (d)(17)--
       ``(i) Fiduciary adviser.--The term `fiduciary adviser' 
     means, with respect to a plan, a person who is a fiduciary of 
     the plan by reason of the provision of investment advice by 
     the person to the participant or beneficiary of the plan and 
     who is--

       ``(I) registered as an investment adviser under the 
     Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) or 
     under the laws of the State in which the fiduciary maintains 
     its principal office and place of business,
       ``(II) a bank or similar financial institution referred to 
     in section 408(b)(4) or a savings association (as defined in 
     section 3(b)(1) of the Federal Deposit Insurance Act (12 
     U.S.C. 1813(b)(1)), but only if the advice is provided 
     through a trust department of the bank or similar financial 
     institution or savings association which is subject to 
     periodic examination and review by Federal or State banking 
     authorities,
       ``(III) an insurance company qualified to do business under 
     the laws of a State,

       ``(IV) a person registered as a broker or dealer under the 
     Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.),
       ``(V) an affiliate of a person described in any of 
     subclauses (I) through (IV), or
       ``(VI) an employee, agent, or registered representative of 
     a person described in subclauses (I) through (V) who 
     satisfies the requirements of applicable insurance, banking, 
     and securities laws relating to the provision of the advice.

     For purposes of this title, a person who develops the 
     computer model described in subparagraph (C)(ii) or markets 
     the investment advice program or computer model shall be 
     treated as a person who is a fiduciary of the plan by reason 
     of the provision of investment advice referred to in 
     subsection (e)(3)(B) to the participant or beneficiary and 
     shall be treated as a fiduciary adviser for purposes of this 
     paragraph and subsection (d)(17), except that the Secretary 
     of Labor may prescribe rules under which only 1 fiduciary 
     adviser may elect to be treated as a fiduciary with respect 
     to the plan.
       ``(ii) Affiliate.--The term `affiliate' of another entity 
     means an affiliated person of the entity (as defined in 
     section 2(a)(3) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-2(a)(3))).
       ``(iii) Registered representative.--The term `registered 
     representative' of another entity means a person described in 
     section 3(a)(18) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78c(a)(18)) (substituting the entity for the broker or 
     dealer referred to in such section) or a person described in 
     section 202(a)(17) of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-2(a)(17)) (substituting the entity for the 
     investment adviser referred to in such section).''.
       (3) Determination of feasibility of application of computer 
     model investment advice programs for individual retirement 
     and similar plans.--
       (A) Solicitation of information.--As soon as practicable 
     after the date of the enactment of this Act, the Secretary of 
     Labor, in consultation with the Secretary of the Treasury, 
     shall--
       (i) solicit information as to the feasibility of the 
     application of computer model investment advice programs for 
     plans described in subparagraphs (B) through (F) (and so much 
     of subparagraph (G) as relates to such subparagraphs) of 
     section 4975(e)(1) of the Internal Revenue Code of 1986, 
     including soliciting information from--

       (I) at least the top 50 trustees of such plans, determined 
     on the basis of assets held by such trustees, and
       (II) other persons offering computer model investment 
     advice programs based on nonproprietary products, and

       (ii) shall on the basis of such information make the 
     determination under subparagraph (B).

     The information solicited by the Secretary of Labor under 
     clause (i) from persons described in subclauses (I) and (II) 
     of clause (i) shall include information on computer modeling 
     capabilities of such persons with respect to the current year 
     and preceding year, including such capabilities for 
     investment accounts maintained by such persons.
       (B) Determination of feasibility.--The Secretary of Labor, 
     in consultation with the Secretary of the Treasury, shall, on 
     the basis of information received under subparagraph (A), 
     determine whether there is any computer model investment 
     advice program which may be utilized by a plan described in 
     subparagraph (A)(i) to provide investment advice to the 
     account beneficiary of the plan which--
       (i) utilizes relevant information about the account 
     beneficiary, which may include age, life expectancy, 
     retirement age, risk tolerance, other assets or sources of 
     income, and preferences as to certain types of investments,
       (ii) takes into account the full range of investments, 
     including equities and bonds, in determining the options for 
     the investment portfolio of the account beneficiary, and
       (iii) allows the account beneficiary, in directing the 
     investment of assets, sufficient flexibility in obtaining 
     advice to evaluate and select investment options.
     The Secretary of Labor shall report the results of such 
     determination to the committees of Congress referred to in 
     subparagraph (D)(ii) not later than December 31, 2007.
       (C) Application of computer model investment advice 
     program.--
       (i) Certification required for use of computer model.--

       (I) Restriction on use.--Subclause (II) of section 
     4975(f)(8)(B)(i) of the Internal Revenue Code of 1986 shall 
     not apply to a plan described in subparagraph (A)(i).
       (II) Restriction lifted if model certified.--If the 
     Secretary of Labor determines under subparagraph (B) or (D) 
     that there is a computer model investment advice program 
     described in subparagraph (B), subclause (I) shall cease to 
     apply as of the date of such determination.

       (ii) Class exemption if no initial certification by 
     secretary.--If the Secretary of Labor determines under 
     subparagraph (B) that there is no computer model investment 
     advice program described in subparagraph (B), the Secretary 
     of Labor shall grant a class exemption from treatment as a 
     prohibited transaction under section 4975(c) of the Internal 
     Revenue Code of 1986 to any transaction described in section 
     4975(d)(17)(A) of such Code with respect to plans described 
     in subparagraph (A)(i), subject to such conditions as set 
     forth in such exemption as are in the interests of the plan 
     and its account beneficiary and protective of the rights of 
     the account beneficiary and as are necessary to--

       (I) ensure the requirements of sections 4975(d)(17) and 
     4975(f)(8) (other than subparagraph (C) thereof) of the 
     Internal Revenue Code of 1986 are met, and
       (II) ensure the investment advice provided under the 
     investment advice program utilizes prescribed objective 
     criteria to provide asset allocation portfolios comprised of 
     securities or other property available as investments under 
     the plan.

     If the Secretary of Labor solicits any information under 
     subparagraph (A) from a person and such person does not 
     provide such information within 60 days after the 
     solicitation, then, unless such failure was due to reasonable 
     cause and not wilful neglect, such person shall not be 
     entitled to utilize the class exemption under this clause.
       (D) Subsequent determination.--
       (i) In general.--If the Secretary of Labor initially makes 
     a determination described in subparagraph (C)(ii), the 
     Secretary may subsequently determine that there is a computer 
     model investment advice program described in subparagraph 
     (B). If the Secretary makes such subsequent determination, 
     then the class exemption described in subparagraph (C)(ii) 
     shall cease to apply after the later of--

       (I) the date which is 2 years after such subsequent 
     determination, or
       (II) the date which is 3 years after the first date on 
     which such exemption took effect.

       (ii) Requests for determination.--Any person may request 
     the Secretary of Labor to make a determination under this 
     subparagraph with respect to any computer model investment 
     advice program, and the Secretary of Labor shall make a 
     determination with respect to such request within 90 days. If 
     the Secretary of Labor makes a determination that such 
     program is not described in subparagraph (B), the Secretary 
     shall, within 10 days of such determination, notify the 
     Committee on Ways and Means and the Committee on Education 
     and the Workforce of the House of Representatives and the 
     Committee on Finance and the Committee

[[Page 16368]]

     on Health, Education, Labor, and Pensions of the Senate of 
     such determination and the reasons for such determination.
       (E) Effective date.--The provisions of this paragraph shall 
     take effect on the date of the enactment of this Act.
       (4) Effective date.--Except as provided in this subsection, 
     the amendments made by this subsection shall apply with 
     respect to advice referred to in section 4975(c)(3)(B) of the 
     Internal Revenue Code of 1986 provided after December 31, 
     2006.
       (c) Coordination With Existing Exemptions.--Any exemption 
     under section 408(b) of the Employee Retirement Income 
     Security Act of 1974 and section 4975(d) of the Internal 
     Revenue Code of 1986 provided by the amendments made by this 
     section shall not in any manner alter existing individual or 
     class exemptions, provided by statute or administrative 
     action.

                  Subtitle B--Prohibited Transactions

     SEC. 611. PROHIBITED TRANSACTION RULES RELATING TO FINANCIAL 
                   INVESTMENTS.

       (a) Exemption for Block Trading.--
       (1) Amendments to employee retirement income security act 
     of 1974.--Section 408(b) of such Act (29 U.S.C. 1108(b)), as 
     amended by section 601, is amended by adding at the end the 
     following new paragraph:
       ``(15)(A) Any transaction involving the purchase or sale of 
     securities, or other property (as determined by the 
     Secretary), between a plan and a party in interest (other 
     than a fiduciary described in section 3(21)(A)) with respect 
     to a plan if--
       ``(i) the transaction involves a block trade,
       ``(ii) at the time of the transaction, the interest of the 
     plan (together with the interests of any other plans 
     maintained by the same plan sponsor), does not exceed 10 
     percent of the aggregate size of the block trade,
       ``(iii) the terms of the transaction, including the price, 
     are at least as favorable to the plan as an arm's length 
     transaction, and
       ``(iv) the compensation associated with the purchase and 
     sale is not greater than the compensation associated with an 
     arm's length transaction with an unrelated party.
       ``(B) For purposes of this paragraph, the term `block 
     trade' means any trade of at least 10,000 shares or with a 
     market value of at least $200,000 which will be allocated 
     across two or more unrelated client accounts of a 
     fiduciary.''.
       (2) Amendments to internal revenue code of 1986.--
       (A) In general.--Subsection (d) of section 4975 of the 
     Internal Revenue Code of 1986 (relating to exemptions), as 
     amended by section 601, is amended by striking ``or'' at the 
     end of paragraph (16), by striking the period at the end of 
     paragraph (17) and inserting ``, or'', and by adding at the 
     end the following new paragraph:
       ``(18) any transaction involving the purchase or sale of 
     securities, or other property (as determined by the Secretary 
     of Labor), between a plan and a party in interest (other than 
     a fiduciary described in subsection (e)(3)(B)) with respect 
     to a plan if--
       ``(A) the transaction involves a block trade,
       ``(B) at the time of the transaction, the interest of the 
     plan (together with the interests of any other plans 
     maintained by the same plan sponsor), does not exceed 10 
     percent of the aggregate size of the block trade,
       ``(C) the terms of the transaction, including the price, 
     are at least as favorable to the plan as an arm's length 
     transaction, and
       ``(D) the compensation associated with the purchase and 
     sale is not greater than the compensation associated with an 
     arm's length transaction with an unrelated party.''.
       (B) Special rule relating to block trade.--Subsection (f) 
     of section 4975 of such Code (relating to other definitions 
     and special rules), as amended by section 601, is amended by 
     adding at the end the following new paragraph:
       ``(9) Block trade.--The term `block trade' means any trade 
     of at least 10,000 shares or with a market value of at least 
     $200,000 which will be allocated across two or more unrelated 
     client accounts of a fiduciary.''.
       (b) Bonding Relief.--Section 412(a) of such Act (29 U.S.C. 
     1112(a)) is amended--
       (1) by redesignating paragraph (2) as paragraph (3),
       (2) by striking ``and'' at the end of paragraph (1), and
       (3) by inserting after paragraph (1) the following new 
     paragraph:
       ``(2) no bond shall be required of any entity which is 
     registered as a broker or a dealer under section 15(b) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78o(b)) if the 
     broker or dealer is subject to the fidelity bond requirements 
     of a self-regulatory organization (within the meaning of 
     section 3(a)(26) of such Act (15 U.S.C. 78c(a)(26)).''.
       (c) Exemption for Electronic Communication Network.--
       (1) Amendments to employee retirement income security act 
     of 1974.--Section 408(b) of such Act, as amended by 
     subsection (a), is amended by adding at the end the 
     following:
       ``(16) Any transaction involving the purchase or sale of 
     securities, or other property (as determined by the 
     Secretary), between a plan and a party in interest if--
       ``(A) the transaction is executed through an electronic 
     communication network, alternative trading system, or similar 
     execution system or trading venue subject to regulation and 
     oversight by--
       ``(i) the applicable Federal regulating entity, or
       ``(ii) such foreign regulatory entity as the Secretary may 
     determine by regulation,
       ``(B) either--
       ``(i) the transaction is effected pursuant to rules 
     designed to match purchases and sales at the best price 
     available through the execution system in accordance with 
     applicable rules of the Securities and Exchange Commission or 
     other relevant governmental authority, or
       ``(ii) neither the execution system nor the parties to the 
     transaction take into account the identity of the parties in 
     the execution of trades,
       ``(C) the price and compensation associated with the 
     purchase and sale are not greater than the price and 
     compensation associated with an arm's length transaction with 
     an unrelated party,
       ``(D) if the party in interest has an ownership interest in 
     the system or venue described in subparagraph (A), the system 
     or venue has been authorized by the plan sponsor or other 
     independent fiduciary for transactions described in this 
     paragraph, and
       ``(E) not less than 30 days prior to the initial 
     transaction described in this paragraph executed through any 
     system or venue described in subparagraph (A), a plan 
     fiduciary is provided written or electronic notice of the 
     execution of such transaction through such system or 
     venue.''.
       (2) Amendments to internal revenue code of 1986.--
     Subsection (d) of section 4975 of the Internal Revenue Code 
     of 1986 (relating to exemptions), as amended by subsection 
     (a), is amended by striking ``or'' at the end of paragraph 
     (17), by striking the period at the end of paragraph (18) and 
     inserting ``, or'', and by adding at the end the following 
     new paragraph:
       ``(19) any transaction involving the purchase or sale of 
     securities, or other property (as determined by the Secretary 
     of Labor), between a plan and a party in interest if--
       ``(A) the transaction is executed through an electronic 
     communication network, alternative trading system, or similar 
     execution system or trading venue subject to regulation and 
     oversight by--
       ``(i) the applicable Federal regulating entity, or
       ``(ii) such foreign regulatory entity as the Secretary of 
     Labor may determine by regulation,
       ``(B) either--
       ``(i) the transaction is effected pursuant to rules 
     designed to match purchases and sales at the best price 
     available through the execution system in accordance with 
     applicable rules of the Securities and Exchange Commission or 
     other relevant governmental authority, or
       ``(ii) neither the execution system nor the parties to the 
     transaction take into account the identity of the parties in 
     the execution of trades,
       ``(C) the price and compensation associated with the 
     purchase and sale are not greater than the price and 
     compensation associated with an arm's length transaction with 
     an unrelated party,
       ``(D) if the party in interest has an ownership interest in 
     the system or venue described in subparagraph (A), the system 
     or venue has been authorized by the plan sponsor or other 
     independent fiduciary for transactions described in this 
     paragraph, and
       ``(E) not less than 30 days prior to the initial 
     transaction described in this paragraph executed through any 
     system or venue described in subparagraph (A), a plan 
     fiduciary is provided written or electronic notice of the 
     execution of such transaction through such system or 
     venue.''.
       (d) Exemption for Service Providers.--
       (1) Amendments to employee retirement income security act 
     of 1974.--Section 408(b) of such Act (29 U.S.C. 1106), as 
     amended by subsection (c), is amended by adding at the end 
     the following new paragraph:
       ``(17)(A) Transactions described in subparagraphs (A), (B), 
     and (D) of section 406(a)(1) between a plan and a person that 
     is a party in interest other than a fiduciary (or an 
     affiliate) who has or exercises any discretionary authority 
     or control with respect to the investment of the plan assets 
     involved in the transaction or renders investment advice 
     (within the meaning of section 3(21)(A)(ii)) with respect to 
     those assets, solely by reason of providing services to the 
     plan or solely by reason of a relationship to such a service 
     provider described in subparagraph (F), (G), (H), or (I) of 
     section 3(14), or both, but only if in connection with such 
     transaction the plan receives no less, nor pays no more, than 
     adequate consideration.
       ``(B) For purposes of this paragraph, the term `adequate 
     consideration' means--
       ``(i) in the case of a security for which there is a 
     generally recognized market--

       ``(I) the price of the security prevailing on a national 
     securities exchange which is registered under section 6 of 
     the Securities Exchange Act of 1934, taking into account 
     factors such as the size of the transaction and marketability 
     of the security, or
       ``(II) if the security is not traded on such a national 
     securities exchange, a price not less favorable to the plan 
     than the offering price

[[Page 16369]]

     for the security as established by the current bid and asked 
     prices quoted by persons independent of the issuer and of the 
     party in interest, taking into account factors such as the 
     size of the transaction and marketability of the security, 
     and

       ``(ii) in the case of an asset other than a security for 
     which there is a generally recognized market, the fair market 
     value of the asset as determined in good faith by a fiduciary 
     or fiduciaries in accordance with regulations prescribed by 
     the Secretary.''.
       (2) Amendment to internal revenue code of 1986.--
       (A) In general.--Subsection (d) of section 4975 of the 
     Internal Revenue Code of 1986 (relating to exemptions), as 
     amended by subsection (c), is amended by striking ``or'' at 
     the end of paragraph (18), by striking the period at the end 
     of paragraph (19) and inserting ``, or'', and by adding at 
     the end the following new paragraph:
       ``(20) transactions described in subparagraphs (A), (B), 
     and (D) of subsection (c)(1) between a plan and a person that 
     is a party in interest other than a fiduciary (or an 
     affiliate) who has or exercises any discretionary authority 
     or control with respect to the investment of the plan assets 
     involved in the transaction or renders investment advice 
     (within the meaning of subsection (e)(3)(B)) with respect to 
     those assets, solely by reason of providing services to the 
     plan or solely by reason of a relationship to such a service 
     provider described in subparagraph (F), (G), (H), or (I) of 
     subsection (e)(2), or both, but only if in connection with 
     such transaction the plan receives no less, nor pays no more, 
     than adequate consideration.''.
       (B) Special rule relating to service providers.--Subsection 
     (f) of section 4975 of such Code (relating to other 
     definitions and special rules), as amended by subsection (a), 
     is amended by adding at the end the following new paragraph:
       ``(10) Adequate consideration.--The term `adequate 
     consideration' means--
       ``(A) in the case of a security for which there is a 
     generally recognized market--
       ``(i) the price of the security prevailing on a national 
     securities exchange which is registered under section 6 of 
     the Securities Exchange Act of 1934, taking into account 
     factors such as the size of the transaction and marketability 
     of the security, or
       ``(ii) if the security is not traded on such a national 
     securities exchange, a price not less favorable to the plan 
     than the offering price for the security as established by 
     the current bid and asked prices quoted by persons 
     independent of the issuer and of the party in interest, 
     taking into account factors such as the size of the 
     transaction and marketability of the security, and
       ``(B) in the case of an asset other than a security for 
     which there is a generally recognized market, the fair market 
     value of the asset as determined in good faith by a fiduciary 
     or fiduciaries in accordance with regulations prescribed by 
     the Secretary of Labor.''.
       (e) Relief for Foreign Exchange Transactions.--
       (1) Amendments to employee retirement income security act 
     of 1974.--Section 408(b) of such Act (29 U.S.C. 1108(b)), as 
     amended by subsection (d), is amended by adding at the end 
     the following new paragraph:
       ``(18) Foreign exchange transactions.--Any foreign exchange 
     transactions, between a bank or broker-dealer (or any 
     affiliate of either), and a plan (as defined in section 3(3)) 
     with respect to which such bank or broker-dealer (or 
     affiliate) is a trustee, custodian, fiduciary, or other party 
     in interest, if--
       ``(A) the transaction is in connection with the purchase, 
     holding, or sale of securities or other investment assets 
     (other than a foreign exchange transaction unrelated to any 
     other investment in securities or other investment assets),
       ``(B) at the time the foreign exchange transaction is 
     entered into, the terms of the transaction are not less 
     favorable to the plan than the terms generally available in 
     comparable arm's length foreign exchange transactions between 
     unrelated parties, or the terms afforded by the bank or 
     broker-dealer (or any affiliate of either) in comparable 
     arm's-length foreign exchange transactions involving 
     unrelated parties,
       ``(C) the exchange rate used by such bank or broker-dealer 
     (or affiliate) for a particular foreign exchange transaction 
     does not deviate by more or less than 3 percent from the 
     interbank bid and asked rates for transactions of comparable 
     size and maturity at the time of the transaction as displayed 
     on an independent service that reports rates of exchange in 
     the foreign currency market for such currency, and
       ``(D) the bank or broker-dealer (or any affiliate of 
     either) does not have investment discretion, or provide 
     investment advice, with respect to the transaction.''.
       (2) Amendment to internal revenue code of 1986.--Subsection 
     (d) of section 4975 of the Internal Revenue Code of 1986 
     (relating to exemptions), as amended by subsection (d), is 
     amended by striking ``or'' at the end of paragraph (19), by 
     striking the period at the end of paragraph (20) and 
     inserting ``, or'', and by adding at the end the following 
     new paragraph:
       ``(21) any foreign exchange transactions, between a bank or 
     broker-dealer (or any affiliate of either) and a plan (as 
     defined in this section) with respect to which such bank or 
     broker-dealer (or affiliate) is a trustee, custodian, 
     fiduciary, or other party in interest person, if--
       ``(A) the transaction is in connection with the purchase, 
     holding, or sale of securities or other investment assets 
     (other than a foreign exchange transaction unrelated to any 
     other investment in securities or other investment assets),
       ``(B) at the time the foreign exchange transaction is 
     entered into, the terms of the transaction are not less 
     favorable to the plan than the terms generally available in 
     comparable arm's length foreign exchange transactions between 
     unrelated parties, or the terms afforded by the bank or 
     broker-dealer (or any affiliate of either) in comparable 
     arm's-length foreign exchange transactions involving 
     unrelated parties,
       ``(C) the exchange rate used by such bank or broker-dealer 
     (or affiliate) for a particular foreign exchange transaction 
     does not deviate by more or less than 3 percent from the 
     interbank bid and asked rates for transactions of comparable 
     size and maturity at the time of the transaction as displayed 
     on an independent service that reports rates of exchange in 
     the foreign currency market for such currency, and
       ``(D) the bank or broker-dealer (or any affiliate of 
     either) does not have investment discretion, or provide 
     investment advice, with respect to the transaction.''.
       (f) Definition of Plan Asset Vehicle.--Section 3 of such 
     Act (29 U.S.C. 1002) is amended by adding at the end the 
     following new paragraph:
       ``(42) the term `plan assets' means plan assets as defined 
     by such regulations as the Secretary may prescribe, except 
     that under such regulations the assets of any entity shall 
     not be treated as plan assets if, immediately after the most 
     recent acquisition of any equity interest in the entity, less 
     than 25 percent of the total value of each class of equity 
     interest in the entity is held by benefit plan investors. For 
     purposes of determinations pursuant to this paragraph, the 
     value of any equity interest held by a person (other than 
     such a benefit plan investor) who has discretionary authority 
     or control with respect to the assets of the entity or any 
     person who provides investment advice for a fee (direct or 
     indirect) with respect to such assets, or any affiliate of 
     such a person, shall be disregarded for purposes of 
     calculating the 25 percent threshold. An entity shall be 
     considered to hold plan assets only to the extent of the 
     percentage of the equity interest held by benefit plan 
     investors. For purposes of this paragraph, the term `benefit 
     plan investor' means an employee benefit plan subject to part 
     4, any plan to which section 4975 of the Internal Revenue 
     Code of 1986 applies, and any entity whose underlying assets 
     include plan assets by reason of a plan's investment in such 
     entity.''.
       (g) Exemption for Cross Trading.--
       (1) Amendments to employee retirement income security act 
     of 1974.--Section 408(b) of such Act (29 U.S.C. 1108(b)), as 
     amended by subsection (e), is amended by adding at the end 
     the following new paragraph:
       ``(19) Cross trading.--Any transaction described in 
     sections 406(a)(1)(A) and 406(b)(2) involving the purchase 
     and sale of a security between a plan and any other account 
     managed by the same investment manager, if--
       ``(A) the transaction is a purchase or sale, for no 
     consideration other than cash payment against prompt delivery 
     of a security for which market quotations are readily 
     available,
       ``(B) the transaction is effected at the independent 
     current market price of the security (within the meaning of 
     section 270.17a-7(b) of title 17, Code of Federal 
     Regulations),
       ``(C) no brokerage commission, fee (except for customary 
     transfer fees, the fact of which is disclosed pursuant to 
     subparagraph (D)), or other remuneration is paid in 
     connection with the transaction,
       ``(D) a fiduciary (other than the investment manager 
     engaging in the cross-trades or any affiliate) for each plan 
     participating in the transaction authorizes in advance of any 
     cross-trades (in a document that is separate from any other 
     written agreement of the parties) the investment manager to 
     engage in cross trades at the investment manager's 
     discretion, after such fiduciary has received disclosure 
     regarding the conditions under which cross trades may take 
     place (but only if such disclosure is separate from any other 
     agreement or disclosure involving the asset management 
     relationship), including the written policies and procedures 
     of the investment manager described in subparagraph (H),
       ``(E) each plan participating in the transaction has assets 
     of at least $100,000,000, except that if the assets of a plan 
     are invested in a master trust containing the assets of plans 
     maintained by employers in the same controlled group (as 
     defined in section 407(d)(7)), the master trust has assets of 
     at least $100,000,000,
       ``(F) the investment manager provides to the plan fiduciary 
     who authorized cross trading under subparagraph (D) a 
     quarterly report detailing all cross trades executed by the 
     investment manager in which the plan participated during such 
     quarter, including the following information, as applicable: 
     (i) the identity of each security bought or sold;

[[Page 16370]]

     (ii) the number of shares or units traded, (iii) the parties 
     involved in the cross-trade; and (iv) trade price and the 
     method used to establish the trade price,
       ``(G) the investment manager does not base its fee schedule 
     on the plan`s consent to cross trading, and no other service 
     (other than the investment opportunities and cost savings 
     available through a cross trade) is conditioned on the plan's 
     consent to cross trading,
       ``(H) the investment manager has adopted, and cross-trades 
     are effected in accordance with, written cross-trading 
     policies and procedures that are fair and equitable to all 
     accounts participating in the cross-trading program, and that 
     include a description of the manager's pricing policies and 
     procedures, and the manager's policies and procedures for 
     allocating cross trades in an objective manner among accounts 
     participating in the cross-trading program, and
       ``(I) the investment manager has designated an individual 
     responsible for periodically reviewing such purchases and 
     sales to ensure compliance with the written policies and 
     procedures described in subparagraph (H), and following such 
     review, the individual shall issue an annual written report 
     no later than 90 days following the period to which it 
     relates signed under penalty of perjury to the plan fiduciary 
     who authorized cross trading under subparagraph (D) 
     describing the steps performed during the course of the 
     review, the level of compliance, and any specific instances 
     of non-compliance.

     The written report under subparagraph (I) shall also notify 
     the plan fiduciary of the plan's right to terminate 
     participation in the investment manager's cross-trading 
     program at any time.''.
       (2) Amendments of internal revenue code of 1986.--
     Subsection (d) of section 4975 of the Internal Revenue Code 
     of 1986 (relating to exemptions), as amended by subsection 
     (e), is amended by striking ``or'' at the end of paragraph 
     (20), by striking the period at the end of paragraph (21) and 
     inserting ``, or'', and by adding at the end the following 
     new paragraph:
       ``(22) any transaction described in subsection (c)(1)(A) 
     involving the purchase and sale of a security between a plan 
     and any other account managed by the same investment manager, 
     if--
       ``(A) the transaction is a purchase or sale, for no 
     consideration other than cash payment against prompt delivery 
     of a security for which market quotations are readily 
     available,
       ``(B) the transaction is effected at the independent 
     current market price of the security (within the meaning of 
     section 270.17a-7(b) of title 17, Code of Federal 
     Regulations),
       ``(C) no brokerage commission, fee (except for customary 
     transfer fees, the fact of which is disclosed pursuant to 
     subparagraph (D)), or other remuneration is paid in 
     connection with the transaction,
       ``(D) a fiduciary (other than the investment manager 
     engaging in the cross-trades or any affiliate) for each plan 
     participating in the transaction authorizes in advance of any 
     cross-trades (in a document that is separate from any other 
     written agreement of the parties) the investment manager to 
     engage in cross trades at the investment manager's 
     discretion, after such fiduciary has received disclosure 
     regarding the conditions under which cross trades may take 
     place (but only if such disclosure is separate from any other 
     agreement or disclosure involving the asset management 
     relationship), including the written policies and procedures 
     of the investment manager described in subparagraph (H),
       ``(E) each plan participating in the transaction has assets 
     of at least $100,000,000, except that if the assets of a plan 
     are invested in a master trust containing the assets of plans 
     maintained by employers in the same controlled group (as 
     defined in section 407(d)(7) of the Employee Retirement 
     Income Security Act of 1974), the master trust has assets of 
     at least $100,000,000,
       ``(F) the investment manager provides to the plan fiduciary 
     who authorized cross trading under subparagraph (D) a 
     quarterly report detailing all cross trades executed by the 
     investment manager in which the plan participated during such 
     quarter, including the following information, as applicable: 
     (i) the identity of each security bought or sold; (ii) the 
     number of shares or units traded, (iii) the parties involved 
     in the cross-trade; and (iv) trade price and the method used 
     to establish the trade price,
       ``(G) the investment manager does not base its fee schedule 
     on the plan`s consent to cross trading, and no other service 
     (other than the investment opportunities and cost savings 
     available through a cross trade) is conditioned on the plan's 
     consent to cross trading,
       ``(H) the investment manager has adopted, and cross-trades 
     are effected in accordance with, written cross-trading 
     policies and procedures that are fair and equitable to all 
     accounts participating in the cross-trading program, and that 
     include a description of the manager's pricing policies and 
     procedures, and the manager's policies and procedures for 
     allocating cross trades in an objective manner among accounts 
     participating in the cross-trading program, and
       ``(I) the investment manager has designated an individual 
     responsible for periodically reviewing such purchases and 
     sales to ensure compliance with the written policies and 
     procedures described in subparagraph (H), and following such 
     review, the individual shall issue an annual written report 
     no later than 90 days following the period to which it 
     relates signed under penalty of perjury to the plan fiduciary 
     who authorized cross trading under subparagraph (D) 
     describing the steps performed during the course of the 
     review, the level of compliance, and any specific instances 
     of non-compliance.

     The written report shall also notify the plan fiduciary of 
     the plan's right to terminate participation in the investment 
     manager's cross-trading program at any time.''.
       (3) Regulations.--No later than 180 days after the date of 
     the enactment of this Act, the Secretary of Labor, after 
     consultation with the Securities and Exchange Commission, 
     shall issue regulations regarding the content of policies and 
     procedures required to be adopted by an investment manager 
     under section 408(b)(19) of the Employee Retirement Income 
     Security Act of 1974.
       (h) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to transactions 
     occurring after the date of the enactment of this Act.
       (2) Bonding rule.--The amendments made by subsection (b) 
     shall apply to plan years beginning after such date.

     SEC. 612. CORRECTION PERIOD FOR CERTAIN TRANSACTIONS 
                   INVOLVING SECURITIES AND COMMODITIES.

       (a) Amendment of Employee Retirement Income Security Act of 
     1974.--Section 408(b) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1108(b)), as amended by 
     sections 601 and 611, is further amended by adding at the end 
     the following new paragraph:
       ``(20)(A) Except as provided in subparagraphs (B) and (C), 
     a transaction described in section 406(a) in connection with 
     the acquisition, holding, or disposition of any security or 
     commodity, if the transaction is corrected before the end of 
     the correction period.
       ``(B) Subparagraph (A) does not apply to any transaction 
     between a plan and a plan sponsor or its affiliates that 
     involves the acquisition or sale of an employer security (as 
     defined in section 407(d)(1)) or the acquisition, sale, or 
     lease of employer real property (as defined in section 
     407(d)(2)).
       ``(C) In the case of any fiduciary or other party in 
     interest (or any other person knowingly participating in such 
     transaction), subparagraph (A) does not apply to any 
     transaction if, at the time the transaction occurs, such 
     fiduciary or party in interest (or other person) knew (or 
     reasonably should have known) that the transaction would 
     (without regard to this paragraph) constitute a violation of 
     section 406(a).
       ``(D) For purposes of this paragraph, the term `correction 
     period' means, in connection with a fiduciary or party in 
     interest (or other person knowingly participating in the 
     transaction), the 14-day period beginning on the date on 
     which such fiduciary or party in interest (or other person) 
     discovers, or reasonably should have discovered, that the 
     transaction would (without regard to this paragraph) 
     constitute a violation of section 406(a).
       ``(E) For purposes of this paragraph--
       ``(i) The term `security' has the meaning given such term 
     by section 475(c)(2) of the Internal Revenue Code of 1986 
     (without regard to subparagraph (F)(iii) and the last 
     sentence thereof).
       ``(ii) The term `commodity' has the meaning given such term 
     by section 475(e)(2) of such Code (without regard to 
     subparagraph (D)(iii) thereof).
       ``(iii) The term `correct' means, with respect to a 
     transaction--
       ``(I) to undo the transaction to the extent possible and in 
     any case to make good to the plan or affected account any 
     losses resulting from the transaction, and
       ``(II) to restore to the plan or affected account any 
     profits made through the use of assets of the plan.''.
       (b) Amendment of Internal Revenue Code of 1986.--
       (1) In general.--Subsection (d) of section 4975 of the 
     Internal Revenue Code of 1986 (relating to exemptions), as 
     amended by sections 601 and 611, is amended by striking 
     ``or'' at the end of paragraph (21), by striking the period 
     at the end of paragraph (22) and inserting ``, or'', and by 
     adding at the end the following new paragraph:
       ``(23) except as provided in subsection (f)(11), a 
     transaction described in subparagraph (A), (B), (C), or (D) 
     of subsection (c)(1) in connection with the acquisition, 
     holding, or disposition of any security or commodity, if the 
     transaction is corrected before the end of the correction 
     period.''.
       (2) Special rules relating to correction period.--
     Subsection (f) of section 4975 of such Code (relating to 
     other definitions and special rules), as amended by sections 
     601 and 611, is amended by adding at the end the following 
     new paragraph:
       ``(11) Correction period.--
       ``(A) In general.--For purposes of subsection (d)(23), the 
     term `correction period' means the 14-day period beginning on 
     the

[[Page 16371]]

     date on which the disqualified person discovers, or 
     reasonably should have discovered, that the transaction would 
     (without regard to this paragraph and subsection (d)(23)) 
     constitute a prohibited transaction.
       ``(B) Exceptions.--
       ``(i) Employer securities.--Subsection (d)(23) does not 
     apply to any transaction between a plan and a plan sponsor or 
     its affiliates that involves the acquisition or sale of an 
     employer security (as defined in section 407(d)(1)) or the 
     acquisition, sale, or lease of employer real property (as 
     defined in section 407(d)(2)).
       ``(ii) Knowing prohibited transaction.--In the case of any 
     disqualified person, subsection (d)(23) does not apply to a 
     transaction if, at the time the transaction is entered into, 
     the disqualified person knew (or reasonably should have 
     known) that the transaction would (without regard to this 
     paragraph) constitute a prohibited transaction.
       ``(C) Abatement of tax where there is a correction.--If a 
     transaction is not treated as a prohibited transaction by 
     reason of subsection (d)(23), then no tax under subsection 
     (a) and (b) shall be assessed with respect to such 
     transaction, and if assessed the assessment shall be abated, 
     and if collected shall be credited or refunded as an 
     overpayment.
       ``(D) Definitions.--For purposes of this paragraph and 
     subsection (d)(23)--
       ``(i) Security.--The term `security' has the meaning given 
     such term by section 475(c)(2) (without regard to 
     subparagraph (F)(iii) and the last sentence thereof).
       ``(ii) Commodity.--The term `commodity' has the meaning 
     given such term by section 475(e)(2) (without regard to 
     subparagraph (D)(iii) thereof).
       ``(iii) Correct.--The term `correct' means, with respect to 
     a transaction--

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

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

                 Subtitle C--Fiduciary and Other Rules

     SEC. 621. INAPPLICABILITY OF RELIEF FROM FIDUCIARY LIABILITY 
                   DURING SUSPENSION OF ABILITY OF PARTICIPANT OR 
                   BENEFICIARY TO DIRECT INVESTMENTS.

       (a) In General.--Section 404(c) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1104(c)) is amended--
       (1) in paragraph (1)--
       (A) by redesignating subparagraphs (A) and (B) as clauses 
     (i) and (ii), respectively, and by inserting ``(A)'' after 
     ``(c)(1)'',
       (B) in subparagraph (A)(ii) (as redesignated by paragraph 
     (1)), by inserting before the period the following: ``, 
     except that this clause shall not apply in connection with 
     such participant or beneficiary for any blackout period 
     during which the ability of such participant or beneficiary 
     to direct the investment of the assets in his or her account 
     is suspended by a plan sponsor or fiduciary'', and
       (C) by adding at the end the following new subparagraphs:
       ``(B) If a person referred to in subparagraph (A)(ii) meets 
     the requirements of this title in connection with authorizing 
     and implementing the blackout period, any person who is 
     otherwise a fiduciary shall not be liable under this title 
     for any loss occurring during such period.
       ``(C) For purposes of this paragraph, the term `blackout 
     period' has the meaning given such term by section 
     101(i)(7).''; and
       (2) by adding at the end the following:
       ``(4)(A) In any case in which a qualified change in 
     investment options occurs in connection with an individual 
     account plan, a participant or beneficiary shall not be 
     treated for purposes of paragraph (1) as not exercising 
     control over the assets in his account in connection with 
     such change if the requirements of subparagraph (C) are met 
     in connection with such change.
       ``(B) For purposes of subparagraph (A), the term `qualified 
     change in investment options' means, in connection with an 
     individual account plan, a change in the investment options 
     offered to the participant or beneficiary under the terms of 
     the plan, under which--
       ``(i) the account of the participant or beneficiary is 
     reallocated among one or more remaining or new investment 
     options which are offered in lieu of one or more investment 
     options offered immediately prior to the effective date of 
     the change, and
       ``(ii) the stated characteristics of the remaining or new 
     investment options provided under clause (i), including 
     characteristics relating to risk and rate of return, are, as 
     of immediately after the change, reasonably similar to those 
     of the existing investment options as of immediately before 
     the change.
       ``(C) The requirements of this subparagraph are met in 
     connection with a qualified change in investment options if--
       ``(i) at least 30 days and no more than 60 days prior to 
     the effective date of the change, the plan administrator 
     furnishes written notice of the change to the participants 
     and beneficiaries, including information comparing the 
     existing and new investment options and an explanation that, 
     in the absence of affirmative investment instructions from 
     the participant or beneficiary to the contrary, the account 
     of the participant or beneficiary will be invested in the 
     manner described in subparagraph (B),
       ``(ii) the participant or beneficiary has not provided to 
     the plan administrator, in advance of the effective date of 
     the change, affirmative investment instructions contrary to 
     the change, and
       ``(iii) the investments under the plan of the participant 
     or beneficiary as in effect immediately prior to the 
     effective date of the change were the product of the exercise 
     by such participant or beneficiary of control over the assets 
     of the account within the meaning of paragraph (1).''.
       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to plan years beginning after December 31, 2007.
       (2) Special rule for collectively bargained agreements.--In 
     the case of a plan maintained pursuant to 1 or more 
     collective bargaining agreements between employee 
     representatives and 1 or more employers ratified on or before 
     the date of the enactment of this Act, paragraph (1) shall be 
     applied to benefits pursuant to, and individuals covered by, 
     any such agreement by substituting for ``December 31, 2007'' 
     the earlier of--
       (A) the later of--
       (i) December 31, 2008, or
       (ii) the date on which the last of such collective 
     bargaining agreements terminates (determined without regard 
     to any extension thereof after such date of enactment), or
       (B) December 31, 2009.

     SEC. 622. INCREASE IN MAXIMUM BOND AMOUNT.

       (a) In General.--Section 412(a) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1112), as amended by 
     section 611(b), is amended by adding at the end the 
     following: ``In the case of a plan that holds employer 
     securities (within the meaning of section 407(d)(1)), this 
     subsection shall be applied by substituting `$1,000,000' for 
     `$500,000' each place it appears.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to plan years beginning after December 31, 2007.

     SEC. 623. INCREASE IN PENALTIES FOR COERCIVE INTERFERENCE 
                   WITH EXERCISE OF ERISA RIGHTS.

       (a) In General.--Section 511 of the Employment Retirement 
     Income Security Act of 1974 (29 U.S.C. 1141) is amended--
       (1) by striking ``$10,000'' and inserting ``$100,000'', and
       (2) by striking ``one year'' and inserting ``10 years''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to violations occurring on and after the date of 
     the enactment of this Act.

     SEC. 624. TREATMENT OF INVESTMENT OF ASSETS BY PLAN WHERE 
                   PARTICIPANT FAILS TO EXERCISE INVESTMENT 
                   ELECTION.

       (a) In General.--Section 404(c) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1104(c)), as amended 
     by section 622, is amended by adding at the end the following 
     new paragraph:
       ``(5) Default investment arrangements.--
       ``(A) In general.--For purposes of paragraph (1), a 
     participant in an individual account plan meeting the notice 
     requirements of subparagraph (B) shall be treated as 
     exercising control over the assets in the account with 
     respect to the amount of contributions and earnings which, in 
     the absence of an investment election by the participant, are 
     invested by the plan in accordance with regulations 
     prescribed by the Secretary. The regulations under this 
     subparagraph shall provide guidance on the appropriateness of 
     designating default investments that include a mix of asset 
     classes consistent with capital preservation or long-term 
     capital appreciation, or a blend of both.
       ``(B) Notice requirements.--
       ``(i) In general.--The requirements of this subparagraph 
     are met if each participant--

       ``(I) receives, within a reasonable period of time before 
     each plan year, a notice explaining the employee's right 
     under the plan to designate how contributions and earnings 
     will be invested and explaining how, in the absence of any 
     investment election by the participant, such contributions 
     and earnings will be invested, and
       ``(II) has a reasonable period of time after receipt of 
     such notice and before the beginning of the plan year to make 
     such designation.

       ``(ii) Form of notice.--The requirements of clauses (i) and 
     (ii) of section 401(k)(12)(D) of the Internal Revenue Code of 
     1986 shall apply with respect to the notices described in 
     this subparagraph.''.
       (b) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to plan years beginning after December 31, 2006.
       (2) Regulations.--Final regulations under section 
     404(c)(5)(A) of the Employee Retirement Income Security Act 
     of 1974 (as added by this section) shall be issued no later 
     than 6 months after the date of the enactment of this Act.

[[Page 16372]]



     SEC. 625. CLARIFICATION OF FIDUCIARY RULES.

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

                  TITLE VII--BENEFIT ACCRUAL STANDARDS

     SEC. 701. BENEFIT ACCRUAL STANDARDS.

       (a) Amendments to the Employee Retirement Income Security 
     Act of 1974.--
       (1) Rules relating to reduction in rate of benefit 
     accrual.--Section 204(b) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1054(b)) is amended by adding 
     at the end the following new paragraph:
       ``(5) Special rules relating to age.--
       ``(A) Comparison to similarly situated younger 
     individual.--
       ``(i) In general.--A plan shall not be treated as failing 
     to meet the requirements of paragraph (1)(H)(i) if a 
     participant's accrued benefit, as determined as of any date 
     under the terms of the plan, would be equal to or greater 
     than that of any similarly situated, younger individual who 
     is or could be a participant.
       ``(ii) Similarly situated.--For purposes of this 
     subparagraph, a participant is similarly situated to any 
     other individual if such participant is identical to such 
     other individual in every respect (including period of 
     service, compensation, position, date of hire, work history, 
     and any other respect) except for age.
       ``(iii) Disregard of subsidized early retirement 
     benefits.--In determining the accrued benefit as of any date 
     for purposes of this clause, the subsidized portion of any 
     early retirement benefit or retirement-type subsidy shall be 
     disregarded.
       ``(iv) Accrued benefit.--For purposes of this subparagraph, 
     the accrued benefit may, under the terms of the plan, be 
     expressed as an annuity payable at normal retirement age, the 
     balance of a hypothetical account, or the current value of 
     the accumulated percentage of the employee's final average 
     compensation.
       ``(B) Applicable defined benefit plans.--
       ``(i) Interest credits.--

       ``(I) In general.--An applicable defined benefit plan shall 
     be treated as failing to meet the requirements of paragraph 
     (1)(H) unless the terms of the plan provide that any interest 
     credit (or an equivalent amount) for any plan year shall be 
     at a rate which is not greater than a market rate of return. 
     A plan shall not be treated as failing to meet the 
     requirements of this subclause merely because the plan 
     provides for a reasonable minimum guaranteed rate of return 
     or for a rate of return that is equal to the greater of a 
     fixed or variable rate of return.
       ``(II) Preservation of capital.--An interest credit (or an 
     equivalent amount) of less than zero shall in no event result 
     in the account balance or similar amount being less than the 
     aggregate amount of contributions credited to the account.

       ``(III) Market rate of return.--The Secretary of the 
     Treasury may provide by regulation for rules governing the 
     calculation of a market rate of return for purposes of 
     subclause (I) and for permissible methods of crediting 
     interest to the account (including fixed or variable interest 
     rates) resulting in effective rates of return meeting the 
     requirements of subclause (I).

       ``(ii) Special rule for plan conversions.--If, after June 
     29, 2005, an applicable plan amendment is adopted, the plan 
     shall be treated as failing to meet the requirements of 
     paragraph (1)(H) unless the requirements of clause (iii) are 
     met with respect to each individual who was a participant in 
     the plan immediately before the adoption of the amendment.
       ``(iii) Rate of benefit accrual.--Subject to clause (iv), 
     the requirements of this clause are met with respect to any 
     participant if the accrued benefit of the participant under 
     the terms of the plan as in effect after the amendment is not 
     less than the sum of--

       ``(I) the participant's accrued benefit for years of 
     service before the effective date of the amendment, 
     determined under the terms of the plan as in effect before 
     the amendment, plus
       ``(II) the participant's accrued benefit for years of 
     service after the effective date of the amendment, determined 
     under the terms of the plan as in effect after the amendment.

       ``(iv) Special rules for early retirement subsidies.--For 
     purposes of clause (iii)(I), the plan shall credit the 
     accumulation account or similar amount with the amount of any 
     early retirement benefit or retirement-type subsidy for the 
     plan year in which the participant retires if, as of such 
     time, the participant has met the age, years of service, and 
     other requirements under the plan for entitlement to such 
     benefit or subsidy.
       ``(v) Applicable plan amendment.--For purposes of this 
     subparagraph--

       ``(I) In general.--The term `applicable plan amendment' 
     means an amendment to a defined benefit plan which has the 
     effect of converting the plan to an applicable defined 
     benefit plan.
       ``(II) Special rule for coordinated benefits.--If the 
     benefits of 2 or more defined benefit plans established or 
     maintained by an employer are coordinated in such a manner as 
     to have the effect of the adoption of an amendment described 
     in subclause (I), the sponsor of the defined benefit plan or 
     plans providing for such coordination shall be treated as 
     having adopted such a plan amendment as of the date such 
     coordination begins.
       ``(III) Multiple amendments.--The Secretary of the Treasury 
     shall issue regulations to prevent the avoidance of the 
     purposes of this subparagraph through the use of 2 or more 
     plan amendments rather than a single amendment.
       ``(IV) Applicable defined benefit plan.--For purposes of 
     this subparagraph, the term `applicable defined benefit plan' 
     has the meaning given such term by section 203(f)(3).

       ``(vi) Termination requirements.--An applicable defined 
     benefit plan shall not be treated as meeting the requirements 
     of clause (i) unless the plan provides that, upon the 
     termination of the plan--

       ``(I) if the interest credit rate (or an equivalent amount) 
     under the plan is a variable rate, the rate of interest used 
     to determine accrued benefits under the plan shall be equal 
     to the average of the rates of interest used under the plan 
     during the 5-year period ending on the termination date, and
       ``(II) the interest rate and mortality table used to 
     determine the amount of any benefit under the plan payable in 
     the form of an annuity payable at normal retirement age shall 
     be the rate and table specified under the plan for such 
     purpose as of the termination date, except that if such 
     interest rate is a variable rate, the interest rate shall be 
     determined under the rules of subclause (I).

       ``(C) Certain offsets permitted.--A plan shall not be 
     treated as failing to meet the requirements of paragraph 
     (1)(H)(i) solely because the plan provides offsets against 
     benefits under the plan to the extent such offsets are 
     allowable in applying the requirements of section 401(a) of 
     the Internal Revenue Code of 1986.
       ``(D) Permitted disparities in plan contributions or 
     benefits.--A plan shall not be treated as failing to meet the 
     requirements of paragraph (1)(H) solely because the plan 
     provides a disparity in contributions or benefits with 
     respect to which the requirements of section 401(l) of the 
     Internal Revenue Code of 1986 are met.
       ``(E) Indexing permitted.--
       ``(i) In general.--A plan shall not be treated as failing 
     to meet the requirements of paragraph (1)(H) solely because 
     the plan provides for indexing of accrued benefits under the 
     plan.
       ``(ii) Protection against loss.--Except in the case of any 
     benefit provided in the form of a variable annuity, clause 
     (i) shall not apply with respect to any indexing which 
     results in an accrued benefit less than the accrued benefit 
     determined without regard to such indexing.
       ``(iii) Indexing.--For purposes of this subparagraph, the 
     term `indexing' means, in connection with an accrued benefit, 
     the periodic adjustment of the accrued benefit by means of 
     the application of a recognized investment index or 
     methodology.
       ``(F) Early retirement benefit or retirement-type 
     subsidy.--For purposes of this paragraph, the terms `early 
     retirement benefit' and `retirement-type subsidy' have the 
     meaning given such terms in subsection (g)(2)(A).
       ``(G) Benefit accrued to date.--For purposes of this 
     paragraph, any reference to the accrued benefit shall be a 
     reference to such benefit accrued to date.''.
       (2) Determinations of accrued benefit as balance of benefit 
     account or equivalent amounts.--Section 203 of such Act (29 
     U.S.C. 1053) is amended by adding at the end the following 
     new subsection:
       ``(f) Special Rules for Plans Computing Accrued Benefits by 
     Reference to Hypothetical Account Balance or Equivalent 
     Amounts.--
       ``(1) In general.--An applicable defined benefit plan shall 
     not be treated as failing to meet--
       ``(A) subject to paragraph (2), the requirements of 
     subsection (a)(2), or
       ``(B) the requirements of section 204(c) or section 205(g) 
     with respect to contributions other than employee 
     contributions,
     solely because the present value of the accrued benefit (or 
     any portion thereof) of any participant is, under the terms 
     of the plan, equal to the amount expressed as the balance in 
     the hypothetical account described in paragraph (3) or as an 
     accumulated percentage of the participant's final average 
     compensation.
       ``(2) 3-year vesting.--In the case of an applicable defined 
     benefit plan, such plan shall be treated as meeting the 
     requirements of subsection (a)(2) only if an employee who has 
     completed at least 3 years of service has a nonforfeitable 
     right to 100 percent of the employee's accrued benefit 
     derived from employer contributions.
       ``(3) Applicable defined benefit plan and related rules.--
     For purposes of this subsection--

[[Page 16373]]

       ``(A) In general.--The term `applicable defined benefit 
     plan' means a defined benefit plan under which the accrued 
     benefit (or any portion thereof) is calculated as the balance 
     of a hypothetical account maintained for the participant or 
     as an accumulated percentage of the participant's final 
     average compensation.
       ``(B) Regulations to include similar plans.--The Secretary 
     of the Treasury shall issue regulations which include in the 
     definition of an applicable defined benefit plan any defined 
     benefit plan (or any portion of such a plan) which has an 
     effect similar to an applicable defined benefit plan.''.
       (b) Amendments to the Internal Revenue Code of 1986.--
       (1) Rules relating to reduction in rate of benefit 
     accrual.--Subsection (b) of section 411 of the Internal 
     Revenue Code of 1986 is amended by adding at the end the 
     following new paragraph:
       ``(5) Special rules relating to age.--
       ``(A) Comparison to similarly situated younger 
     individual.--
       ``(i) In general.--A plan shall not be treated as failing 
     to meet the requirements of paragraph (1)(H)(i) if a 
     participant's accrued benefit, as determined as of any date 
     under the terms of the plan, would be equal to or greater 
     than that of any similarly situated, younger individual who 
     is or could be a participant.
       ``(ii) Similarly situated.--For purposes of this 
     subparagraph, a participant is similarly situated to any 
     other individual if such participant is identical to such 
     other individual in every respect (including period of 
     service, compensation, position, date of hire, work history, 
     and any other respect) except for age.
       ``(iii) Disregard of subsidized early retirement 
     benefits.--In determining the accrued benefit as of any date 
     for purposes of this clause, the subsidized portion of any 
     early retirement benefit or retirement-type subsidy shall be 
     disregarded.
       ``(iv) Accrued benefit.--For purposes of this subparagraph, 
     the accrued benefit may, under the terms of the plan, be 
     expressed as an annuity payable at normal retirement age, the 
     balance of a hypothetical account, or the current value of 
     the accumulated percentage of the employee's final average 
     compensation.
       ``(B) Applicable defined benefit plans.--
       ``(i) Interest credits.--

       ``(I) In general.--An applicable defined benefit plan shall 
     be treated as failing to meet the requirements of paragraph 
     (1)(H) unless the terms of the plan provide that any interest 
     credit (or an equivalent amount) for any plan year shall be 
     at a rate which is not greater than a market rate of return. 
     A plan shall not be treated as failing to meet the 
     requirements of this subclause merely because the plan 
     provides for a reasonable minimum guaranteed rate of return 
     or for a rate of return that is equal to the greater of a 
     fixed or variable rate of return.
       ``(II) Preservation of capital.--An interest credit (or an 
     equivalent amount) of less than zero shall in no event result 
     in the account balance or similar amount being less than the 
     aggregate amount of contributions credited to the account.
       ``(III) Market rate of return.--The Secretary may provide 
     by regulation for rules governing the calculation of a market 
     rate of return for purposes of subclause (I) and for 
     permissible methods of crediting interest to the account 
     (including fixed or variable interest rates) resulting in 
     effective rates of return meeting the requirements of 
     subclause (I).

       ``(ii) Special rule for plan conversions.--If, after June 
     29, 2005, an applicable plan amendment is adopted, the plan 
     shall be treated as failing to meet the requirements of 
     paragraph (1)(H) unless the requirements of clause (iii) are 
     met with respect to each individual who was a participant in 
     the plan immediately before the adoption of the amendment.
       ``(iii) Rate of benefit accrual.--Subject to clause (iv), 
     the requirements of this clause are met with respect to any 
     participant if the accrued benefit of the participant under 
     the terms of the plan as in effect after the amendment is not 
     less than the sum of--

       ``(I) the participant's accrued benefit for years of 
     service before the effective date of the amendment, 
     determined under the terms of the plan as in effect before 
     the amendment, plus
       ``(II) the participant's accrued benefit for years of 
     service after the effective date of the amendment, determined 
     under the terms of the plan as in effect after the amendment.

       ``(iv) Special rules for early retirement subsidies.--For 
     purposes of clause (iii)(I), the plan shall credit the 
     accumulation account or similar amount with the amount of any 
     early retirement benefit or retirement-type subsidy for the 
     plan year in which the participant retires if, as of such 
     time, the participant has met the age, years of service, and 
     other requirements under the plan for entitlement to such 
     benefit or subsidy.
       ``(v) Applicable plan amendment.--For purposes of this 
     subparagraph--

       ``(I) In general.--The term `applicable plan amendment' 
     means an amendment to a defined benefit plan which has the 
     effect of converting the plan to an applicable defined 
     benefit plan.
       ``(II) Special rule for coordinated benefits.--If the 
     benefits of 2 or more defined benefit plans established or 
     maintained by an employer are coordinated in such a manner as 
     to have the effect of the adoption of an amendment described 
     in subclause (I), the sponsor of the defined benefit plan or 
     plans providing for such coordination shall be treated as 
     having adopted such a plan amendment as of the date such 
     coordination begins.
       ``(III) Multiple amendments.--The Secretary shall issue 
     regulations to prevent the avoidance of the purposes of this 
     subparagraph through the use of 2 or more plan amendments 
     rather than a single amendment.
       ``(IV) Applicable defined benefit plan.--For purposes of 
     this subparagraph, the term `applicable defined benefit plan' 
     has the meaning given such term by section 411(a)(13).

       ``(vi) Termination requirements.--An applicable defined 
     benefit plan shall not be treated as meeting the requirements 
     of clause (i) unless the plan provides that, upon the 
     termination of the plan--

       ``(I) if the interest credit rate (or an equivalent amount) 
     under the plan is a variable rate, the rate of interest used 
     to determine accrued benefits under the plan shall be equal 
     to the average of the rates of interest used under the plan 
     during the 5-year period ending on the termination date, and
       ``(II) the interest rate and mortality table used to 
     determine the amount of any benefit under the plan payable in 
     the form of an annuity payable at normal retirement age shall 
     be the rate and table specified under the plan for such 
     purpose as of the termination date, except that if such 
     interest rate is a variable rate, the interest rate shall be 
     determined under the rules of subclause (I).

       ``(C) Certain offsets permitted.--A plan shall not be 
     treated as failing to meet the requirements of paragraph 
     (1)(H)(i) solely because the plan provides offsets against 
     benefits under the plan to the extent such offsets are 
     allowable in applying the requirements of section 401(a).
       ``(D) Permitted disparities in plan contributions or 
     benefits.--A plan shall not be treated as failing to meet the 
     requirements of paragraph (1)(H) solely because the plan 
     provides a disparity in contributions or benefits with 
     respect to which the requirements of section 401(l) are met.
       ``(E) Indexing permitted.--
       ``(i) In general.--A plan shall not be treated as failing 
     to meet the requirements of paragraph (1)(H) solely because 
     the plan provides for indexing of accrued benefits under the 
     plan.
       ``(ii) Protection against loss.--Except in the case of any 
     benefit provided in the form of a variable annuity, clause 
     (i) shall not apply with respect to any indexing which 
     results in an accrued benefit less than the accrued benefit 
     determined without regard to such indexing.
       ``(iii) Indexing.--For purposes of this subparagraph, the 
     term `indexing' means, in connection with an accrued benefit, 
     the periodic adjustment of the accrued benefit by means of 
     the application of a recognized investment index or 
     methodology.
       ``(F) Early retirement benefit or retirement-type 
     subsidy.--For purposes of this paragraph, the terms `early 
     retirement benefit' and `retirement-type subsidy' have the 
     meaning given such terms in subsection (d)(6)(B)(i).
       ``(G) Benefit accrued to date.--For purposes of this 
     paragraph, any reference to the accrued benefit shall be a 
     reference to such benefit accrued to date.''.
       (2) Determinations of accrued benefit as balance of benefit 
     account or equivalent amounts.--Subsection (a) of section 411 
     of such Code is amended by adding at the end the following 
     new paragraph:
       ``(13) Special rules for plans computing accrued benefits 
     by reference to hypothetical account balance or equivalent 
     amounts.--
       ``(A) In general.--An applicable defined benefit plan shall 
     not be treated as failing to meet--
       ``(i) subject to paragraph (2), the requirements of 
     subsection (a)(2), or
       ``(ii) the requirements of subsection (c) or section 417(e) 
     with respect to contributions other than employee 
     contributions,
     solely because the present value of the accrued benefit (or 
     any portion thereof) of any participant is, under the terms 
     of the plan, equal to the amount expressed as the balance in 
     the hypothetical account described in paragraph (3) or as an 
     accumulated percentage of the participant's final average 
     compensation.
       ``(B) 3-year vesting.--In the case of an applicable defined 
     benefit plan, such plan shall be treated as meeting the 
     requirements of subsection (a)(2) only if an employee who has 
     completed at least 3 years of service has a nonforfeitable 
     right to 100 percent of the employee's accrued benefit 
     derived from employer contributions.
       ``(C) Applicable defined benefit plan and related rules.--
     For purposes of this subsection--
       ``(i) In general.--The term `applicable defined benefit 
     plan' means a defined benefit plan under which the accrued 
     benefit (or any portion thereof) is calculated as the balance 
     of a hypothetical account maintained for the

[[Page 16374]]

     participant or as an accumulated percentage of the 
     participant's final average compensation.
       ``(ii) Regulations to include similar plans.--The Secretary 
     shall issue regulations which include in the definition of an 
     applicable defined benefit plan any defined benefit plan (or 
     any portion of such a plan) which has an effect similar to an 
     applicable defined benefit plan.''.
       (c) Amendments to Age Discrimination in Employment Act.--
     Section 4(i) of the Age Discrimination in Employment Act of 
     1967 (29 U.S.C. 623(i)) is amended by adding at the end the 
     following new paragraph:
       ``(10) Special rules relating to age.--
       ``(A) Comparison to similarly situated younger 
     individual.--
       ``(i) In general.--A plan shall not be treated as failing 
     to meet the requirements of paragraph (1) if a participant's 
     accrued benefit, as determined as of any date under the terms 
     of the plan, would be equal to or greater than that of any 
     similarly situated, younger individual who is or could be a 
     participant.
       ``(ii) Similarly situated.--For purposes of this 
     subparagraph, a participant is similarly situated to any 
     other individual if such participant is identical to such 
     other individual in every respect (including period of 
     service, compensation, position, date of hire, work history, 
     and any other respect) except for age.
       ``(iii) Disregard of subsidized early retirement 
     benefits.--In determining the accrued benefit as of any date 
     for purposes of this clause, the subsidized portion of any 
     early retirement benefit or retirement-type subsidy shall be 
     disregarded.
       ``(iv) Accrued benefit.--For purposes of this subparagraph, 
     the accrued benefit may, under the terms of the plan, be 
     expressed as an annuity payable at normal retirement age, the 
     balance of a hypothetical account, or the current value of 
     the accumulated percentage of the employee's final average 
     compensation.
       ``(B) Applicable defined benefit plans.--
       ``(i) Interest credits.--

       ``(I) In general.--An applicable defined benefit plan shall 
     be treated as failing to meet the requirements of paragraph 
     (1) unless the terms of the plan provide that any interest 
     credit (or an equivalent amount) for any plan year shall be 
     at a rate which is not greater than a market rate of return. 
     A plan shall not be treated as failing to meet the 
     requirements of this subclause merely because the plan 
     provides for a reasonable minimum guaranteed rate of return 
     or for a rate of return that is equal to the greater of a 
     fixed or variable rate of return.
       ``(II) Preservation of capital.--An interest credit (or an 
     equivalent amount) of less than zero shall in no event result 
     in the account balance or similar amount being less than the 
     aggregate amount of contributions credited to the account.
       ``(III) Market rate of return.--The Secretary of the 
     Treasury may provide by regulation for rules governing the 
     calculation of a market rate of return for purposes of 
     subclause (I) and for permissible methods of crediting 
     interest to the account (including fixed or variable interest 
     rates) resulting in effective rates of return meeting the 
     requirements of subclause (I).

       ``(ii) Special rule for plan conversions.--If, after June 
     29, 2005, an applicable plan amendment is adopted, the plan 
     shall be treated as failing to meet the requirements of 
     paragraph (1)(H) unless the requirements of clause (iii) are 
     met with respect to each individual who was a participant in 
     the plan immediately before the adoption of the amendment.
       ``(iii) Rate of benefit accrual.--Subject to clause (iv), 
     the requirements of this clause are met with respect to any 
     participant if the accrued benefit of the participant under 
     the terms of the plan as in effect after the amendment is not 
     less than the sum of--

       ``(I) the participant's accrued benefit for years of 
     service before the effective date of the amendment, 
     determined under the terms of the plan as in effect before 
     the amendment, plus
       ``(II) the participant's accrued benefit for years of 
     service after the effective date of the amendment, determined 
     under the terms of the plan as in effect after the amendment.

       ``(iv) Special rules for early retirement subsidies.--For 
     purposes of clause (iii)(I), the plan shall credit the 
     accumulation account or similar amount with the amount of any 
     early retirement benefit or retirement-type subsidy for the 
     plan year in which the participant retires if, as of such 
     time, the participant has met the age, years of service, and 
     other requirements under the plan for entitlement to such 
     benefit or subsidy.
       ``(v) Applicable plan amendment.--For purposes of this 
     subparagraph--

       ``(I) In general.--The term `applicable plan amendment' 
     means an amendment to a defined benefit plan which has the 
     effect of converting the plan to an applicable defined 
     benefit plan.
       ``(II) Special rule for coordinated benefits.--If the 
     benefits of 2 or more defined benefit plans established or 
     maintained by an employer are coordinated in such a manner as 
     to have the effect of the adoption of an amendment described 
     in subclause (I), the sponsor of the defined benefit plan or 
     plans providing for such coordination shall be treated as 
     having adopted such a plan amendment as of the date such 
     coordination begins.
       ``(III) Multiple amendments.--The Secretary of the Treasury 
     shall issue regulations to prevent the avoidance of the 
     purposes of this subparagraph through the use of 2 or more 
     plan amendments rather than a single amendment.
       ``(IV) Applicable defined benefit plan.--For purposes of 
     this subparagraph, the term `applicable defined benefit plan' 
     has the meaning given such term by section 203(f)(3) of the 
     Employee Retirement Income Security Act of 1974.

       ``(vi) Termination requirements.--An applicable defined 
     benefit plan shall not be treated as meeting the requirements 
     of clause (i) unless the plan provides that, upon the 
     termination of the plan--

       ``(I) if the interest credit rate (or an equivalent amount) 
     under the plan is a variable rate, the rate of interest used 
     to determine accrued benefits under the plan shall be equal 
     to the average of the rates of interest used under the plan 
     during the 5-year period ending on the termination date, and
       ``(II) the interest rate and mortality table used to 
     determine the amount of any benefit under the plan payable in 
     the form of an annuity payable at normal retirement age shall 
     be the rate and table specified under the plan for such 
     purpose as of the termination date, except that if such 
     interest rate is a variable rate, the interest rate shall be 
     determined under the rules of subclause (I).

       ``(C) Certain offsets permitted.--A plan shall not be 
     treated as failing to meet the requirements of paragraph (1) 
     solely because the plan provides offsets against benefits 
     under the plan to the extent such offsets are allowable in 
     applying the requirements of section 401(a) of the Internal 
     Revenue Code of 1986.
       ``(D) Permitted disparities in plan contributions or 
     benefits.--A plan shall not be treated as failing to meet the 
     requirements of paragraph (1) solely because the plan 
     provides a disparity in contributions or benefits with 
     respect to which the requirements of section 401(l) of the 
     Internal Revenue Code of 1986 are met.
       ``(E) Indexing permitted.--
       ``(i) In general.--A plan shall not be treated as failing 
     to meet the requirements of paragraph (1) solely because the 
     plan provides for indexing of accrued benefits under the 
     plan.
       ``(ii) Protection against loss.--Except in the case of any 
     benefit provided in the form of a variable annuity, clause 
     (i) shall not apply with respect to any indexing which 
     results in an accrued benefit less than the accrued benefit 
     determined without regard to such indexing.
       ``(iii) Indexing.--For purposes of this subparagraph, the 
     term `indexing' means, in connection with an accrued benefit, 
     the periodic adjustment of the accrued benefit by means of 
     the application of a recognized investment index or 
     methodology.
       ``(F) Early retirement benefit or retirement-type 
     subsidy.--For purposes of this paragraph, the terms `early 
     retirement benefit' and `retirement-type subsidy' have the 
     meaning given such terms in section 203(g)(2)(A) of the 
     Employee Retirement Income Security Act of 1974.
       ``(G) Benefit accrued to date.--For purposes of this 
     paragraph, any reference to the accrued benefit shall be a 
     reference to such benefit accrued to date.''.
       (d) No Inference.--Nothing in the amendments made by this 
     section shall be construed to create an inference with 
     respect to--
       (1) the treatment of applicable defined benefit plans or 
     conversions to applicable defined benefit plans under 
     sections 204(b)(1)(H) of the Employee Retirement Income 
     Security Act of 1974, 4(i)(1) of the Age Discrimination in 
     Employment Act of 1967, and 411(b)(1)(H) of the Internal 
     Revenue Code of 1986, as in effect before such amendments, or
       (2) the determination of whether an applicable defined 
     benefit plan fails to meet the requirements of sections 
     203(a)(2), 204(c), or 204(g) of the Employee Retirement 
     Income Security Act of 1974 or sections 411(a)(2), 411(c), or 
     417(e) of such Code, as in effect before such amendments, 
     solely because the present value of the accrued benefit (or 
     any portion thereof) of any participant is, under the terms 
     of the plan, equal to the amount expressed as the balance in 
     a hypothetical account or as an accumulated percentage of the 
     participant's final average compensation.

     For purposes of this subsection, the term ``applicable 
     defined benefit plan'' has the meaning given such term by 
     section 203(f)(3) of the Employee Retirement Income Security 
     Act of 1974 and section 411(a)(13)(C) of such Code, as in 
     effect after such amendments.
       (e) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to periods beginning on or after June 29, 2005.
       (2) Present value of accrued benefit.--The amendments made 
     by subsections (a)(2) and (b)(2) shall apply to distributions 
     made after the date of the enactment of this Act.
       (3) Vesting and interest credit requirements.--In the case 
     of a plan in existence on

[[Page 16375]]

     June 29, 2005, the requirements of clause (i) of section 
     411(b)(5)(B) of the Internal Revenue Code of 1986, clause (i) 
     of section 204(b)(5)(B) of the Employee Retirement Income 
     Security Act of 1974, and clause (i) of section 4(i)(10)(B) 
     of the Age Discrimination in Employment Act of 1967 (as added 
     by this Act) and the requirements of 203(f)(2) of the 
     Employee Retirement Income Security Act of 1974 and section 
     411(a)(13)(B) of the Internal Revenue Code of 1986 (as so 
     added) shall, for purposes of applying the amendments made by 
     subsections (a) and (b), apply to years beginning after 
     December 31, 2007, unless the plan sponsor elects the 
     application of such requirements for any period after June 
     29, 2005, and before the first year beginning after December 
     31, 2007.
       (4) Special rule for collectively bargained plans.--In the 
     case of a plan maintained pursuant to 1 or more collective 
     bargaining agreements between employee representatives and 1 
     or more employers ratified on or before the date of the 
     enactment of this Act, the requirements described in 
     paragraph (3) shall, for purposes of applying the amendments 
     made by subsections (a) and (b), not apply to plan years 
     beginning before--
       (A) the earlier of--
       (i) the date on which the last of such collective 
     bargaining agreements terminates (determined without regard 
     to any extension thereof on or after such date of enactment), 
     or
       (ii) January 1, 2008, or
       (B) January 1, 2010.
       (5) Conversions.--The requirements of clause (ii) of 
     section 411(b)(5)(B) of the Internal Revenue Code of 1986, 
     clause (ii) of section 204(b)(5)(B) of the Employee 
     Retirement Income Security Act of 1974, and clause (ii) of 
     section 4(i)(10)(B) of the Age Discrimination in Employment 
     Act of 1967 (as added by this Act), shall apply to plan 
     amendments adopted after, and taking effect after, June 29, 
     2005, except that the plan sponsor may elect to have such 
     amendments apply to plan amendments adopted before, and 
     taking effect after, such date.

     SEC. 702. REGULATIONS RELATING TO MERGERS AND ACQUISITIONS.

       The Secretary of the Treasury or his delegate shall, not 
     later than 12 months after the date of the enactment of this 
     Act, prescribe regulations for the application of the 
     amendments made by, and the provisions of, this title in 
     cases where the conversion of a plan to an applicable defined 
     benefit plan is made with respect to a group of employees who 
     become employees by reason of a merger, acquisition, or 
     similar transaction.

             TITLE VIII--PENSION RELATED REVENUE PROVISIONS

                   Subtitle A--Deduction Limitations

     SEC. 801. INCREASE IN DEDUCTION LIMIT FOR SINGLE-EMPLOYER 
                   PLANS.

       (a) In General.--Section 404 of the Internal Revenue Code 
     of 1986 (relating to deduction for contributions of an 
     employer to an employees' trust or annuity plan and 
     compensation under a deferred payment plan) is amended--
       (1) in subsection (a)(1)(A), by inserting ``in the case of 
     a defined benefit plan other than a multiemployer plan, in an 
     amount determined under subsection (o), and in the case of 
     any other plan'' after ``section 501(a),'', and
       (2) by inserting at the end the following new subsection:
       ``(o) Deduction Limit for Single-Employer Plans.--For 
     purposes of subsection (a)(1)(A)--
       ``(1) In general.--In the case of a defined benefit plan to 
     which subsection (a)(1)(A) applies (other than a 
     multiemployer plan), the amount determined under this 
     subsection for any taxable year shall be equal to the greater 
     of--
       ``(A) the sum of the amounts determined under paragraph (2) 
     with respect to each plan year ending with or within the 
     taxable year, or
       ``(B) the sum of the minimum required contributions under 
     section 430 for such plan years.
       ``(2) Determination of amount.--
       ``(A) In general.--The amount determined under this 
     paragraph for any plan year shall be equal to the excess (if 
     any) of--
       ``(i) the sum of--

       ``(I) the funding target for the plan year,
       ``(II) the target normal cost for the plan year, and
       ``(III) the cushion amount for the plan year, over

       ``(ii) the value (determined under section 430(g)(2)) of 
     the assets of the plan which are held by the plan as of the 
     valuation date for the plan year.
       ``(B) Special rule for certain employers.--If section 
     430(i) does not apply to a plan for a plan year, the amount 
     determined under subparagraph (A)(i) for the plan year shall 
     in no event be less than the sum of--
       ``(i) the funding target for the plan year (determined as 
     if section 430(i) applied to the plan), plus
       ``(ii) the target normal cost for the plan year (as so 
     determined).
       ``(3) Cushion amount.--For purposes of paragraph 
     (2)(A)(i)(III)--
       ``(A) In general.--The cushion amount for any plan year is 
     the sum of--
       ``(i) 50 percent of the funding target for the plan year, 
     and
       ``(ii) the amount by which the funding target for the plan 
     year would increase if the plan were to take into account--

       ``(I) increases in compensation which are expected to occur 
     in succeeding plan years, or
       ``(II) if the plan does not base benefits for service to 
     date on compensation, increases in benefits which are 
     expected to occur in succeeding plan years (determined on the 
     basis of the average annual increase in benefits over the 6 
     immediately preceding plan years).

       ``(B) Limitations.--
       ``(i) In general.--In making the computation under 
     subparagraph (A)(ii), the plan's actuary shall assume that 
     the limitations under subsection (l) and section 415(b) shall 
     apply.
       ``(ii) Expected increases.--In the case of a plan year 
     during which a plan is covered under section 4021 of the 
     Employee Retirement Income Security Act of 1974, the plan's 
     actuary may, notwithstanding subsection (l), take into 
     account increases in the limitations which are expected to 
     occur in succeeding plan years.
       ``(4) Special rules for plans with 100 or fewer 
     participants.--
       ``(A) In general.--For purposes of determining the amount 
     under paragraph (3) for any plan year, in the case of a plan 
     which has 100 or fewer participants for the plan year, the 
     liability of the plan attributable to benefit increases for 
     highly compensated employees (as defined in section 414(q)) 
     resulting from a plan amendment which is made or becomes 
     effective, whichever is later, within the last 2 years shall 
     not be taken into account in determining the target 
     liability.
       ``(B) Rule for determining number of participants.--For 
     purposes of determining the number of plan participants, all 
     defined benefit plans maintained by the same employer (or any 
     member of such employer's controlled group (within the 
     meaning of section 412(f)(4))) shall be treated as one plan, 
     but only participants of such member or employer shall be 
     taken into account.
       ``(5) Special rule for terminating plans.--In the case of a 
     plan which, subject to section 4041 of the Employee 
     Retirement Income Security Act of 1974, terminates during the 
     plan year, the amount determined under paragraph (2) shall in 
     no event be less than the amount required to make the plan 
     sufficient for benefit liabilities (within the meaning of 
     section 4041(d) of such Act).
       ``(6) Actuarial assumptions.--Any computation under this 
     subsection for any plan year shall use the same actuarial 
     assumptions which are used for the plan year under section 
     430.
       ``(7) Definitions.--Any term used in this subsection which 
     is also used in section 430 shall have the same meaning given 
     such term by section 430.''.
       (b) Exception From Limitation on Deduction Where 
     Combination of Defined Contribution and Defined Benefit 
     Plans.--Section 404(a)(7)(C) of such Code, as amended by this 
     Act, is amended by adding at the end the following new 
     clause:
       ``(iv) Guaranteed plans.--In applying this paragraph, any 
     single-employer plan covered under section 4021 of the 
     Employee Retirement Income Security Act of 1974 shall not be 
     taken into account.''.
       (c) Technical and Conforming Amendments.--
       (1) The last sentence of section 404(a)(1)(A) of such Code 
     is amended by striking ``section 412'' each place it appears 
     and inserting ``section 431''.
       (2) Section 404(a)(1)(B) of such Code is amended--
       (A) by striking ``In the case of a plan'' and inserting 
     ``In the case of a multiemployer plan'',
       (B) by striking ``section 412(c)(7)'' each place it appears 
     and inserting ``section 431(c)(6)'',
       (C) by striking ``section 412(c)(7)(B)'' and inserting 
     ``section 431(c)(6)(A)(ii)'',
       (D) by striking ``section 412(c)(7)(A)'' and inserting 
     ``section 431(c)(6)(A)(i)'', and
       (E) by striking ``section 412'' and inserting ``section 
     431''.
       (3) Section 404(a)(7) of such Code, as amended by this Act, 
     is amended--
       (A) by adding at the end of subparagraph (A) the following 
     new sentence: ``In the case of a defined benefit plan which 
     is a single employer plan, the amount necessary to satisfy 
     the minimum funding standard provided by section 412 shall 
     not be less than the plan's funding shortfall determined 
     under section 430.'', and
       (B) by striking subparagraph (D) and inserting:
       ``(D) Insurance contract plans.--For purposes of this 
     paragraph, a plan described in section 412(e)(3) shall be 
     treated as a defined benefit plan.''.
       (4) Section 404A(g)(3)(A) of such Code is amended by 
     striking ``paragraphs (3) and (7) of section 412(c)'' and 
     inserting ``paragraphs (3) and (6) of section 431(c)''.
       (d) Special Rule for 2006 and 2007.--
       (1) In general.--Clause (i) of section 404(a)(1)(D) of the 
     Internal Revenue Code of 1986 (relating to special rule in 
     case of certain plans) is amended by striking ``section 
     412(l)'' and inserting ``section 412(l)(8)(A), except that 
     section 412(l)(8)(A) shall be applied for purposes of this 
     clause by substituting

[[Page 16376]]

     `150 percent (140 percent in the case of a multiemployer 
     plan) of current liability' for `the current liability' in 
     clause (i).''
       (2) Conforming amendment.--Section 404(a)(1) of the 
     Internal Revenue Code of 1986 is amended by striking 
     subparagraph (F).
       (e) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to years 
     beginning after December 31, 2007.
       (2) Special rules.--The amendments made by subsection (d) 
     shall apply to years beginning after December 31, 2005.

     SEC. 802. DEDUCTION LIMITS FOR MULTIEMPLOYER PLANS.

       (a) Increase in Deduction.--Section 404(a)(1)(D) of the 
     Internal Revenue Code of 1986, as amended by this Act, is 
     amended to read as follows:
       ``(D) Amount determined on basis of unfunded current 
     liability.--In the case of a defined benefit plan which is a 
     multiemployer plan, except as provided in regulations, the 
     maximum amount deductible under the limitations of this 
     paragraph shall not be less than the excess (if any) of--
       ``(i) 140 percent of the current liability of the plan 
     determined under section 431(c)(6)(C), over
       ``(ii) the value of the plan's assets determined under 
     section 431(c)(2).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to years beginning after December 31, 2007.

     SEC. 803. UPDATING DEDUCTION RULES FOR COMBINATION OF PLANS.

       (a) In General.--Subparagraph (C) of section 404(a)(7) of 
     the Internal Revenue Code of 1986 (relating to limitation on 
     deductions where combination of defined contribution plan and 
     defined benefit plan) is amended by adding after clause (ii) 
     the following new clause:
       ``(iii) Limitation.--In the case of employer contributions 
     to 1 or more defined contribution plans, this paragraph shall 
     only apply to the extent that such contributions exceed 6 
     percent of the compensation otherwise paid or accrued during 
     the taxable year to the beneficiaries under such plans. For 
     purposes of this clause, amounts carried over from preceding 
     taxable years under subparagraph (B) shall be treated as 
     employer contributions to 1 or more defined contributions to 
     the extent attributable to employer contributions to such 
     plans in such preceding taxable years.''.
       (b) Exception From Limitation on Deduction Where 
     Combination of Defined Contribution and Defined Benefit 
     Plans.--Section 404(a)(7)(C) of such Code, as amended by this 
     Act, is amended by adding at the end the following new 
     clause:
       ``(v) Multiemployer plans.--In applying this paragraph, any 
     multiemployer plan shall not be taken into account.''.
       (c) Conforming Amendment.--Subparagraph (A) of section 
     4972(c)(6) of such Code (relating to nondeductible 
     contributions) is amended to read as follows:
       ``(A) so much of the contributions to 1 or more defined 
     contribution plans which are not deductible when contributed 
     solely because of section 404(a)(7) as does not exceed the 
     amount of contributions described in section 401(m)(4)(A), 
     or''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to contributions for taxable years beginning 
     after December 31, 2005.

         Subtitle B--Certain Pension Provisions Made Permanent

     SEC. 811. PENSIONS AND INDIVIDUAL RETIREMENT ARRANGEMENT 
                   PROVISIONS OF ECONOMIC GROWTH AND TAX RELIEF 
                   RECONCILIATION ACT OF 2001 MADE PERMANENT.

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

     SEC. 812. SAVER'S CREDIT.

       Section 25B of the Internal Revenue Code of 1986 (relating 
     to elective deferrals and IRA contributions by certain 
     individuals) is amended by striking subsection (h).

Subtitle C--Improvements in Portability, Distribution, and Contribution 
                                 Rules

     SEC. 821. CLARIFICATIONS REGARDING PURCHASE OF PERMISSIVE 
                   SERVICE CREDIT.

       (a) In General.--Section 415(n) of the Internal Revenue 
     Code of 1986 (relating to special rules for the purchase of 
     permissive service credit) is amended--
       (1) by striking ``an employee'' in paragraph (1) and 
     inserting ``a participant'', and
       (2) by adding at the end of paragraph (3)(A) the following 
     new flush sentence:

     ``Such term may include service credit for periods for which 
     there is no performance of service, and, notwithstanding 
     clause (ii), may include service credited in order to provide 
     an increased benefit for service credit which a participant 
     is receiving under the plan.''.
       (b) Special Rules for Trustee-to-Trustee Transfers.--
     Section 415(n)(3) of such Code is amended by adding at the 
     end the following new subparagraph:
       ``(D) Special rules for trustee-to-trustee transfers.--In 
     the case of a trustee-to-trustee transfer to which section 
     403(b)(13)(A) or 457(e)(17)(A) applies (without regard to 
     whether the transfer is made between plans maintained by the 
     same employer)--
       ``(i) the limitations of subparagraph (B) shall not apply 
     in determining whether the transfer is for the purchase of 
     permissive service credit, and
       ``(ii) the distribution rules applicable under this title 
     to the defined benefit governmental plan to which any amounts 
     are so transferred shall apply to such amounts and any 
     benefits attributable to such amounts.''.
       (c) Nonqualified Service.--Section 415(n)(3) of such Code 
     is amended--
       (1) by striking ``permissive service credit attributable to 
     nonqualified service'' each place it appears in subparagraph 
     (B) and inserting ``nonqualified service credit'',
       (2) by striking so much of subparagraph (C) as precedes 
     clause (i) and inserting:
       ``(C) Nonqualified service credit.--For purposes of 
     subparagraph (B), the term `nonqualified service credit' 
     means permissive service credit other than that allowed with 
     respect to--'', and
       (3) by striking ``elementary or secondary education 
     (through grade 12), as determined under State law'' in 
     subparagraph (C)(ii) and inserting ``elementary or secondary 
     education (through grade 12), or a comparable level of 
     education, as determined under the applicable law of the 
     jurisdiction in which the service was performed''.
       (d) Effective Dates.--
       (1) In general.--The amendments made by subsections (a) and 
     (c) shall take effect as if included in the amendments made 
     by section 1526 of the Taxpayer Relief Act of 1997.
       (2) Subsection (b).--The amendments made by subsection (b) 
     shall take effect as if included in the amendments made by 
     section 647 of the Economic Growth and Tax Relief 
     Reconciliation Act of 2001.

     SEC. 822. ALLOW ROLLOVER OF AFTER-TAX AMOUNTS IN ANNUITY 
                   CONTRACTS.

       (a) In General.--Subparagraph (A) of section 402(c)(2) 
     (relating to the maximum amount which may be rolled over) is 
     amended--
       (1) by striking ``which is part of a plan which is a 
     defined contribution plan and which agrees to separately 
     account'' and inserting ``or to an annuity contract described 
     in section 403(b) and such trust or contract provides for 
     separate accounting''; and
       (2) by inserting ``(and earnings thereon)'' after ``so 
     transferred''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 823. CLARIFICATION OF MINIMUM DISTRIBUTION RULES FOR 
                   GOVERNMENTAL PLANS.

       The Secretary of the Treasury shall issue regulations under 
     which a governmental plan (as defined in section 414(d) of 
     the Internal Revenue Code of 1986) shall, for all years to 
     which section 401(a)(9) of such Code applies to such plan, be 
     treated as having complied with such section 401(a)(9) if 
     such plan complies with a reasonable good faith 
     interpretation of such section 401(a)(9).

     SEC. 824. ALLOW DIRECT ROLLOVERS FROM RETIREMENT PLANS TO 
                   ROTH IRAS.

       (a) In General.--Subsection (e) of section 408A of the 
     Internal Revenue Code of 1986 (defining qualified rollover 
     contribution) is amended to read as follows:
       ``(e) Qualified Rollover Contribution.--For purposes of 
     this section, the term `qualified rollover contribution' 
     means a rollover contribution--
       ``(1) to a Roth IRA from another such account,
       ``(2) from an eligible retirement plan, but only if--
       ``(A) in the case of an individual retirement plan, such 
     rollover contribution meets the requirements of section 
     408(d)(3), and
       ``(B) in the case of any eligible retirement plan (as 
     defined in section 402(c)(8)(B) other than clauses (i) and 
     (ii) thereof), such rollover contribution meets the 
     requirements of section 402(c), 403(b)(8), or 457(e)(16), as 
     applicable.

     For purposes of section 408(d)(3)(B), there shall be 
     disregarded any qualified rollover contribution from an 
     individual retirement plan (other than a Roth IRA) to a Roth 
     IRA.''.
       (b) Conforming Amendments.--
       (1) Section 408A(c)(3)(B) of such Code, as in effect before 
     the Tax Increase Prevention and Reconciliation Act of 2005, 
     is amended--
       (A) in the text by striking ``individual retirement plan'' 
     and inserting ``an eligible retirement plan (as defined by 
     section 402(c)(8)(B))'', and
       (B) in the heading by striking ``IRA'' the first place it 
     appears and inserting ``eligible retirement plan''.
       (2) Section 408A(d)(3) of such Code is amended--
       (A) in subparagraph (A), by striking ``section 408(d)(3)'' 
     inserting ``sections 402(c), 403(b)(8), 408(d)(3), and 
     457(e)(16)'',
       (B) in subparagraph (B), by striking ``individual 
     retirement plan'' and inserting ``eligible retirement plan 
     (as defined by section 402(c)(8)(B))'',
       (C) in subparagraph (D), by inserting ``or 6047'' after 
     ``408(i)'',

[[Page 16377]]

       (D) in subparagraph (D), by striking ``or both'' and 
     inserting ``persons subject to section 6047(d)(1), or all of 
     the foregoing persons'', and
       (E) in the heading, by striking ``IRA'' the first place it 
     appears and inserting ``eligible retirement plan''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 2007.

     SEC. 825. ELIGIBILITY FOR PARTICIPATION IN RETIREMENT PLANS.

       An individual shall not be precluded from participating in 
     an eligible deferred compensation plan by reason of having 
     received a distribution under section 457(e)(9) of the 
     Internal Revenue Code of 1986, as in effect prior to the 
     enactment of the Small Business Job Protection Act of 1996.

     SEC. 826. MODIFICATIONS OF RULES GOVERNING HARDSHIPS AND 
                   UNFORSEEN FINANCIAL EMERGENCIES.

       Within 180 days after the date of the enactment of this 
     Act, the Secretary of the Treasury shall modify the rules for 
     determining whether a participant has had a hardship for 
     purposes of section 401(k)(2)(B)(i)(IV) of the Internal 
     Revenue Code of 1986 to provide that if an event (including 
     the occurrence of a medical expense) would constitute a 
     hardship under the plan if it occurred with respect to the 
     participant's spouse or dependent (as defined in section 152 
     of such Code), such event shall, to the extent permitted 
     under a plan, constitute a hardship if it occurs with respect 
     to a person who is a beneficiary under the plan with respect 
     to the participant. The Secretary of the Treasury shall issue 
     similar rules for purposes of determining whether a 
     participant has had--
       (1) a hardship for purposes of section 403(b)(11)(B) of 
     such Code; or
       (2) an unforeseen financial emergency for purposes of 
     sections 409A(a)(2)(A)(vi), 409A(a)(2)(B)(ii), and 
     457(d)(1)(A)(iii) of such Code.

     SEC. 827. PENALTY-FREE WITHDRAWALS FROM RETIREMENT PLANS FOR 
                   INDIVIDUALS CALLED TO ACTIVE DUTY FOR AT LEAST 
                   179 DAYS.

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

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

       ``(iv) Application of subparagraph.--This subparagraph 
     applies to individuals ordered or called to active duty after 
     September 11, 2001, and before December 31, 2007. In no event 
     shall the 2-year period referred to in clause (ii) end before 
     the date which is 2 years after the date of the enactment of 
     this subparagraph.''.
       (b) Conforming Amendments.--
       (1) Section 401(k)(2)(B)(i) of such Code is amended by 
     striking ``or'' at the end of subclause (III), by striking 
     ``and'' at the end of subclause (IV) and inserting ``or'', 
     and by inserting after subclause (IV) the following new 
     subclause:

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

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

     SEC. 828. WAIVER OF 10 PERCENT EARLY WITHDRAWAL PENALTY TAX 
                   ON CERTAIN DISTRIBUTIONS OF PENSION PLANS FOR 
                   PUBLIC SAFETY EMPLOYEES.

       (a) In General.--Section 72(t) of the Internal Revenue Code 
     of 1986 (relating to subsection not to apply to certain 
     distributions) is amended by adding at the end the following 
     new paragraph:
       ``(10) Distributions to qualified public safety employees 
     in governmental plans.--
       ``(A) In general.--In the case of a distribution to a 
     qualified public safety employee from a governmental plan 
     (within the meaning of section 414(d)) which is a defined 
     benefit plan, paragraph (2)(A)(v) shall be applied by 
     substituting `age 50' for `age 55'.
       ``(B) Qualified public safety employee.--For purposes of 
     this paragraph, the term `qualified public safety employee' 
     means any employee of a State or political subdivision of a 
     State who provides police protection, firefighting services, 
     or emergency medical services for any area within the 
     jurisdiction of such State or political subdivision.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to distributions after the date of the enactment 
     of this Act.

     SEC. 829. ALLOW ROLLOVERS BY NONSPOUSE BENEFICIARIES OF 
                   CERTAIN RETIREMENT PLAN DISTRIBUTIONS.

       (a) In General.--
       (1) Qualified plans.--Section 402(c) of the Internal 
     Revenue Code of 1986 (relating to rollovers from exempt 
     trusts) is amended by adding at the end the following new 
     paragraph:
       ``(11) Distributions to inherited individual retirement 
     plan of nonspouse beneficiary.--
       ``(A) In general.--If, with respect to any portion of a 
     distribution from an eligible retirement plan of a deceased 
     employee, a direct trustee-to-trustee transfer is made to an 
     individual retirement plan described in clause (i) or (ii) of 
     paragraph (8)(B) established for the purposes of receiving 
     the distribution on behalf of an individual who is a 
     designated beneficiary (as defined by section 401(a)(9)(E)) 
     of the employee and who is not the surviving spouse of the 
     employee--
       ``(i) the transfer shall be treated as an eligible rollover 
     distribution for purposes of this subsection,
       ``(ii) the individual retirement plan shall be treated as 
     an inherited individual retirement account or individual 
     retirement annuity (within the meaning of section 
     408(d)(3)(C)) for purposes of this title, and
       ``(iii) section 401(a)(9)(B) (other than clause (iv) 
     thereof) shall apply to such plan.
       ``(B) Certain trusts treated as beneficiaries.--For 
     purposes of this paragraph, to the extent provided in rules 
     prescribed by the Secretary, a trust maintained for the 
     benefit of one or more designated beneficiaries shall be 
     treated in the same manner as a trust designated 
     beneficiary.''.
       (2) Section 403(a) plans.--Subparagraph (B) of section 
     403(a)(4) of such Code (relating to rollover amounts) is 
     amended by inserting ``and (11)'' after ``(7)''.
       (3) Section 403(b) plans.--Subparagraph (B) of section 
     403(b)(8) of such Code (relating to rollover amounts) is 
     amended by striking ``and (9)'' and inserting ``, (9), and 
     (11)''.
       (4) Section 457 plans.--Subparagraph (B) of section 
     457(e)(16) of such Code (relating to rollover amounts) is 
     amended by striking ``and (9)'' and inserting ``, (9), and 
     (11)''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 2006.

     SEC. 830. DIRECT PAYMENT OF TAX REFUNDS TO INDIVIDUAL 
                   RETIREMENT PLANS.

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

     SEC. 831. ALLOWANCE OF ADDITIONAL IRA PAYMENTS IN CERTAIN 
                   BANKRUPTCY CASES.

       (a) Allowance of Contributions.--Section 219(b)(5) of the 
     Internal Revenue Code of 1986 (relating to deductible amount) 
     is amended by redesignating subparagraph (C) as subparagraph 
     (D) and by inserting after subparagraph (B) the following new 
     subparagraph:

[[Page 16378]]

       ``(C) Catchup contributions for certain individuals.--
       ``(i) In general.--In the case of an applicable individual 
     who elects to make a qualified retirement contribution in 
     addition to the deductible amount determined under 
     subparagraph (A)--

       ``(I) the deductible amount for any taxable year shall be 
     increased by an amount equal to 3 times the applicable amount 
     determined under subparagraph (B) for such taxable year, and
       ``(II) subparagraph (B) shall not apply.

       ``(ii) Applicable individual.--For purposes of this 
     subparagraph, the term `applicable individual' means, with 
     respect to any taxable year, any individual who was a 
     qualified participant in a qualified cash or deferred 
     arrangement (as defined in section 401(k)) of an employer 
     described in clause (iii) under which the employer matched at 
     least 50 percent of the employee's contributions to such 
     arrangement with stock of such employer.
       ``(iii) Employer described.--An employer is described in 
     this clause if, in any taxable year preceding the taxable 
     year described in clause (ii)--

       ``(I) such employer (or any controlling corporation of such 
     employer) was a debtor in a case under title 11 of the United 
     States Code, or similar Federal or State law, and
       ``(II) such employer (or any other person) was subject to 
     an indictment or conviction resulting from business 
     transactions related to such case.

       ``(iv) Qualified participant.--For purposes of clause (ii), 
     the term `qualified participant' means any applicable 
     individual who was a participant in the cash or deferred 
     arrangement described in such clause on the date that is 6 
     months before the filing of the case described in clause 
     (iii).
       ``(v) Termination.--This subparagraph shall not apply to 
     taxable years beginning after December 31, 2009.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 832. DETERMINATION OF AVERAGE COMPENSATION FOR SECTION 
                   415 LIMITS.

       (a) In General.--Section 415(b)(3) of the Internal Revenue 
     Code of 1986 is amended by striking ``both was an active 
     participant in the plan and''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to years beginning after December 31, 2005.

     SEC. 833. INFLATION INDEXING OF GROSS INCOME LIMITATIONS ON 
                   CERTAIN RETIREMENT SAVINGS INCENTIVES.

       (a) Saver's Credit.--Subsection (b) of section 25B of the 
     Internal Revenue Code of 1986 is amended to read as follows:
       ``(b) Applicable Percentage.--For purposes of this 
     section--
       ``(1) Joint returns.--In the case of a joint return, the 
     applicable percentage is--
       ``(A) if the adjusted gross income of the taxpayer is not 
     over $30,000, 50 percent,
       ``(B) if the adjusted gross income of the taxpayer is over 
     $30,000 but not over $32,500, 20 percent,
       ``(C) if the adjusted gross income of the taxpayer is over 
     $32,500 but not over $50,000, 10 percent, and
       ``(D) if the adjusted gross income of the taxpayer is over 
     $50,000, zero percent.
       ``(2) Other returns.--In the case of--
       ``(A) a head of household, the applicable percentage shall 
     be determined under paragraph (1) except that such paragraph 
     shall be applied by substituting for each dollar amount 
     therein (as adjusted under paragraph (3)) a dollar amount 
     equal to 75 percent of such dollar amount, and
       ``(B) any taxpayer not described in paragraph (1) or 
     subparagraph (A), the applicable percentage shall be 
     determined under paragraph (1) except that such paragraph 
     shall be applied by substituting for each dollar amount 
     therein (as adjusted under paragraph (3)) a dollar amount 
     equal to 50 percent of such dollar amount.
       ``(3) Inflation adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2006, each of the 
     dollar amount in paragraph (1) shall be increased by an 
     amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 2005' 
     for `calendar year 1992' in subparagraph (B) thereof.

     Any increase determined under the preceding sentence shall be 
     rounded to the nearest multiple of $500.''.
       (b) Deduction of Retirement Contributions for Active 
     Participants.--Section 219(g) of such Code is amended by 
     adding at the end the following new paragraph:
       ``(8) Inflation adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2006, the dollar 
     amount in the last row of the table contained in paragraph 
     (3)(B)(i), the dollar amount in the last row of the table 
     contained in paragraph (3)(B)(ii), and the dollar amount 
     contained in paragraph (7)(A), shall each be increased by an 
     amount equal to--
       ``(A) such dollar amount, multiplied by
       ``(B) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 2005' 
     for `calendar year 1992' in subparagraph (B) thereof.

     Any increase determined under the preceding sentence shall be 
     rounded to the nearest multiple of $1,000.''.
       (c) Contribution Limitation for Roth IRAs.--Section 
     408A(c)(3) of such Code is amended by adding at the end the 
     following new subparagraph:
       ``(C) Inflation adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2006, the dollar 
     amounts in subclauses (I) and (II) of subparagraph (C)(ii) 
     shall each be increased by an amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 2005' 
     for `calendar year 1992' in subparagraph (B) thereof.

     Any increase determined under the preceding sentence shall be 
     rounded to the nearest multiple of $1,000.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after 2006.

                Subtitle D--Health and Medical Benefits

     SEC. 841. USE OF EXCESS PENSION ASSETS FOR FUTURE RETIREE 
                   HEALTH BENEFITS AND COLLECTIVELY BARGAINED 
                   RETIREE HEALTH BENEFITS.

       (a) In General.--Section 420 of the Internal Revenue Code 
     of 1986 (relating to transfers of excess pension assets to 
     retiree health accounts) is amended by adding at the end the 
     following new subsection:
       ``(f) Qualified Transfers to Cover Future Retiree Health 
     Costs and Collectively Bargained Retiree Health Benefits.--
       ``(1) In general.--An employer maintaining a defined 
     benefit plan (other than a multiemployer plan) may, in lieu 
     of a qualified transfer, elect for any taxable year to have 
     the plan make--
       ``(A) a qualified future transfer, or
       ``(B) a collectively bargained transfer.
     Except as provided in this subsection, a qualified future 
     transfer and a collectively bargained transfer shall be 
     treated for purposes of this title and the Employee 
     Retirement Income Security Act of 1974 as if it were a 
     qualified transfer.
       ``(2) Qualified future and collectively bargained 
     transfers.--For purposes of this subsection--
       ``(A) In general.--The terms `qualified future transfer' 
     and `collectively bargained transfer' mean a transfer which 
     meets all of the requirements for a qualified transfer, 
     except that--
       ``(i) the determination of excess pension assets shall be 
     made under subparagraph (B),
       ``(ii) the limitation on the amount transferred shall be 
     determined under subparagraph (C),
       ``(iii) the minimum cost requirements of subsection (c)(3) 
     shall be modified as provided under subparagraph (D), and
       ``(iv) in the case of a collectively bargained transfer, 
     the requirements of subparagraph (E) shall be met with 
     respect to the transfer.
       ``(B) Excess pension assets.--
       ``(i) In general.--In determining excess pension assets for 
     purposes of this subsection, subsection (e)(2) shall be 
     applied by substituting `120 percent' for `125 percent'.
       ``(ii) Requirement to maintain funded status.--If, as of 
     any valuation date of any plan year in the transfer period, 
     the amount determined under subsection (e)(2)(B) (after 
     application of clause (i)) exceeds the amount determined 
     under subsection (e)(2)(A), either--

       ``(I) the employer maintaining the plan shall make 
     contributions to the plan in an amount not less than the 
     amount required to reduce such excess to zero as of such 
     date, or
       ``(II) there is transferred from the health benefits 
     account to the plan an amount not less than the amount 
     required to reduce such excess to zero as of such date.

       ``(C) Limitation on amount transferred.--Notwithstanding 
     subsection (b)(3), the amount of the excess pension assets 
     which may be transferred--
       ``(i) in the case of a qualified future transfer shall be 
     equal to the sum of--

       ``(I) if the transfer period includes the taxable year of 
     the transfer, the amount determined under subsection (b)(3) 
     for such taxable year, plus
       ``(II) in the case of all other taxable years in the 
     transfer period, the sum of the qualified current retiree 
     health liabilities which the plan reasonably estimates, in 
     accordance with guidance issued by the Secretary, will be 
     incurred for each of such years, and

       ``(ii) in the case of a collectively bargained transfer, 
     shall not exceed the amount which is reasonably estimated, in 
     accordance with the provisions of the collective bargaining 
     agreement and generally accepted accounting principles, to be 
     the amount the employer maintaining the plan will pay 
     (whether directly or through reimbursement) out of such 
     account during the collectively bargained cost maintenance 
     period for collectively bargained retiree health liabilities.
       ``(D) Minimum cost requirements.--
       ``(i) In general.--The requirements of subsection (c)(3) 
     shall be treated as met if--

[[Page 16379]]

       ``(I) in the case of a qualified future transfer, each 
     group health plan or arrangement under which applicable 
     health benefits are provided provides applicable health 
     benefits during the period beginning with the first year of 
     the transfer period and ending with the last day of the 4th 
     year following the transfer period such that the annual 
     average amount of such the applicable employer cost during 
     such period is not less than the applicable employer cost 
     determined under subsection (c)(3)(A) with respect to the 
     transfer, and
       ``(II) in the case of a collectively bargained transfer, 
     each collectively bargained group health plan under which 
     collectively bargained health benefits are provided provides 
     that the collectively bargained employer cost for each 
     taxable year during the collectively bargained cost 
     maintenance period shall not be less than the amount 
     specified by the collective bargaining agreement.

       ``(ii) Election to maintain benefits for future 
     transfers.--An employer may elect, in lieu of the 
     requirements of clause (i)(I), to meet the requirements of 
     subsection (c)(3) by meeting the requirements of such 
     subsection (as in effect before the amendments made by 
     section 535 of the Tax Relief Extension Act of 1999) for each 
     of the years described in the period under clause (i)(I).
       ``(iii) Collectively bargained employer cost.--For purposes 
     of this subparagraph, the term `collectively bargained 
     employer cost' means the average cost per covered individual 
     of providing collectively bargained retiree health benefits 
     as determined in accordance with the applicable collective 
     bargaining agreement. Such agreement may provide for an 
     appropriate reduction in the collectively bargained employer 
     cost to take into account any portion of the collectively 
     bargained retiree health benefits that is provided or 
     financed by a government program or other source.
       ``(E) Special rules for collectively bargained transfers.--
       ``(i) In general.--A collectively bargained transfer shall 
     only include a transfer which--

       ``(I) is made in accordance with a collective bargaining 
     agreement,
       ``(II) before the transfer, the employer designates, in a 
     written notice delivered to each employee organization that 
     is a party to the collective bargaining agreement, as a 
     collectively bargained transfer in accordance with this 
     section, and
       ``(III) involves a plan maintained by an employer which, in 
     its taxable year ending in 2005, provided health benefits or 
     coverage to retirees and their spouses and dependents under 
     all of the benefit plans maintained by the employer, but only 
     if the aggregate cost (including administrative expenses) of 
     such benefits or coverage which would have been allowable as 
     a deduction to the employer (if such benefits or coverage had 
     been provided directly by the employer and the employer used 
     the cash receipts and disbursements method of accounting) is 
     at least 5 percent of the gross receipts of the employer 
     (determined in accordance with the last sentence of 
     subsection (c)(2)(E)(ii)(II)) for such taxable year, or a 
     plan maintained by a successor to such employer.

       ``(ii) Use of assets.--Any assets transferred to a health 
     benefits account in a collectively bargained transfer (and 
     any income allocable thereto) shall be used only to pay 
     collectively bargained retiree health liabilities (other than 
     liabilities of key employees not taken into account under 
     paragraph (6)(B)(iii)) for the taxable year of the transfer 
     or for any subsequent taxable year during the collectively 
     bargained cost maintenance period (whether directly or 
     through reimbursement).
       ``(3) Coordination with other transfers.--In applying 
     subsection (b)(3) to any subsequent transfer during a taxable 
     year in a transfer period or collectively bargained cost 
     maintenance period, qualified current retiree health 
     liabilities shall be reduced by any such liabilities taken 
     into account with respect to the qualified future transfer or 
     collectively bargained transfer to which such period relates.
       ``(4) Special deduction rules for collectively bargained 
     transfers.--In the case of a collectively bargained 
     transfer--
       ``(A) the limitation under subsection (d)(1)(C) shall not 
     apply, and
       ``(B) notwithstanding subsection (d)(2), an employer may 
     contribute an amount to a health benefits account or welfare 
     benefit fund (as defined in section 419(e)(1)) with respect 
     to collectively bargained retiree health liabilities for 
     which transferred assets are required to be used under 
     subsection (c)(1)(B), and the deductibility of any such 
     contribution shall be governed by the limits applicable to 
     the deductibility of contributions to a welfare benefit fund 
     under a collective bargaining agreement (as determined under 
     section 419A(f)(5)(A)) without regard to whether such 
     contributions are made to a health benefits account or 
     welfare benefit fund and without regard to the provisions of 
     section 404 or the other provisions of this section.

     The Secretary shall provide rules to ensure that the 
     application of this paragraph does not result in a deduction 
     being allowed more than once for the same contribution or for 
     2 or more contributions or expenditures relating to the same 
     collectively bargained retiree health liabilities.
       ``(5) Transfer period.--For purposes of this subsection, 
     the term `transfer period' means, with respect to any 
     transfer, a period of consecutive taxable years (not less 
     than 2) specified in the election under paragraph (1) which 
     begins and ends during the 10-taxable-year period beginning 
     with the taxable year of the transfer.
       ``(6) Terms relating to collectively bargained transfers.--
     For purposes of this subsection--
       ``(A) Collectively bargained cost maintenance period.--The 
     term `collectively bargained cost maintenance period' means, 
     with respect to each covered retiree and his covered spouse 
     and dependents, the shorter of--
       ``(i) the remaining lifetime of such covered retiree and 
     his covered spouse and dependents, or
       ``(ii) the period of coverage provided by the collectively 
     bargained health plan (determined as of the date of the 
     collectively bargained transfer) with respect to such covered 
     retiree and his covered spouse and dependents.
       ``(B) Collectively bargained retiree health liabilities.--
       ``(i) In general.--The term `collectively bargained retiree 
     health liabilities' means the present value, as of the 
     beginning of a taxable year and determined in accordance with 
     the applicable collective bargaining agreement, of all 
     collectively bargained health benefits (including 
     administrative expenses) for such taxable year and all 
     subsequent taxable years during the collectively bargained 
     cost maintenance period.
       ``(ii) Reduction for amounts previously set aside.--The 
     amount determined under clause (i) shall be reduced by the 
     value (as of the close of the plan year preceding the year of 
     the collectively bargained transfer) of the assets in all 
     health benefits accounts or welfare benefit funds (as defined 
     in section 419(e)(1)) set aside to pay for the collectively 
     bargained retiree health liabilities.
       ``(iii) Key employees excluded.--If an employee is a key 
     employee (within the meaning of section 416(I)(1)) with 
     respect to any plan year ending in a taxable year, such 
     employee shall not be taken into account in computing 
     collectively bargained retiree health liabilities for such 
     taxable year or in calculating collectively bargained 
     employer cost under subsection (c)(3)(C).
       ``(C) Collectively bargained health benefits.--The term 
     `collectively bargained health benefits' means health 
     benefits or coverage which are provided to--
       ``(i) retired employees who, immediately before the 
     collectively bargained transfer, are entitled to receive such 
     benefits upon retirement and who are entitled to pension 
     benefits under the plan, and their spouses and dependents, 
     and
       ``(ii) if specified by the provisions of the collective 
     bargaining agreement governing the collectively bargained 
     transfer, active employees who, following their retirement, 
     are entitled to receive such benefits and who are entitled to 
     pension benefits under the plan, and their spouses and 
     dependents.
       ``(D) Collectively bargained health plan.--The term 
     `collectively bargained health plan' means a group health 
     plan or arrangement for retired employees and their spouses 
     and dependents that is maintained pursuant to 1 or more 
     collective bargaining agreements.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to transfers after the date of the enactment of 
     this Act.

     SEC. 842. TRANSFER OF EXCESS PENSION ASSETS TO MULTIEMPLOYER 
                   HEALTH PLAN.

       (a) In General.--Section 420 of the Internal Revenue Code 
     of 1986 is amended--
       (1) by striking ``(other than a multiemployer plan)'' in 
     subsection (a), and
       (2) by adding at the end of subsection (e) the following 
     new paragraph:
       ``(5) Application to multiemployer plans.--In the case of a 
     multiemployer plan, this section shall be applied to any such 
     plan--
       ``(A) by treating any reference in this section to an 
     employer as a reference to all employers maintaining the plan 
     (or, if appropriate, the plan sponsor), and
       ``(B) in accordance with such modifications of this section 
     (and the provisions of this title relating to this section) 
     as the Secretary determines appropriate to reflect the fact 
     the plan is not maintained by a single employer.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to transfers made in taxable years beginning 
     after December 31, 2006.

     SEC. 843. ALLOWANCE OF RESERVE FOR MEDICAL BENEFITS OF PLANS 
                   SPONSORED BY BONA FIDE ASSOCIATIONS.

       (a) In General.--Section 419A(c) of the Internal Revenue 
     Code of 1986 (relating to account limit) is amended by adding 
     at the end the following new paragraph:
       ``(6) Additional reserve for medical benefits of bona fide 
     association plans.--
       ``(A) In general.--An applicable account limit for any 
     taxable year may include a reserve in an amount not to exceed 
     35 percent of the sum of--
       ``(i) the qualified direct costs, and
       ``(ii) the change in claims incurred but unpaid,

[[Page 16380]]

     for such taxable year with respect to medical benefits (other 
     than post-retirement medical benefits).
       ``(B) Applicable account limit.--For purposes of this 
     subsection, the term `applicable account limit' means an 
     account limit for a qualified asset account with respect to 
     medical benefits provided through a plan maintained by a bona 
     fide association (as defined in section 2791(d)(3) of the 
     Public Health Service Act (42 U.S.C. 300gg-91(d)(3))''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 844. TREATMENT OF ANNUITY AND LIFE INSURANCE CONTRACTS 
                   WITH A LONG-TERM CARE INSURANCE FEATURE.

       (a) Exclusion From Gross Income.--Subsection (e) of section 
     72 of the Internal Revenue Code of 1986 (relating to amounts 
     not received as annuities) is amended by redesignating 
     paragraph (11) as paragraph (12) and by inserting after 
     paragraph (10) the following new paragraph:
       ``(11) Special rules for certain combination contracts 
     providing long-term care insurance.--Notwithstanding 
     paragraphs (2), (5)(C), and (10), in the case of any charge 
     against the cash value of an annuity contract or the cash 
     surrender value of a life insurance contract made as payment 
     for coverage under a qualified long-term care insurance 
     contract which is part of or a rider on such annuity or life 
     insurance contract--
       ``(A) the investment in the contract shall be reduced (but 
     not below zero) by such charge, and
       ``(B) such charge shall not be includible in gross 
     income.''.
       (b) Tax-Free Exchanges Among Certain Insurance Policies.--
       (1) Annuity contracts can include qualified long-term care 
     insurance riders.--Paragraph (2) of section 1035(b) of such 
     Code is amended by adding at the end the following new 
     sentence: ``For purposes of the preceding sentence, a 
     contract shall not fail to be treated as an annuity contract 
     solely because a qualified long-term care insurance contract 
     is a part of or a rider on such contract.''.
       (2) Life insurance contracts can include qualified long-
     term care insurance riders.--Paragraph (3) of section 1035(b) 
     of such Code is amended by adding at the end the following 
     new sentence: ``For purposes of the preceding sentence, a 
     contract shall not fail to be treated as a life insurance 
     contract solely because a qualified long-term care insurance 
     contract is a part of or a rider on such contract.''.
       (3) Expansion of tax-free exchanges of life insurance, 
     endowment, and annuity contracts for long-term care 
     contracts.--Subsection (a) of section 1035 of such Code 
     (relating to certain exchanges of insurance policies) is 
     amended--
       (A) in paragraph (1) by inserting ``or for a qualified 
     long-term care insurance contract'' before the semicolon at 
     the end,
       (B) in paragraph (2) by inserting ``, or (C) for a 
     qualified long-term care insurance contract'' before the 
     semicolon at the end, and
       (C) in paragraph (3) by inserting ``or for a qualified 
     long-term care insurance contract'' before the period at the 
     end.
       (4) Tax-free exchanges of qualified long-term care 
     insurance contract.--Subsection (a) of section 1035 of such 
     Code (relating to certain exchanges of insurance policies) is 
     amended by striking ``or'' at the end of paragraph (2), by 
     striking the period at the end of paragraph (3) and inserting 
     ``; or'', and by inserting after paragraph (3) the following 
     new paragraph:
       ``(4) a qualified long-term care insurance contract for a 
     qualified long-term care insurance contract.''.
       (c) Treatment of Coverage Provided as Part of a Life 
     Insurance or Annuity Contract.--Subsection (e) of section 
     7702B of such Code (relating to treatment of qualified long-
     term care insurance) is amended to read as follows:
       ``(e) Treatment of Coverage Provided as Part of a Life 
     Insurance or Annuity Contract.--Except as otherwise provided 
     in regulations prescribed by the Secretary, in the case of 
     any long-term care insurance coverage (whether or not 
     qualified) provided by a rider on or as part of a life 
     insurance contract or an annuity contract--
       ``(1) In general.--This title shall apply as if the portion 
     of the contract providing such coverage is a separate 
     contract.
       ``(2) Denial of deduction under section 213.--No deduction 
     shall be allowed under section 213(a) for any payment made 
     for coverage under a qualified long-term care insurance 
     contract if such payment is made as a charge against the cash 
     surrender value of a life insurance contract or the cash 
     value of an annuity contract.
       ``(3) Portion defined.--For purposes of this subsection, 
     the term `portion' means only the terms and benefits under a 
     life insurance contract or annuity contract that are in 
     addition to the terms and benefits under the contract without 
     regard to long-term care insurance coverage.
       ``(4) Annuity contracts to which paragraph (1) does not 
     apply.--For purposes of this subsection, none of the 
     following shall be treated as an annuity contract:
       ``(A) A trust described in section 401(a) which is exempt 
     from tax under section 501(a).
       ``(B) A contract--
       ``(i) purchased by a trust described in subparagraph (A),
       ``(ii) purchased as part of a plan described in section 
     403(a),
       ``(iii) described in section 403(b),
       ``(iv) provided for employees of a life insurance company 
     under a plan described in section 818(a)(3), or
       ``(v) from an individual retirement account or an 
     individual retirement annuity.
       ``(C) A contract purchased by an employer for the benefit 
     of the employee (or the employee's spouse).

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

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

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

     The written statement required under the preceding sentence 
     shall be furnished to the individual on or before January 31 
     of the year following the calendar year for which the return 
     under subsection (a) was required to be made.''.
       (2) Penalty for failure to file.--
       (A) Return.--Subparagraph (B) of section 6724(d)(1) of such 
     Code is amended by striking ``or'' at the end of clause 
     (xvii), by striking ``and'' at the end of clause (xviii) and 
     inserting ``or'', and by adding at the end the following new 
     clause:
       ``(xix) section 6050U (relating to charges or payments for 
     qualified long-term care insurance contracts under combined 
     arrangements), and''.
       (B) Statement.--Paragraph (2) of section 6724(d) of such 
     Code is amended by striking ``or'' at the end of subparagraph 
     (AA), by striking the period at the end of subparagraph (BB), 
     and by inserting after subparagraph (BB) the following new 
     subparagraph:
       ``(CC) section 6050U (relating to charges or payments for 
     qualified long-term care insurance contracts under combined 
     arrangements).''.
       (3) Clerical amendment.--The table of sections for subpart 
     B of part III of subchapter A of such chapter 61 of such Code 
     is amended by adding at the end the following new item:

``Sec. 6050U. Charges or payments for qualified long-term care 
              insurance contracts under combined arrangements.''.
       (e) Treatment of Policy Acquisition Expenses.--Subsection 
     (e) of section 848 of such Code (relating to classification 
     of contracts) is amended by adding at the end the following 
     new paragraph:
       ``(6) Treatment of certain qualified long-term care 
     insurance contract arrangements.--An annuity or life 
     insurance contract which includes a qualified long-term care 
     insurance contract as a part of or a rider on such annuity or 
     life insurance contract shall be treated as a specified 
     insurance contract not described in subparagraph (A) or (B) 
     of subsection (c)(1).''.
       (f) Technical Amendment.--Paragraph (1) of section 7702B(e) 
     of such Code (as in effect before amendment by subsection 
     (c)) is amended by striking ``section'' and inserting 
     ``title''.
       (g) Effective Dates.--
       (1) In general.--Except as otherwise provided in this 
     subsection, the amendments made by this section shall apply 
     to contracts issued after December 31, 1996, but only with 
     respect to taxable years beginning after December 31, 2009.
       (2) Tax-free exchanges.--The amendments made by subsection 
     (b) shall apply with respect to exchanges occurring after 
     December 31, 2009.
       (3) Information reporting.--The amendments made by 
     subsection (d) shall apply to charges made after December 31, 
     2009.

[[Page 16381]]

       (4) Policy acquisition expenses.--The amendment made by 
     subsection (e) shall apply to specified policy acquisition 
     expenses determined for taxable years beginning after 
     December 31, 2009.
       (5) Technical amendment.--The amendment made by subsection 
     (f) shall take effect as if included in section 321(a) of the 
     Health Insurance Portability and Accountability Act of 1996.

     SEC. 845. DISTRIBUTIONS FROM GOVERNMENTAL RETIREMENT PLANS 
                   FOR HEALTH AND LONG-TERM CARE INSURANCE FOR 
                   PUBLIC SAFETY OFFICERS.

       (a) In General.--Section 402 of the Internal Revenue Code 
     of 1986 (relating to taxability of beneficiary of employees' 
     trust) is amended by adding at the end the following new 
     subsection:
       ``(l) Distributions From Governmental Plans for Health and 
     Long-Term Care Insurance.--
       ``(1) In general.--In the case of an employee who is an 
     eligible retired public safety officer who makes the election 
     described in paragraph (6) with respect to any taxable year 
     of such employee, gross income of such employee for such 
     taxable year does not include any distribution from an 
     eligible retirement plan to the extent that the aggregate 
     amount of such distributions does not exceed the amount paid 
     by such employee for qualified health insurance premiums of 
     the employee, his spouse, or dependents (as defined in 
     section 152) for such taxable year.
       ``(2) Limitation.--The amount which may be excluded from 
     gross income for the taxable year by reason of paragraph (1) 
     shall not exceed $3,000.
       ``(3) Distributions must otherwise be includible.--
       ``(A) In general.--An amount shall be treated as a 
     distribution for purposes of paragraph (1) only to the extent 
     that such amount would be includible in gross income without 
     regard to paragraph (1).
       ``(B) Application of section 72.--Notwithstanding section 
     72, in determining the extent to which an amount is treated 
     as a distribution for purposes of subparagraph (A), the 
     aggregate amounts distributed from an eligible retirement 
     plan in a taxable year (up to the amount excluded under 
     paragraph (1)) shall be treated as includible in gross income 
     (without regard to subparagraph (A)) to the extent that such 
     amount does not exceed the aggregate amount which would have 
     been so includible if all amounts distributed from all 
     eligible retirement plans were treated as 1 contract for 
     purposes of determining the inclusion of such distribution 
     under section 72. Proper adjustments shall be made in 
     applying section 72 to other distributions in such taxable 
     year and subsequent taxable years.
       ``(4) Definitions.--For purposes of this subsection--
       ``(A) Eligible retirement plan.--For purposes of paragraph 
     (1), the term `eligible retirement plan' means a governmental 
     plan (within the meaning of section 414(d)) which is 
     described in clause (iii), (iv), (v), or (vi) of subsection 
     (c)(8)(B).
       ``(B) Eligible retired public safety officer.--The term 
     `eligible retired public safety officer' means an individual 
     who, by reason of disability or attainment of normal 
     retirement age, is separated from service as a public safety 
     officer with the employer who maintains the eligible 
     retirement plan from which distributions subject to paragraph 
     (1) are made.
       ``(C) Public safety officer.--The term `public safety 
     officer' shall have the same meaning given such term by 
     section 1204(9)(A) of the Omnibus Crime Control and Safe 
     Streets Act of 1968 (42 U.S.C. 3796b(9)(A)).
       ``(D) Qualified health insurance premiums.--The term 
     `qualified health insurance premiums' means premiums for 
     coverage for the eligible retired public safety officer, his 
     spouse, and dependents, by an accident or health insurance 
     plan or qualified long-term care insurance contract (as 
     defined in section 7702B(b)).
       ``(5) Special rules.--For purposes of this subsection--
       ``(A) Direct payment to insurer required.--Paragraph (1) 
     shall only apply to a distribution if payment of the premiums 
     is made directly to the provider of the accident or health 
     insurance plan or qualified long-term care insurance contract 
     by deduction from a distribution from the eligible retirement 
     plan.
       ``(B) Related plans treated as 1.--All eligible retirement 
     plans of an employer shall be treated as a single plan.
       ``(6) Election described.--
       ``(A) In general.--For purposes of paragraph (1), an 
     election is described in this paragraph if the election is 
     made by an employee after separation from service with 
     respect to amounts not distributed from an eligible 
     retirement plan to have amounts from such plan distributed in 
     order to pay for qualified health insurance premiums.
       ``(B) Special rule.--A plan shall not be treated as 
     violating the requirements of section 401, or as engaging in 
     a prohibited transaction for purposes of section 503(b), 
     merely because it provides for an election with respect to 
     amounts that are otherwise distributable under the plan or 
     merely because of a distribution made pursuant to an election 
     described in subparagraph (A).
       ``(7) Coordination with medical expense deduction.--The 
     amounts excluded from gross income under paragraph (1) shall 
     not be taken into account under section 213.
       ``(8) Coordination with deduction for health insurance 
     costs of self-employed individuals.--The amounts excluded 
     from gross income under paragraph (1) shall not be taken into 
     account under section 162(l).''.
       (b) Conforming Amendments.--
       (1) Section 403(a) of such Code (relating to taxability of 
     beneficiary under a qualified annuity plan) is amended by 
     inserting after paragraph (1) the following new paragraph:
       ``(2) Special rule for health and long-term care 
     insurance.--To the extent provided in section 402(l), 
     paragraph (1) shall not apply to the amount distributed under 
     the contract which is otherwise includible in gross income 
     under this subsection.''.
       (2) Section 403(b) of such Code (relating to taxability of 
     beneficiary under annuity purchased by section 501(c)(3) 
     organization or public school) is amended by inserting after 
     paragraph (1) the following new paragraph:
       ``(2) Special rule for health and long-term care 
     insurance.--To the extent provided in section 402(l), 
     paragraph (1) shall not apply to the amount distributed under 
     the contract which is otherwise includible in gross income 
     under this subsection.''.
       (3) Section 457(a) of such Code (relating to year of 
     inclusion in gross income) is amended by adding at the end 
     the following new paragraph:
       ``(3) Special rule for health and long-term care 
     insurance.--In the case of a plan of an eligible employer 
     described in subsection (e)(1)(A), to the extent provided in 
     section 402(l), paragraph (1) shall not apply to amounts 
     otherwise includible in gross income under this 
     subsection.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions in taxable years beginning after 
     December 31, 2006.

           Subtitle E--United States Tax Court Modernization

     SEC. 851. COST-OF-LIVING ADJUSTMENTS FOR TAX COURT JUDICIAL 
                   SURVIVOR ANNUITIES.

       (a) In General.--Subsection (s) of section 7448 of the 
     Internal Revenue Code of 1986 (relating to annuities to 
     surviving spouses and dependent children of judges) is 
     amended to read as follows:
       ``(s) Increases in Survivor Annuities.--Each time that an 
     increase is made under section 8340(b) of title 5, United 
     States Code, in annuities payable under subchapter III of 
     chapter 83 of that title, each annuity payable from the 
     survivors annuity fund under this section shall be increased 
     at the same time by the same percentage by which annuities 
     are increased under such section 8340(b).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply with respect to increases made under section 
     8340(b) of title 5, United States Code, in annuities payable 
     under subchapter III of chapter 83 of that title, taking 
     effect after the date of the enactment of this Act.

     SEC. 852. COST OF LIFE INSURANCE COVERAGE FOR TAX COURT 
                   JUDGES AGE 65 OR OVER.

       Section 7472 of the Internal Revenue Code of 1986 (relating 
     to expenditures) is amended by inserting after the first 
     sentence the following new sentence: ``Notwithstanding any 
     other provision of law, the Tax Court is authorized to pay on 
     behalf of its judges, age 65 or over, any increase in the 
     cost of Federal Employees' Group Life Insurance imposed after 
     the date of the enactment of the Pension Protection Act of 
     2006, including any expenses generated by such payments, as 
     authorized by the chief judge in a manner consistent with 
     such payments authorized by the Judicial Conference of the 
     United States pursuant to section 604(a)(5) of title 28, 
     United States Code.''

     SEC. 853. PARTICIPATION OF TAX COURT JUDGES IN THE THRIFT 
                   SAVINGS PLAN.

       (a) In General.--Section 7447 of the Internal Revenue Code 
     of 1986 (relating to retirement of judges) is amended by 
     adding at the end the following new subsection:
       ``(j) Thrift Savings Plan.--
       ``(1) Election to contribute.--
       ``(A) In general.--A judge of the Tax Court may elect to 
     contribute to the Thrift Savings Fund established by section 
     8437 of title 5, United States Code.
       ``(B) Period of election.--An election may be made under 
     this paragraph only during a period provided under section 
     8432(b) of title 5, United States Code, for individuals 
     subject to chapter 84 of such title.
       ``(2) Applicability of title 5 provisions.--Except as 
     otherwise provided in this subsection, the provisions of 
     subchapters III and VII of chapter 84 of title 5, United 
     States Code, shall apply with respect to a judge who makes an 
     election under paragraph (1).
       ``(3) Special rules.--
       ``(A) Amount contributed.--The amount contributed by a 
     judge to the Thrift Savings Fund in any pay period shall not 
     exceed the maximum percentage of such judge's basic pay for 
     such period as allowable under section 8440f of title 5, 
     United States Code. Basic pay does not include any retired 
     pay paid pursuant to this section.
       ``(B) Contributions for benefit of judge.--No contributions 
     may be made for the benefit of a judge under section 8432(c) 
     of title 5, United States Code.
       ``(C) Applicability of section 8433(b) of title 5 whether 
     or not judge retires.--

[[Page 16382]]

     Section 8433(b) of title 5, United States Code, applies with 
     respect to a judge who makes an election under paragraph (1) 
     and who either--
       ``(i) retires under subsection (b), or
       ``(ii) ceases to serve as a judge of the Tax Court but does 
     not retire under subsection (b).

     Retirement under subsection (b) is a separation from service 
     for purposes of subchapters III and VII of chapter 84 of that 
     title.
       ``(D) Applicability of section 8351(b)(5) of title 5.--The 
     provisions of section 8351(b)(5) of title 5, United States 
     Code, shall apply with respect to a judge who makes an 
     election under paragraph (1).
       ``(E) Exception.--Notwithstanding subparagraph (C), if any 
     judge retires under this section, or resigns without having 
     met the age and service requirements set forth under 
     subsection (b)(2), and such judge's nonforfeitable account 
     balance is less than an amount that the Executive Director of 
     the Federal Retirement Thrift Investment Board prescribes by 
     regulation, the Executive Director shall pay the 
     nonforfeitable account balance to the participant in a single 
     payment.''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act, 
     except that United States Tax Court judges may only begin to 
     participate in the Thrift Savings Plan at the next open 
     season beginning after such date.

     SEC. 854. ANNUITIES TO SURVIVING SPOUSES AND DEPENDENT 
                   CHILDREN OF SPECIAL TRIAL JUDGES OF THE TAX 
                   COURT.

       (a) Definitions.--Section 7448(a) of the Internal Revenue 
     Code of 1986 (relating to definitions), as amended by this 
     Act, is amended by redesignating paragraphs (5), (6), (7), 
     and (8) as paragraphs (7), (8), (9), and (10), respectively, 
     and by inserting after paragraph (4) the following new 
     paragraphs:
       ``(5) The term `special trial judge' means a judicial 
     officer appointed pursuant to section 7443A, including any 
     individual receiving an annuity under chapters 83 or 84 of 
     title 5, United States Code, whether or not performing 
     judicial duties under section 7443B.
       ``(6) The term `special trial judge's salary' means the 
     salary of a special trial judge received under section 
     7443A(d), any amount received as an annuity under chapters 83 
     or 84 of title 5, United States Code, and compensation 
     received under section 7443B.''.
       (b) Election.--Subsection (b) of section 7448 of such Code 
     (relating to annuities to surviving spouses and dependent 
     children of judges) is amended--
       (1) by striking the subsection heading and inserting the 
     following:
       ``(b) Election.--
       ``(1) Judges.--'',
       (2) by moving the text 2 ems to the right, and
       (3) by adding at the end the following new paragraph:
       ``(2) Special trial judges.--Any special trial judge may by 
     written election filed with the chief judge bring himself or 
     herself within the purview of this section. Such election 
     shall be filed not later than the later of 6 months after--
       ``(A) 6 months after the date of the enactment of this 
     paragraph,
       ``(B) the date the judge takes office, or
       ``(C) the date the judge marries.''.
       (c) Conforming Amendments.--
       (1) The heading of section 7448 of such Code is amended by 
     inserting ``AND SPECIAL TRIAL JUDGES'' after ``JUDGES''.
       (2) The item relating to section 7448 in the table of 
     sections for part I of subchapter C of chapter 76 of such 
     Code is amended by inserting ``and special trial judges'' 
     after ``judges''.
       (3) Subsections (c)(1), (d), (f), (g), (h), (j), (m), (n), 
     and (u) of section 7448 of such Code, as amended by this Act, 
     are each amended--
       (A) by inserting ``or special trial judge'' after ``judge'' 
     each place it appears other than in the phrase ``chief 
     judge'', and
       (B) by inserting ``or special trial judge's'' after 
     ``judge's'' each place it appears.
       (4) Section 7448(c) of such Code is amended--
       (A) in paragraph (1), by striking ``Tax Court judges'' and 
     inserting ``Tax Court judicial officers'',
       (B) in paragraph (2)--
       (i) in subparagraph (A), by inserting ``and section 
     7443A(d)'' after ``(a)(4)'', and
       (ii) in subparagraph (B), by striking ``subsection (a)(4)'' 
     and inserting ``subsections (a)(4) and (a)(6)''.
       (5) Section 7448(j)(1) of such Code is amended--
       (A) in subparagraph (A), by striking ``service or retired'' 
     and inserting ``service, retired'', and by inserting ``, or 
     receiving any annuity under chapters 83 or 84 of title 5, 
     United States Code,'' after ``section 7447'', and
       (B) in the last sentence, by striking ``subsections (a) (6) 
     and (7)'' and inserting ``paragraphs (8) and (9) of 
     subsection (a)''.
       (6) Section 7448(m)(1) of such Code, as amended by this 
     Act, is amended by inserting ``or any annuity under chapters 
     83 or 84 of title 5, United States Code'' after ``7447(d)''.
       (7) Section 7448(n) of such Code is amended by inserting 
     ``his years of service pursuant to any appointment under 
     section 7443A,'' after ``of the Tax Court,''.
       (8) Section 3121(b)(5)(E) of such Code is amended by 
     inserting ``or special trial judge'' before ``of the United 
     States Tax Court''.
       (9) Section 210(a)(5)(E) of the Social Security Act is 
     amended by inserting ``or special trial judge'' before ``of 
     the United States Tax Court''.

     SEC. 855. JURISDICTION OF TAX COURT OVER COLLECTION DUE 
                   PROCESS CASES.

       (a) In General.--Paragraph (1) of section 6330(d) of the 
     Internal Revenue Code of 1986 (relating to proceeding after 
     hearing) is amended to read as follows:
       ``(1) Judicial review of determination.--The person may, 
     within 30 days of a determination under this section, appeal 
     such determination to the Tax Court (and the Tax Court shall 
     have jurisdiction with respect to such matter).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to determinations made after the date which is 60 
     days after the date of the enactment of this Act.

     SEC. 856. PROVISIONS FOR RECALL.

       (a) In General.--Part I of subchapter C of chapter 76 of 
     the Internal Revenue Code of 1986 is amended by inserting 
     after section 7443A the following new section:

     ``SEC. 7443B. RECALL OF SPECIAL TRIAL JUDGES OF THE TAX 
                   COURT.

       ``(a) Recalling of Retired Special Trial Judges.--Any 
     individual who has retired pursuant to the applicable 
     provisions of title 5, United States Code, upon reaching the 
     age and service requirements established therein, may at or 
     after retirement be called upon by the chief judge of the Tax 
     Court to perform such judicial duties with the Tax Court as 
     may be requested of such individual for any period or periods 
     specified by the chief judge; except that in the case of any 
     such individual--
       ``(1) the aggregate of such periods in any 1 calendar year 
     shall not (without such individual's consent) exceed 90 
     calendar days, and
       ``(2) such individual shall be relieved of performing such 
     duties during any period in which illness or disability 
     precludes the performance of such duties.

     Any act, or failure to act, by an individual performing 
     judicial duties pursuant to this subsection shall have the 
     same force and effect as if it were the act (or failure to 
     act) of a special trial judge of the Tax Court.
       ``(b) Compensation.--For the year in which a period of 
     recall occurs, the special trial judge shall receive, in 
     addition to the annuity provided under the applicable 
     provisions of title 5, United States Code, an amount equal to 
     the difference between that annuity and the current salary of 
     the office to which the special trial judge is recalled.
       ``(c) Rulemaking Authority.--The provisions of this section 
     may be implemented under such rules as may be promulgated by 
     the Tax Court.''
       (b) Conforming Amendment.--The table of sections for part I 
     of subchapter C of chapter 76 of such Code is amended by 
     inserting after the item relating to section 7443A the 
     following new item:

``Sec. 7443B. Recall of special trial judges of the Tax Court.''.

     SEC. 857. AUTHORITY FOR SPECIAL TRIAL JUDGES TO HEAR AND 
                   DECIDE CERTAIN EMPLOYMENT STATUS CASES.

       (a) In General.--Section 7443A(b) of the Internal Revenue 
     Code of 1986 (relating to proceedings which may be assigned 
     to special trial judges) is amended by striking ``and'' at 
     the end of paragraph (4), by redesignating paragraph (5) as 
     paragraph (6), and by inserting after paragraph (4) the 
     following new paragraph:
       ``(5) any proceeding under section 7436(c), and''.
       (b) Conforming Amendment.--Section 7443A(c) of such Code is 
     amended by striking ``or (4)'' and inserting ``(4), or (5)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to any proceeding under section 7436(c) of the 
     Internal Revenue Code of 1986 with respect to which a 
     decision has not become final (as determined under section 
     7481 of such Code) before the date of the enactment of this 
     Act.

     SEC. 858. CONFIRMATION OF AUTHORITY OF TAX COURT TO APPLY 
                   DOCTRINE OF EQUITABLE RECOUPMENT.

       (a) Confirmation of Authority of Tax Court To Apply 
     Doctrine of Equitable Recoupment.--Section 6214(b) of the 
     Internal Revenue Code of 1986 (relating to jurisdiction over 
     other years and quarters) is amended by adding at the end the 
     following new sentence: ``Notwithstanding the preceding 
     sentence, the Tax Court may apply the doctrine of equitable 
     recoupment to the same extent that it is available in civil 
     tax cases before the district courts of the United States and 
     the United States Court of Federal Claims.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to any action or proceeding in the United States 
     Tax Court with respect to which a decision has not become 
     final (as determined under section 7481 of the Internal 
     Revenue Code of 1986) as of the date of the enactment of this 
     Act.

     SEC. 859. TAX COURT FILING FEE IN ALL CASES COMMENCED BY 
                   FILING PETITION.

       (a) In General.--Section 7451 of the Internal Revenue Code 
     of 1986 (relating to fee for filing a Tax Court petition) is 
     amended by striking all that follows ``petition'' and 
     inserting a period.

[[Page 16383]]

       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 860. EXPANDED USE OF TAX COURT PRACTICE FEE FOR PRO SE 
                   TAXPAYERS.

       (a) In General.--Section 7475(b) of the Internal Revenue 
     Code of 1986 (relating to use of fees) is amended by 
     inserting before the period at the end ``and to provide 
     services to pro se taxpayers''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

                      Subtitle F--Other Provisions

     SEC. 861. EXTENSION TO ALL GOVERNMENTAL PLANS OF CURRENT 
                   MORATORIUM ON APPLICATION OF CERTAIN 
                   NONDISCRIMINATION RULES APPLICABLE TO STATE AND 
                   LOCAL PLANS.

       (a) In General.--
       (1) Subparagraph (G) of section 401(a)(5) and subparagraph 
     (G) of section 401(a)(26) of the Internal Revenue Code of 
     1986 are each amended by striking ``section 414(d))'' and all 
     that follows and inserting ``section 414(d)).''.
       (2) Subparagraph (G) of section 401(k)(3) of such Code and 
     paragraph (2) of section 1505(d) of the Taxpayer Relief Act 
     of 1997 (Public Law 105-34; 111 Stat. 1063) are each amended 
     by striking ``maintained by a State or local government or 
     political subdivision thereof (or agency or instrumentality 
     thereof)''.
       (b) Conforming Amendments.--
       (1) The heading of subparagraph (G) of section 401(a)(5) of 
     the Internal Revenue Code of 1986 is amended by striking 
     ``State and local governmental'' and inserting 
     ``Governmental''.
       (2) The heading of subparagraph (G) of section 401(a)(26) 
     of such Code is amended by striking ``Exception for state and 
     local'' and inserting ``Exception for''.
       (3) Section 401(k)(3)(G) of such Code is amended by 
     inserting ``Governmental plan.--'' after ``(G)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to any year beginning after the date of the 
     enactment of this Act.

     SEC. 862. ELIMINATION OF AGGREGATE LIMIT FOR USAGE OF EXCESS 
                   FUNDS FROM BLACK LUNG DISABILITY TRUSTS.

       (a) In General.--So much of section 501(c)(21)(C) of the 
     Internal Revenue Code of 1986 (relating to black lung 
     disability trusts) as precedes the last sentence is amended 
     to read as follows:
       ``(C) Payments described in subparagraph (A)(i)(IV) may be 
     made from such trust during a taxable year only to the extent 
     that the aggregate amount of such payments during such 
     taxable year does not exceed the excess (if any), as of the 
     close of the preceding taxable year, of--
       ``(i) the fair market value of the assets of the trust, 
     over
       ``(ii) 110 percent of the present value of the liability 
     described in subparagraph (A)(i)(I) of such person.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.

     SEC. 863. TREATMENT OF DEATH BENEFITS FROM CORPORATE-OWNED 
                   LIFE INSURANCE.

       (a) In General.--Section 101 of the Internal Revenue Code 
     of 1986 (relating to certain death benefits) is amended by 
     adding at the end the following new subsection:
       ``(j) Treatment of Certain Employer-Owned Life Insurance 
     Contracts.--
       ``(1) General rule.--In the case of an employer-owned life 
     insurance contract, the amount excluded from gross income of 
     an applicable policyholder by reason of paragraph (1) of 
     subsection (a) shall not exceed an amount equal to the sum of 
     the premiums and other amounts paid by the policyholder for 
     the contract.
       ``(2) Exceptions.--In the case of an employer-owned life 
     insurance contract with respect to which the notice and 
     consent requirements of paragraph (4) are met, paragraph (1) 
     shall not apply to any of the following:
       ``(A) Exceptions based on insured's status.--Any amount 
     received by reason of the death of an insured who, with 
     respect to an applicable policyholder--
       ``(i) was an employee at any time during the 12-month 
     period before the insured's death, or
       ``(ii) is, at the time the contract is issued--

       ``(I) a director,
       ``(II) a highly compensated employee within the meaning of 
     section 414(q) (without regard to paragraph (1)(B)(ii) 
     thereof), or
       ``(III) a highly compensated individual within the meaning 
     of section 105(h)(5), except that `35 percent' shall be 
     substituted for `25 percent' in subparagraph (C) thereof.

       ``(B) Exception for amounts paid to insured's heirs.--Any 
     amount received by reason of the death of an insured to the 
     extent--
       ``(i) the amount is paid to a member of the family (within 
     the meaning of section 267(c)(4)) of the insured, any 
     individual who is the designated beneficiary of the insured 
     under the contract (other than the applicable policyholder), 
     a trust established for the benefit of any such member of the 
     family or designated beneficiary, or the estate of the 
     insured, or
       ``(ii) the amount is used to purchase an equity (or capital 
     or profits) interest in the applicable policyholder from any 
     person described in clause (i).
       ``(3) Employer-owned life insurance contract.--
       ``(A) In general.--For purposes of this subsection, the 
     term `employer-owned life insurance contract' means a life 
     insurance contract which--
       ``(i) is owned by a person engaged in a trade or business 
     and under which such person (or a related person described in 
     subparagraph (B)(ii)) is directly or indirectly a beneficiary 
     under the contract, and
       ``(ii) covers the life of an insured who is an employee 
     with respect to the trade or business of the applicable 
     policyholder on the date the contract is issued.

     For purposes of the preceding sentence, if coverage for each 
     insured under a master contract is treated as a separate 
     contract for purposes of sections 817(h), 7702, and 7702A, 
     coverage for each such insured shall be treated as a separate 
     contract.
       ``(B) Applicable policyholder.--For purposes of this 
     subsection--
       ``(i) In general.--The term `applicable policyholder' 
     means, with respect to any employer-owned life insurance 
     contract, the person described in subparagraph (A)(i) which 
     owns the contract.
       ``(ii) Related persons.--The term `applicable policyholder' 
     includes any person which--

       ``(I) bears a relationship to the person described in 
     clause (i) which is specified in section 267(b) or 707(b)(1), 
     or
       ``(II) is engaged in trades or businesses with such person 
     which are under common control (within the meaning of 
     subsection (a) or (b) of section 52).

       ``(4) Notice and consent requirements.--The notice and 
     consent requirements of this paragraph are met if, before the 
     issuance of the contract, the employee--
       ``(A) is notified in writing that the applicable 
     policyholder intends to insure the employee's life and the 
     maximum face amount for which the employee could be insured 
     at the time the contract was issued,
       ``(B) provides written consent to being insured under the 
     contract and that such coverage may continue after the 
     insured terminates employment, and
       ``(C) is informed in writing that an applicable 
     policyholder will be a beneficiary of any proceeds payable 
     upon the death of the employee.
       ``(5) Definitions.--For purposes of this subsection--
       ``(A) Employee.--The term `employee' includes an officer, 
     director, and highly compensated employee (within the meaning 
     of section 414(q)).
       ``(B) Insured.--The term `insured' means, with respect to 
     an employer-owned life insurance contract, an individual 
     covered by the contract who is a United States citizen or 
     resident. In the case of a contract covering the joint lives 
     of 2 individuals, references to an insured include both of 
     the individuals.''.
       (b) Reporting Requirements.--Subpart A of part III of 
     subchapter A of chapter 61 of the Internal Revenue Code of 
     1986 (relating to information concerning persons subject to 
     special provisions) is amended by inserting after section 
     6039H the following new section:

     ``SEC. 6039I. RETURNS AND RECORDS WITH RESPECT TO EMPLOYER-
                   OWNED LIFE INSURANCE CONTRACTS.

       ``(a) In General.--Every applicable policyholder owning 1 
     or more employer-owned life insurance contracts issued after 
     the date of the enactment of this section shall file a return 
     (at such time and in such manner as the Secretary shall by 
     regulations prescribe) showing for each year such contracts 
     are owned--
       ``(1) the number of employees of the applicable 
     policyholder at the end of the year,
       ``(2) the number of such employees insured under such 
     contracts at the end of the year,
       ``(3) the total amount of insurance in force at the end of 
     the year under such contracts,
       ``(4) the name, address, and taxpayer identification number 
     of the applicable policyholder and the type of business in 
     which the policyholder is engaged, and
       ``(5) that the applicable policyholder has a valid consent 
     for each insured employee (or, if all such consents are not 
     obtained, the number of insured employees for whom such 
     consent was not obtained).
       ``(b) Recordkeeping Requirement.--Each applicable 
     policyholder owning 1 or more employer-owned life insurance 
     contracts during any year shall keep such records as may be 
     necessary for purposes of determining whether the 
     requirements of this section and section 101(j) are met.
       ``(c) Definitions.--Any term used in this section which is 
     used in section 101(j) shall have the same meaning given such 
     term by section 101(j).''.
       (c) Conforming Amendments.--
       (1) Paragraph (1) of section 101(a) of the Internal Revenue 
     Code of 1986 is amended by striking ``and subsection (f)'' 
     and inserting ``subsection (f), and subsection (j)''.
       (2) The table of sections for subpart A of part III of 
     subchapter A of chapter 61 of such Code is amended by 
     inserting after the item relating to section 6039H the 
     following new item:


[[Page 16384]]


``Sec. 6039I. Returns and records with respect to employer-owned life 
              insurance contracts.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to life insurance contracts issued after the date 
     of the enactment of this Act, except for a contract issued 
     after such date pursuant to an exchange described in section 
     1035 of the Internal Revenue Code of 1986 for a contract 
     issued on or prior to that date. For purposes of the 
     preceding sentence, any material increase in the death 
     benefit or other material change shall cause the contract to 
     be treated as a new contract except that, in the case of a 
     master contract (within the meaning of section 264(f)(4)(E) 
     of such Code), the addition of covered lives shall be treated 
     as a new contract only with respect to such additional 
     covered lives.

     SEC. 864. TREATMENT OF TEST ROOM SUPERVISORS AND PROCTORS WHO 
                   ASSIST IN THE ADMINISTRATION OF COLLEGE 
                   ENTRANCE AND PLACEMENT EXAMS.

       (a) In General.--Section 530 of the Revenue Reconciliation 
     Act of 1978 is amended by adding at the end the following new 
     subsection:
       ``(f) Treatment of Test Room Supervisors and Proctors Who 
     Assist in the Administration of College Entrance and 
     Placement Exams.--
       ``(1) In general.--In the case of an individual described 
     in paragraph (2) who is providing services as a test proctor 
     or room supervisor by assisting in the administration of 
     college entrance or placement examinations, this section 
     shall be applied to such services performed after December 
     31, 2006 (and remuneration paid for such services) without 
     regard to subsection (a)(3) thereof.
       ``(2) Applicability.--An individual is described in this 
     paragraph if the individual--
       ``(A) is providing the services described in subsection (a) 
     to an organization described in section 501(c), and exempt 
     from tax under section 501(a), of the Internal Revenue Code 
     of 1986, and
       ``(B) is not otherwise treated as an employee of such 
     organization for purposes of subtitle C of such Code 
     (relating to employment taxes).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to remuneration for services performed after 
     December 31, 2006.

     SEC. 865. GRANDFATHER RULE FOR CHURCH PLANS WHICH SELF-
                   ANNUITIZE.

       (a) In General.--In the case of any plan year ending after 
     the date of the enactment of this Act, annuity payments 
     provided with respect to any account maintained for a 
     participant or beneficiary under a qualified church plan 
     shall not fail to satisfy the requirements of section 
     401(a)(9) of the Internal Revenue Code of 1986 merely because 
     the payments are not made under an annuity contract purchased 
     from an insurance company if such payments would not fail 
     such requirements if provided with respect to a retirement 
     income account described in section 403(b)(9) of such Code.
       (b) Qualified Church Plan.--For purposes of this section, 
     the term ``qualified church plan'' means any money purchase 
     pension plan described in section 401(a) of such Code which--
       (1) is a church plan (as defined in section 414(e) of such 
     Code) with respect to which the election provided by section 
     410(d) of such Code has not been made, and
       (2) was in existence on April 17, 2002.

     SEC. 866. EXEMPTION FOR INCOME FROM LEVERAGED REAL ESTATE 
                   HELD BY CHURCH PLANS.

       (a) In General.--Section 514(c)(9)(C) of the Internal 
     Revenue Code of 1986 is amended by striking ``or'' after 
     clause (ii), by striking the period at the end of clause 
     (iii) and inserting ``; or'', and by inserting after clause 
     (iii) the following:
       ``(iv) a retirement income account described in section 
     403(b)(9).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning on or after the date 
     of enactment of this Act.

     SEC. 867. CHURCH PLAN RULE.

       (a) In General.--Paragraph (11) of section 415(b) of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following: ``Subparagraph (B) of paragraph (1) shall not 
     apply to a plan maintained by an organization described in 
     section 3121(w)(3)(A) except with respect to highly 
     compensated benefits. For purposes of this paragraph, the 
     term `highly compensated benefits' means any benefits accrued 
     for an employee in any year on or after the first year in 
     which such employee is a highly compensated employee (as 
     defined in section 414(q)) of the organization described in 
     section 3121(w)(3)(A). For purposes of applying paragraph 
     (1)(B) to highly compensated benefits, all benefits of the 
     employee otherwise taken into account (without regard to this 
     paragraph) shall be taken into account.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to years beginning after December 31, 2006.

     SEC. 868. GRATUITOUS TRANSFER FOR BENEFITS OF EMPLOYEES.

       (a) In General.--Subparagraph (E) of section 664(g)(3) of 
     the Internal Revenue Code of 1986 is amended by inserting 
     ``(determined on the basis of fair market value of securities 
     when allocated to participants)'' after ``paragraph (7)''.
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

 TITLE IX--INCREASE IN PENSION PLAN DIVERSIFICATION AND PARTICIPATION 
                      AND OTHER PENSION PROVISIONS

     SEC. 901. DEFINED CONTRIBUTION PLANS REQUIRED TO PROVIDE 
                   EMPLOYEES WITH FREEDOM TO INVEST THEIR PLAN 
                   ASSETS.

       (a) Amendments of Internal Revenue Code.--
       (1) Qualification requirement.--Section 401(a) of the 
     Internal Revenue Code of 1986 (relating to qualified pension, 
     profit-sharing, and stock bonus plans) is amended by 
     inserting after paragraph (34) the following new paragraph:
       ``(35) Diversification requirements for certain defined 
     contribution plans.--
       ``(A) In general.--A trust which is part of an applicable 
     defined contribution plan shall not be treated as a qualified 
     trust unless the plan meets the diversification requirements 
     of subparagraphs (B), (C), and (D).
       ``(B) Employee contributions and elective deferrals 
     invested in employer securities.--In the case of the portion 
     of an applicable individual's account attributable to 
     employee contributions and elective deferrals which is 
     invested in employer securities, a plan meets the 
     requirements of this subparagraph if the applicable 
     individual may elect to direct the plan to divest any such 
     securities and to reinvest an equivalent amount in other 
     investment options meeting the requirements of subparagraph 
     (D).
       ``(C) Employer contributions invested in employer 
     securities.--In the case of the portion of the account 
     attributable to employer contributions other than elective 
     deferrals which is invested in employer securities, a plan 
     meets the requirements of this subparagraph if each 
     applicable individual who--
       ``(i) is a participant who has completed at least 3 years 
     of service, or
       ``(ii) is a beneficiary of a participant described in 
     clause (i) or of a deceased participant,

     may elect to direct the plan to divest any such securities 
     and to reinvest an equivalent amount in other investment 
     options meeting the requirements of subparagraph (D).
       ``(D) Investment options.--
       ``(i) In general.--The requirements of this subparagraph 
     are met if the plan offers not less than 3 investment 
     options, other than employer securities, to which an 
     applicable individual may direct the proceeds from the 
     divestment of employer securities pursuant to this paragraph, 
     each of which is diversified and has materially different 
     risk and return characteristics.
       ``(ii) Treatment of certain restrictions and conditions.--

       ``(I) Time for making investment choices.--A plan shall not 
     be treated as failing to meet the requirements of this 
     subparagraph merely because the plan limits the time for 
     divestment and reinvestment to periodic, reasonable 
     opportunities occurring no less frequently than quarterly.
       ``(II) Certain restrictions and conditions not allowed.--
     Except as provided in regulations, a plan shall not meet the 
     requirements of this subparagraph if the plan imposes 
     restrictions or conditions with respect to the investment of 
     employer securities which are not imposed on the investment 
     of other assets of the plan. This subclause shall not apply 
     to any restrictions or conditions imposed by reason of the 
     application of securities laws.

       ``(E) Applicable defined contribution plan.--For purposes 
     of this paragraph--
       ``(i) In general.--The term `applicable defined 
     contribution plan' means any defined contribution plan which 
     holds any publicly traded employer securities.
       ``(ii) Exception for certain esops.--Such term does not 
     include an employee stock ownership plan if--

       ``(I) there are no contributions to such plan (or earnings 
     thereunder) which are held within such plan and are subject 
     to subsection (k) or (m), and
       ``(II) such plan is a separate plan for purposes of section 
     414(l) with respect to any other defined benefit plan or 
     defined contribution plan maintained by the same employer or 
     employers.

       ``(iii) Exception for one participant plans.--Such term 
     does not include a one-participant retirement plan.
       ``(iv) One-participant retirement plan.--For purposes of 
     clause (iii), the term `one-participant retirement plan' 
     means a retirement plan that--

       ``(I) on the first day of the plan year covered only one 
     individual (or the individual and the individual's spouse) 
     and the individual owned 100 percent of the plan sponsor 
     (whether or not incorporated), or covered only one or more 
     partners (or partners and their spouses) in the plan sponsor,
       ``(II) meets the minimum coverage requirements of section 
     410(b) without being combined with any other plan of the 
     business that covers the employees of the business,
       ``(III) does not provide benefits to anyone except the 
     individual (and the individual's spouse) or the partners (and 
     their spouses),

[[Page 16385]]

       ``(IV) does not cover a business that is a member of an 
     affiliated service group, a controlled group of corporations, 
     or a group of businesses under common control, and
       ``(V) does not cover a business that uses the services of 
     leased employees (within the meaning of section 414(n)).

     For purposes of this clause, the term `partner' includes a 2-
     percent shareholder (as defined in section 1372(b)) of an S 
     corporation.
       ``(F) Certain plans treated as holding publicly traded 
     employer securities.--
       ``(i) In general.--Except as provided in regulations or in 
     clause (ii), a plan holding employer securities which are not 
     publicly traded employer securities shall be treated as 
     holding publicly traded employer securities if any employer 
     corporation, or any member of a controlled group of 
     corporations which includes such employer corporation, has 
     issued a class of stock which is a publicly traded employer 
     security.
       ``(ii) Exception for certain controlled groups with 
     publicly traded securities.--Clause (i) shall not apply to a 
     plan if--

       ``(I) no employer corporation, or parent corporation of an 
     employer corporation, has issued any publicly traded employer 
     security, and
       ``(II) no employer corporation, or parent corporation of an 
     employer corporation, has issued any special class of stock 
     which grants particular rights to, or bears particular risks 
     for, the holder or issuer with respect to any corporation 
     described in clause (i) which has issued any publicly traded 
     employer security.

       ``(iii) Definitions.--For purposes of this subparagraph, 
     the term--

       ``(I) `controlled group of corporations' has the meaning 
     given such term by section 1563(a), except that `50 percent' 
     shall be substituted for `80 percent' each place it appears,
       ``(II) `employer corporation' means a corporation which is 
     an employer maintaining the plan, and
       ``(III) `parent corporation' has the meaning given such 
     term by section 424(e).

       ``(G) Other definitions.--For purposes of this paragraph--
       ``(i) Applicable individual.--The term `applicable 
     individual' means--

       ``(I) any participant in the plan, and
       ``(II) any beneficiary who has an account under the plan 
     with respect to which the beneficiary is entitled to exercise 
     the rights of a participant.

       ``(ii) Elective deferral.--The term `elective deferral' 
     means an employer contribution described in section 
     402(g)(3)(A).
       ``(iii) Employer security.--The term `employer security' 
     has the meaning given such term by section 407(d)(1) of the 
     Employee Retirement Income Security Act of 1974.
       ``(iv) Employee stock ownership plan.--The term `employee 
     stock ownership plan' has the meaning given such term by 
     section 4975(e)(7).
       ``(v) Publicly traded employer securities.--The term 
     `publicly traded employer securities' means employer 
     securities which are readily tradable on an established 
     securities market.
       ``(vi) Year of service.--The term `year of service' has the 
     meaning given such term by section 411(a)(5).
       ``(H) Transition rule for securities attributable to 
     employer contributions.--
       ``(i) Rules phased in over 3 years.--

       ``(I) In general.--In the case of the portion of an account 
     to which subparagraph (C) applies and which consists of 
     employer securities acquired in a plan year beginning before 
     January 1, 2007, subparagraph (C) shall only apply to the 
     applicable percentage of such securities. This subparagraph 
     shall be applied separately with respect to each class of 
     securities.
       ``(II) Exception for certain participants aged 55 or 
     over.--Subclause (I) shall not apply to an applicable 
     individual who is a participant who has attained age 55 and 
     completed at least 3 years of service before the first plan 
     year beginning after December 31, 2005.

       ``(ii) Applicable percentage.--For purposes of clause (i), 
     the applicable percentage shall be determined as follows:
``Plan year to which                                     The applicable
  subparagraph (C) applies:                              percentage is:
  1st...............................................................33 
  2d................................................................66 
  3d and following..............................................100.''.
       (2) Conforming amendments.--
       (A) Section 401(a)(28)(B) of such Code (relating to 
     additional requirements relating to employee stock ownership 
     plans) is amended by adding at the end the following new 
     clause:
       ``(v) Exception.--This subparagraph shall not apply to an 
     applicable defined contribution plan (as defined in paragraph 
     (35)(E)).''
       (B) Section 409(h)(7) of such Code is amended by inserting 
     ``or subparagraph (B) or (C) of section 401(a)(35)'' before 
     the period at the end.
       (C) Section 4980(c)(3)(A) of such Code is amended by 
     striking ``if--'' and all that follows and inserting ``if the 
     requirements of subparagraphs (B), (C), and (D) are met.''
       (b) Amendments of ERISA.--
       (1) In general.--Section 204 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1054) is amended by 
     redesignating subsection (j) as subsection (k) and by 
     inserting after subsection (i) the following new subsection:
       ``(j) Diversification Requirements for Certain Individual 
     Account Plans.--
       ``(1) In general.--An applicable individual account plan 
     shall meet the diversification requirements of paragraphs 
     (2), (3), and (4).
       ``(2) Employee contributions and elective deferrals 
     invested in employer securities.--In the case of the portion 
     of an applicable individual's account attributable to 
     employee contributions and elective deferrals which is 
     invested in employer securities, a plan meets the 
     requirements of this paragraph if the applicable individual 
     may elect to direct the plan to divest any such securities 
     and to reinvest an equivalent amount in other investment 
     options meeting the requirements of paragraph (4).
       ``(3) Employer contributions invested in employer 
     securities.--In the case of the portion of the account 
     attributable to employer contributions other than elective 
     deferrals which is invested in employer securities, a plan 
     meets the requirements of this paragraph if each applicable 
     individual who--
       ``(A) is a participant who has completed at least 3 years 
     of service, or
       ``(B) is a beneficiary of a participant described in 
     subparagraph (A) or of a deceased participant,

     may elect to direct the plan to divest any such securities 
     and to reinvest an equivalent amount in other investment 
     options meeting the requirements of paragraph (4).
       ``(4) Investment options.--
       ``(A) In general.--The requirements of this paragraph are 
     met if the plan offers not less than 3 investment options, 
     other than employer securities, to which an applicable 
     individual may direct the proceeds from the divestment of 
     employer securities pursuant to this subsection, each of 
     which is diversified and has materially different risk and 
     return characteristics.
       ``(B) Treatment of certain restrictions and conditions.--
       ``(i) Time for making investment choices.--A plan shall not 
     be treated as failing to meet the requirements of this 
     paragraph merely because the plan limits the time for 
     divestment and reinvestment to periodic, reasonable 
     opportunities occurring no less frequently than quarterly.
       ``(ii) Certain restrictions and conditions not allowed.--
     Except as provided in regulations, a plan shall not meet the 
     requirements of this paragraph if the plan imposes 
     restrictions or conditions with respect to the investment of 
     employer securities which are not imposed on the investment 
     of other assets of the plan. This subparagraph shall not 
     apply to any restrictions or conditions imposed by reason of 
     the application of securities laws.
       ``(5) Applicable individual account plan.--For purposes of 
     this subsection--
       ``(A) In general.--The term `applicable individual account 
     plan' means any individual account plan (as defined in 
     section 3(34)) which holds any publicly traded employer 
     securities.
       ``(B) Exception for certain esops.--Such term does not 
     include an employee stock ownership plan if--
       ``(i) there are no contributions to such plan (or earnings 
     thereunder) which are held within such plan and are subject 
     to subsection (k) or (m) of section 401 of the Internal 
     Revenue Code of 1986, and
       ``(ii) such plan is a separate plan (for purposes of 
     section 414(l) of such Code) with respect to any other 
     defined benefit plan or individual account plan maintained by 
     the same employer or employers.
       ``(C) Exception for one participant plans.--Such term shall 
     not include a one-participant retirement plan (as defined in 
     section 101(i)(8)(B)).
       ``(D) Certain plans treated as holding publicly traded 
     employer securities.--
       ``(i) In general.--Except as provided in regulations or in 
     clause (ii), a plan holding employer securities which are not 
     publicly traded employer securities shall be treated as 
     holding publicly traded employer securities if any employer 
     corporation, or any member of a controlled group of 
     corporations which includes such employer corporation, has 
     issued a class of stock which is a publicly traded employer 
     security.
       ``(ii) Exception for certain controlled groups with 
     publicly traded securities.--Clause (i) shall not apply to a 
     plan if--

       ``(I) no employer corporation, or parent corporation of an 
     employer corporation, has issued any publicly traded employer 
     security, and
       ``(II) no employer corporation, or parent corporation of an 
     employer corporation, has issued any special class of stock 
     which grants particular rights to, or bears particular risks 
     for, the holder or issuer with respect to any corporation 
     described in clause (i) which has issued any publicly traded 
     employer security.

       ``(iii) Definitions.--For purposes of this subparagraph, 
     the term--

       ``(I) `controlled group of corporations' has the meaning 
     given such term by section 1563(a) of the Internal Revenue 
     Code of 1986, except that `50 percent' shall be substituted 
     for `80 percent' each place it appears,

[[Page 16386]]

       ``(II) `employer corporation' means a corporation which is 
     an employer maintaining the plan, and
       ``(III) `parent corporation' has the meaning given such 
     term by section 424(e) of such Code.

       ``(6) Other definitions.--For purposes of this paragraph--
       ``(A) Applicable individual.--The term `applicable 
     individual' means--
       ``(i) any participant in the plan, and
       ``(ii) any beneficiary who has an account under the plan 
     with respect to which the beneficiary is entitled to exercise 
     the rights of a participant.
       ``(B) Elective deferral.--The term `elective deferral' 
     means an employer contribution described in section 
     402(g)(3)(A) of the Internal Revenue Code of 1986.
       ``(C) Employer security.--The term `employer security' has 
     the meaning given such term by section 407(d)(1).
       ``(D) Employee stock ownership plan.--The term `employee 
     stock ownership plan' has the meaning given such term by 
     section 4975(e)(7) of such Code.
       ``(E) Publicly traded employer securities.--The term 
     `publicly traded employer securities' means employer 
     securities which are readily tradable on an established 
     securities market.
       ``(F) Year of service.--The term `year of service' has the 
     meaning given such term by section 203(b)(2).
       ``(7) Transition rule for securities attributable to 
     employer contributions.--
       ``(A) Rules phased in over 3 years.--
       ``(i) In general.--In the case of the portion of an account 
     to which paragraph (3) applies and which consists of employer 
     securities acquired in a plan year beginning before January 
     1, 2007, paragraph (3) shall only apply to the applicable 
     percentage of such securities. This subparagraph shall be 
     applied separately with respect to each class of securities.
       ``(ii) Exception for certain participants aged 55 or 
     over.--Clause (i) shall not apply to an applicable individual 
     who is a participant who has attained age 55 and completed at 
     least 3 years of service before the first plan year beginning 
     after December 31, 2005.
       ``(B) Applicable percentage.--For purposes of subparagraph 
     (A), the applicable percentage shall be determined as 
     follows:
``Plan year to which                                     The applicable
   paragraph (3) applies:                                percentage is:
  1st...............................................................33 
  2d................................................................66 
  3d............................................................100.''.
       (2) Conforming amendment.--Section 407(b)(3) of such Act 
     (29 U.S.C. 1107(b)(3)) is amended by adding at the end the 
     following:
       ``(D) For diversification requirements for qualifying 
     employer securities held in certain individual account plans, 
     see section 204(j).''.
       (c) Effective Dates.--
       (1) In general.--Except as provided in paragraphs (2) and 
     (3), the amendments made by this section shall apply to plan 
     years beginning after December 31, 2006.
       (2) Special rule for collectively bargained agreements.--In 
     the case of a plan maintained pursuant to 1 or more 
     collective bargaining agreements between employee 
     representatives and 1 or more employers ratified on or before 
     the date of the enactment of this Act, paragraph (1) shall be 
     applied to benefits pursuant to, and individuals covered by, 
     any such agreement by substituting for ``December 31, 2006'' 
     the earlier of--
       (A) the later of--
       (i) December 31, 2007, or
       (ii) the date on which the last of such collective 
     bargaining agreements terminates (determined without regard 
     to any extension thereof after such date of enactment), or
       (B) December 31, 2008.
       (3) Special rule for certain employer securities held in an 
     esop.--
       (A) In general.--In the case of employer securities to 
     which this paragraph applies, the amendments made by this 
     section shall apply to plan years beginning after the earlier 
     of--
       (i) December 31, 2007, or
       (ii) the first date on which the fair market value of such 
     securities exceeds the guaranteed minimum value described in 
     subparagraph (B)(ii).
       (B) Applicable securities.--This paragraph shall apply to 
     employer securities which are attributable to employer 
     contributions other than elective deferrals, and which, on 
     September 17, 2003--
       (i) consist of preferred stock, and
       (ii) are within an employee stock ownership plan (as 
     defined in section 4975(e)(7) of the Internal Revenue Code of 
     1986), the terms of which provide that the value of the 
     securities cannot be less than the guaranteed minimum value 
     specified by the plan on such date.
       (C) Coordination with transition rule.--In applying section 
     401(a)(35)(H) of the Internal Revenue Code of 1986 and 
     section 204(j)(7) of the Employee Retirement Income Security 
     Act of 1974 (as added by this section) to employer securities 
     to which this paragraph applies, the applicable percentage 
     shall be determined without regard to this paragraph.

     SEC. 902. INCREASING PARTICIPATION THROUGH AUTOMATIC 
                   CONTRIBUTION ARRANGEMENTS.

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

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

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

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

       ``(iv) Automatic deferral for current employees not 
     required.--Clause (i) may be applied without taking into 
     account any employee who--

       ``(I) was eligible to participate in the arrangement (or a 
     predecessor arrangement) immediately before the date on which 
     such arrangement becomes a qualified automatic contribution 
     arrangement (determined after application of this clause), 
     and
       ``(II) had an election in effect on such date either to 
     participate in the arrangement or to not participate in the 
     arrangement.

       ``(D) Matching or nonelective contributions.--
       ``(i) In general.--The requirements of this subparagraph 
     are met if, under the arrangement, the employer--

       ``(I) makes matching contributions on behalf of each 
     employee who is not a highly compensated employee in an 
     amount equal to the sum of 100 percent of the elective 
     contributions of the employee to the extent that such 
     contributions do not exceed 1 percent of compensation plus 50 
     percent of so much of such compensation as exceeds 1 percent 
     but does not exceed 6 percent of compensation, or
       ``(II) is required, without regard to whether the employee 
     makes an elective contribution or employee contribution, to 
     make a contribution to a defined contribution plan on behalf 
     of each employee who is not a highly compensated employee and 
     who is eligible to participate in the arrangement in an 
     amount equal to at least 3 percent of the employee's 
     compensation.

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

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

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

       ``(I) is sufficiently accurate and comprehensive to apprise 
     the employee of such rights and obligations, and

[[Page 16387]]

       ``(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) Treatment of Withdrawals of Contributions During First 
     90 Days.--
       (1) In general.--Section 414 of the Internal Revenue Code 
     of 1986 is amended by adding at the end the following new 
     subsection:
       ``(w) Special Rules for Certain Withdrawals From Eligible 
     Automatic Contribution Arrangements.--
       ``(1) In general.--If an eligible automatic contribution 
     arrangement allows an employee to elect to make permissible 
     withdrawals--
       ``(A) the amount of any such withdrawal shall be includible 
     in the gross income of the employee for the taxable year of 
     the employee in which the distribution is made,
       ``(B) no tax shall be imposed under section 72(t) with 
     respect to the distribution, and
       ``(C) the arrangement shall not be treated as violating any 
     restriction on distributions under this title solely by 
     reason of allowing the withdrawal.

     In the case of any distribution to an employee by reason of 
     an election under this paragraph, employer matching 
     contributions shall be forfeited or subject to such other 
     treatment as the Secretary may prescribe.
       ``(2) Permissible withdrawal.--For purposes of this 
     subsection--
       ``(A) In general.--The term `permissible withdrawal' means 
     any withdrawal from an eligible automatic contribution 
     arrangement meeting the requirements of this paragraph 
     which--
       ``(i) is made pursuant to an election by an employee, and
       ``(ii) consists of elective contributions described in 
     paragraph (3)(B) (and earnings attributable thereto).
       ``(B) Time for making election.--Subparagraph (A) shall not 
     apply to an election by an employee unless the election is 
     made no later than the date which is 90 days after the date 
     of the first elective contribution with respect to the 
     employee under the arrangement.
       ``(C) Amount of distribution.--Subparagraph (A) shall not 
     apply to any election by an employee unless the amount of any 
     distribution by reason of the election is equal to the amount 
     of elective contributions made with respect to the first 
     payroll period to which the eligible automatic contribution 
     arrangement applies to the employee and any succeeding 
     payroll period beginning before the effective date of the 
     election (and earnings attributable thereto).
       ``(3) Eligible automatic contribution arrangement.--For 
     purposes of this subsection, the term `eligible automatic 
     contribution arrangement' means an arrangement under an 
     applicable employer plan--
       ``(A) under which a participant may elect to have the 
     employer make payments as contributions under the plan on 
     behalf of the participant, or to the participant directly in 
     cash,
       ``(B) under which the participant is treated as having 
     elected to have the employer make such contributions in an 
     amount equal to a uniform percentage of compensation provided 
     under the plan until the participant specifically elects not 
     to have such contributions made (or specifically elects to 
     have such contributions made at a different percentage),
       ``(C) under which, in the absence of an investment election 
     by the participant, contributions described in subparagraph 
     (B) are invested in accordance with regulations prescribed by 
     the Secretary of Labor under section 404(c)(5) of the 
     Employee Retirement Income Security Act of 1974, and
       ``(D) which meets the requirements of paragraph (4).
       ``(4) Notice requirements.--
       ``(A) In general.--The administrator of a plan containing 
     an arrangement described in paragraph (3) shall, within a 
     reasonable period before each plan year, give to each 
     employee to whom an arrangement described in paragraph (3) 
     applies for such plan year notice of the employee's rights 
     and obligations under the arrangement which--
       ``(i) is sufficiently accurate and comprehensive to apprise 
     the employee of such rights and obligations, and
       ``(ii) is written in a manner calculated to be understood 
     by the average employee to whom the arrangement applies.
       ``(B) Time and form of notice.--A notice shall not be 
     treated as meeting the requirements of subparagraph (A) with 
     respect to an employee unless--
       ``(i) the notice includes an explanation of the employee's 
     right under the arrangement to elect not to have elective 
     contributions made on the employee's behalf (or to elect to 
     have such contributions made at a different percentage),
       ``(ii) the employee has a reasonable period of time after 
     receipt of the notice described in clause (i) and before the 
     first elective contribution is made to make such election, 
     and
       ``(iii) the notice explains how contributions made under 
     the arrangement will be invested in the absence of any 
     investment election by the employee.
       ``(5) Applicable employer plan.--For purposes of this 
     subsection, the term `applicable employer plan' means--
       ``(A) an employees' trust described in section 401(a) which 
     is exempt from tax under section 501(a),
       ``(B) a plan under which amounts are contributed by an 
     individual's employer for an annuity contract described in 
     section 403(b), and
       ``(C) an eligible deferred compensation plan described in 
     section 457(b) which is maintained by an eligible employer 
     described in section 457(e)(1)(A).
       ``(6) Special rule.--A withdrawal described in paragraph 
     (1) (subject to the limitation of paragraph (2)(C)) shall not 
     be taken into account for purposes of section 401(k)(3).''.
       (2) Vesting conforming amendments.--
       (A) Section 411(a)(3)(G) of such Code is amended by 
     inserting ``an erroneous automatic contribution under section 
     414(w),'' after ``402(g)(2)(A),''.
       (B) The heading of section 411(a)(3)(G) of such Code is 
     amended by inserting ``OR ERRONEOUS AUTOMATIC CONTRIBUTION'' 
     before the period.
       (C) Section 401(k)(8)(E) of such Code is amended by 
     inserting ``an erroneous automatic contribution under section 
     414(w),'' after ``402(g)(2)(A),''.
       (D) The heading of section 401(k)(8)(E) of such Code is 
     amended by inserting ``OR ERRONEOUS AUTOMATIC CONTRIBUTION'' 
     before the period.
       (E) Section 203(a)(3)(F) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1053(a)(3)(F)) is amended by 
     inserting ``an erroneous automatic contribution under section 
     414(w) of such Code,'' after ``402(g)(2)(A) of such Code,''.
       (e) Excess Contributions.--
       (1) Expansion of corrective distribution period for 
     automatic contribution arrangements.--Subsection (f) of 
     section 4979 of the Internal Revenue Code of 1986 is 
     amended--
       (A) by inserting ``(6 months in the case of an excess 
     contribution or excess aggregate contribution to an eligible 
     automatic contribution arrangement (as defined in section 
     414(w)(3)))'' after ``2\1/2\ months'' in paragraph (1), and
       (B) by striking ``2\1/2\ Months of'' in the heading and 
     inserting ``Specified Period After''.
       (2) Year of inclusion.--Paragraph (2) of section 4979(f) of 
     such Code is amended to read as follows:
       ``(2) Year of inclusion.--Any amount distributed as 
     provided in paragraph (1) shall be treated as earned and 
     received by the recipient in the recipient's taxable year in 
     which such distributions were made.''.
       (3) Simplification of allocable earnings.--
       (A) Section 4979.--Paragraph (1) of section 4979(f) of such 
     Code is amended by adding ``through the end of the plan year 
     for which the contribution was made'' after ``thereto''.
       (B) Section 401(k) and 401(m).--
       (i) Clause (i) of section 401(k)(8)(A) of such Code is 
     amended by adding ``through the end of such year'' after 
     ``such contributions''.
       (ii) Subparagraph (A) of section 401(m)(6) of such Code is 
     amended by adding ``through the end of such year'' after ``to 
     such contributions''.
       (f) Preemption of Conflicting State Regulation.--
       (1) In general.--Section 514 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1144) is amended by 
     adding at the end the following new subsection:

[[Page 16388]]

       ``(e)(1) Notwithstanding any other provision of this 
     section, this title shall supersede any law of a State which 
     would directly or indirectly prohibit or restrict the 
     inclusion in any plan of an automatic contribution 
     arrangement. The Secretary may prescribe regulations which 
     would establish minimum standards that such an arrangement 
     would be required to satisfy in order for this subsection to 
     apply in the case of such arrangement.
       ``(2) For purposes of this subsection, the term `automatic 
     contribution arrangement' means an arrangement----
       ``(A) under which a participant may elect to have the plan 
     sponsor make payments as contributions under the plan on 
     behalf of the participant, or to the participant directly in 
     cash,
       ``(B) under which a participant is treated as having 
     elected to have the plan sponsor make such contributions in 
     an amount equal to a uniform percentage of compensation 
     provided under the plan until the participant specifically 
     elects not to have such contributions made (or specifically 
     elects to have such contributions made at a different 
     percentage), and
       ``(C) under which such contributions are invested in 
     accordance with regulations prescribed by the Secretary under 
     section 404(c)(5).
       ``(3)(A) The plan administrator of an automatic 
     contribution arrangement shall, within a reasonable period 
     before such plan year, provide to each participant to whom 
     the arrangement applies for such plan year notice of the 
     participant's rights and obligations under the arrangement 
     which--
       ``(i) is sufficiently accurate and comprehensive to apprise 
     the participant of such rights and obligations, and
       ``(ii) is written in a manner calculated to be understood 
     by the average participant to whom the arrangement applies.
       ``(B) A notice shall not be treated as meeting the 
     requirements of subparagraph (A) with respect to a 
     participant unless--
       ``(i) the notice includes an explanation of the 
     participant's right under the arrangement not to have 
     elective contributions made on the participant's behalf (or 
     to elect to have such contributions made at a different 
     percentage),
       ``(ii) the participant has a reasonable period of time, 
     after receipt of the notice described in clause (i) and 
     before the first elective contribution is made, to make such 
     election, and
       ``(iii) the notice explains how contributions made under 
     the arrangement will be invested in the absence of any 
     investment election by the participant.''.
       (2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C. 
     1132(c)(4)) is amended by striking ``or section 
     302(b)(7)(F)(vi)'' inserting ``, section 302(b)(7)(F)(vi), or 
     section 514(e)(3)''.
       (g) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2007, 
     except that the amendments made by subsection (f) shall take 
     effect on the date of the enactment of this Act.

     SEC. 903. TREATMENT OF ELIGIBLE COMBINED DEFINED BENEFIT 
                   PLANS AND QUALIFIED CASH OR DEFERRED 
                   ARRANGEMENTS.

       (a) Amendments of Internal Revenue Code.--Section 414 of 
     the Internal Revenue Code of 1986, as amended by this Act, is 
     amended by adding at the end the following new subsection:
       ``(x) Special Rules for Eligible Combined Defined Benefit 
     Plans and Qualified Cash or Deferred Arrangements.--
       ``(1) General rule.--Except as provided in this subsection, 
     the requirements of this title shall be applied to any 
     defined benefit plan or applicable defined contribution plan 
     which are part of an eligible combined plan in the same 
     manner as if each such plan were not a part of the eligible 
     combined plan.
       ``(2) Eligible combined plan.--For purposes of this 
     subsection--
       ``(A) In general.--The term `eligible combined plan' means 
     a plan--
       ``(i) which is maintained by an employer which, at the time 
     the plan is established, is a small employer,
       ``(ii) which consists of a defined benefit plan and an 
     applicable defined contribution plan,
       ``(iii) the assets of which are held in a single trust 
     forming part of the plan and are clearly identified and 
     allocated to the defined benefit plan and the applicable 
     defined contribution plan to the extent necessary for the 
     separate application of this title under paragraph (1), and
       ``(iv) with respect to which the benefit, contribution, 
     vesting, and nondiscrimination requirements of subparagraphs 
     (B), (C), (D), (E), and (F) are met.

     For purposes of this subparagraph, the term `small employer' 
     has the meaning given such term by section 4980D(d)(2), 
     except that such section shall be applied by substituting 
     `500' for `50' each place it appears.
       ``(B) Benefit requirements.--
       ``(i) In general.--The benefit requirements of this 
     subparagraph are met with respect to the defined benefit plan 
     forming part of the eligible combined plan if the accrued 
     benefit of each participant derived from employer 
     contributions, when expressed as an annual retirement 
     benefit, is not less than the applicable percentage of the 
     participant's final average pay. For purposes of this clause, 
     final average pay shall be determined using the period of 
     consecutive years (not exceeding 5) during which the 
     participant had the greatest aggregate compensation from the 
     employer.
       ``(ii) Applicable percentage.--For purposes of clause (i), 
     the applicable percentage is the lesser of--

       ``(I) 1 percent multiplied by the number of years of 
     service with the employer, or
       ``(II) 20 percent.

       ``(iii) Special rule for applicable defined benefit 
     plans.--If the defined benefit plan under clause (i) is an 
     applicable defined benefit plan as defined in section 
     411(a)(13)(B) which meets the interest credit requirements of 
     section 411(b)(5)(B)(i), the plan shall be treated as meeting 
     the requirements of clause (i) with respect to any plan year 
     if each participant receives a pay credit for the year which 
     is not less than the percentage of compensation determined in 
     accordance with the following table:
``If the participant's age as of the beginning of thThe percentage is--
  30 or less.........................................................2 
  Over 30 but less than 40...........................................4 
  40 or over but less than 50........................................6 
  50 or over.........................................................8.

       ``(iv) Years of service.--For purposes of this 
     subparagraph, years of service shall be determined under the 
     rules of paragraphs (4), (5), and (6) of section 411(a), 
     except that the plan may not disregard any year of service 
     because of a participant making, or failing to make, any 
     elective deferral with respect to the qualified cash or 
     deferred arrangement to which subparagraph (C) applies.
       ``(C) Contribution requirements.--
       ``(i) In general.--The contribution requirements of this 
     subparagraph with respect to any applicable defined 
     contribution plan forming part of an eligible combined plan 
     are met if--

       ``(I) the qualified cash or deferred arrangement included 
     in such plan constitutes an automatic contribution 
     arrangement, and
       ``(II) the employer is required to make matching 
     contributions on behalf of each employee eligible to 
     participate in the arrangement in an amount equal to 50 
     percent of the elective contributions of the employee to the 
     extent such elective contributions do not exceed 4 percent of 
     compensation.

     Rules similar to the rules of clauses (ii) and (iii) of 
     section 401(k)(12)(B) shall apply for purposes of this 
     clause.
       ``(ii) Nonelective contributions.--An applicable defined 
     contribution plan shall not be treated as failing to meet the 
     requirements of clause (i) because the employer makes 
     nonelective contributions under the plan but such 
     contributions shall not be taken into account in determining 
     whether the requirements of clause (i)(II) are met.
       ``(D) Vesting requirements.--The vesting requirements of 
     this subparagraph are met if--
       ``(i) in the case of a defined benefit plan forming part of 
     an eligible combined plan an employee who has completed at 
     least 3 years of service has a nonforfeitable right to 100 
     percent of the employee's accrued benefit under the plan 
     derived from employer contributions, and
       ``(ii) in the case of an applicable defined contribution 
     plan forming part of eligible combined plan--

       ``(I) an employee has a nonforfeitable right to any 
     matching contribution made under the qualified cash or 
     deferred arrangement included in such plan by an employer 
     with respect to any elective contribution, including matching 
     contributions in excess of the contributions required under 
     subparagraph (C)(i)(II), and
       ``(II) an employee who has completed at least 3 years of 
     service has a nonforfeitable right to 100 percent of the 
     employee's accrued benefit derived under the arrangement from 
     nonelective contributions of the employer.

     For purposes of this subparagraph, the rules of section 411 
     shall apply to the extent not inconsistent with this 
     subparagraph.
       ``(E) Uniform provision of contributions and benefits.--In 
     the case of a defined benefit plan or applicable defined 
     contribution plan forming part of an eligible combined plan, 
     the requirements of this subparagraph are met if all 
     contributions and benefits under each such plan, and all 
     rights and features under each such plan, must be provided 
     uniformly to all participants.
       ``(F) Requirements must be met without taking into account 
     social security and similar contributions and benefits or 
     other plans.--
       ``(i) In general.--The requirements of this subparagraph 
     are met if the requirements of clauses (ii) and (iii) are 
     met.
       ``(ii) Social security and similar contributions.--The 
     requirements of this clause are met if--

       ``(I) the requirements of subparagraphs (B) and (C) are met 
     without regard to section 401(l), and
       ``(II) the requirements of sections 401(a)(4) and 410(b) 
     are met with respect to both the applicable defined 
     contribution plan and defined benefit plan forming part of an 
     eligible combined plan without regard to section 401(l).

[[Page 16389]]

       ``(iii) Other plans and arrangements.--The requirements of 
     this clause are met if the applicable defined contribution 
     plan and defined benefit plan forming part of an eligible 
     combined plan meet the requirements of sections 401(a)(4) and 
     410(b) without being combined with any other plan.
       ``(3) Nondiscrimination requirements for qualified cash or 
     deferred arrangement.--
       ``(A) In general.--A qualified cash or deferred arrangement 
     which is included in an applicable defined contribution plan 
     forming part of an eligible combined plan shall be treated as 
     meeting the requirements of section 401(k)(3)(A)(ii) if the 
     requirements of paragraph (2)(C) are met with respect to such 
     arrangement.
       ``(B) Matching contributions.--In applying section 
     401(m)(11) to any matching contribution with respect to a 
     contribution to which paragraph (2)(C) applies, the 
     contribution requirement of paragraph (2)(C) and the notice 
     requirements of paragraph (5)(B) shall be substituted for the 
     requirements otherwise applicable under clauses (i) and (ii) 
     of section 401(m)(11)(A).
       ``(4) Satisfaction of top-heavy rules.--A defined benefit 
     plan and applicable defined contribution plan forming part of 
     an eligible combined plan for any plan year shall be treated 
     as meeting the requirements of section 416 for the plan year.
       ``(5) Automatic contribution arrangement.--For purposes of 
     this subsection--
       ``(A) In general.--A qualified cash or deferred arrangement 
     shall be treated as an automatic contribution arrangement if 
     the arrangement--
       ``(i) provides that each employee eligible to participate 
     in the arrangement is treated as having elected to have the 
     employer make elective contributions in an amount equal to 4 
     percent of the employee's compensation unless the employee 
     specifically elects not to have such contributions made or to 
     have such contributions made at a different rate, and
       ``(ii) meets the notice requirements under subparagraph 
     (B).
       ``(B) Notice requirements.--
       ``(i) In general.--The requirements of this subparagraph 
     are met if the requirements of clauses (ii) and (iii) are 
     met.
       ``(ii) Reasonable period to make election.--The 
     requirements of this clause are met if each employee to whom 
     subparagraph (A)(i) applies--

       ``(I) receives a notice explaining the employee's right 
     under the arrangement to elect not to have elective 
     contributions made on the employee's behalf or to have the 
     contributions made at a different rate, and
       ``(II) has a reasonable period of time after receipt of 
     such notice and before the first elective contribution is 
     made to make such election.

       ``(iii) Annual notice of rights and obligations.--The 
     requirements of this clause are met if each employee eligible 
     to participate in the arrangement is, within a reasonable 
     period before any year, given notice of the employee's rights 
     and obligations under the arrangement.

     The requirements of clauses (i) and (ii) of section 
     401(k)(12)(D) shall be met with respect to the notices 
     described in clauses (ii) and (iii) of this subparagraph.
       ``(6) Coordination with other requirements.--
       ``(A) Treatment of separate plans.--Section 414(k) shall 
     not apply to an eligible combined plan.
       ``(B) Reporting.--An eligible combined plan shall be 
     treated as a single plan for purposes of sections 6058 and 
     6059.
       ``(7) Applicable defined contribution plan.--For purposes 
     of this subsection--
       ``(A) In general.--The term `applicable defined 
     contribution plan' means a defined contribution plan which 
     includes a qualified cash or deferred arrangement.
       ``(B) Qualified cash or deferred arrangement.--The term 
     `qualified cash or deferred arrangement' has the meaning 
     given such term by section 401(k)(2).''.
       (b) Amendments to the Employee Retirement Income Security 
     Act of 1974.--
       (1) In general.--Section 210 of the Employee Retirement 
     Income Security Act of 1974 is amended by adding at the end 
     the following new subsection:
       ``(e) Special Rules for Eligible Combined Defined Benefit 
     Plans and Qualified Cash or Deferred Arrangements.--
       ``(1) General rule.--Except as provided in this subsection, 
     this Act shall be applied to any defined benefit plan or 
     applicable individual account plan which are part of an 
     eligible combined plan in the same manner as if each such 
     plan were not a part of the eligible combined plan.
       ``(2) Eligible combined plan.--For purposes of this 
     subsection--
       ``(A) In general.--The term `eligible combined plan' means 
     a plan--
       ``(i) which is maintained by an employer which, at the time 
     the plan is established, is a small employer,
       ``(ii) which consists of a defined benefit plan and an 
     applicable individual account plan each of which qualifies 
     under section 401(a) of the Internal Revenue Code of 1986,
       ``(iii) the assets of which are held in a single trust 
     forming part of the plan and are clearly identified and 
     allocated to the defined benefit plan and the applicable 
     individual account plan to the extent necessary for the 
     separate application of this Act under paragraph (1), and
       ``(iv) with respect to which the benefit, contribution, 
     vesting, and nondiscrimination requirements of subparagraphs 
     (B), (C), (D), (E), and (F) are met.

     For purposes of this subparagraph, the term `small employer' 
     has the meaning given such term by section 4980D(d)(2) of the 
     Internal Revenue Code of 1986, except that such section shall 
     be applied by substituting `500' for `50' each place it 
     appears.
       ``(B) Benefit requirements.--
       ``(i) In general.--The benefit requirements of this 
     subparagraph are met with respect to the defined benefit plan 
     forming part of the eligible combined plan if the accrued 
     benefit of each participant derived from employer 
     contributions, when expressed as an annual retirement 
     benefit, is not less than the applicable percentage of the 
     participant's final average pay. For purposes of this clause, 
     final average pay shall be determined using the period of 
     consecutive years (not exceeding 5) during which the 
     participant had the greatest aggregate compensation from the 
     employer.
       ``(ii) Applicable percentage.--For purposes of clause (i), 
     the applicable percentage is the lesser of--

       ``(I) 1 percent multiplied by the number of years of 
     service with the employer, or
       ``(II) 20 percent.

       ``(iii) Special rule for applicable defined benefit 
     plans.--If the defined benefit plan under clause (i) is an 
     applicable defined benefit plan as defined in section 
     203(f)(3)(B) which meets the interest credit requirements of 
     section 204(b)(5)(B)(i), the plan shall be treated as meeting 
     the requirements of clause (i) with respect to any plan year 
     if each participant receives pay credit for the year which is 
     not less than the percentage of compensation determined in 
     accordance with the following table:

``If the participant's age as of the beginning of thThe percentage is--
  30 or less.........................................................2 
  Over 30 but less than 40...........................................4 
  40 or over but less than 50........................................6 
  50 or over.........................................................8.

       ``(iv) Years of service.--For purposes of this 
     subparagraph, years of service shall be determined under the 
     rules of paragraphs (1), (2), and (3) of section 203(b), 
     except that the plan may not disregard any year of service 
     because of a participant making, or failing to make, any 
     elective deferral with respect to the qualified cash or 
     deferred arrangement to which subparagraph (C) applies.
       ``(C) Contribution requirements.--
       ``(i) In general.--The contribution requirements of this 
     subparagraph with respect to any applicable individual 
     account plan forming part of an eligible combined plan are 
     met if--

       ``(I) the qualified cash or deferred arrangement included 
     in such plan constitutes an automatic contribution 
     arrangement, and
       ``(II) the employer is required to make matching 
     contributions on behalf of each employee eligible to 
     participate in the arrangement in an amount equal to 50 
     percent of the elective contributions of the employee to the 
     extent such elective contributions do not exceed 4 percent of 
     compensation.

     Rules similar to the rules of clauses (ii) and (iii) of 
     section 401(k)(12)(B) of the Internal Revenue Code of 1986 
     shall apply for purposes of this clause.
       ``(ii) Nonelective contributions.--An applicable individual 
     account plan shall not be treated as failing to meet the 
     requirements of clause (i) because the employer makes 
     nonelective contributions under the plan but such 
     contributions shall not be taken into account in determining 
     whether the requirements of clause (i)(II) are met.
       ``(D) Vesting requirements.--The vesting requirements of 
     this subparagraph are met if--
       ``(i) in the case of a defined benefit plan forming part of 
     an eligible combined plan an employee who has completed at 
     least 3 years of service has a nonforfeitable right to 100 
     percent of the employee's accrued benefit under the plan 
     derived from employer contributions, and
       ``(ii) in the case of an applicable individual account plan 
     forming part of eligible combined plan--

       ``(I) an employee has a nonforfeitable right to any 
     matching contribution made under the qualified cash or 
     deferred arrangement included in such plan by an employer 
     with respect to any elective contribution, including matching 
     contributions in excess of the contributions required under 
     subparagraph (C)(i)(II), and
       ``(II) an employee who has completed at least 3 years of 
     service has a nonforfeitable right to 100 percent of the 
     employee's accrued benefit derived under the arrangement from 
     nonelective contributions of the employer.

     For purposes of this subparagraph, the rules of section 203 
     shall apply to the extent not inconsistent with this 
     subparagraph.
       ``(E) Uniform provision of contributions and benefits.--In 
     the case of a defined benefit plan or applicable individual 
     account

[[Page 16390]]

     plan forming part of an eligible combined plan, the 
     requirements of this subparagraph are met if all 
     contributions and benefits under each such plan, and all 
     rights and features under each such plan, must be provided 
     uniformly to all participants.
       ``(F) Requirements must be met without taking into account 
     social security and similar contributions and benefits or 
     other plans.--
       ``(i) In general.--The requirements of this subparagraph 
     are met if the requirements of clauses (ii) and (iii) are 
     met.
       ``(ii) Social security and similar contributions.--The 
     requirements of this clause are met if--

       ``(I) the requirements of subparagraphs (B) and (C) are met 
     without regard to section 401(l) of the Internal Revenue Code 
     of 1986, and
       ``(II) the requirements of sections 401(a)(4) and 410(b) of 
     the Internal Revenue Code of 1986 are met with respect to 
     both the applicable defined contribution plan and defined 
     benefit plan forming part of an eligible combined plan 
     without regard to section 401(l) of the Internal Revenue Code 
     of 1986.

       ``(iii) Other plans and arrangements.--The requirements of 
     this clause are met if the applicable defined contribution 
     plan and defined benefit plan forming part of an eligible 
     combined plan meet the requirements of sections 401(a)(4) and 
     410(b) of the Internal Revenue Code of 1986 without being 
     combined with any other plan.
       ``(3) Nondiscrimination requirements for qualified cash or 
     deferred arrangement.--
       ``(A) In general.--A qualified cash or deferred arrangement 
     which is included in an applicable individual account plan 
     forming part of an eligible combined plan shall be treated as 
     meeting the requirements of section 401(k)(3)(A)(ii) of the 
     Internal Revenue Code of 1986 if the requirements of 
     paragraph (2) are met with respect to such arrangement.
       ``(B) Matching contributions.--In applying section 
     401(m)(11) of such Code to any matching contribution with 
     respect to a contribution to which paragraph (2)(C) applies, 
     the contribution requirement of paragraph (2)(C) and the 
     notice requirements of paragraph (5)(B) shall be substituted 
     for the requirements otherwise applicable under clauses (i) 
     and (ii) of section 401(m)(11)(A) of such Code.
       ``(4) Automatic contribution arrangement.--For purposes of 
     this subsection--
       ``(A) In general.--A qualified cash or deferred arrangement 
     shall be treated as an automatic contribution arrangement if 
     the arrangement--
       ``(i) provides that each employee eligible to participate 
     in the arrangement is treated as having elected to have the 
     employer make elective contributions in an amount equal to 4 
     percent of the employee's compensation unless the employee 
     specifically elects not to have such contributions made or to 
     have such contributions made at a different rate, and
       ``(ii) meets the notice requirements under subparagraph 
     (B).
       ``(B) Notice requirements.--
       ``(i) In general.--The requirements of this subparagraph 
     are met if the requirements of clauses (ii) and (iii) are 
     met.
       ``(ii) Reasonable period to make election.--The 
     requirements of this clause are met if each employee to whom 
     subparagraph (A)(i) applies--

       ``(I) receives a notice explaining the employee's right 
     under the arrangement to elect not to have elective 
     contributions made on the employee's behalf or to have the 
     contributions made at a different rate, and
       ``(II) has a reasonable period of time after receipt of 
     such notice and before the first elective contribution is 
     made to make such election.

       ``(iii) Annual notice of rights and obligations.--The 
     requirements of this clause are met if each employee eligible 
     to participate in the arrangement is, within a reasonable 
     period before any year, given notice of the employee's rights 
     and obligations under the arrangement.

     The requirements of this subparagraph shall not be treated as 
     met unless the requirements of clauses (i) and (ii) of 
     section 401(k)(12)(D) of the Internal Revenue Code of 1986 
     are met with respect to the notices described in clauses (ii) 
     and (iii) of this subparagraph.
       ``(5) Coordination with other requirements.--
       ``(A) Treatment of separate plans.--The except clause in 
     section 3(35) shall not apply to an eligible combined plan.
       ``(B) Reporting.--An eligible combined plan shall be 
     treated as a single plan for purposes of section 103.
       ``(6) Applicable individual account plan.--For purposes of 
     this subsection--
       ``(A) In general.--The term `applicable individual account 
     plan' means an individual account plan which includes a 
     qualified cash or deferred arrangement.
       ``(B) Qualified cash or deferred arrangement.--The term 
     `qualified cash or deferred arrangement' has the meaning 
     given such term by section 401(k)(2) of the Internal Revenue 
     Code of 1986.''.
       (2) Conforming changes.--
       (A) The heading for section 210 of such Act is amended to 
     read as follows:

     ``SEC. 210. MULTIPLE EMPLOYER PLANS AND OTHER SPECIAL 
                   RULES.''.

       (B) The table of contents in section 1 of such Act is 
     amended by striking the item relating to section 210 and 
     inserting the following new item:

``Sec. 210. Multiple employer plans and other special rules.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2009.

     SEC. 904. FASTER VESTING OF EMPLOYER NONELECTIVE 
                   CONTRIBUTIONS.

       (a) Amendments to the Internal Revenue Code of 1986.--
       (1) In general.--Paragraph (2) of section 411(a) of the 
     Internal Revenue Code of 1986 (relating to employer 
     contributions) is amended to read as follows:
       ``(2) Employer contributions.--
       ``(A) Defined benefit plans.--
       ``(i) In general.--In the case of a defined benefit plan, a 
     plan satisfies the requirements of this paragraph if it 
     satisfies the requirements of clause (ii) or (iii).
       ``(ii) 5-year vesting.--A plan satisfies the requirements 
     of this clause if an employee who has completed at least 5 
     years of service has a nonforfeitable right to 100 percent of 
     the employee's accrued benefit derived from employer 
     contributions.
       ``(iii) 3 to 7 year vesting.--A plan satisfies the 
     requirements of this clause if an employee has a 
     nonforfeitable right to a percentage of the employee's 
     accrued benefit derived from employer contributions 
     determined under the following table:

`` Years of service:                  The nonforfeitable percentage is:
  3.................................................................20 
  4.................................................................40 
  5.................................................................60 
  6.................................................................80 
  7 or more........................................................100.

       ``(B) Defined contribution plans.--
       ``(i) In general.--In the case of a defined contribution 
     plan, a plan satisfies the requirements of this paragraph if 
     it satisfies the requirements of clause (ii) or (iii).
       ``(ii) 3-year vesting.--A plan satisfies the requirements 
     of this clause if an employee who has completed at least 3 
     years of service has a nonforfeitable right to 100 percent of 
     the employee's accrued benefit derived from employer 
     contributions.
       ``(iii) 2 to 6 year vesting.--A plan satisfies the 
     requirements of this clause if an employee has a 
     nonforfeitable right to a percentage of the employee's 
     accrued benefit derived from employer contributions 
     determined under the following table:

``Years of service:                   The nonforfeitable percentage is:
  2.................................................................20 
  3.................................................................40 
  4.................................................................60 
  5.................................................................80 
  6 or more.....................................................100.''.

       (2) Conforming amendment.--Section 411(a) of such Code 
     (relating to general rule for minimum vesting standards) is 
     amended by striking paragraph (12).
       (b) Amendments to the Employee Retirement Income Security 
     Act of 1974.--
       (1) In general.--Paragraph (2) of section 203(a) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1053(a)(2)) is amended to read as follows:
       ``(2)(A)(i) In the case of a defined benefit plan, a plan 
     satisfies the requirements of this paragraph if it satisfies 
     the requirements of clause (ii) or (iii).
       ``(ii) A plan satisfies the requirements of this clause if 
     an employee who has completed at least 5 years of service has 
     a nonforfeitable right to 100 percent of the employee's 
     accrued benefit derived from employer contributions.
       ``(iii) A plan satisfies the requirements of this clause if 
     an employee has a nonforfeitable right to a percentage of the 
     employee's accrued benefit derived from employer 
     contributions determined under the following table:

`` Years of service:                  The nonforfeitable percentage is:
  3.................................................................20 
  4.................................................................40 
  5.................................................................60 
  6.................................................................80 
  7 or more........................................................100.

       ``(B)(i) In the case of an individual account plan, a plan 
     satisfies the requirements of this paragraph if it satisfies 
     the requirements of clause (ii) or (iii).
       ``(ii) A plan satisfies the requirements of this clause if 
     an employee who has completed at least 3 years of service has 
     a nonforfeitable right to 100 percent of the employee's 
     accrued benefit derived from employer contributions.
       ``(iii) A plan satisfies the requirements of this clause if 
     an employee has a nonforfeitable right to a percentage of the 
     employee's accrued benefit derived from employer 
     contributions determined under the following table:

``Years of service:                   The nonforfeitable percentage is:
  2.................................................................20 
  3.................................................................40 

[[Page 16391]]

  4.................................................................60 
  5.................................................................80 
  6 or more.....................................................100.''.

       (2) Conforming amendment.--Section 203(a) of such Act is 
     amended by striking paragraph (4).
       (c) Effective Dates.--
       (1) In general.--Except as provided in paragraphs (2) and 
     (4), the amendments made by this section shall apply to 
     contributions for plan years beginning after December 31, 
     2006.
       (2) Collective bargaining agreements.--In the case of a 
     plan maintained pursuant to one or more collective bargaining 
     agreements between employee representatives and one or more 
     employers ratified before the date of the enactment of this 
     Act, the amendments made by this section shall not apply to 
     contributions on behalf of employees covered by any such 
     agreement for plan years beginning before the earlier of--
       (A) the later of--
       (i) the date on which the last of such collective 
     bargaining agreements terminates (determined without regard 
     to any extension thereof on or after such date of the 
     enactment); or
       (ii) January 1, 2007; or
       (B) January 1, 2009.
       (3) Service required.--With respect to any plan, the 
     amendments made by this section shall not apply to any 
     employee before the date that such employee has 1 hour of 
     service under such plan in any plan year to which the 
     amendments made by this section apply.
       (4) Special rule for stock ownership plans.--
     Notwithstanding paragraph (1) or (2), in the case of an 
     employee stock ownership plan (as defined in section 
     4975(e)(7) of the Internal Revenue Code of 1986) which had 
     outstanding on September 26, 2005, a loan incurred for the 
     purpose of acquiring qualifying employer securities (as 
     defined in section 4975(e)(8) of such Code), the amendments 
     made by this section shall not apply to any plan year 
     beginning before the earlier of--
       (A) the date on which the loan is fully repaid, or
       (B) the date on which the loan was, as of September 26, 
     2005, scheduled to be fully repaid.

     SEC. 905. DISTRIBUTIONS DURING WORKING RETIREMENT.

       (a) Amendment to the Employee Retirement Income Security 
     Act of 1974.--Subparagraph (A) of section 3(2) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1002(2)) is amended by adding at the end the following new 
     sentence: ``A distribution from a plan, fund, or program 
     shall not be treated as made in a form other than retirement 
     income or as a distribution prior to termination of covered 
     employment solely because such distribution is made to an 
     employee who has attained age 62 and who is not separated 
     from employment at the time of such distribution.''.
       (b) Amendment to the Internal Revenue Code of 1986.--
     Subsection (a) of section 401 of the Internal Revenue Code of 
     1986 (as amended by this Act) is amended by inserting after 
     paragraph (35) the following new paragraph:
       ``(36) Distributions during working retirement.--A trust 
     forming part of a pension plan shall not be treated as 
     failing to constitute a qualified trust under this section 
     solely because the plan provides that a distribution may be 
     made from such trust to an employee who has attained age 62 
     and who is not separated from employment at the time of such 
     distribution.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions in plan years beginning after 
     December 31, 2006.

     SEC. 906. TREATMENT OF CERTAIN PENSION PLANS OF INDIAN TRIBAL 
                   GOVERNMENTS.

       (a) Definition of Government Plan to Include Certain 
     Pension Plans of Indian Tribal Governments.--
       (1) Amendment to internal revenue code of 1986.--Section 
     414(d) of the Internal Revenue Code of 1986 (defining 
     governmental plan) is amended by adding at the end the 
     following: ``The term `governmental plan' includes a plan 
     which is established and maintained by an Indian tribal 
     government (as defined in section 7701(a)(40)), a subdivision 
     of an Indian tribal government (determined in accordance with 
     section 7871(d)), or an agency or instrumentality of either, 
     and all of the participants of which are employees of such 
     entity substantially all of whose services as such an 
     employee are in the performance of essential governmental 
     functions but not in the performance of commercial activities 
     (whether or not an essential government function).''.
       (2) Amendment to employee retirement income security act of 
     1974.--
       (A) Section 3(32) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1002(32)) is amended by 
     adding at the end the following: ``The term `governmental 
     plan' includes a plan which is established and maintained by 
     an Indian tribal government (as defined in section 
     7701(a)(40) of the Internal Revenue Code of 1986), a 
     subdivision of an Indian tribal government (determined in 
     accordance with section 7871(d) of such Code), or an agency 
     or instrumentality of either, and all of the participants of 
     which are employees of such entity substantially all of whose 
     services as such an employee are in the performance of 
     essential governmental functions but not in the performance 
     of commercial activities (whether or not an essential 
     government function)''.
       (B) Section 4021(b)(2) of such Act is amended by adding at 
     the end the following: ``or which is described in the last 
     sentence of section 3(32)''.
       (b) Clarification That Tribal Governments Are Subject to 
     the Same Pension Plan Rules and Regulations Applied to State 
     and Other Local Governments and Their Police and 
     Firefighters.--
       (1) Amendments to internal revenue code of 1986.--
       (A) Police and firefighters.--Subparagraph (H) section 
     415(b)(2) of the Internal Revenue Code of 1986 (defining 
     participant) is amended--
       (i) in clause (i), by striking ``State or political 
     subdivision'' and inserting ``State, Indian tribal government 
     (as defined in section 7701(a)(40)), or any political 
     subdivision''; and
       (ii) in clause (ii)(I), by striking ``State or political 
     subdivision'' each place it appears and inserting ``State, 
     Indian tribal government (as so defined), or any political 
     subdivision''.
       (B) State and local government plans.--
       (i) In general.--Subparagraph (A) of section 415(b)(10) of 
     such Code (relating to limitation to equal accrued benefit) 
     is amended by inserting ``or a governmental plan described in 
     the last sentence of section 414(d) (relating to plans of 
     Indian tribal governments),'' after ``foregoing,''.
       (ii) Conforming amendment.--The heading of paragraph (1) of 
     section 415(b) of such Code is amended by striking ``Special 
     rule for state and'' and inserting ``Special rule for state, 
     indian tribal, and''.
       (C) Government pick up contributions.--Paragraph (2) of 
     section 414(h) of such Code (relating to designation by units 
     of government) is amended by inserting ``or a governmental 
     plan described in the last sentence of section 414(d) 
     (relating to plans of Indian tribal governments),'' after 
     ``foregoing,''.
       (2) Amendments to employee retirement income security act 
     of 1974.--Section 4021(b) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1321(b)) is amended--
       (A) in paragraph (12), by striking ``or'' at the end;
       (B) in paragraph (13), by striking ``plan.'' and inserting 
     ``plan; or''; and
       (C) by adding at the end the following:
       ``(14) established and maintained by an Indian tribal 
     government (as defined in section 7701(a)(40) of the Internal 
     Revenue Code of 1986), a subdivision of an Indian tribal 
     government (determined in accordance with section 7871(d) of 
     such Code), or an agency or instrumentality of either, and 
     all of the participants of which are employees of such entity 
     substantially all of whose services as such an employee are 
     in the performance of essential governmental functions but 
     not in the performance of commercial activities (whether or 
     not an essential government function).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to any year beginning on or after the date of the 
     enactment of this Act.

       TITLE X--PROVISIONS RELATING TO SPOUSAL PENSION PROTECTION

     SEC. 1001. REGULATIONS ON TIME AND ORDER OF ISSUANCE OF 
                   DOMESTIC RELATIONS ORDERS.

       Not later than 1 year after the date of the enactment of 
     this Act, the Secretary of Labor shall issue regulations 
     under section 206(d)(3) of the Employee Retirement Security 
     Act of 1974 and section 414(p) of the Internal Revenue Code 
     of 1986 which clarify that--
       (1) a domestic relations order otherwise meeting the 
     requirements to be a qualified domestic relations order, 
     including the requirements of section 206(d)(3)(D) of such 
     Act and section 414(p)(3) of such Code, shall not fail to be 
     treated as a qualified domestic relations order solely 
     because--
       (A) the order is issued after, or revises, another domestic 
     relations order or qualified domestic relations order; or
       (B) of the time at which it is issued; and
       (2) any order described in paragraph (1) shall be subject 
     to the same requirements and protections which apply to 
     qualified domestic relations orders, including the provisions 
     of section 206(d)(3)(H) of such Act and section 414(p)(7) of 
     such Code.

     SEC. 1002. ENTITLEMENT OF DIVORCED SPOUSES TO RAILROAD 
                   RETIREMENT ANNUITIES INDEPENDENT OF ACTUAL 
                   ENTITLEMENT OF EMPLOYEE.

       (a) In General.--Section 2 of the Railroad Retirement Act 
     of 1974 (45 U.S.C. 231a) is amended--
       (1) in subsection (c)(4)(i), by striking ``(A) is entitled 
     to an annuity under subsection (a)(1) and (B)''; and
       (2) in subsection (e)(5), by striking ``or divorced wife'' 
     the second place it appears.
       (b) Effective Date.--The amendments made by this section 
     shall take effect 1 year after the date of the enactment of 
     this Act.

[[Page 16392]]



     SEC. 1003. EXTENSION OF TIER II RAILROAD RETIREMENT BENEFITS 
                   TO SURVIVING FORMER SPOUSES PURSUANT TO DIVORCE 
                   AGREEMENTS.

       (a) In General.--Section 5 of the Railroad Retirement Act 
     of 1974 (45 U.S.C. 231d) is amended by adding at the end the 
     following:
       ``(d) Notwithstanding any other provision of law, the 
     payment of any portion of an annuity computed under section 
     3(b) to a surviving former spouse in accordance with a court 
     decree of divorce, annulment, or legal separation or the 
     terms of any court-approved property settlement incident to 
     any such court decree shall not be terminated upon the death 
     of the individual who performed the service with respect to 
     which such annuity is so computed unless such termination is 
     otherwise required by the terms of such court decree.''
       (b) Effective Date.--The amendment made by this section 
     shall take effect 1 year after the date of the enactment of 
     this Act.

     SEC. 1004. REQUIREMENT FOR ADDITIONAL SURVIVOR ANNUITY 
                   OPTION.

       (a) Amendments to Internal Revenue Code.--
       (1) Election of survivor annuity.--Section 417(a)(1)(A) of 
     the Internal Revenue Code of 1986 is amended--
       (A) in clause (i), by striking ``, and'' and inserting a 
     comma;
       (B) by redesignating clause (ii) as clause (iii); and
       (C) by inserting after clause (i) the following:
       ``(ii) if the participant elects a waiver under clause (i), 
     may elect the qualified optional survivor annuity at any time 
     during the applicable election period, and''.
       (2) Definition.--Section 417 of such Code is amended by 
     adding at the end the following:
       ``(g) Definition of Qualified Optional Survivor Annuity.--
       ``(1) In general.--For purposes of this section, the term 
     `qualified optional survivor annuity' means an annuity--
       ``(A) for the life of the participant with a survivor 
     annuity for the life of the spouse which is equal to the 
     applicable percentage of the amount of the annuity which is 
     payable during the joint lives of the participant and the 
     spouse, and
       ``(B) which is the actuarial equivalent of a single annuity 
     for the life of the participant.
     Such term also includes any annuity in a form having the 
     effect of an annuity described in the preceding sentence.
       ``(2) Applicable percentage.--
       ``(A) In general.--For purposes of paragraph (1), if the 
     survivor annuity percentage--
       ``(i) is less than 75 percent, the applicable percentage is 
     75 percent, and
       ``(ii) is greater than or equal to 75 percent, the 
     applicable percentage is 50 percent.
       ``(B) Survivor annuity percentage.--For purposes of 
     subparagraph (A), the term `survivor annuity percentage' 
     means the percentage which the survivor annuity under the 
     plan's qualified joint and survivor annuity bears to the 
     annuity payable during the joint lives of the participant and 
     the spouse.''.
       (3) Notice.--Section 417(a)(3)(A)(i) of such Code is 
     amended by inserting ``and of the qualified optional survivor 
     annuity'' after ``annuity''.
       (b) Amendments to ERISA.--
       (1) Election of survivor annuity.--Section 205(c)(1)(A) of 
     the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1055(c)(1)(A)) is amended--
       (A) in clause (i), by striking ``, and'' and inserting a 
     comma;
       (B) by redesignating clause (ii) as clause (iii); and
       (C) by inserting after clause (i) the following:
       ``(ii) if the participant elects a waiver under clause (i), 
     may elect the qualified optional survivor annuity at any time 
     during the applicable election period, and''.
       (2) Definition.--Section 205(d) of such Act (29 U.S.C. 
     1055(d)) is amended--
       (A) by inserting ``(1)'' after ``(d)'';
       (B) by redesignating paragraphs (1) and (2) as 
     subparagraphs (A) and (B), respectively; and
       (C) by adding at the end the following:
       ``(2)(A) For purposes of this section, the term `qualified 
     optional survivor annuity' means an annuity--
       ``(i) for the life of the participant with a survivor 
     annuity for the life of the spouse which is equal to the 
     applicable percentage of the amount of the annuity which is 
     payable during the joint lives of the participant and the 
     spouse, and
       ``(ii) which is the actuarial equivalent of a single 
     annuity for the life of the participant.
     Such term also includes any annuity in a form having the 
     effect of an annuity described in the preceding sentence.
       ``(B)(i) For purposes of subparagraph (A), if the survivor 
     annuity percentage--
       ``(I) is less than 75 percent, the applicable percentage is 
     75 percent, and
       ``(II) is greater than or equal to 75 percent, the 
     applicable percentage is 50 percent.
       ``(ii) For purposes of clause (i), the term `survivor 
     annuity percentage' means the percentage which the survivor 
     annuity under the plan's qualified joint and survivor annuity 
     bears to the annuity payable during the joint lives of the 
     participant and the spouse.''.
       (3) Notice.--Section 205(c)(3)(A)(i) of such Act (29 U.S.C. 
     1055(c)(3)(A)(i)) is amended by inserting ``and of the 
     qualified optional survivor annuity'' after ``annuity''.
       (c) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to plan years beginning after December 31, 2007.
       (2) Special rule for collectively bargained plans.--In the 
     case of a plan maintained pursuant to 1 or more collective 
     bargaining agreements between employee representatives and 1 
     or more employers ratified on or before the date of the 
     enactment of this Act, the amendments made by this section 
     shall not apply to plan years beginning before the earlier 
     of--
       (A) the later of--
       (i) January 1, 2008, or
       (ii) the date on which the last collective bargaining 
     agreement related to the plan terminates (determined without 
     regard to any extension thereof after the date of enactment 
     of this Act), or
       (B) January 1, 2009.

                  TITLE XI--ADMINISTRATIVE PROVISIONS

     SEC. 1101. EMPLOYEE PLANS COMPLIANCE RESOLUTION SYSTEM.

       (a) In General.--The Secretary of the Treasury shall have 
     full authority to establish and implement the Employee Plans 
     Compliance Resolution System (or any successor program) and 
     any other employee plans correction policies, including the 
     authority to waive income, excise, or other taxes to ensure 
     that any tax, penalty, or sanction is not excessive and bears 
     a reasonable relationship to the nature, extent, and severity 
     of the failure.
       (b) Improvements.--The Secretary of the Treasury shall 
     continue to update and improve the Employee Plans Compliance 
     Resolution System (or any successor program), giving special 
     attention to--
       (1) increasing the awareness and knowledge of small 
     employers concerning the availability and use of the program;
       (2) taking into account special concerns and circumstances 
     that small employers face with respect to compliance and 
     correction of compliance failures;
       (3) extending the duration of the self-correction period 
     under the Self-Correction Program for significant compliance 
     failures;
       (4) expanding the availability to correct insignificant 
     compliance failures under the Self-Correction Program during 
     audit; and
       (5) assuring that any tax, penalty, or sanction that is 
     imposed by reason of a compliance failure is not excessive 
     and bears a reasonable relationship to the nature, extent, 
     and severity of the failure.

     SEC. 1102. NOTICE AND CONSENT PERIOD REGARDING DISTRIBUTIONS.

       (a) Expansion of Period.--
       (1) Amendment of internal revenue code.--
       (A) In general.--Section 417(a)(6)(A) of the Internal 
     Revenue Code of 1986 is amended by striking ``90-day'' and 
     inserting ``180-day''.
       (B) Modification of regulations.--The Secretary of the 
     Treasury shall modify the regulations under sections 402(f), 
     411(a)(11), and 417 of the Internal Revenue Code of 1986 by 
     substituting ``180 days'' for ``90 days'' each place it 
     appears in Treasury Regulations sections 1.402(f)-1, 
     1.411(a)-11(c), and 1.417(e)-1(b).
       (2) Amendment of erisa.--
       (A) In general.--Section 205(c)(7)(A) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 
     1055(c)(7)(A)) is amended by striking ``90-day'' and 
     inserting ``180-day''.
       (B) Modification of regulations.--The Secretary of the 
     Treasury shall modify the regulations under part 2 of 
     subtitle B of title I of the Employee Retirement Income 
     Security Act of 1974 relating to sections 203(e) and 205 of 
     such Act by substituting ``180 days'' for ``90 days'' each 
     place it appears.
       (3) Effective date.--The amendments and modifications made 
     or required by this subsection shall apply to years beginning 
     after December 31, 2006.
       (b) Notification of Right To Defer.--
       (1) In general.--The Secretary of the Treasury shall modify 
     the regulations under section 411(a)(11) of the Internal 
     Revenue Code of 1986 and under section 205 of the Employee 
     Retirement Income Security Act of 1974 to provide that the 
     description of a participant's right, if any, to defer 
     receipt of a distribution shall also describe the 
     consequences of failing to defer such receipt.
       (2) Effective date.--
       (A) In general.--The modifications required by paragraph 
     (1) shall apply to years beginning after December 31, 2006.
       (B) Reasonable notice.--A plan shall not be treated as 
     failing to meet the requirements of section 411(a)(11) of 
     such Code or section 205 of such Act with respect to any 
     description of consequences described in paragraph (1) made 
     within 90 days after the Secretary of the Treasury issues the 
     modifications required by paragraph (1) if the plan 
     administrator makes a reasonable attempt to comply with such 
     requirements.

     SEC. 1103. REPORTING SIMPLIFICATION.

       (a) Simplified Annual Filing Requirement for Owners and 
     Their Spouses.--
       (1) In general.--The Secretary of the Treasury shall modify 
     the requirements for filing annual returns with respect to 
     one-participant retirement plans to ensure that such plans 
     with assets of $250,000 or less as of

[[Page 16393]]

     the close of the plan year need not file a return for that 
     year.
       (2) One-participant retirement plan defined.--For purposes 
     of this subsection, the term ``one-participant retirement 
     plan'' means a retirement plan with respect to which the 
     following requirements are met:
       (A) on the first day of the plan year--
       (i) the plan covered only one individual (or the individual 
     and the individual's spouse) and the individual owned 100 
     percent of the plan sponsor (whether or not incorporated), or
       (ii) the plan covered only one or more partners (or 
     partners and their spouses) in the plan sponsor;
       (B) the plan meets the minimum coverage requirements of 
     section 410(b) of the Internal Revenue Code of 1986 without 
     being combined with any other plan of the business that 
     covers the employees of the business;
       (C) the plan does not provide benefits to anyone except the 
     individual (and the individual's spouse) or the partners (and 
     their spouses);
       (D) the plan does not cover a business that is a member of 
     an affiliated service group, a controlled group of 
     corporations, or a group of businesses under common control; 
     and
       (E) the plan does not cover a business that uses the 
     services of leased employees (within the meaning of section 
     414(n) of such Code).

     For purposes of this paragraph, the term ``partner'' includes 
     a 2-percent shareholder (as defined in section 1372(b) of 
     such Code) of an S corporation.
       (3) Other definitions.--Terms used in paragraph (2) which 
     are also used in section 414 of the Internal Revenue Code of 
     1986 shall have the respective meanings given such terms by 
     such section.
       (4) Effective date.--The provisions of this subsection 
     shall apply to plan years beginning on or after January 1, 
     2007.
       (b) Simplified Annual Filing Requirement for Plans With 
     Fewer Than 25 Participants.--In the case of plan years 
     beginning after December 31, 2006, the Secretary of the 
     Treasury and the Secretary of Labor shall provide for the 
     filing of a simplified annual return for any retirement plan 
     which covers less than 25 participants on the first day of a 
     plan year and which meets the requirements described in 
     subparagraphs (B), (D), and (E) of subsection (a)(2).

     SEC. 1104. VOLUNTARY EARLY RETIREMENT INCENTIVE AND 
                   EMPLOYMENT RETENTION PLANS MAINTAINED BY LOCAL 
                   EDUCATIONAL AGENCIES AND OTHER ENTITIES.

       (a) Voluntary Early Retirement Incentive Plans.--
       (1) Treatment as plan providing severance pay.--Section 
     457(e)(11) of the Internal Revenue Code of 1986 (relating to 
     certain plans excluded) is amended by adding at the end the 
     following new subparagraph:
       ``(D) Certain voluntary early retirement incentive plans.--
       ``(i) In general.--If an applicable voluntary early 
     retirement incentive plan--

       ``(I) makes payments or supplements as an early retirement 
     benefit, a retirement-type subsidy, or a benefit described in 
     the last sentence of section 411(a)(9), and
       ``(II) such payments or supplements are made in 
     coordination with a defined benefit plan which is described 
     in section 401(a) and includes a trust exempt from tax under 
     section 501(a) and which is maintained by an eligible 
     employer described in paragraph (1)(A) or by an education 
     association described in clause (ii)(II),

     such applicable plan shall be treated for purposes of 
     subparagraph (A)(i) as a bona fide severance pay plan with 
     respect to such payments or supplements to the extent such 
     payments or supplements could otherwise have been provided 
     under such defined benefit plan (determined as if section 411 
     applied to such defined benefit plan).
       ``(ii) Applicable voluntary early retirement incentive 
     plan.--For purposes of this subparagraph, the term 
     `applicable voluntary early retirement incentive plan' means 
     a voluntary early retirement incentive plan maintained by--

       ``(I) a local educational agency (as defined in section 
     9101 of the Elementary and Secondary Education Act of 1965 
     (20 U.S.C. 7801)), or
       ``(II) an education association which principally 
     represents employees of 1 or more agencies described in 
     subclause (I) and which is described in section 501(c) (5) or 
     (6) and exempt from tax under section 501(a).''

       (2) Age discrimination in employment act.--Section 4(l)(1) 
     of the Age Discrimination in Employment Act of 1967 (29 
     U.S.C. 623(l)(1)) is amended--
       (A) by inserting ``(A)'' after ``(1)'',
       (B) by redesignating subparagraphs (A) and (B) as clauses 
     (i) and (ii), respectively,
       (C) by redesignating clauses (i) and (ii) of subparagraph 
     (B) (as in effect before the amendments made by subparagraph 
     (B)) as subclauses (I) and (II), respectively, and
       (D) by adding at the end the following:
       ``(B) A voluntary early retirement incentive plan that--
       ``(i) is maintained by--
       ``(I) a local educational agency (as defined in section 
     9101 of the Elementary and Secondary Education Act of 1965 
     (20 U.S.C. 7801), or
       ``(II) an education association which principally 
     represents employees of 1 or more agencies described in 
     subclause (I) and which is described in section 501(c) (5) or 
     (6) of the Internal Revenue Code of 1986 and exempt from 
     taxation under section 501(a) of such Code, and
       ``(ii) makes payments or supplements described in 
     subclauses (I) and (II) of subparagraph (A)(ii) in 
     coordination with a defined benefit plan (as so defined) 
     maintained by an eligible employer described in section 
     457(e)(1)(A) of such Code or by an education association 
     described in clause (i)(II),

     shall be treated solely for purposes of subparagraph (A)(ii) 
     as if it were a part of the defined benefit plan with respect 
     to such payments or supplements. Payments or supplements 
     under such a voluntary early retirement incentive plan shall 
     not constitute severance pay for purposes of paragraph 
     (2).''.
       (b) Employment Retention Plans.--
       (1) In general.--Section 457(f)(2) of the Internal Revenue 
     Code of 1986 (relating to exceptions) is amended by striking 
     ``and'' at the end of subparagraph (D), by striking the 
     period at the end of subparagraph (E) and inserting ``, 
     and'', and by adding at the end the following:
       ``(F) that portion of any applicable employment retention 
     plan described in paragraph (4) with respect to any 
     participant.''
       (2) Definitions and rules relating to employment retention 
     plans.--Section 457(f) of such Code is amended by adding at 
     the end the following new paragraph:
       ``(4) Employment retention plans.--For purposes of 
     paragraph (2)(F)--
       ``(A) In general.--The portion of an applicable employment 
     retention plan described in this paragraph with respect to 
     any participant is that portion of the plan which provides 
     benefits payable to the participant not in excess of twice 
     the applicable dollar limit determined under subsection 
     (e)(15).
       ``(B) Other rules.--
       ``(i) Limitation.--Paragraph (2)(F) shall only apply to the 
     portion of the plan described in subparagraph (A) for years 
     preceding the year in which such portion is paid or otherwise 
     made available to the participant.
       ``(ii) Treatment.--A plan shall not be treated for purposes 
     of this title as providing for the deferral of compensation 
     for any year with respect to the portion of the plan 
     described in subparagraph (A).
       ``(C) Applicable employment retention plan.--The term 
     `applicable employment retention plan' means an employment 
     retention plan maintained by--
       ``(i) a local educational agency (as defined in section 
     9101 of the Elementary and Secondary Education Act of 1965 
     (20 U.S.C. 7801), or
       ``(ii) an education association which principally 
     represents employees of 1 or more agencies described in 
     clause (i) and which is described in section 501(c) (5) or 
     (6) and exempt from taxation under section 501(a).
       ``(D) Employment retention plan.--The term `employment 
     retention plan' means a plan to pay, upon termination of 
     employment, compensation to an employee of a local 
     educational agency or education association described in 
     subparagraph (C) for purposes of--
       ``(i) retaining the services of the employee, or
       ``(ii) rewarding such employee for the employee's service 
     with 1 or more such agencies or associations.''.
       (c) Coordination With ERISA.--Section 3(2)(B) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1002(2)(B)) is amended by adding at the end the following: 
     ``An applicable voluntary early retirement incentive plan (as 
     defined in section 457(e)(11)(D)(ii) of the Internal Revenue 
     Code of 1986) making payments or supplements described in 
     section 457(e)(11)(D)(i) of such Code, and an applicable 
     employment retention plan (as defined in section 457(f)(4)(C) 
     of such Code) making payments of benefits described in 
     section 457(f)(4)(A) of such Code, shall, for purposes of 
     this title, be treated as a welfare plan (and not a pension 
     plan) with respect to such payments and supplements.''
       (d) Effective Dates.--
       (1) In general.--The amendments made by this Act shall take 
     effect on the date of the enactment of this Act.
       (2) Tax amendments.--The amendments made by subsections 
     (a)(1) and (b) shall apply to taxable years ending after the 
     date of the enactment of this Act.
       (3) ERISA amendments.--The amendment made by subsection (c) 
     shall apply to plan years ending after the date of the 
     enactment of this Act.
       (4) Construction.--Nothing in the amendments made by this 
     section shall alter or affect the construction of the 
     Internal Revenue Code of 1986, the Employee Retirement Income 
     Security Act of 1974, or the Age Discrimination in Employment 
     Act of 1967 as applied to any plan, arrangement, or conduct 
     to which such amendments do not apply.

     SEC. 1105. NO REDUCTION IN UNEMPLOYMENT COMPENSATION AS A 
                   RESULT OF PENSION ROLLOVERS.

       (a) In General.--Section 3304(a) of the Internal Revenue 
     Code of 1986 (relating to requirements for State unemployment 
     laws) is amended by adding at the end the following new flush 
     sentence:

     ``Compensation shall not be reduced under paragraph (15) for 
     any pension, retirement or

[[Page 16394]]

     retired pay, annuity, or similar payment which is not 
     includible in gross income of the individual for the taxable 
     year in which paid because it was part of a rollover 
     distribution.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to weeks beginning on or after the date of the 
     enactment of this Act.

     SEC. 1106. REVOCATION OF ELECTION RELATING TO TREATMENT AS 
                   MULTIEMPLOYER PLAN.

       (a) Amendment to ERISA.--Section 3(37) of the Employee 
     Retirement Income Security Act of 1974 is amended by adding 
     at the end the following new subparagraph (G):
       ``(G)(i) Within 1 year after the enactment of the Pension 
     Protection Act of 2006--
       ``(I) an election under subparagraph (E) may be revoked, 
     pursuant to procedures prescribed by the Pension Benefit 
     Guaranty Corporation, if, for each of the 3 plan years prior 
     to the date of the enactment of that Act, the plan would have 
     been a multiemployer plan but for the election under 
     subparagraph (E), and
       ``(II) a plan that meets the criteria in clauses (i) and 
     (ii) of subparagraph (A) of this paragraph or that is 
     described in clause (vi) may, pursuant to procedures 
     prescribed by the Pension Benefit Guaranty Corporation, elect 
     to be a multiemployer plan, if--
       ``(aa) for each of the 3 plan years immediately before the 
     date of the enactment of the Pension Protection Act of 2006, 
     the plan has met those criteria or is so described,
       ``(bb) substantially all of the plan's employer 
     contributions for each of those plan years were made or 
     required to be made by organizations that were exempt from 
     tax under section 501 of the Internal Revenue Code of 1986, 
     and
       ``(cc) the plan was established prior to September 2, 1974.
       ``(ii) An election under this paragraph shall be effective 
     for all purposes under this Act and under the Internal 
     Revenue Code of 1986, starting with the first plan year 
     ending after the date of the enactment of the Pension 
     Protection Act of 2006.
       ``(iii) Once made, an election under this paragraph shall 
     be irrevocable, except that a plan described in subclause 
     (i)(II) shall cease to be a multiemployer plan as of the plan 
     year beginning immediately after the first plan year for 
     which the majority of its employer contributions were made or 
     required to be made by organizations that were not exempt 
     from tax under section 501 of the Internal Revenue Code of 
     1986.
       ``(iv) The fact that a plan makes an election under clause 
     (i)(II) does not imply that the plan was not a multiemployer 
     plan prior to the date of the election or would not be a 
     multiemployer plan without regard to the election.
       ``(v)(I) No later than 30 days before an election is made 
     under this paragraph, the plan administrator shall provide 
     notice of the pending election to each plan participant and 
     beneficiary, each labor organization representing such 
     participants or beneficiaries, and each employer that has an 
     obligation to contribute to the plan, describing the 
     principal differences between the guarantee programs under 
     title IV and the benefit restrictions under this title for 
     single employer and multiemployer plans, along with such 
     other information as the plan administrator chooses to 
     include.
       ``(II) Within 180 days after the date of enactment of the 
     Pension Protection Act of 2006, the Secretary shall prescribe 
     a model notice under this subparagraph.
       ``(III) A plan administrator's failure to provide the 
     notice required under this subparagraph shall be treated for 
     purposes of section 502(c)(2) as a failure or refusal by the 
     plan administrator to file the annual report required to be 
     filed with the Secretary under section 101(b)(4).
       ``(vi) A plan is described in this clause if it is a plan--
       ``(I) that was established in Chicago, Illinois, on August 
     12, 1881; and
       ``(II) sponsored by an organization described in section 
     501(c)(5) of the Internal Revenue Code of 1986 and exempt 
     from tax under section 501(a) of such Code.''.
       (b) Amendment to Internal Revenue Code.--Subsection (f) of 
     section 414 of the Internal Revenue Code of 1986 is amended 
     by adding at the end the following new paragraph (6):
       ``(6) Election with regard to multiemployer status.--
       ``(A) Within 1 year after the enactment of the Pension 
     Protection Act of 2006--
       ``(i) An election under paragraph (5) may be revoked, 
     pursuant to procedures prescribed by the Pension Benefit 
     Guaranty Corporation, if, for each of the 3 plan years prior 
     to the date of the enactment of that Act, the plan would have 
     been a multiemployer plan but for the election under 
     paragraph (5), and
       ``(ii) a plan that meets the criteria in subparagraph (A) 
     and (B) of paragraph (1) of this subsection or that is 
     described in subparagraph (E) may, pursuant to procedures 
     prescribed by the Pension Benefit Guaranty Corporation, elect 
     to be a multiemployer plan, if--

       ``(I) for each of the 3 plan years immediately before the 
     date of enactment of the Pension Protection Act of 2006, the 
     plan has met those criteria or is so described,
       ``(II) substantially all of the plan's employer 
     contributions for each of those plan years were made or 
     required to be made by organizations that were exempt from 
     tax under section 501, and
       ``(III) the plan was established prior to September 2, 
     1974.

       ``(B) An election under this paragraph shall be effective 
     for all purposes under this Act and under the Employee 
     Retirement Income Security Act of 1974, starting with the 
     first plan year ending after the date of the enactment of the 
     Pension Protection Act of 2006.
       ``(C) Once made, an election under this paragraph shall be 
     irrevocable, except that a plan described in subparagraph 
     (A)(ii) shall cease to be a multiemployer plan as of the plan 
     year beginning immediately after the first plan year for 
     which the majority of its employer contributions were made or 
     required to be made by organizations that were not exempt 
     from tax under section 501.
       ``(D) The fact that a plan makes an election under 
     subparagraph (A)(ii) does not imply that the plan was not a 
     multiemployer plan prior to the date of the election or would 
     not be a multiemployer plan without regard to the election.
       ``(E) A plan is described in this subparagraph if it is a 
     plan--
       ``(i) that was established in Chicago, Illinois, on August 
     12, 1881; and
       ``(ii) sponsored by an organization described in section 
     501(c)(5) and exempt from tax under section 501(a).''.

     SEC. 1107. PROVISIONS RELATING TO PLAN AMENDMENTS.

       (a) In General.--If this section applies to any pension 
     plan or contract amendment--
       (1) such pension plan or contract shall be treated as being 
     operated in accordance with the terms of the plan during the 
     period described in subsection (b)(2)(A), and
       (2) except as provided by the Secretary of the Treasury, 
     such pension plan shall not fail to meet the requirements of 
     section 411(d)(6) of the Internal Revenue Code of 1986 and 
     section 204(g) of the Employee Retirement Income Security Act 
     of 1974 by reason of such amendment.
       (b) Amendments to Which Section Applies.--
       (1) In general.--This section shall apply to any amendment 
     to any pension plan or annuity contract which is made--
       (A) pursuant to any amendment made by this Act or pursuant 
     to any regulation issued by the Secretary of the Treasury or 
     the Secretary of Labor under this Act, and
       (B) on or before the last day of the first plan year 
     beginning on or after January 1, 2009.

     In the case of a governmental plan (as defined in section 
     414(d) of the Internal Revenue Code of 1986), this paragraph 
     shall be applied by substituting ``2011'' for ``2009''.
       (2) Conditions.--This section shall not apply to any 
     amendment unless--
       (A) during the period--
       (i) beginning on the date the legislative or regulatory 
     amendment described in paragraph (1)(A) takes effect (or in 
     the case of a plan or contract amendment not required by such 
     legislative or regulatory amendment, the effective date 
     specified by the plan), and
       (ii) ending on the date described in paragraph (1)(B) (or, 
     if earlier, the date the plan or contract amendment is 
     adopted), the plan or contract is operated as if such plan or 
     contract amendment were in effect; and
       (B) such plan or contract amendment applies retroactively 
     for such period.

         TITLE XII--PROVISIONS RELATING TO EXEMPT ORGANIZATIONS

                Subtitle A--Charitable Giving Incentives

     SEC. 1201. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT 
                   PLANS FOR CHARITABLE PURPOSES.

       (a) In General.--Subsection (d) of section 408 (relating to 
     individual retirement accounts) is amended by adding at the 
     end the following new paragraph:
       ``(8) Distributions for charitable purposes.--
       ``(A) In general.--So much of the aggregate amount of 
     qualified charitable distributions with respect to a taxpayer 
     made during any taxable year which does not exceed $100,000 
     shall not be includible in gross income of such taxpayer for 
     such taxable year.
       ``(B) Qualified charitable distribution.--For purposes of 
     this paragraph, the term `qualified charitable distribution' 
     means any distribution from an individual retirement plan 
     (other than a plan described in subsection (k) or (p))--
       ``(i) which is made directly by the trustee to an 
     organization described in section 170(b)(1)(A) (other than 
     any organization described in section 509(a)(3) or any fund 
     or account described in section 4966(d)(2)), and
       ``(ii) which is made on or after the date that the 
     individual for whose benefit the plan is maintained has 
     attained age 70\1/2\.

     A distribution shall be treated as a qualified charitable 
     distribution only to the extent that the distribution would 
     be includible in gross income without regard to subparagraph 
     (A).
       ``(C) Contributions must be otherwise deductible.--For 
     purposes of this paragraph, a distribution to an organization 
     described in subparagraph (B)(i) shall be treated as a 
     qualified charitable distribution only if a deduction for the 
     entire distribution would be

[[Page 16395]]

     allowable under section 170 (determined without regard to 
     subsection (b) thereof and this paragraph).
       ``(D) Application of section 72.--Notwithstanding section 
     72, in determining the extent to which a distribution is a 
     qualified charitable distribution, the entire amount of the 
     distribution shall be treated as includible in gross income 
     without regard to subparagraph (A) to the extent that such 
     amount does not exceed the aggregate amount which would have 
     been so includible if all amounts distributed from all 
     individual retirement plans were treated as 1 contract under 
     paragraph (2)(A) for purposes of determining the inclusion of 
     such distribution under section 72. Proper adjustments shall 
     be made in applying section 72 to other distributions in such 
     taxable year and subsequent taxable years.
       ``(E) Denial of deduction.--Qualified charitable 
     distributions which are not includible in gross income 
     pursuant to subparagraph (A) shall not be taken into account 
     in determining the deduction under section 170.
       ``(F) Termination.--This paragraph shall not apply to 
     distributions made in taxable years beginning after December 
     31, 2007.''.
       (b) Modifications Relating to Information Returns by 
     Certain Trusts.--
       (1) Returns.--Section 6034 (relating to returns by trusts 
     described in section 4947(a)(2) or claiming charitable 
     deductions under section 642(c)) is amended to read as 
     follows:

     ``SEC. 6034. RETURNS BY CERTAIN TRUSTS.

       ``(a) Split-Interest Trusts.--Every trust described in 
     section 4947(a)(2) shall furnish such information with 
     respect to the taxable year as the Secretary may by forms or 
     regulations require.
       ``(b) Trusts Claiming Certain Charitable Deductions.--
       ``(1) In general.--Every trust not required to file a 
     return under subsection (a) but claiming a deduction under 
     section 642(c) for the taxable year shall furnish such 
     information with respect to such taxable year as the 
     Secretary may by forms or regulations prescribe, including--
       ``(A) the amount of the deduction taken under section 
     642(c) within such year,
       ``(B) the amount paid out within such year which represents 
     amounts for which deductions under section 642(c) have been 
     taken in prior years,
       ``(C) the amount for which such deductions have been taken 
     in prior years but which has not been paid out at the 
     beginning of such year,
       ``(D) the amount paid out of principal in the current and 
     prior years for the purposes described in section 642(c),
       ``(E) the total income of the trust within such year and 
     the expenses attributable thereto, and
       ``(F) a balance sheet showing the assets, liabilities, and 
     net worth of the trust as of the beginning of such year.
       ``(2) Exceptions.--Paragraph (1) shall not apply to a trust 
     for any taxable year if--
       ``(A) all the net income for such year, determined under 
     the applicable principles of the law of trusts, is required 
     to be distributed currently to the beneficiaries, or
       ``(B) the trust is described in section 4947(a)(1).''.
       (2) Increase in penalty relating to filing of information 
     return by split-interest trusts.--Paragraph (2) of section 
     6652(c) (relating to returns by exempt organizations and by 
     certain trusts) is amended by adding at the end the following 
     new subparagraph:
       ``(C) Split-interest trusts.--In the case of a trust which 
     is required to file a return under section 6034(a), 
     subparagraphs (A) and (B) of this paragraph shall not apply 
     and paragraph (1) shall apply in the same manner as if such 
     return were required under section 6033, except that--
       ``(i) the 5 percent limitation in the second sentence of 
     paragraph (1)(A) shall not apply,
       ``(ii) in the case of any trust with gross income in excess 
     of $250,000, the first sentence of paragraph (1)(A) shall be 
     applied by substituting `$100' for `$20', and the second 
     sentence thereof shall be applied by substituting `$50,000' 
     for `$10,000', and
       ``(iii) the third sentence of paragraph (1)(A) shall be 
     disregarded.

     In addition to any penalty imposed on the trust pursuant to 
     this subparagraph, if the person required to file such return 
     knowingly fails to file the return, such penalty shall also 
     be imposed on such person who shall be personally liable for 
     such penalty.''.
       (3) Confidentiality of noncharitable beneficiaries.--
     Subsection (b) of section 6104 (relating to inspection of 
     annual information returns) is amended by adding at the end 
     the following new sentence: ``In the case of a trust which is 
     required to file a return under section 6034(a), this 
     subsection shall not apply to information regarding 
     beneficiaries which are not organizations described in 
     section 170(c).''.
       (4) Clerical amendment.--The item in the table of sections 
     for subpart A of part III of subchapter A of chapter 61 
     relating to section 6034 is amended to read as follows:

``Sec. 6034. Returns by certain trusts.''.
       (c) Effective Dates.--
       (1) Subsection (a).--The amendment made by subsection (a) 
     shall apply to distributions made in taxable years beginning 
     after December 31, 2005.
       (2) Subsection (b).--The amendments made by subsection (b) 
     shall apply to returns for taxable years beginning after 
     December 31, 2006.

     SEC. 1202. EXTENSION OF MODIFICATION OF CHARITABLE DEDUCTION 
                   FOR CONTRIBUTIONS OF FOOD INVENTORY.

       (a) In General.--Section 170(e)(3)(C)(iv) (relating to 
     termination) is amended by striking ``2005'' and inserting 
     ``2007''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions made after December 31, 2005.

     SEC. 1203. BASIS ADJUSTMENT TO STOCK OF S CORPORATION 
                   CONTRIBUTING PROPERTY.

       (a) In General.--Paragraph (2) of section 1367(a) (relating 
     to adjustments to basis of stock of shareholders, etc.) is 
     amended by adding at the end the following new flush 
     sentence:

     ``The decrease under subparagraph (B) by reason of a 
     charitable contribution (as defined in section 170(c)) of 
     property shall be the amount equal to the shareholder's pro 
     rata share of the adjusted basis of such property. The 
     preceding sentence shall not apply to contributions made in 
     taxable years beginning after December 31, 2007.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions made in taxable years beginning 
     after December 31, 2005.

     SEC. 1204. EXTENSION OF MODIFICATION OF CHARITABLE DEDUCTION 
                   FOR CONTRIBUTIONS OF BOOK INVENTORY.

       (a) In General.--Section 170(e)(3)(D)(iv) (relating to 
     termination) is amended by striking ``2005'' and inserting 
     ``2007''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions made after December 31, 2005.

     SEC. 1205. MODIFICATION OF TAX TREATMENT OF CERTAIN PAYMENTS 
                   TO CONTROLLING EXEMPT ORGANIZATIONS.

       (a) In General.--Paragraph (13) of section 512(b) (relating 
     to special rules for certain amounts received from controlled 
     entities) is amended by redesignating subparagraph (E) as 
     subparagraph (F) and by inserting after subparagraph (D) the 
     following new subparagraph:
       ``(E) Paragraph to apply only to certain excess payments.--
       ``(i) In general.--Subparagraph (A) shall apply only to the 
     portion of a qualifying specified payment received or accrued 
     by the controlling organization that exceeds the amount which 
     would have been paid or accrued if such payment met the 
     requirements prescribed under section 482.
       ``(ii) Addition to tax for valuation misstatements.--The 
     tax imposed by this chapter on the controlling organization 
     shall be increased by an amount equal to 20 percent of the 
     larger of--

       ``(I) such excess determined without regard to any 
     amendment or supplement to a return of tax, or
       ``(II) such excess determined with regard to all such 
     amendments and supplements.

       ``(iii) Qualifying specified payment.--The term `qualifying 
     specified payment' means a specified payment which is made 
     pursuant to--

       ``(I) a binding written contract in effect on the date of 
     the enactment of this subparagraph, or
       ``(II) a contract which is a renewal, under substantially 
     similar terms, of a contract described in subclause (I).

       ``(iv) Termination.--This subparagraph shall not apply to 
     payments received or accrued after December 31, 2007.''.
       (b) Reporting.--
       (1) In general.--Section 6033 (relating to returns by 
     exempt organizations) is amended by redesignating subsection 
     (h) as subsection (i) and by inserting after subsection (g) 
     the following new subsection:
       ``(h) Controlling Organizations.--Each controlling 
     organization (within the meaning of section 512(b)(13)) which 
     is subject to the requirements of subsection (a) shall 
     include on the return required under subsection (a)--
       ``(1) any interest, annuities, royalties, or rents received 
     from each controlled entity (within the meaning of section 
     512(b)(13)),
       ``(2) any loans made to each such controlled entity, and
       ``(3) any transfers of funds between such controlling 
     organization and each such controlled entity.''.
       (2) Report to congress.--Not later than January 1, 2009, 
     the Secretary of the Treasury shall submit to the Committee 
     on Finance of the Senate and the Committee on Ways and Means 
     of the House of Representatives a report on the effectiveness 
     of the Internal Revenue Service in administering the 
     amendments made by subsection (a) and on the extent to which 
     payments by controlled entities (within the meaning of 
     section 512(b)(13) of the Internal Revenue Code of 1986) to 
     controlling organizations (within the meaning of section 
     512(b)(13) of such Code) meet the requirements under section 
     482 of such Code. Such report shall include the results of 
     any audit of any controlling organization or controlled 
     entity and recommendations relating to the tax treatment of 
     payments from controlled entities to controlling 
     organizations.
       (c) Effective Date.--

[[Page 16396]]

       (1) Subsection (a).--The amendments made by subsection (a) 
     shall apply to payments received or accrued after December 
     31, 2005.
       (2) Subsection (b).--The amendments made by subsection (b) 
     shall apply to returns the due date (determined without 
     regard to extensions) of which is after the date of the 
     enactment of this Act.

     SEC. 1206. ENCOURAGEMENT OF CONTRIBUTIONS OF CAPITAL GAIN 
                   REAL PROPERTY MADE FOR CONSERVATION PURPOSES.

       (a) In General.--
       (1) Individuals.--Paragraph (1) of section 170(b) (relating 
     to percentage limitations) is amended by redesignating 
     subparagraphs (E) and (F) as subparagraphs (F) and (G), 
     respectively, and by inserting after subparagraph (D) the 
     following new subparagraph:
       ``(E) Contributions of qualified conservation 
     contributions.--
       ``(i) In general.--Any qualified conservation contribution 
     (as defined in subsection (h)(1)) shall be allowed to the 
     extent the aggregate of such contributions does not exceed 
     the excess of 50 percent of the taxpayer's contribution base 
     over the amount of all other charitable contributions 
     allowable under this paragraph.
       ``(ii) Carryover.--If the aggregate amount of contributions 
     described in clause (i) exceeds the limitation of clause (i), 
     such excess shall be treated (in a manner consistent with the 
     rules of subsection (d)(1)) as a charitable contribution to 
     which clause (i) applies in each of the 15 succeeding years 
     in order of time.
       ``(iii) Coordination with other subparagraphs.--For 
     purposes of applying this subsection and subsection (d)(1), 
     contributions described in clause (i) shall not be treated as 
     described in subparagraph (A), (B), (C), or (D) and such 
     subparagraphs shall apply without regard to such 
     contributions.
       ``(iv) Special rule for contribution of property used in 
     agriculture or livestock production.--

       ``(I) In general.--If the individual is a qualified farmer 
     or rancher for the taxable year for which the contribution is 
     made, clause (i) shall be applied by substituting `100 
     percent' for `50 percent'.
       ``(II) Exception.--Subclause (I) shall not apply to any 
     contribution of property made after the date of the enactment 
     of this subparagraph which is used in agriculture or 
     livestock production (or available for such production) 
     unless such contribution is subject to a restriction that 
     such property remain available for such production. This 
     subparagraph shall be applied separately with respect to 
     property to which subclause (I) does not apply by reason of 
     the preceding sentence prior to its application to property 
     to which subclause (I) does apply.

       ``(v) Definition.--For purposes of clause (iv), the term 
     `qualified farmer or rancher' means a taxpayer whose gross 
     income from the trade or business of farming (within the 
     meaning of section 2032A(e)(5)) is greater than 50 percent of 
     the taxpayer's gross income for the taxable year.
       ``(vi) Termination.--This subparagraph shall not apply to 
     any contribution made in taxable years beginning after 
     December 31, 2007.''.
       (2) Corporations.--Paragraph (2) of section 170(b) is 
     amended to read as follows:
       ``(2) Corporations.--In the case of a corporation--
       ``(A) In general.--The total deductions under subsection 
     (a) for any taxable year (other than for contributions to 
     which subparagraph (B) applies) shall not exceed 10 percent 
     of the taxpayer's taxable income.
       ``(B) Qualified conservation contributions by certain 
     corporate farmers and ranchers.--
       ``(i) In general.--Any qualified conservation contribution 
     (as defined in subsection (h)(1))--

       ``(I) which is made by a corporation which, for the taxable 
     year during which the contribution is made, is a qualified 
     farmer or rancher (as defined in paragraph (1)(E)(v)) and the 
     stock of which is not readily tradable on an established 
     securities market at any time during such year, and
       ``(II) which, in the case of contributions made after the 
     date of the enactment of this subparagraph, is a contribution 
     of property which is used in agriculture or livestock 
     production (or available for such production) and which is 
     subject to a restriction that such property remain available 
     for such production,

     shall be allowed to the extent the aggregate of such 
     contributions does not exceed the excess of the taxpayer's 
     taxable income over the amount of charitable contributions 
     allowable under subparagraph (A).
       ``(ii) Carryover.--If the aggregate amount of contributions 
     described in clause (i) exceeds the limitation of clause (i), 
     such excess shall be treated (in a manner consistent with the 
     rules of subsection (d)(2)) as a charitable contribution to 
     which clause (i) applies in each of the 15 succeeding years 
     in order of time.
       ``(iii) Termination.--This subparagraph shall not apply to 
     any contribution made in taxable years beginning after 
     December 31, 2007.
       ``(C) Taxable income.--For purposes of this paragraph, 
     taxable income shall be computed without regard to--
       ``(i) this section,
       ``(ii) part VIII (except section 248),
       ``(iii) any net operating loss carryback to the taxable 
     year under section 172,
       ``(iv) section 199, and
       ``(v) any capital loss carryback to the taxable year under 
     section 1212(a)(1).''.
       (b) Conforming Amendments.--
       (1) Paragraph (2) of section 170(d) is amended by striking 
     ``subsection (b)(2)'' each place it appears and inserting 
     ``subsection (b)(2)(A)''.
       (2) Section 545(b)(2) is amended by striking ``and (D)'' 
     and inserting ``(D), and (E)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to contributions made in taxable years beginning 
     after December 31, 2005.

     SEC. 1207. EXCISE TAXES EXEMPTION FOR BLOOD COLLECTOR 
                   ORGANIZATIONS.

       (a) Exemption From Imposition of Special Fuels Tax.--
     Section 4041(g) (relating to other exemptions) is amended by 
     striking ``and'' at the end of paragraph (3), by striking the 
     period in paragraph (4) and inserting ``; and'', and by 
     inserting after paragraph (4) the following new paragraph:
       ``(5) with respect to the sale of any liquid to a qualified 
     blood collector organization (as defined in section 
     7701(a)(49)) for such organization's exclusive use in the 
     collection, storage, or transportation of blood.''.
       (b) Exemption From Manufacturers Excise Tax.--
       (1) In general.--Section 4221(a) (relating to certain tax-
     free sales) is amended by striking ``or'' at the end of 
     paragraph (4), by adding ``or'' at the end of paragraph (5), 
     and by inserting after paragraph (5) the following new 
     paragraph:
       ``(6) to a qualified blood collector organization (as 
     defined in section 7701(a)(49)) for such organization's 
     exclusive use in the collection, storage, or transportation 
     of blood,''.
       (2) No exemption with respect to vaccines and recreational 
     equipment.--Section 4221(a) is amended by adding at the end 
     the following new sentence: ``In the case of taxes imposed by 
     subchapter C or D, paragraph (6) shall not apply.''.
       (3) Conforming amendments.--
       (A) The second sentence of section 4221(a) is amended by 
     striking ``Paragraphs (4) and (5)'' and inserting 
     ``Paragraphs (4), (5), and (6)''.
       (B) Section 6421(c) is amended by striking ``or (5)'' and 
     inserting ``(5), or (6)''.
       (c) Exemption From Communication Excise Tax.--
       (1) In general.--Section 4253 (relating to exemptions) is 
     amended by redesignating subsection (k) as subsection (l) and 
     inserting after subsection (j) the following new subsection:
       ``(k) Exemption for Qualified Blood Collector 
     Organizations.--Under regulations provided by the Secretary, 
     no tax shall be imposed under section 4251 on any amount paid 
     by a qualified blood collector organization (as defined in 
     section 7701(a)(49)) for services or facilities furnished to 
     such organization.''.
       (2) Conforming amendment.--Section 4253(l), as redesignated 
     by paragraph (1), is amended by striking ``or (j)'' and 
     inserting ``(j), or (k)''.
       (d) Exemption From Tax on Heavy Vehicles.--Section 4483 is 
     amended by redesignating subsection (h) as subsection (i) and 
     by inserting after subsection (g) the following new 
     subsection:
       ``(h) Exemption for Vehicles Used in Blood Collection.--
       ``(1) In general.--No tax shall be imposed by section 4481 
     on the use of any qualified blood collector vehicle by a 
     qualified blood collector organization.
       ``(2) Qualified blood collector vehicle.--For purposes of 
     this subsection, the term `qualified blood collector vehicle' 
     means a vehicle at least 80 percent of the use of which 
     during the prior taxable period was by a qualified blood 
     collector organization in the collection, storage, or 
     transportation of blood.
       ``(3) Special rule for vehicles first placed in service in 
     a taxable period.--In the case of a vehicle first placed in 
     service in a taxable period, a vehicle shall be treated as a 
     qualified blood collector vehicle for such taxable period if 
     such qualified blood collector organization certifies to the 
     Secretary that the organization reasonably expects at least 
     80 percent of the use of such vehicle by the organization 
     during such taxable period will be in the collection, 
     storage, or transportation of blood.
       ``(4) Qualified blood collector organization.--The term 
     `qualified blood collector organization' has the meaning 
     given such term by section 7701(a)(49).''.
       (e) Credit or Refund for Certain Taxes on Sales and 
     Services.--
       (1) Deemed overpayment.--
       (A) In general.--Section 6416(b)(2) is amended by 
     redesignating subparagraphs (E) and (F) as subparagraphs (F) 
     and (G), respectively, and by inserting after subparagraph 
     (D) the following new subparagraph:
       ``(E) sold to a qualified blood collector organization (as 
     defined in section 7701(a)(49)) for such organization's 
     exclusive use in the collection, storage, or transportation 
     of blood;''.
       (B) No credit or refund for vaccines or recreational 
     equipment.--Section 6416(b)(2)

[[Page 16397]]

     is amended by adding at the end the following new sentence: 
     ``In the case of taxes imposed by subchapter C or D of 
     chapter 32, subparagraph (E) shall not apply.''.
       (C) Conforming amendments.--Section 6416(b)(2) is amended--
       (i) by striking ``Subparagraphs (C) and (D)'' in the second 
     sentence and inserting ``Subparagraphs (C), (D), and (E)''.
       (ii) by striking ``(B), (C), and (D)'' and inserting ``(B), 
     (C), (D), and (E)''.
       (2) Sales of tires.--Section 6416(b)(4)(B) is amended by 
     striking ``or'' at the end of clause (i), by striking the 
     period at the end of clause (ii) and inserting ``, or'', and 
     by adding after clause (ii) the following:
       ``(iii) sold to a qualified blood collector organization 
     for its exclusive use in connection with a vehicle the 
     organization certifies will be primarily used in the 
     collection, storage, or transportation of blood.''.
       (f) Definition of Qualified Blood Collector Organization.--
     Section 7701(a) is amended by inserting at the end the 
     following new paragraph:
       ``(49) Qualified blood collector organization.--The term 
     `qualified blood collector organization' means an 
     organization which is--
       ``(A) described in section 501(c)(3) and exempt from tax 
     under section 501(a),
       ``(B) primarily engaged in the activity of the collection 
     of human blood,
       ``(C) registered with the Secretary for purposes of excise 
     tax exemptions, and
       ``(D) registered by the Food and Drug Administration to 
     collect blood.''.
       (g) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     take effect on January 1, 2007.
       (2) Subsection (d).--The amendment made by subsection (d) 
     shall apply to taxable periods beginning on or after July 1, 
     2007.

               Subtitle B--Reforming Exempt Organizations

                        PART 1--GENERAL REFORMS

     SEC. 1211. REPORTING ON CERTAIN ACQUISITIONS OF INTERESTS IN 
                   INSURANCE CONTRACTS IN WHICH CERTAIN EXEMPT 
                   ORGANIZATIONS HOLD AN INTEREST.

       (a) Reporting Requirements.--
       (1) In general.--Subpart B of part III of subchapter A of 
     chapter 61 (relating to information concerning transactions 
     with other persons), as amended by this Act, is amended by 
     adding at the end the following new section:

     ``SEC. 6050V. RETURNS RELATING TO APPLICABLE INSURANCE 
                   CONTRACTS IN WHICH CERTAIN EXEMPT ORGANIZATIONS 
                   HOLD INTERESTS.

       ``(a) In General.--Each applicable exempt organization 
     which makes a reportable acquisition shall make the return 
     described in subsection (c).
       ``(b) Time for Making Return.--Any applicable exempt 
     organization required to make a return under subsection (a) 
     shall file such return at such time as may be established by 
     the Secretary.
       ``(c) Form and Manner of Returns.--A return is described in 
     this subsection if such return--
       ``(1) is in such form as the Secretary prescribes,
       ``(2) contains the name, address, and taxpayer 
     identification number of the applicable exempt organization 
     and the issuer of the applicable insurance contract, and
       ``(3) contains such other information as the Secretary may 
     prescribe.
       ``(d) Definitions.--For purposes of this section--
       ``(1) Reportable acquisition.--The term `reportable 
     acquisition' means the acquisition by an applicable exempt 
     organization of a direct or indirect interest in any 
     applicable insurance contract in any case in which such 
     acquisition is a part of a structured transaction involving a 
     pool of such contracts.
       ``(2) Applicable insurance contract.--
       ``(A) In general.--The term `applicable insurance contract' 
     means any life insurance, annuity, or endowment contract with 
     respect to which both an applicable exempt organization and a 
     person other than an applicable exempt organization have 
     directly or indirectly held an interest in the contract 
     (whether or not at the same time).
       ``(B) Exceptions.--Such term shall not include a life 
     insurance, annuity, or endowment contract if--
       ``(i) all persons directly or indirectly holding any 
     interest in the contract (other than applicable exempt 
     organizations) have an insurable interest in the insured 
     under the contract independent of any interest of an 
     applicable exempt organization in the contract,
       ``(ii) the sole interest in the contract of an applicable 
     exempt organization or each person other than an applicable 
     exempt organization is as a named beneficiary, or
       ``(iii) the sole interest in the contract of each person 
     other than an applicable exempt organization is--

       ``(I) as a beneficiary of a trust holding an interest in 
     the contract, but only if the person's designation as such 
     beneficiary was made without consideration and solely on a 
     purely gratuitous basis, or
       ``(II) as a trustee who holds an interest in the contract 
     in a fiduciary capacity solely for the benefit of applicable 
     exempt organizations or persons otherwise described in 
     subclause (I) or clause (i) or (ii).

       ``(3) Applicable exempt organization.--The term `applicable 
     exempt organization' means--
       ``(A) an organization described in section 170(c),
       ``(B) an organization described in section 
     168(h)(2)(A)(iv), or
       ``(C) an organization not described in paragraph (1) or (2) 
     which is described in section 2055(a) or section 2522(a).
       ``(e) Termination.--This section shall not apply to 
     reportable acquisitions occurring after the date which is 2 
     years after the date of the enactment of this section.''.
       (2) Conforming amendment.--The table of sections for 
     subpart B of part III of subchapter A of chapter 61 is 
     amended by adding at the end the following new item:

``Sec. 6050V. Returns relating to applicable insurance contracts in 
              which certain exempt organizations hold interests.''.
       (b) Penalties.--
       (1) In general.--Subparagraph (B) of section 6724(d)(1), as 
     amended by this Act, is amended by redesignating clauses 
     (xiv) through (xix) as clauses (xv) through (xx) and by 
     inserting after clause (xiii) the following new clause:
       ``(xiv) section 6050V (relating to returns relating to 
     applicable insurance contracts in which certain exempt 
     organizations hold interests),''.
       (2) Intentional disregard.--Section 6721(e)(2) is amended 
     by striking ``or'' at the end of subparagraph (B), by 
     striking ``and'' at the end of subparagraph (C) and inserting 
     ``or'', and by adding at the end the following new 
     subparagraph:
       ``(D) in the case of a return required to be filed under 
     section 6050V, 10 percent of the value of the benefit of any 
     contract with respect to which information is required to be 
     included on the return, and''.
       (c) Study.--
       (1) In general.--The Secretary of the Treasury shall 
     undertake a study on--
       (A) the use by tax exempt organizations of applicable 
     insurance contracts (as defined under section 6050V(d)(2) of 
     the Internal Revenue Code of 1986, as added by subsection 
     (a)) for the purpose of sharing the benefits of the 
     organization's insurable interest in individuals insured 
     under such contracts with investors, and
       (B) whether such activities are consistent with the tax 
     exempt status of such organizations.
       (2) Report.--Not later than 30 months after the date of the 
     enactment of this Act, the Secretary of the Treasury shall 
     report on the study conducted under paragraph (1) to the 
     Committee on Finance of the Senate and the Committee on Ways 
     and Means of the House of Representatives.
       (d) Effective Date.--The amendments made by this section 
     shall apply to acquisitions of contracts after the date of 
     enactment of this Act.

     SEC. 1212. INCREASE IN PENALTY EXCISE TAXES RELATING TO 
                   PUBLIC CHARITIES, SOCIAL WELFARE ORGANIZATIONS, 
                   AND PRIVATE FOUNDATIONS.

       (a) Taxes on Self-Dealing and Excess Benefit 
     Transactions.--
       (1) In general.--Section 4941(a) (relating to initial 
     taxes) is amended--
       (A) in paragraph (1), by striking ``5 percent'' and 
     inserting ``10 percent'', and
       (B) in paragraph (2), by striking ``2\1/2\ percent'' and 
     inserting ``5 percent''.
       (2) Increased limitation for managers on self-dealing.--
     Section 4941(c)(2) is amended by striking ``$10,000'' each 
     place it appears in the text and heading thereof and 
     inserting ``$20,000''.
       (3) Increased limitation for managers on excess benefit 
     transactions.--Section 4958(d)(2) is amended by striking 
     ``$10,000'' and inserting ``$20,000''.
       (b) Taxes on Failure to Distribute Income.--Section 4942(a) 
     (relating to initial tax) is amended by striking ``15 
     percent'' and inserting ``30 percent''.
       (c) Taxes on Excess Business Holdings.--Section 4943(a)(1) 
     (relating to imposition) is amended by striking ``5 percent'' 
     and inserting ``10 percent''.
       (d) Taxes on Investments Which Jeopardize Charitable 
     Purpose.--
       (1) In general.--Section 4944(a) (relating to initial 
     taxes) is amended by striking ``5 percent'' both places it 
     appears and inserting ``10 percent''.
       (2) Increased limitation for managers.--Section 4944(d)(2) 
     is amended--
       (A) by striking ``$5,000,'' and inserting ``$10,000,'', and
       (B) by striking ``$10,000.'' and inserting ``$20,000.''.
       (e) Taxes on Taxable Expenditures.--
       (1) In general.--Section 4945(a) (relating to initial 
     taxes) is amended--
       (A) in paragraph (1), by striking ``10 percent'' and 
     inserting ``20 percent'', and
       (B) in paragraph (2), by striking ``2\1/2\ percent'' and 
     inserting ``5 percent''.
       (2) Increased limitation for managers.--Section 4945(c)(2) 
     is amended--
       (A) by striking ``$5,000,'' and inserting ``$10,000,'', and
       (B) by striking ``$10,000.'' and inserting ``$20,000.''.
       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

[[Page 16398]]



     SEC. 1213. REFORM OF CHARITABLE CONTRIBUTIONS OF CERTAIN 
                   EASEMENTS IN REGISTERED HISTORIC DISTRICTS AND 
                   REDUCED DEDUCTION FOR PORTION OF QUALIFIED 
                   CONSERVATION CONTRIBUTION ATTRIBUTABLE TO 
                   REHABILITATION CREDIT.

       (a) Special Rules With Respect to Buildings in Registered 
     Historic Districts.--
       (1) In general.--Paragraph (4) of section 170(h) (relating 
     to definition of conservation purpose) is amended by 
     redesignating subparagraph (B) as subparagraph (C) and by 
     inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) Special rules with respect to buildings in registered 
     historic districts.--In the case of any contribution of a 
     qualified real property interest which is a restriction with 
     respect to the exterior of a building described in 
     subparagraph (C)(ii), such contribution shall not be 
     considered to be exclusively for conservation purposes 
     unless--
       ``(i) such interest--

       ``(I) includes a restriction which preserves the entire 
     exterior of the building (including the front, sides, rear, 
     and height of the building), and
       ``(II) prohibits any change in the exterior of the building 
     which is inconsistent with the historical character of such 
     exterior,

       ``(ii) the donor and donee enter into a written agreement 
     certifying, under penalty of perjury, that the donee--

       ``(I) is a qualified organization (as defined in paragraph 
     (3)) with a purpose of environmental protection, land 
     conservation, open space preservation, or historic 
     preservation, and
       ``(II) has the resources to manage and enforce the 
     restriction and a commitment to do so, and

       ``(iii) in the case of any contribution made in a taxable 
     year beginning after the date of the enactment of this 
     subparagraph, the taxpayer includes with the taxpayer's 
     return for the taxable year of the contribution--

       ``(I) a qualified appraisal (within the meaning of 
     subsection (f)(11)(E)) of the qualified property interest,
       ``(II) photographs of the entire exterior of the building, 
     and
       ``(III) a description of all restrictions on the 
     development of the building.''.

       (b) Disallowance of Deduction for Structures and Land in 
     Registered Historic Districts.--Subparagraph (C) of section 
     170(h)(4), as redesignated by subsection (a), is amended--
       (1) by striking ``any building, structure, or land area 
     which'',
       (2) by inserting ``any building, structure, or land area 
     which'' before ``is listed'' in clause (i), and
       (3) by inserting ``any building which'' before ``is 
     located'' in clause (ii).
       (c) Filing Fee for Certain Contributions.--Subsection (f) 
     of section 170 (relating to disallowance of deduction in 
     certain cases and special rules) is amended by adding at the 
     end the following new paragraph:
       ``(13) Contributions of certain interests in buildings 
     located in registered historic districts.--
       ``(A) In general.--No deduction shall be allowed with 
     respect to any contribution described in subparagraph (B) 
     unless the taxpayer includes with the return for the taxable 
     year of the contribution a $500 filing fee.
       ``(B) Contribution described.--A contribution is described 
     in this subparagraph if such contribution is a qualified 
     conservation contribution (as defined in subsection (h)) 
     which is a restriction with respect to the exterior of a 
     building described in subsection (h)(4)(C)(ii) and for which 
     a deduction is claimed in excess of $10,000.
       ``(C) Dedication of fee.--Any fee collected under this 
     paragraph shall be used for the enforcement of the provisions 
     of subsection (h).''.
       (d) Reduced Deduction for Portion of Qualified Conservation 
     Contribution Attributable to the Rehabilitation Credit.--
     Subsection (f) of section 170, as amended by subsection (c), 
     is amended by adding at the end the following new paragraph:
       ``(14) Reduction for amounts attributable to rehabilitation 
     credit.--In the case of any qualified conservation 
     contribution (as defined in subsection (h)), the amount of 
     the deduction allowed under this section shall be reduced by 
     an amount which bears the same ratio to the fair market value 
     of the contribution as--
       ``(A) the sum of the credits allowed to the taxpayer under 
     section 47 for the 5 preceding taxable years with respect to 
     any building which is a part of such contribution, bears to
       ``(B) the fair market value of the building on the date of 
     the contribution.''.
       (e) Effective Dates.--
       (1) Special rules for buildings in registered historic 
     districts.--The amendments made by subsection (a) shall apply 
     to contributions made after July 25, 2006.
       (2) Disallowance of deduction for structures and land; 
     reduction for rehabilitation credit.--The amendments made by 
     subsections (b) and (d) shall apply to contributions made 
     after the date of the enactment of this Act.
       (3) Filing fee.--The amendment made by subsection (c) shall 
     apply to contributions made 180 days after the date of the 
     enactment of this Act.

     SEC. 1214. CHARITABLE CONTRIBUTIONS OF TAXIDERMY PROPERTY.

       (a) Denial of Long-Term Capital Gain.--Subparagraph (B) of 
     section 170(e)(1) is amended by striking ``or'' at the end of 
     clause (ii), by inserting ``or'' at the end of clause (iii), 
     and by inserting after clause (iii) the following new clause:
       ``(iv) of any taxidermy property which is contributed by 
     the person who prepared, stuffed, or mounted the property or 
     by any person who paid or incurred the cost of such 
     preparation, stuffing, or mounting,''.
       (b) Treatment of Basis.--Subsection (f) of section 170, as 
     amended by this Act, is amended by adding at the end the 
     following new paragraph:
       ``(15) Special rule for taxidermy property.--
       ``(A) Basis.--For purposes of this section and 
     notwithstanding section 1012, in the case of a charitable 
     contribution of taxidermy property which is made by the 
     person who prepared, stuffed, or mounted the property or by 
     any person who paid or incurred the cost of such preparation, 
     stuffing, or mounting, only the cost of the preparing, 
     stuffing, or mounting shall be included in the basis of such 
     property.
       ``(B) Taxidermy property.--For purposes of this section, 
     the term `taxidermy property' means any work of art which--
       ``(i) is the reproduction or preservation of an animal, in 
     whole or in part,
       ``(ii) is prepared, stuffed, or mounted for purposes of 
     recreating one or more characteristics of such animal, and
       ``(iii) contains a part of the body of the dead animal.''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to contributions made after July 25, 2006.

     SEC. 1215. RECAPTURE OF TAX BENEFIT FOR CHARITABLE 
                   CONTRIBUTIONS OF EXEMPT USE PROPERTY NOT USED 
                   FOR AN EXEMPT USE.

       (a) Recapture of Deduction on Certain Sales of Exempt Use 
     Property.--
       (1) In general.--Clause (i) of section 170(e)(1)(B) 
     (related to certain contributions of ordinary income and 
     capital gain property) is amended to read as follows:
       ``(i) of tangible personal property--

       ``(I) if the use by the donee is unrelated to the purpose 
     or function constituting the basis for its exemption under 
     section 501 (or, in the case of a governmental unit, to any 
     purpose or function described in subsection (c)), or
       ``(II) which is applicable property (as defined in 
     paragraph (7)(C)) which is sold, exchanged, or otherwise 
     disposed of by the donee before the last day of the taxable 
     year in which the contribution was made and with respect to 
     which the donee has not made a certification in accordance 
     with paragraph (7)(D),''.

       (2) Dispositions after close of taxable year.--Section 
     170(e) is amended by adding at the end the following new 
     paragraph:
       ``(7) Recapture of deduction on certain dispositions of 
     exempt use property.--
       ``(A) In general.--In the case of an applicable disposition 
     of applicable property, there shall be included in the income 
     of the donor of such property for the taxable year of such 
     donor in which the applicable disposition occurs an amount 
     equal to the excess (if any) of--
       ``(i) the amount of the deduction allowed to the donor 
     under this section with respect to such property, over
       ``(ii) the donor's basis in such property at the time such 
     property was contributed.
       ``(B) Applicable disposition.--For purposes of this 
     paragraph, the term `applicable disposition' means any sale, 
     exchange, or other disposition by the donee of applicable 
     property--
       ``(i) after the last day of the taxable year of the donor 
     in which such property was contributed, and
       ``(ii) before the last day of the 3-year period beginning 
     on the date of the contribution of such property,
     unless the donee makes a certification in accordance with 
     subparagraph (D).
       ``(C) Applicable property.--For purposes of this paragraph, 
     the term `applicable property' means charitable deduction 
     property (as defined in section 6050L(a)(2)(A))--
       ``(i) which is tangible personal property the use of which 
     is identified by the donee as related to the purpose or 
     function constituting the basis of the donee's exemption 
     under section 501, and
       ``(ii) for which a deduction in excess of the donor's basis 
     is allowed.
       ``(D) Certification.--A certification meets the 
     requirements of this subparagraph if it is a written 
     statement which is signed under penalty of perjury by an 
     officer of the donee organization and--
       ``(i) which--

       ``(I) certifies that the use of the property by the donee 
     was related to the purpose or function constituting the basis 
     for the donee's exemption under section 501, and
       ``(II) describes how the property was used and how such use 
     furthered such purpose or function, or

       ``(ii) which--

       ``(I) states the intended use of the property by the donee 
     at the time of the contribution, and

[[Page 16399]]

       ``(II) certifies that such intended use has become 
     impossible or infeasible to implement.''.

       (b) Reporting Requirements.--Paragraph (1) of section 
     6050L(a) (relating to returns relating to certain 
     dispositions of donated property) is amended--
       (1) by striking ``2 years'' and inserting ``3 years'', and
       (2) by striking ``and'' at the end of subparagraph (D), by 
     striking the period at the end of subparagraph (E) and 
     inserting a comma, and by inserting at the end the following:
       ``(F) a description of the donee's use of the property, and
       ``(G) a statement indicating whether the use of the 
     property was related to the purpose or function constituting 
     the basis for the donee's exemption under section 501.

     In any case in which the donee indicates that the use of 
     applicable property (as defined in section 170(e)(7)(C)) was 
     related to the purpose or function constituting the basis for 
     the exemption of the donee under section 501 under 
     subparagraph (G), the donee shall include with the return the 
     certification described in section 170(e)(7)(D) if such 
     certification is made under section 170(e)(7).''.
       (c) Penalty.--
       (1) In general.--Part I of subchapter B of chapter 68 
     (relating to assessable penalties) is amended by inserting 
     after section 6720A the following new section:

     ``SEC. 6720B. FRAUDULENT IDENTIFICATION OF EXEMPT USE 
                   PROPERTY.

       ``In addition to any criminal penalty provided by law, any 
     person who identifies applicable property (as defined in 
     section 170(e)(7)(C)) as having a use which is related to a 
     purpose or function constituting the basis for the donee's 
     exemption under section 501 and who knows that such property 
     is not intended for such a use shall pay a penalty of 
     $10,000.''.
       (2) Clerical amendment.--The table of sections for part I 
     of subchapter B of chapter 68 is amended by adding after the 
     item relating to section 6720A the following new item:

``Sec. 6720B. Fraudulent identification of exempt use property.''.
       (d) Effective Date.--
       (1) Recapture.--The amendments made by subsection (a) shall 
     apply to contributions after September 1, 2006.
       (2) Reporting.--The amendments made by subsection (b) shall 
     apply to returns filed after September 1, 2006.
       (3) Penalty.--The amendments made by subsection (c) shall 
     apply to identifications made after the date of the enactment 
     of this Act.

     SEC. 1216. LIMITATION OF DEDUCTION FOR CHARITABLE 
                   CONTRIBUTIONS OF CLOTHING AND HOUSEHOLD ITEMS.

       (a) In General.--Subsection (f) of section 170, as amended 
     by this Act, is amended by adding at the end the following 
     new paragraph:
       ``(16) Contributions of clothing and household items.--
       ``(A) In general.--In the case of an individual, 
     partnership, or corporation, no deduction shall be allowed 
     under subsection (a) for any contribution of clothing or a 
     household item unless such clothing or household item is in 
     good used condition or better.
       ``(B) Items of minimal value.--Notwithstanding subparagraph 
     (A), the Secretary may by regulation deny a deduction under 
     subsection (a) for any contribution of clothing or a 
     household item which has minimal monetary value.
       ``(C) Exception for certain property.--Subparagraphs (A) 
     and (B) shall not apply to any contribution of a single item 
     of clothing or a household item for which a deduction of more 
     than $500 is claimed if the taxpayer includes with the 
     taxpayer's return a qualified appraisal with respect to the 
     property.
       ``(D) Household items.--For purposes of this paragraph--
       ``(i) In general.--The term `household items' includes 
     furniture, furnishings, electronics, appliances, linens, and 
     other similar items.
       ``(ii) Excluded items.--Such term does not include--

       ``(I) food,
       ``(II) paintings, antiques, and other objects of art,
       ``(III) jewelry and gems, and
       ``(IV) collections.

       ``(E) Special rule for pass-thru entities.--In the case of 
     a partnership or S corporation, this paragraph shall be 
     applied at the entity level, except that the deduction shall 
     be denied at the partner or shareholder level.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions made after the date of enactment 
     of this Act.

     SEC. 1217. MODIFICATION OF RECORDKEEPING REQUIREMENTS FOR 
                   CERTAIN CHARITABLE CONTRIBUTIONS.

       (a) Recordkeeping Requirement.--Subsection (f) of section 
     170, as amended by this Act, is amended by adding at the end 
     the following new paragraph:
       ``(17) Recordkeeping.--No deduction shall be allowed under 
     subsection (a) for any contribution of a cash, check, or 
     other monetary gift unless the donor maintains as a record of 
     such contribution a bank record or a written communication 
     from the donee showing the name of the donee organization, 
     the date of the contribution, and the amount of the 
     contribution.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions made in taxable years beginning 
     after the date of the enactment of this Act.

     SEC. 1218. CONTRIBUTIONS OF FRACTIONAL INTERESTS IN TANGIBLE 
                   PERSONAL PROPERTY.

       (a) Income Tax.--Section 170 (relating to charitable, etc., 
     contributions and gifts) is amended by redesignating 
     subsection (o) as subsection (p) and by inserting after 
     subsection (n) the following new subsection:
       ``(o) Special Rules for Fractional Gifts.--
       ``(1) Denial of deduction in certain cases.--
       ``(A) In general.--No deduction shall be allowed for a 
     contribution of an undivided portion of a taxpayer's entire 
     interest in tangible personal property unless all interest in 
     the property is held immediately before such contribution 
     by--
       ``(i) the taxpayer, or
       ``(ii) the taxpayer and the donee.
       ``(B) Exceptions.--The Secretary may, by regulation, 
     provide for exceptions to subparagraph (A) in cases where all 
     persons who hold an interest in the property make 
     proportional contributions of an undivided portion of the 
     entire interest held by such persons.
       ``(2) Valuation of subsequent gifts.--In the case of any 
     additional contribution, the fair market value of such 
     contribution shall be determined by using the lesser of--
       ``(A) the fair market value of the property at the time of 
     the initial fractional contribution, or
       ``(B) the fair market value of the property at the time of 
     the additional contribution.
       ``(3) Recapture of deduction in certain cases; addition to 
     tax.--
       ``(A) Recapture.--The Secretary shall provide for the 
     recapture of the amount of any deduction allowed under this 
     section (plus interest) with respect to any contribution of 
     an undivided portion of a taxpayer's entire interest in 
     tangible personal property--
       ``(i) in any case in which the donor does not contribute 
     all of the remaining interest in such property to the donee 
     (or, if such donee is no longer in existence, to any person 
     described in section 170(c)) before the earlier of--

       ``(I) the date that is 10 years after the date of the 
     initial fractional contribution, or
       ``(II) the date of the death of the donor, and

       ``(ii) in any case in which the donee has not, during the 
     period beginning on the date of the initial fractional 
     contribution and ending on the date described in clause (i)--

       ``(I) had substantial physical possession of the property, 
     and
       ``(II) used the property in a use which is related to a 
     purpose or function constituting the basis for the 
     organizations' exemption under section 501.

       ``(B) Addition to tax.--The tax imposed under this chapter 
     for any taxable year for which there is a recapture under 
     subparagraph (A) shall be increased by 10 percent of the 
     amount so recaptured.
       ``(4) Definitions.--For purposes of this subsection--
       ``(A) Additional contribution.--The term `additional 
     contribution' means any charitable contribution by the 
     taxpayer of any interest in property with respect to which 
     the taxpayer has previously made an initial fractional 
     contribution.
       ``(B) Initial fractional contribution.--The term `initial 
     fractional contribution' means, with respect to any taxpayer, 
     the first charitable contribution of an undivided portion of 
     the taxpayer's entire interest in any tangible personal 
     property.''.
       (b) Estate Tax.--Section 2055 (relating to transfers for 
     public, charitable, and religious uses) is amended by 
     redesignating subsection (g) as subsection (h) and by 
     inserting after subsection (f) the following new subsection:
       ``(g) Valuation of Subsequent Gifts.--
       ``(1) In general.--In the case of any additional 
     contribution, the fair market value of such contribution 
     shall be determined by using the lesser of--
       ``(A) the fair market value of the property at the time of 
     the initial fractional contribution, or
       ``(B) the fair market value of the property at the time of 
     the additional contribution.
       ``(2) Definitions.--For purposes of this paragraph--
       ``(A) Additional contribution.--The term `additional 
     contribution' means a bequest, legacy, devise, or transfer 
     described in subsection (a) of any interest in a property 
     with respect to which the decedent had previously made an 
     initial fractional contribution.
       ``(B) Initial fractional contribution.--The term `initial 
     fractional contribution' means, with respect to any decedent, 
     any charitable contribution of an undivided portion of the 
     decedent's entire interest in any tangible personal property 
     for which a deduction was allowed under section 170.''.
       (c) Gift Tax.--Section 2522 (relating to charitable and 
     similar gifts) is amended by redesignating subsection (e) as 
     subsection (f) and by inserting after subsection (d) the 
     following new subsection:
       ``(e) Special Rules for Fractional Gifts.--
       ``(1) Denial of deduction in certain cases.--

[[Page 16400]]

       ``(A) In general.--No deduction shall be allowed for a 
     contribution of an undivided portion of a taxpayer's entire 
     interest in tangible personal property unless all interest in 
     the property is held immediately before such contribution 
     by--
       ``(i) the taxpayer, or
       ``(ii) the taxpayer and the donee.
       ``(B) Exceptions.--The Secretary may, by regulation, 
     provide for exceptions to subparagraph (A) in cases where all 
     persons who hold an interest in the property make 
     proportional contributions of an undivided portion of the 
     entire interest held by such persons.
       ``(2) Valuation of subsequent gifts.--In the case of any 
     additional contribution, the fair market value of such 
     contribution shall be determined by using the lesser of--
       ``(A) the fair market value of the property at the time of 
     the initial fractional contribution, or
       ``(B) the fair market value of the property at the time of 
     the additional contribution.
       ``(3) Recapture of deduction in certain cases; addition to 
     tax.--
       ``(A) In general.--The Secretary shall provide for the 
     recapture of an amount equal to any deduction allowed under 
     this section (plus interest) with respect to any contribution 
     of an undivided portion of a taxpayer's entire interest in 
     tangible personal property--
       ``(i) in any case in which the donor does not contribute 
     all of the remaining interest in such property to the donee 
     (or, if such donee is no longer in existence, to any person 
     described in section 170(c)) before the earlier of--

       ``(I) the date that is 10 years after the date of the 
     initial fractional contribution, or
       ``(II) the date of the death of the donor, and

       ``(ii) in any case in which the donee has not, during the 
     period beginning on the date of the initial fractional 
     contribution and ending on the date described in clause (i)--

       ``(I) had substantial physical possession of the property, 
     and
       ``(II) used the property in a use which is related to a 
     purpose or function constituting the basis for the 
     organizations' exemption under section 501.

       ``(B) Addition to tax.--The tax imposed under this chapter 
     for any taxable year for which there is a recapture under 
     subparagraph (A) shall be increased by 10 percent of the 
     amount so recaptured.
       ``(4) Definitions.--For purposes of this subsection--
       ``(A) Additional contribution.--The term `additional 
     contribution' means any gift for which a deduction is allowed 
     under subsection (a) or (b) of any interest in a property 
     with respect to which the donor has previously made an 
     initial fractional contribution.
       ``(B) Initial fractional contribution.--The term `initial 
     fractional contribution' means, with respect to any donor, 
     the first gift of an undivided portion of the donor's entire 
     interest in any tangible personal property for which a 
     deduction is allowed under subsection (a) or (b).''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to contributions, bequests, and gifts made after 
     the date of the enactment of this Act.

     SEC. 1219. PROVISIONS RELATING TO SUBSTANTIAL AND GROSS 
                   OVERSTATEMENTS OF VALUATIONS.

       (a) Modification of Thresholds for Substantial and Gross 
     Valuation Misstatements.--
       (1) Substantial valuation misstatement.--
       (A) Income taxes.--Subparagraph (A) of section 6662(e)(1) 
     (relating to substantial valuation misstatement under chapter 
     1) is amended by striking ``200 percent'' and inserting ``150 
     percent''.
       (B) Estate and gift taxes.--Paragraph (1) of section 
     6662(g) is amended by striking ``50 percent'' and inserting 
     ``65 percent''.
       (2) Gross valuation misstatement.--
       (A) Income taxes.--Clauses (i) and (ii) of section 
     6662(h)(2)(A) (relating to increase in penalty in case of 
     gross valuation misstatements) are amended to read as 
     follows:
       ``(i) in paragraph (1)(A), `200 percent' for `150 percent',
       ``(ii) in paragraph (1)(B)(i)--

       ``(I) `400 percent' for `200 percent', and
       ``(II) `25 percent' for `50 percent', and''.

       (B) Estate and gift taxes.--Subparagraph (C) of section 
     6662(h)(2) is amended by striking ``1A`25 percent' 
     for `50 percent'1A'' and inserting ``1A`40 
     percent' for `65 percent'1A''.
       (3) Elimination of reasonable cause exception for gross 
     misstatements.--Section 6664(c)(2) (relating to reasonable 
     cause exception for underpayments) is amended by striking 
     ``paragraph (1) shall not apply unless'' and inserting 
     ``paragraph (1) shall not apply. The preceding sentence shall 
     not apply to a substantial valuation overstatement under 
     chapter 1 if''.
       (b) Penalty on Appraisers Whose Appraisals Result in 
     Substantial or Gross Valuation Misstatements.--
       (1) In general.--Part I of subchapter B of chapter 68 
     (relating to assessable penalties) is amended by inserting 
     after section 6695 the following new section:

     ``SEC. 6695A. SUBSTANTIAL AND GROSS VALUATION MISSTATEMENTS 
                   ATTRIBUTABLE TO INCORRECT APPRAISALS.

       ``(a) Imposition of Penalty.--If--
       ``(1) a person prepares an appraisal of the value of 
     property and such person knows, or reasonably should have 
     known, that the appraisal would be used in connection with a 
     return or a claim for refund, and
       ``(2) the claimed value of the property on a return or 
     claim for refund which is based on such appraisal results in 
     a substantial valuation misstatement under chapter 1 (within 
     the meaning of section 6662(e)), or a gross valuation 
     misstatement (within the meaning of section 6662(h)), with 
     respect to such property, then such person shall pay a 
     penalty in the amount determined under subsection (b).
       ``(b) Amount of Penalty.--The amount of the penalty imposed 
     under subsection (a) on any person with respect to an 
     appraisal shall be equal to the lesser of--
       ``(1) the greater of--
       ``(A) 10 percent of the amount of the underpayment (as 
     defined in section 6664(a)) attributable to the misstatement 
     described in subsection (a)(2), or
       ``(B) $1,000, or
       ``(2) 125 percent of the gross income received by the 
     person described in subsection (a)(1) from the preparation of 
     the appraisal.
       ``(c) Exception.--No penalty shall be imposed under 
     subsection (a) if the person establishes to the satisfaction 
     of the Secretary that the value established in the appraisal 
     was more likely than not the proper value.''.
       (2) Rules applicable to penalty.--Section 6696 (relating to 
     rules applicable with respect to sections 6694 and 6695) is 
     amended--
       (A) by striking ``6694 and 6695'' each place it appears in 
     the text and heading thereof and inserting ``6694, 6695, and 
     6695A'', and
       (B) by striking ``6694 or 6695'' each place it appears in 
     the text and inserting ``6694, 6695, or 6695A''.
       (3) Conforming amendment.--The table of sections for part I 
     of subchapter B of chapter 68 is amended by striking the item 
     relating to section 6696 and inserting the following new 
     items:

``Sec. 6695A. Substantial and gross valuation misstatements 
              attributable to incorrect appraisals.
``Sec. 6696. Rules applicable with respect to sections 6694, 6695, and 
              6695A.''.
       (c) Qualified Appraisers and Appraisals.--
       (1) In general.--Subparagraph (E) of section 170(f)(11) is 
     amended to read as follows:
       ``(E) Qualified appraisal and appraiser.--For purposes of 
     this paragraph--
       ``(i) Qualified appraisal.--The term `qualified appraisal' 
     means, with respect to any property, an appraisal of such 
     property which--

       ``(I) is treated for purposes of this paragraph as a 
     qualified appraisal under regulations or other guidance 
     prescribed by the Secretary, and
       ``(II) is conducted by a qualified appraiser in accordance 
     with generally accepted appraisal standards and any 
     regulations or other guidance prescribed under subclause (I).

       ``(ii) Qualified appraiser.--Except as provided in clause 
     (iii), the term `qualified appraiser' means an individual 
     who--

       ``(I) has earned an appraisal designation from a recognized 
     professional appraiser organization or has otherwise met 
     minimum education and experience requirements set forth in 
     regulations prescribed by the Secretary,
       ``(II) regularly performs appraisals for which the 
     individual receives compensation, and
       ``(III) meets such other requirements as may be prescribed 
     by the Secretary in regulations or other guidance.

       ``(iii) Specific appraisals.--An individual shall not be 
     treated as a qualified appraiser with respect to any specific 
     appraisal unless--

       ``(I) the individual demonstrates verifiable education and 
     experience in valuing the type of property subject to the 
     appraisal, and
       ``(II) the individual has not been prohibited from 
     practicing before the Internal Revenue Service by the 
     Secretary under section 330(c) of title 31, United States 
     Code, at any time during the 3-year period ending on the date 
     of the appraisal.''.

       (2) Reasonable cause exception.--Subparagraphs (B) and (C) 
     of section 6664(c)(3) are amended to read as follows:
       ``(B) Qualified appraisal.--The term `qualified appraisal' 
     has the meaning given such term by section 170(f)(11)(E)(i).
       ``(C) Qualified appraiser.--The term `qualified appraiser' 
     has the meaning given such term by section 
     170(f)(11)(E)(ii).''.
       (d) Disciplinary Actions Against Appraisers.--Section 
     330(c) of title 31, United States Code, is amended by 
     striking ``with respect to whom a penalty has been assessed 
     under section 6701(a) of the Internal Revenue Code of 1986''.
       (e) Effective Dates.--
       (1) Misstatement penalties.--Except as provided in 
     paragraph (3), the amendments made by subsection (a) shall 
     apply to returns filed after the date of the enactment of 
     this Act.
       (2) Appraiser provisions.--Except as provided in paragraph 
     (3), the amendments made by subsections (b), (c), and (d) 
     shall

[[Page 16401]]

     apply to appraisals prepared with respect to returns or 
     submissions filed after the date of the enactment of this 
     Act.
       (3) Special rule for certain easements.--In the case of a 
     contribution of a qualified real property interest which is a 
     restriction with respect to the exterior of a building 
     described in section 170(h)(4)(C)(ii) of the Internal Revenue 
     Code of 1986, and an appraisal with respect to the 
     contribution, the amendments made by subsections (a) and (b) 
     shall apply to returns filed after July 25, 2006.

     SEC. 1220. ADDITIONAL STANDARDS FOR CREDIT COUNSELING 
                   ORGANIZATIONS.

       (a) In General.--Section 501 (relating to exemption from 
     tax on corporations, certain trusts, etc.) is amended by 
     redesignating subsection (q) as subsection (r) and by 
     inserting after subsection (p) the following new subsection:
       ``(q) Special Rules for Credit Counseling Organizations.--
       ``(1) In general.--An organization with respect to which 
     the provision of credit counseling services is a substantial 
     purpose shall not be exempt from tax under subsection (a) 
     unless such organization is described in paragraph (3) or (4) 
     of subsection (c) and such organization is organized and 
     operated in accordance with the following requirements:
       ``(A) The organization--
       ``(i) provides credit counseling services tailored to the 
     specific needs and circumstances of consumers,
       ``(ii) makes no loans to debtors (other than loans with no 
     fees or interest) and does not negotiate the making of loans 
     on behalf of debtors,
       ``(iii) provides services for the purpose of improving a 
     consumer's credit record, credit history, or credit rating 
     only to the extent that such services are incidental to 
     providing credit counseling services, and
       ``(iv) does not charge any separately stated fee for 
     services for the purpose of improving any consumer's credit 
     record, credit history, or credit rating.
       ``(B) The organization does not refuse to provide credit 
     counseling services to a consumer due to the inability of the 
     consumer to pay, the ineligibility of the consumer for debt 
     management plan enrollment, or the unwillingness of the 
     consumer to enroll in a debt management plan.
       ``(C) The organization establishes and implements a fee 
     policy which--
       ``(i) requires that any fees charged to a consumer for 
     services are reasonable,
       ``(ii) allows for the waiver of fees if the consumer is 
     unable to pay, and
       ``(iii) except to the extent allowed by State law, 
     prohibits charging any fee based in whole or in part on a 
     percentage of the consumer's debt, the consumer's payments to 
     be made pursuant to a debt management plan, or the projected 
     or actual savings to the consumer resulting from enrolling in 
     a debt management plan.
       ``(D) At all times the organization has a board of 
     directors or other governing body--
       ``(i) which is controlled by persons who represent the 
     broad interests of the public, such as public officials 
     acting in their capacities as such, persons having special 
     knowledge or expertise in credit or financial education, and 
     community leaders,
       ``(ii) not more than 20 percent of the voting power of 
     which is vested in persons who are employed by the 
     organization or who will benefit financially, directly or 
     indirectly, from the organization's activities (other than 
     through the receipt of reasonable directors' fees or the 
     repayment of consumer debt to creditors other than the credit 
     counseling organization or its affiliates), and
       ``(iii) not more than 49 percent of the voting power of 
     which is vested in persons who are employed by the 
     organization or who will benefit financially, directly or 
     indirectly, from the organization's activities (other than 
     through the receipt of reasonable directors' fees).
       ``(E) The organization does not own more than 35 percent 
     of--
       ``(i) the total combined voting power of any corporation 
     (other than a corporation which is an organization described 
     in subsection (c)(3) and exempt from tax under subsection 
     (a)) which is in the trade or business of lending money, 
     repairing credit, or providing debt management plan services, 
     payment processing, or similar services,
       ``(ii) the profits interest of any partnership (other than 
     a partnership which is an organization described in 
     subsection (c)(3) and exempt from tax under subsection (a)) 
     which is in the trade or business of lending money, repairing 
     credit, or providing debt management plan services, payment 
     processing, or similar services, and
       ``(iii) the beneficial interest of any trust or estate 
     (other than a trust which is an organization described in 
     subsection (c)(3) and exempt from tax under subsection (a)) 
     which is in the trade or business of lending money, repairing 
     credit, or providing debt management plan services, payment 
     processing, or similar services.
       ``(F) The organization receives no amount for providing 
     referrals to others for debt management plan services, and 
     pays no amount to others for obtaining referrals of 
     consumers.
       ``(2) Additional requirements for organizations described 
     in subsection (c)(3).--
       ``(A) In general.--In addition to the requirements under 
     paragraph (1), an organization with respect to which the 
     provision of credit counseling services is a substantial 
     purpose and which is described in paragraph (3) of subsection 
     (c) shall not be exempt from tax under subsection (a) unless 
     such organization is organized and operated in accordance 
     with the following requirements:
       ``(i) The organization does not solicit contributions from 
     consumers during the initial counseling process or while the 
     consumer is receiving services from the organization.
       ``(ii) The aggregate revenues of the organization which are 
     from payments of creditors of consumers of the organization 
     and which are attributable to debt management plan services 
     do not exceed the applicable percentage of the total revenues 
     of the organization.
       ``(B) Applicable percentage.--
       ``(i) In general.--For purposes of subparagraph (A)(ii), 
     the applicable percentage is 50 percent.
       ``(ii) Transition rule.--Notwithstanding clause (i), in the 
     case of an organization with respect to which the provision 
     of credit counseling services is a substantial purpose and 
     which is described in paragraph (3) of subsection (c) and 
     exempt from tax under subsection (a) on the date of the 
     enactment of this subsection, the applicable percentage is--

       ``(I) 80 percent for the first taxable year of such 
     organization beginning after the date which is 1 year after 
     the date of the enactment of this subsection, and
       ``(II) 70 percent for the second such taxable year 
     beginning after such date, and
       ``(III) 60 percent for the third such taxable year 
     beginning after such date.

       ``(3) Additional requirement for organizations described in 
     subsection (c)(4).--In addition to the requirements under 
     paragraph (1), an organization with respect to which the 
     provision of credit counseling services is a substantial 
     purpose and which is described in paragraph (4) of subsection 
     (c) shall not be exempt from tax under subsection (a) unless 
     such organization notifies the Secretary, in such manner as 
     the Secretary may by regulations prescribe, that it is 
     applying for recognition as a credit counseling organization.
       ``(4) Credit counseling services; debt management plan 
     services.--For purposes of this subsection--
       ``(A) Credit counseling services.--The term `credit 
     counseling services' means--
       ``(i) the providing of educational information to the 
     general public on budgeting, personal finance, financial 
     literacy, saving and spending practices, and the sound use of 
     consumer credit,
       ``(ii) the assisting of individuals and families with 
     financial problems by providing them with counseling, or
       ``(iii) a combination of the activities described in 
     clauses (i) and (ii).
       ``(B) Debt management plan services.--The term `debt 
     management plan services' means services related to the 
     repayment, consolidation, or restructuring of a consumer's 
     debt, and includes the negotiation with creditors of lower 
     interest rates, the waiver or reduction of fees, and the 
     marketing and processing of debt management plans.''.
       (b) Debt Management Plan Services Treated as an Unrelated 
     Business.--Section 513 (relating to unrelated trade or 
     business) is amended by adding at the end the following:
       ``(j) Debt Management Plan Services.--The term `unrelated 
     trade or business' includes the provision of debt management 
     plan services (as defined in section 501(q)(4)(B)) by any 
     organization other than an organization which meets the 
     requirements of section 501(q).''.
       (c) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     beginning after the date of the enactment of this Act.
       (2) Transition rule for existing organizations.--In the 
     case of any organization described in paragraph (3) or (4) 
     section 501(c) of the Internal Revenue Code of 1986 and with 
     respect to which the provision of credit counseling services 
     is a substantial purpose on the date of the enactment of this 
     Act, the amendments made by this section shall apply to 
     taxable years beginning after the date which is 1 year after 
     the date of the enactment of this Act.

     SEC. 1221. EXPANSION OF THE BASE OF TAX ON PRIVATE FOUNDATION 
                   NET INVESTMENT INCOME.

       (a) Gross Investment Income.--
       (1) In general.--Paragraph (2) of section 4940(c) (relating 
     to gross investment income) is amended by adding at the end 
     the following new sentence: ``Such term shall also include 
     income from sources similar to those in the preceding 
     sentence.''.
       (2) Conforming amendment.--Subsection (e) of section 509 
     (relating to gross investment income) is amended by adding at 
     the end the following new sentence: ``Such term shall also 
     include income from sources similar to those in the preceding 
     sentence.''.
       (b) Capital Gain Net Income.--Paragraph (4) of section 
     4940(c) (relating to capital gains and losses) is amended--
       (1) in subparagraph (A), by striking ``used for the 
     production of interest, dividends,

[[Page 16402]]

     rents, and royalties'' and inserting ``used for the 
     production of gross investment income (as defined in 
     paragraph (2))'',
       (2) in subparagraph (C), by inserting ``or carrybacks'' 
     after ``carryovers'', and
       (3) by adding at the end the following new subparagraph:
       ``(D) Except to the extent provided by regulation, under 
     rules similar to the rules of section 1031 (including the 
     exception under subsection (a)(2) thereof), no gain or loss 
     shall be taken into account with respect to any portion of 
     property used for a period of not less than 1 year for a 
     purpose or function constituting the basis of the private 
     foundation's exemption if the entire property is exchanged 
     immediately following such period solely for property of like 
     kind which is to be used primarily for a purpose or function 
     constituting the basis for such foundation's exemption.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 1222. DEFINITION OF CONVENTION OR ASSOCIATION OF 
                   CHURCHES.

       Section 7701 (relating to definitions) is amended by 
     redesignating subsection (o) as subsection (p) and by 
     inserting after subsection (n) the following new subsection:
       ``(o) Convention or Association of Churches.--For purposes 
     of this title, any organization which is otherwise a 
     convention or association of churches shall not fail to so 
     qualify merely because the membership of such organization 
     includes individuals as well as churches or because 
     individuals have voting rights in such organization.''.

     SEC. 1223. NOTIFICATION REQUIREMENT FOR ENTITIES NOT 
                   CURRENTLY REQUIRED TO FILE.

       (a) In General.--Section 6033 (relating to returns by 
     exempt organizations), as amended by this Act, is amended by 
     redesignating subsection (i) as subsection (j) and by 
     inserting after subsection (h) the following new subsection:
       ``(i) Additional Notification Requirements.--Any 
     organization the gross receipts of which in any taxable year 
     result in such organization being referred to in subsection 
     (a)(3)(A)(ii) or (a)(3)(B)--
       ``(1) shall furnish annually, in electronic form, and at 
     such time and in such manner as the Secretary may by 
     regulations prescribe, information setting forth--
       ``(A) the legal name of the organization,
       ``(B) any name under which such organization operates or 
     does business,
       ``(C) the organization's mailing address and Internet web 
     site address (if any),
       ``(D) the organization's taxpayer identification number,
       ``(E) the name and address of a principal officer, and
       ``(F) evidence of the continuing basis for the 
     organization's exemption from the filing requirements under 
     subsection (a)(1), and
       ``(2) upon the termination of the existence of the 
     organization, shall furnish notice of such termination.''.
       (b) Loss of Exempt Status for Failure to File Return or 
     Notice.--Section 6033 (relating to returns by exempt 
     organizations), as amended by subsection (a), is amended by 
     redesignating subsection (j) as subsection (k) and by 
     inserting after subsection (i) the following new subsection:
       ``(j) Loss of Exempt Status for Failure to File Return or 
     Notice.--
       ``(1) In general.--If an organization described in 
     subsection (a)(1) or (i) fails to file an annual return or 
     notice required under either subsection for 3 consecutive 
     years, such organization's status as an organization exempt 
     from tax under section 501(a) shall be considered revoked on 
     and after the date set by the Secretary for the filing of the 
     third annual return or notice. The Secretary shall publish 
     and maintain a list of any organization the status of which 
     is so revoked.
       ``(2) Application necessary for reinstatement.--Any 
     organization the tax-exempt status of which is revoked under 
     paragraph (1) must apply in order to obtain reinstatement of 
     such status regardless of whether such organization was 
     originally required to make such an application.
       ``(3) Retroactive reinstatement if reasonable cause shown 
     for failure.--If, upon application for reinstatement of 
     status as an organization exempt from tax under section 
     501(a), an organization described in paragraph (1) can show 
     to the satisfaction of the Secretary evidence of reasonable 
     cause for the failure described in such paragraph, the 
     organization's exempt status may, in the discretion of the 
     Secretary, be reinstated effective from the date of the 
     revocation under such paragraph.''.
       (c) No Declaratory Judgment Relief.--Section 7428(b) 
     (relating to limitations) is amended by adding at the end the 
     following new paragraph:
       ``(4) Nonapplication for certain revocations.--No action 
     may be brought under this section with respect to any 
     revocation of status described in section 6033(j)(1).''.
       (d) No Monetary Penalty for Failure to Notify.--Section 
     6652(c)(1) (relating to annual returns under section 6033 or 
     6012(a)(6)) is amended by adding at the end the following new 
     subparagraph:
       ``(E) No penalty for certain annual notices.--This 
     paragraph shall not apply with respect to any notice required 
     under section 6033(i).''.
       (e) Secretarial Outreach Requirements.--
       (1) Notice requirement.--The Secretary of the Treasury 
     shall notify in a timely manner every organization described 
     in section 6033(i) of the Internal Revenue Code of 1986 (as 
     added by this section) of the requirement under such section 
     6033(i) and of the penalty established under section 6033(j) 
     of such Code--
       (A) by mail, in the case of any organization the identity 
     and address of which is included in the list of exempt 
     organizations maintained by the Secretary, and
       (B) by Internet or other means of outreach, in the case of 
     any other organization.
       (2) Loss of status penalty for failure to file return.--The 
     Secretary of the Treasury shall publicize, in a timely manner 
     in appropriate forms and instructions and through other 
     appropriate means, the penalty established under section 
     6033(j) of such Code for the failure to file a return under 
     subsection (a)(1) or (i) of section 6033 of such Code.
       (f) Effective Date.--The amendments made by this section 
     shall apply to notices and returns with respect to annual 
     periods beginning after 2006.

     SEC. 1224. DISCLOSURE TO STATE OFFICIALS RELATING TO EXEMPT 
                   ORGANIZATIONS.

       (a) In General.--Subsection (c) of section 6104 is amended 
     by striking paragraph (2) and inserting the following new 
     paragraphs:
       ``(2) Disclosure of proposed actions related to charitable 
     organizations.--
       ``(A) Specific notifications.--In the case of an 
     organization to which paragraph (1) applies, the Secretary 
     may disclose to the appropriate State officer--
       ``(i) a notice of proposed refusal to recognize such 
     organization as an organization described in section 
     501(c)(3) or a notice of proposed revocation of such 
     organization's recognition as an organization exempt from 
     taxation,
       ``(ii) the issuance of a letter of proposed deficiency of 
     tax imposed under section 507 or chapter 41 or 42, and
       ``(iii) the names, addresses, and taxpayer identification 
     numbers of organizations which have applied for recognition 
     as organizations described in section 501(c)(3).
       ``(B) Additional disclosures.--Returns and return 
     information of organizations with respect to which 
     information is disclosed under subparagraph (A) may be made 
     available for inspection by or disclosed to an appropriate 
     State officer.
       ``(C) Procedures for disclosure.--Information may be 
     inspected or disclosed under subparagraph (A) or (B) only--
       ``(i) upon written request by an appropriate State officer, 
     and
       ``(ii) for the purpose of, and only to the extent necessary 
     in, the administration of State laws regulating such 
     organizations.

     Such information may only be inspected by or disclosed to a 
     person other than the appropriate State officer if such 
     person is an officer or employee of the State and is 
     designated by the appropriate State officer to receive the 
     returns or return information under this paragraph on behalf 
     of the appropriate State officer.
       ``(D) Disclosures other than by request.--The Secretary may 
     make available for inspection or disclose returns and return 
     information of an organization to which paragraph (1) applies 
     to an appropriate State officer of any State if the Secretary 
     determines that such returns or return information may 
     constitute evidence of noncompliance under the laws within 
     the jurisdiction of the appropriate State officer.
       ``(3) Disclosure with respect to certain other exempt 
     organizations.--Upon written request by an appropriate State 
     officer, the Secretary may make available for inspection or 
     disclosure returns and return information of any organization 
     described in section 501(c) (other than organizations 
     described in paragraph (1) or (3) thereof) for the purpose 
     of, and only to the extent necessary in, the administration 
     of State laws regulating the solicitation or administration 
     of the charitable funds or charitable assets of such 
     organizations. Such information may only be inspected by or 
     disclosed to a person other than the appropriate State 
     officer if such person is an officer or employee of the State 
     and is designated by the appropriate State officer to receive 
     the returns or return information under this paragraph on 
     behalf of the appropriate State officer.
       ``(4) Use in civil judicial and administrative 
     proceedings.--Returns and return information disclosed 
     pursuant to this subsection may be disclosed in civil 
     administrative and civil judicial proceedings pertaining to 
     the enforcement of State laws regulating such organizations 
     in a manner prescribed by the Secretary similar to that for 
     tax administration proceedings under section 6103(h)(4).
       ``(5) No disclosure if impairment.--Returns and return 
     information shall not be disclosed under this subsection, or 
     in any proceeding described in paragraph (4), to the extent 
     that the Secretary determines that such disclosure would 
     seriously impair Federal tax administration.
       ``(6) Definitions.--For purposes of this subsection--

[[Page 16403]]

       ``(A) Return and return information.--The terms `return' 
     and `return information' have the respective meanings given 
     to such terms by section 6103(b).
       ``(B) Appropriate state officer.--The term `appropriate 
     State officer' means--
       ``(i) the State attorney general,
       ``(ii) the State tax officer,
       ``(iii) in the case of an organization to which paragraph 
     (1) applies, any other State official charged with overseeing 
     organizations of the type described in section 501(c)(3), and
       ``(iv) in the case of an organization to which paragraph 
     (3) applies, the head of an agency designated by the State 
     attorney general as having primary responsibility for 
     overseeing the solicitation of funds for charitable 
     purposes.''.
       (b) Conforming Amendments.--
       (1) Paragraph (2) of section 6103(a) is amended by 
     inserting ``or section 6104(c)'' after ``this section''.
       (2) Subparagraph (A) of section 6103(p)(3) is amended by 
     inserting ``and section 6104(c)'' after ``section'' in the 
     first sentence.
       (3) Paragraph (4) of section 6103(p) is amended--
       (A) in the matter preceding subparagraph (A), by inserting 
     ``, any appropriate State officer (as defined in section 
     6104(c)),'' before ``or any other person'',
       (B) in subparagraph (F)(i), by inserting ``any appropriate 
     State officer (as defined in section 6104(c)),'' before ``or 
     any other person'', and
       (C) in the matter following subparagraph (F), by inserting 
     ``, an appropriate State officer (as defined in section 
     6104(c)),'' after ``including an agency'' each place it 
     appears.
       (4) The heading for paragraph (1) of section 6104(c) is 
     amended by inserting ``for charitable organizations'' after 
     ``rule''.
       (5) Paragraph (2) of section 7213(a) is amended by 
     inserting ``or under section 6104(c)'' after ``6103''.
       (6) Paragraph (2) of section 7213A(a) is amended by 
     inserting ``or under section 6104(c)'' after ``7213(a)(2)''.
       (7) Paragraph (2) of section 7431(a) is amended by 
     inserting `` or in violation of section 6104(c)'' after 
     ``6103''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act 
     but shall not apply to requests made before such date.

     SEC. 1225. PUBLIC DISCLOSURE OF INFORMATION RELATING TO 
                   UNRELATED BUSINESS INCOME TAX RETURNS.

       (a) In General.--Subparagraph (A) of section 6104(d)(1) is 
     amended by redesignating clauses (ii) and (iii) as clauses 
     (iii) and (iv), respectively, and by inserting after clause 
     (i) the following new clause:
       ``(ii) any annual return filed under section 6011 which 
     relates to any tax imposed by section 511 (relating to 
     imposition of tax on unrelated business income of charitable, 
     etc., organizations) by such organization, but only if such 
     organization is described in section 501(c)(3),''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to returns filed after the date of the enactment 
     of this Act.

     SEC. 1226. STUDY ON DONOR ADVISED FUNDS AND SUPPORTING 
                   ORGANIZATIONS.

       (a) Study.--The Secretary of the Treasury shall undertake a 
     study on the organization and operation of donor advised 
     funds (as defined in section 4966(d)(2) of the Internal 
     Revenue Code of 1986, as added by this Act) and of 
     organizations described in section 509(a)(3) of such Code. 
     The study shall specifically consider--
       (1) whether the deductions allowed for the income, gift, or 
     estate taxes for charitable contributions to sponsoring 
     organizations (as defined in section 4966(d)(1) of such Code, 
     as added by this Act) of donor advised funds or to 
     organizations described in section 509(a)(3) of such Code are 
     appropriate in consideration of--
       (A) the use of contributed assets (including the type, 
     extent, and timing of such use), or
       (B) the use of the assets of such organizations for the 
     benefit of the person making the charitable contribution (or 
     a person related to such person),
       (2) whether donor advised funds should be required to 
     distribute for charitable purposes a specified amount 
     (whether based on the income or assets of the fund) in order 
     to ensure that the sponsoring organization with respect to 
     such donor advised fund is operating consistent with the 
     purposes or functions constituting the basis for its 
     exemption under section 501, or its status as an organization 
     described in section 509(a), of such Code,
       (3) whether the retention by donors to organizations 
     described in paragraph (1) of rights or privileges with 
     respect to amounts transferred to such organizations 
     (including advisory rights or privileges with respect to the 
     making of grants or the investment of assets) is consistent 
     with the treatment of such transfers as completed gifts that 
     qualify for a deduction for income, gift, or estate taxes, 
     and
       (4) whether the issues raised by paragraphs (1), (2), and 
     (3) are also issues with respect to other forms of charities 
     or charitable donations.
       (b) Report.--Not later than 1 year after the date of the 
     enactment of this Act, the Secretary of the Treasury shall 
     submit to the Committee on Finance of the Senate and the 
     Committee on Ways and Means of the House of Representatives a 
     report on the study conducted under subsection (a) and make 
     such recommendations as the Secretary of the Treasury 
     considers appropriate.

         PART 2--IMPROVED ACCOUNTABILITY OF DONOR ADVISED FUNDS

     SEC. 1231. EXCISE TAXES RELATING TO DONOR ADVISED FUNDS.

       (a) In General.--Chapter 42 (relating to private 
     foundations and certain other tax-exempt organizations), as 
     amended by the Tax Increase Prevention and Reconciliation Act 
     of 2005, is amended by adding at the end the following new 
     subchapter:

                  ``Subchapter G--Donor Advised Funds

``Sec. 4966. Taxes on taxable distributions.
``Sec. 4967. Taxes on prohibited benefits.

     ``SEC. 4966. TAXES ON TAXABLE DISTRIBUTIONS.

       ``(a) Imposition of Taxes.--
       ``(1) On the sponsoring organization.--There is hereby 
     imposed on each taxable distribution a tax equal to 20 
     percent of the amount thereof. The tax imposed by this 
     paragraph shall be paid by the sponsoring organization with 
     respect to the donor advised fund.
       ``(2) On the fund management.--There is hereby imposed on 
     the agreement of any fund manager to the making of a 
     distribution, knowing that it is a taxable distribution, a 
     tax equal to 5 percent of the amount thereof. The tax imposed 
     by this paragraph shall be paid by any fund manager who 
     agreed to the making of the distribution.
       ``(b) Special Rules.--For purposes of subsection (a)--
       ``(1) Joint and several liability.--If more than one person 
     is liable under subsection (a)(2) with respect to the making 
     of a taxable distribution, all such persons shall be jointly 
     and severally liable under such paragraph with respect to 
     such distribution.
       ``(2) Limit for management.--With respect to any one 
     taxable distribution, the maximum amount of the tax imposed 
     by subsection (a)(2) shall not exceed $10,000.
       ``(c) Taxable Distribution.--For purposes of this section--
       ``(1) In general.--The term `taxable distribution' means 
     any distribution from a donor advised fund--
       ``(A) to any natural person, or
       ``(B) to any other person if--
       ``(i) such distribution is for any purpose other than one 
     specified in section 170(c)(2)(B), or
       ``(ii) the sponsoring organization does not exercise 
     expenditure responsibility with respect to such distribution 
     in accordance with section 4945(h).
       ``(2) Exceptions.--Such term shall not include any 
     distribution from a donor advised fund--
       ``(A) to any organization described in section 170(b)(1)(A) 
     (other than a disqualified supporting organization),
       ``(B) to the sponsoring organization of such donor advised 
     fund, or
       ``(C) to any other donor advised fund.
       ``(d) Definitions.--For purposes of this subchapter--
       ``(1) Sponsoring organization.--The term `sponsoring 
     organization' means any organization which--
       ``(A) is described in section 170(c) (other than in 
     paragraph (1) thereof, and without regard to paragraph (2)(A) 
     thereof),
       ``(B) is not a private foundation (as defined in section 
     509(a)), and
       ``(C) maintains 1 or more donor advised funds.
       ``(2) Donor advised fund.--
       ``(A) In general.--Except as provided in subparagraph (B) 
     or (C), the term `donor advised fund' means a fund or 
     account--
       ``(i) which is separately identified by reference to 
     contributions of a donor or donors,
       ``(ii) which is owned and controlled by a sponsoring 
     organization, and
       ``(iii) with respect to which a donor (or any person 
     appointed or designated by such donor) has, or reasonably 
     expects to have, advisory privileges with respect to the 
     distribution or investment of amounts held in such fund or 
     account by reason of the donor's status as a donor.
       ``(B) Exceptions.--The term `donor advised fund' shall not 
     include any fund or account--
       ``(i) which makes distributions only to a single identified 
     organization or governmental entity, or
       ``(ii) with respect to which a person described in 
     subparagraph (A)(iii) advises as to which individuals receive 
     grants for travel, study, or other similar purposes, if--

       ``(I) such person's advisory privileges are performed 
     exclusively by such person in the person's capacity as a 
     member of a committee all of the members of which are 
     appointed by the sponsoring organization,
       ``(II) no combination of persons described in subparagraph 
     (A)(iii) (or persons related to such persons) control, 
     directly or indirectly, such committee, and
       ``(III) all grants from such fund or account are awarded on 
     an objective and nondiscriminatory basis pursuant to a 
     procedure approved in advance by the board of directors of 
     the sponsoring organization, and such procedure is designed 
     to ensure that all such grants meet the requirements of 
     paragraphs (1), (2), or (3) of section 4945(g).

[[Page 16404]]

       ``(C) Secretarial authority.--The Secretary may exempt a 
     fund or account not described in subparagraph (B) from 
     treatment as a donor advised fund--
       ``(i) if such fund or account is advised by a committee not 
     directly or indirectly controlled by the donor or any person 
     appointed or designated by the donor for the purpose of 
     advising with respect to distributions from such fund (and 
     any related parties), or
       ``(ii) if such fund benefits a single identified charitable 
     purpose.
       ``(3) Fund manager.--The term `fund manager' means, with 
     respect to any sponsoring organization--
       ``(A) an officer, director, or trustee of such sponsoring 
     organization (or an individual having powers or 
     responsibilities similar to those of officers, directors, or 
     trustees of the sponsoring organization), and
       ``(B) with respect to any act (or failure to act), the 
     employees of the sponsoring organization having authority or 
     responsibility with respect to such act (or failure to act).
       ``(4) Disqualified supporting organization.--
       ``(A) In general.--The term `disqualified supporting 
     organization' means, with respect to any distribution--
       ``(i) any type III supporting organization (as defined in 
     section 4943(f)(5)(A)) which is not a functionally integrated 
     type III supporting organization (as defined in section 
     4943(f)(5)(B)), and
       ``(ii) any organization which is described in subparagraph 
     (B) or (C) if--

       ``(I) the donor or any person designated by the donor for 
     the purpose of advising with respect to distributions from a 
     donor advised fund (and any related parties) directly or 
     indirectly controls a supported organization (as defined in 
     section 509(f)(3)) of such organization, or
       ``(II) the Secretary determines by regulations that a 
     distribution to such organization otherwise is inappropriate.

       ``(B) Type i and type ii supporting organizations.--An 
     organization is described in this subparagraph if the 
     organization meets the requirements of subparagraphs (A) and 
     (C) of section 509(a)(3) and is--
       ``(i) operated, supervised, or controlled by one or more 
     organizations described in paragraph (1) or (2) of section 
     509(a), or
       ``(ii) supervised or controlled in connection with one or 
     more such organizations.
       ``(C) Functionally integrated type iii supporting 
     organizations.--An organization is described in this 
     subparagraph if the organization is a functionally integrated 
     type III supporting organization (as defined under section 
     4943(f)(5)(B)).

     ``SEC. 4967. TAXES ON PROHIBITED BENEFITS.

       ``(a) Imposition of Taxes.--
       ``(1) On the donor, donor advisor, or related person.--
     There is hereby imposed on the advice of any person described 
     in subsection (d) to have a sponsoring organization make a 
     distribution from a donor advised fund which results in such 
     person or any other person described in subsection (d) 
     receiving, directly or indirectly, a more than incidental 
     benefit as a result of such distribution, a tax equal to 125 
     percent of such benefit. The tax imposed by this paragraph 
     shall be paid by any person described in subsection (d) who 
     advises as to the distribution or who receives such a benefit 
     as a result of the distribution.
       ``(2) On the fund management.--There is hereby imposed on 
     the agreement of any fund manager to the making of a 
     distribution, knowing that such distribution would confer a 
     benefit described in paragraph (1), a tax equal to 10 percent 
     of the amount of such benefit. The tax imposed by this 
     paragraph shall be paid by any fund manager who agreed to the 
     making of the distribution.
       ``(b) Exception.--No tax shall be imposed under this 
     section with respect to any distribution if a tax has been 
     imposed with respect to such distribution under section 4958.
       ``(c) Special Rules.--For purposes of subsection (a)--
       ``(1) Joint and several liability.--If more than one person 
     is liable under paragraph (1) or (2) of subsection (a) with 
     respect to a distribution described in subsection (a), all 
     such persons shall be jointly and severally liable under such 
     paragraph with respect to such distribution.
       ``(2) Limit for management.--With respect to any one 
     distribution described in subsection (a), the maximum amount 
     of the tax imposed by subsection (a)(2) shall not exceed 
     $10,000.
       ``(d) Person Described.--A person is described in this 
     subsection if such person is described in section 4958(f)(7) 
     with respect to a donor advised fund.''.
       (b) Conforming Amendments.--
       (1) Section 4963 is amended by inserting ``4966, 4967,'' 
     after ``4958,'' each place it appears in subsections (a) and 
     (c).
       (2) The table of subchapters for chapter 42 is amended by 
     adding at the end the following new item:


                 ``Subchapter G. Donor Advised Funds''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

     SEC. 1232. EXCESS BENEFIT TRANSACTIONS INVOLVING DONOR 
                   ADVISED FUNDS AND SPONSORING ORGANIZATIONS.

       (a) Disqualified Persons.--
       (1) In general.--Paragraph (1) of section 4958(f) is 
     amended by striking ``and'' at the end of subparagraph (B), 
     by striking the period at the end of subparagraph (C) and 
     inserting a comma, and by adding after subparagraph (C) the 
     following new subparagraphs:
       ``(D) which involves a donor advised fund (as defined in 
     section 4966(d)(2)), any person who is described in paragraph 
     (7) with respect to such donor advised fund (as so defined), 
     and
       ``(E) which involves a sponsoring organization (as defined 
     in section 4966(d)(1)), any person who is described in 
     paragraph (8) with respect to such sponsoring organization 
     (as so defined).''.
       (2) Donors, donor advisors, and investment advisors treated 
     as disqualified persons.--Section 4958(f) is amended by 
     adding at the end the following new paragraphs:
       ``(7) Donors and donor advisors.--For purposes of paragraph 
     (1)(E), a person is described in this paragraph if such 
     person--
       ``(A) is described in section 4966(d)(2)(A)(iii),
       ``(B) is a member of the family of an individual described 
     in subparagraph (A), or
       ``(C) is a 35-percent controlled entity (as defined in 
     paragraph (3) by substituting `persons described in 
     subparagraph (A) or (B) of paragraph (7)' for `persons 
     described in subparagraph (A) or (B) of paragraph (1)' in 
     subparagraph (A)(i) thereof).
       ``(8) Investment advisors.--For purposes of paragraph 
     (1)(F)--
       ``(A) In general.--A person is described in this paragraph 
     if such person--
       ``(i) is an investment advisor,
       ``(ii) is a member of the family of an individual described 
     in clause (i), or
       ``(iii) is a 35-percent controlled entity (as defined in 
     paragraph (3) by substituting `persons described in clause 
     (i) or (ii) of paragraph (8)(A)' for `persons described in 
     subparagraph (A) or (B) of paragraph (1)' in subparagraph 
     (A)(i) thereof).
       ``(B) Investment advisor defined.--For purposes of 
     subparagraph (A), the term `investment advisor' means, with 
     respect to any sponsoring organization (as defined in section 
     4966(d)(1)), any person (other than an employee of such 
     organization) compensated by such organization for managing 
     the investment of, or providing investment advice with 
     respect to, assets maintained in donor advised funds (as 
     defined in section 4966(d)(2)) owned by such organization.''.
       (b) Certain Transactions Treated as Excess Benefit 
     Transactions.--
       (1) In general.--Section 4958(c) is amended by 
     redesignating paragraph (2) as paragraph (3) and by inserting 
     after paragraph (1) the following new paragraph:
       ``(2) Special rules for donor advised funds.--In the case 
     of any donor advised fund (as defined in section 
     4966(d)(2))--
       ``(A) the term `excess benefit transaction' includes any 
     grant, loan, compensation, or other similar payment from such 
     fund to a person described in subsection (f)(7) with respect 
     to such fund, and
       ``(B) the term `excess benefit' includes, with respect to 
     any transaction described in subparagraph (A), the amount of 
     any such grant, loan, compensation, or other similar 
     payment.''.
       (2) Special rule for correction of transaction.--Section 
     4958(f)(6) is amended by inserting ``, except that in the 
     case of any correction of an excess benefit transaction 
     described in subsection (c)(2), no amount repaid in a manner 
     prescribed by the Secretary may be held in any donor advised 
     fund'' after ``standards''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to transactions occurring after the date of the 
     enactment of this Act.

     SEC. 1233. EXCESS BUSINESS HOLDINGS OF DONOR ADVISED FUNDS.

       (a) In General.--Section 4943 is amended by adding at the 
     end the following new subsection:
       ``(e) Application of Tax to Donor Advised Funds.--
       ``(1) In general.--For purposes of this section, a donor 
     advised fund (as defined in section 4966(d)(2)) shall be 
     treated as a private foundation.
       ``(2) Disqualified person.--In applying this section to any 
     donor advised fund (as so defined), the term `disqualified 
     person' means, with respect to the donor advised fund, any 
     person who is--
       ``(A) described in section 4966(d)(2)(A)(iii),
       ``(B) a member of the family of an individual described in 
     subparagraph (A), or
       ``(C) a 35-percent controlled entity (as defined in section 
     4958(f)(3) by substituting `persons described in subparagraph 
     (A) or (B) of section 4943(e)(2)' for `persons described in 
     subparagraph (A) or (B) of paragraph (1)' in subparagraph 
     (A)(i) thereof).
       ``(3) Present holdings.--For purposes of this subsection, 
     rules similar to the rules of paragraphs (4), (5), and (6) of 
     subsection (c) shall apply to donor advised funds (as so 
     defined), except that--
       ``(A) `the date of the enactment of this subsection' shall 
     be substituted for `May 26, 1969' each place it appears in 
     paragraphs (4), (5), and (6), and
       ``(B) `January 1, 2007' shall be substituted for `January 
     1, 1970' in paragraph (4)(E).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable

[[Page 16405]]

     years beginning after the date of the enactment of this Act.

     SEC. 1234. TREATMENT OF CHARITABLE CONTRIBUTION DEDUCTIONS TO 
                   DONOR ADVISED FUNDS.

       (a) Income.--Section 170(f) (relating to disallowance of 
     deduction in certain cases and special rules), as amended by 
     this Act, is amended by adding at the end the following new 
     paragraph:
       ``(18) Contributions to donor advised funds.--A deduction 
     otherwise allowed under subsection (a) for any contribution 
     to a donor advised fund (as defined in section 4966(d)(2)) 
     shall only be allowed if--
       ``(A) the sponsoring organization (as defined in section 
     4966(d)(1)) with respect to such donor advised fund is not--
       ``(i) described in paragraph (3), (4), or (5) of subsection 
     (c), or
       ``(ii) a type III supporting organization (as defined in 
     section 4943(f)(5)(A)) which is not a functionally integrated 
     type III supporting organization (as defined in section 
     4943(f)(5)(B)), and
       ``(B) the taxpayer obtains a contemporaneous written 
     acknowledgment (determined under rules similar to the rules 
     of paragraph (8)(C)) from the sponsoring organization (as so 
     defined) of such donor advised fund that such organization 
     has exclusive legal control over the assets contributed.''.
       (b) Estate.--Section 2055(e) is amended by adding at the 
     end the following new paragraph:
       ``(5) Contributions to donor advised funds.--A deduction 
     otherwise allowed under subsection (a) for any contribution 
     to a donor advised fund (as defined in section 4966(d)(2)) 
     shall only be allowed if--
       ``(A) the sponsoring organization (as defined in section 
     4966(d)(1)) with respect to such donor advised fund is not--
       ``(i) described in paragraph (3) or (4) of subsection (a), 
     or
       ``(ii) a type III supporting organization (as defined in 
     section 4943(f)(5)(A)) which is not a functionally integrated 
     type III supporting organization (as defined in section 
     4943(f)(5)(B)), and
       ``(B) the taxpayer obtains a contemporaneous written 
     acknowledgment (determined under rules similar to the rules 
     of section 170(f)(8)(C)) from the sponsoring organization (as 
     so defined) of such donor advised fund that such organization 
     has exclusive legal control over the assets contributed.''.
       (c) Gift.--Section 2522(c) is amended by adding at the end 
     the following new paragraph:
       ``(5) Contributions to donor advised funds.--A deduction 
     otherwise allowed under subsection (a) for any contribution 
     to a donor advised fund (as defined in section 4966(d)(2)) 
     shall only be allowed if--
       ``(A) the sponsoring organization (as defined in section 
     4966(d)(1)) with respect to such donor advised fund is not--
       ``(i) described in paragraph (3) or (4) of subsection (a), 
     or
       ``(ii) a type III supporting organization (as defined in 
     section 4943(f)(5)(A)) which is not a functionally integrated 
     type III supporting organization (as defined in section 
     4943(f)(5)(B)), and
       ``(B) the taxpayer obtains a contemporaneous written 
     acknowledgment (determined under rules similar to the rules 
     of section 170(f)(8)(C)) from the sponsoring organization (as 
     so defined) of such donor advised fund that such organization 
     has exclusive legal control over the assets contributed.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to contributions made after the date which is 180 
     days after the date of the enactment of this Act.

     SEC. 1235. RETURNS OF, AND APPLICATIONS FOR RECOGNITION BY, 
                   SPONSORING ORGANIZATIONS.

       (a) Matters Included on Returns.--
       (1) In general.--Section 6033, as amended by this Act, is 
     amended by redesignating subsection (k) as subsection (l) and 
     by inserting after subsection (j) the following new 
     subsection:
       ``(k) Additional Provisions Relating to Sponsoring 
     Organizations.--Every organization described in section 
     4966(d)(1) shall, on the return required under subsection (a) 
     for the taxable year--
       ``(1) list the total number of donor advised funds (as 
     defined in section 4966(d)(2)) it owns at the end of such 
     taxable year,
       ``(2) indicate the aggregate value of assets held in such 
     funds at the end of such taxable year, and
       ``(3) indicate the aggregate contributions to and grants 
     made from such funds during such taxable year.''.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to returns filed for taxable years ending after 
     the date of the enactment of this Act.
       (b) Matters Included on Exempt Status Application.--
       (1) In general.--Section 508 is amended by adding at the 
     end the following new subsection:
       ``(f) Additional Provisions Relating to Sponsoring 
     Organizations.--A sponsoring organization (as defined in 
     section 4966(d)(1)) shall give notice to the Secretary (in 
     such manner as the Secretary may provide) whether such 
     organization maintains or intends to maintain donor advised 
     funds (as defined in section 4966(d)(2)) and the manner in 
     which such organization plans to operate such funds.''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to organizations applying for tax-exempt status 
     after the date of the enactment of this Act.

      PART 3--IMPROVED ACCOUNTABILITY OF SUPPORTING ORGANIZATIONS

     SEC. 1241. REQUIREMENTS FOR SUPPORTING ORGANIZATIONS.

       (a) Types of Supporting Organizations.--Subparagraph (B) of 
     section 509(a)(3) is amended to read as follows:
       ``(B) is--
       ``(i) operated, supervised, or controlled by one or more 
     organizations described in paragraph (1) or (2),
       ``(ii) supervised or controlled in connection with one or 
     more such organizations, or
       ``(iii) operated in connection with one or more such 
     organizations, and''.
       (b) Requirements for Supporting Organizations.--Section 509 
     (relating to private foundation defined) is amended by adding 
     at the end the following new subsection:
       ``(f) Requirements for Supporting Organizations.--
       ``(1) Type iii supporting organizations.--For purposes of 
     subsection (a)(3)(B)(iii), an organization shall not be 
     considered to be operated in connection with any organization 
     described in paragraph (1) or (2) of subsection (a) unless 
     such organization meets the following requirements:
       ``(A) Responsiveness.--For each taxable year beginning 
     after the date of the enactment of this subsection, the 
     organization provides to each supported organization such 
     information as the Secretary may require to ensure that such 
     organization is responsive to the needs or demands of the 
     supported organization.
       ``(B) Foreign supported organizations.--
       ``(i) In general.--The organization is not operated in 
     connection with any supported organization that is not 
     organized in the United States.
       ``(ii) Transition rule for existing organizations.--If the 
     organization is operated in connection with an organization 
     that is not organized in the United States on the date of the 
     enactment of this subsection, clause (i) shall not apply 
     until the first day of the third taxable year of the 
     organization beginning after the date of the enactment of 
     this subsection.
       ``(2) Organizations controlled by donors.--
       ``(A) In general.--For purposes of subsection (a)(3)(B), an 
     organization shall not be considered to be--
       ``(i) operated, supervised, or controlled by any 
     organization described in paragraph (1) or (2) of subsection 
     (a), or
       ``(ii) operated in connection with any organization 
     described in paragraph (1) or (2) of subsection (a),

     if such organization accepts any gift or contribution from 
     any person described in subparagraph (B).
       ``(B) Person described.--A person is described in this 
     subparagraph if, with respect to a supported organization of 
     an organization described in subparagraph (A), such person 
     is--
       ``(i) a person (other than an organization described in 
     paragraph (1), (2), or (4) of section 509(a)) who directly or 
     indirectly controls, either alone or together with persons 
     described in clauses (ii) and (iii), the governing body of 
     such supported organization,
       ``(ii) a member of the family (determined under section 
     4958(f)(4)) of an individual described in clause (i), or
       ``(iii) a 35-percent controlled entity (as defined in 
     section 4958(f)(3) by substituting `persons described in 
     clause (i) or (ii) of section 509(f)(2)(B)' for `persons 
     described in subparagraph (A) or (B) of paragraph (1)' in 
     subparagraph (A)(i) thereof).
       ``(3) Supported organization.--For purposes of this 
     subsection, the term `supported organization' means, with 
     respect to an organization described in subsection (a)(3), an 
     organization described in paragraph (1) or (2) of subsection 
     (a)--
       ``(A) for whose benefit the organization described in 
     subsection (a)(3) is organized and operated, or
       ``(B) with respect to which the organization performs the 
     functions of, or carries out the purposes of.''.
       (c) Charitable Trusts Which Are Type III Supporting 
     Organizations.--For purposes of section 509(a)(3)(B)(iii) of 
     the Internal Revenue Code of 1986, an organization which is a 
     trust shall not be considered to be operated in connection 
     with any organization described in paragraph (1) or (2) of 
     section 509(a) of such Code solely because--
       (1) it is a charitable trust under State law,
       (2) the supported organization (as defined in section 
     509(f)(3) of such Code) is a beneficiary of such trust, and
       (3) the supported organization (as so defined) has the 
     power to enforce the trust and compel an accounting.
       (d) Payout Requirements for Type III Supporting 
     Organizations.--
       (1) In general.--The Secretary of the Treasury shall 
     promulgate new regulations under section 509 of the Internal 
     Revenue Code of 1986 on payments required by type III 
     supporting organizations which are not functionally 
     integrated type III supporting organizations. Such 
     regulations shall require

[[Page 16406]]

     such organizations to make distributions of a percentage of 
     either income or assets to supported organizations (as 
     defined in section 509(f)(3) of such Code) in order to ensure 
     that a significant amount is paid to such organizations.
       (2) Type iii supporting organization; functionally 
     integrated type iii supporting organization.--For purposes of 
     paragraph (1), the terms ``type III supporting organization'' 
     and ``functionally integrated type III supporting 
     organization'' have the meanings given such terms under 
     subparagraphs (A) and (B) section 4943(f)(5) of the Internal 
     Revenue Code of 1986 (as added by this Act), respectively.
       (e) Effective Dates.--
       (1) In general.--The amendments made by subsections (a) and 
     (b) shall take effect on the date of the enactment of this 
     Act.
       (2) Charitable trusts which are type iii supporting 
     organizations.--Subsection (c) shall take effect--
       (A) in the case of trusts operated in connection with an 
     organization described in paragraph (1) or (2) of section 
     509(a) of the Internal Revenue Code of 1986 on the date of 
     the enactment of this Act, on the date that is one year after 
     the date of the enactment of this Act, and
       (B) in the case of any other trust, on the date of the 
     enactment of this Act.

     SEC. 1242. EXCESS BENEFIT TRANSACTIONS INVOLVING SUPPORTING 
                   ORGANIZATIONS.

       (a) Disqualified Persons.--Paragraph (1) of section 
     4958(f), as amended by this Act, is amended by redesignating 
     subparagraphs (D) and (E) as subparagraphs (E) and (F), 
     respectively, and by adding after subparagraph (C) the 
     following new subparagraph:
       ``(D) any person who is described in subparagraph (A), (B), 
     or (C) with respect to an organization described in section 
     509(a)(3) and organized and operated exclusively for the 
     benefit of, to perform the functions of, or to carry out the 
     purposes of the applicable tax-exempt organization.''.
       (b) Certain Transactions Treated as Excess Benefit 
     Transactions.--Section 4958(c), as amended by this Act, is 
     amended by redesignating paragraph (3) as paragraph (4) and 
     by inserting after paragraph (2) the following new paragraph:
       ``(3) Special rules for supporting organizations.--
       ``(A) In general.--In the case of any organization 
     described in section 509(a)(3)--
       ``(i) the term `excess benefit transaction' includes--

       ``(I) any grant, loan, compensation, or other similar 
     payment provided by such organization to a person described 
     in subparagraph (B), and
       ``(II) any loan provided by such organization to a 
     disqualified person (other than an organization described in 
     paragraph (1), (2), or (4) of section 509(a)), and

       ``(ii) the term `excess benefit' includes, with respect to 
     any transaction described in clause (i), the amount of any 
     such grant, loan, compensation, or other similar payment.
       ``(B) Person described.--A person is described in this 
     subparagraph if such person is--
       ``(i) a substantial contributor to such organization,
       ``(ii) a member of the family (determined under section 
     4958(f)(4)) of an individual described in clause (i), or
       ``(iii) a 35-percent controlled entity (as defined in 
     section 4958(f)(3) by substituting `persons described in 
     clause (i) or (ii) of section 4958(c)(3)(B)' for `persons 
     described in subparagraph (A) or (B) of paragraph (1)' in 
     subparagraph (A)(i) thereof).
       ``(C) Substantial contributor.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `substantial contributor' means 
     any person who contributed or bequeathed an aggregate amount 
     of more than $5,000 to the organization, if such amount is 
     more than 2 percent of the total contributions and bequests 
     received by the organization before the close of the taxable 
     year of the organization in which the contribution or bequest 
     is received by the organization from such person. In the case 
     of a trust, such term also means the creator of the trust. 
     Rules similar to the rules of subparagraphs (B) and (C) of 
     section 507(d)(2) shall apply for purposes of this 
     subparagraph.
       ``(ii) Exception.--Such term shall not include any 
     organization described in paragraph (1), (2), or (4) of 
     section 509(a).''.
       (c) Effective Dates.--
       (1) Subsection (a).--The amendments made by subsection (a) 
     shall apply to transactions occurring after the date of the 
     enactment of this Act.
       (2) Subsection (b).--The amendments made by subsection (a) 
     shall apply to transactions occurring after July 25, 2006.

     SEC. 1243. EXCESS BUSINESS HOLDINGS OF SUPPORTING 
                   ORGANIZATIONS.

       (a) In General.--Section 4943, as amended by this Act, is 
     amended by adding at the end the following new subsection:
       ``(f) Application of Tax to Supporting Organizations.--
       ``(1) In general.--For purposes of this section, an 
     organization which is described in paragraph (3) shall be 
     treated as a private foundation.
       ``(2) Exception.--The Secretary may exempt the excess 
     business holdings of any organization from the application of 
     this subsection if the Secretary determines that such 
     holdings are consistent with the purpose or function 
     constituting the basis for its exemption under section 501.
       ``(3) Organizations described.--An organization is 
     described in this paragraph if such organization is--
       ``(A) a type III supporting organization (other than a 
     functionally integrated type III supporting organization), or
       ``(B) an organization which meets the requirements of 
     subparagraphs (A) and (C) of section 509(a)(3) and which is 
     supervised or controlled in connection with or one or more 
     organizations described in paragraph (1) or (2) of section 
     509(a), but only if such organization accepts any gift or 
     contribution from any person described in section 
     509(f)(2)(B).
       ``(4) Disqualified person.--
       ``(A) In general.--In applying this section to any 
     organization described in paragraph (3), the term 
     `disqualified person' means, with respect to the 
     organization--
       ``(i) any person who was, at any time during the 5-year 
     period ending on the date described in subsection (a)(2)(A), 
     in a position to exercise substantial influence over the 
     affairs of the organization,
       ``(ii) any member of the family (determined under section 
     4958(f)(4)) of an individual described in clause (i),
       ``(iii) any 35-percent controlled entity (as defined in 
     section 4958(f)(3) by substituting `persons described in 
     clause (i) or (ii) of section 4943(f)(4)(A)' for `persons 
     described in subparagraph (A) or (B) of paragraph (1)' in 
     subparagraph (A)(i) thereof),
       ``(iv) any person described in section 4958(c)(3)(B), and
       ``(v) any organization--

       ``(I) which is effectively controlled (directly or 
     indirectly) by the same person or persons who control the 
     organization in question, or
       ``(II) substantially all of the contributions to which were 
     made (directly or indirectly) by the same person or persons 
     described in subparagraph (B) or a member of the family 
     (within the meaning of section 4946(d)) of such a person.

       ``(B) Persons described.--A person is described in this 
     subparagraph if such person is--
       ``(i) a substantial contributor to the organization (as 
     defined in section 4958(c)(3)(C)),
       ``(ii) an officer, director, or trustee of the organization 
     (or an individual having powers or responsibilities similar 
     to those of the officers, directors, or trustees of the 
     organization), or
       ``(iii) an owner of more than 20 percent of--

       ``(I) the total combined voting power of a corporation,
       ``(II) the profits interest of a partnership, or
       ``(III) the beneficial interest of a trust or 
     unincorporated enterprise,

     which is a substantial contributor (as so defined) to the 
     organization.
       ``(5) Type iii supporting organization; functionally 
     integrated type iii supporting organization.--For purposes of 
     this subsection--
       ``(A) Type iii supporting organization.--The term `type III 
     supporting organization' means an organization which meets 
     the requirements of subparagraphs (A) and (C) of section 
     509(a)(3) and which is operated in connection with one or 
     more organizations described in paragraph (1) or (2) of 
     section 509(a).
       ``(B) Functionally integrated type iii supporting 
     organization.--The term `functionally integrated type III 
     supporting organization' means a type III supporting 
     organization which is not required under regulations 
     established by the Secretary to make payments to supported 
     organizations (as defined under section 509(f)(3)) due to the 
     activities of the organization related to performing the 
     functions of, or carrying out the purposes of, such supported 
     organizations.
       ``(6) Special rule for certain holdings of type iii 
     supporting organizations.--For purposes of this subsection, 
     the term `excess business holdings' shall not include any 
     holdings of a type III supporting organization in any 
     business enterprise if, as of November 18, 2005, the holdings 
     were held (and at all times thereafter, are held) for the 
     benefit of the community pursuant to the direction of a State 
     attorney general or a State official with jurisdiction over 
     such organization.
       ``(7) Present holdings.--For purposes of this subsection, 
     rules similar to the rules of paragraphs (4), (5), and (6) of 
     subsection (c) shall apply to organizations described in 
     section 509(a)(3), except that--
       ``(A) `the date of the enactment of this subsection' shall 
     be substituted for `May 26, 1969' each place it appears in 
     paragraphs (4), (5), and (6), and
       ``(B) `January 1, 2007' shall be substituted for `January 
     1, 1970' in paragraph (4)(E).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after the date of the 
     enactment of this Act.

[[Page 16407]]



     SEC. 1244. TREATMENT OF AMOUNTS PAID TO SUPPORTING 
                   ORGANIZATIONS BY PRIVATE FOUNDATIONS.

       (a) Qualifying Distributions.--Paragraph (4) of section 
     4942(g) is amended to read as follows:
       ``(4) Limitation on distributions by nonoperating private 
     foundations to supporting organizations.--
       ``(A) In general.--For purposes of this section, the term 
     `qualifying distribution' shall not include any amount paid 
     by a private foundation which is not an operating foundation 
     to--
       ``(i) any type III supporting organization (as defined in 
     section 4943(f)(5)(A)) which is not a functionally integrated 
     type III supporting organization (as defined in section 
     4943(f)(5)(B)), and
       ``(ii) any organization which is described in subparagraph 
     (B) or (C) if--

       ``(I) a disqualified person of the private foundation 
     directly or indirectly controls such organization or a 
     supported organization (as defined in section 509(f)(3)) of 
     such organization, or
       ``(II) the Secretary determines by regulations that a 
     distribution to such organization otherwise is inappropriate.

       ``(B) Type i and type ii supporting organizations.--An 
     organization is described in this subparagraph if the 
     organization meets the requirements of subparagraphs (A) and 
     (C) of section 509(a)(3) and is--
       ``(i) operated, supervised, or controlled by one or more 
     organizations described in paragraph (1) or (2) of section 
     509(a), or
       ``(ii) supervised or controlled in connection with one or 
     more such organizations.
       ``(C) Functionally integrated type iii supporting 
     organizations.--An organization is described in this 
     subparagraph if the organization is a functionally integrated 
     type III supporting organization (as defined under section 
     4943(f)(5)(B)).''.
       (b) Taxable Expenditures.--Subparagraph (A) of section 
     4945(d)(4) is amended to read as follows:
       ``(A) such organization--
       ``(i) is described in paragraph (1) or (2) of section 
     509(a),
       ``(ii) is an organization described in section 509(a)(3) 
     (other than an organization described in clause (i) or (ii) 
     of section 4942(g)(4)(A)), or
       ``(iii) is an exempt operating foundation (as defined in 
     section 4940(d)(2)), or''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions and expenditures after the date 
     of the enactment of this Act.

     SEC. 1245. RETURNS OF SUPPORTING ORGANIZATIONS.

       (a) Requirement to File Return.--Subparagraph (B) of 
     section 6033(a)(3) is amended by inserting ``(other than an 
     organization described in section 509(a)(3))'' after 
     ``paragraph (1)''.
       (b) Matters Included on Returns.--Section 6033, as amended 
     by this Act, is amended by redesignating subsection (l) as 
     subsection (m) and by inserting after subsection (k) the 
     following new subsection:
       ``(l) Additional Provisions Relating to Supporting 
     Organizations.--Every organization described in section 
     509(a)(3) shall, on the return required under subsection 
     (a)--
       ``(1) list the supported organizations (as defined in 
     section 509(f)(3)) with respect to which such organization 
     provides support,
       ``(2) indicate whether the organization meets the 
     requirements of clause (i), (ii), or (iii) of section 
     509(a)(3)(B), and
       ``(3) certify that the organization meets the requirements 
     of section 509(a)(3)(C).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to returns filed for taxable years ending after 
     the date of the enactment of this Act.

                      TITLE XIII--OTHER PROVISIONS

     SEC. 1301. TECHNICAL CORRECTIONS RELATING TO MINE SAFETY.

       Section 110 of the Federal Mine Safety and Health Act of 
     1977 (30 U.S.C. 820), as amended by the Mine Improvement and 
     New Emergency Response Act of 2006 (Public Law 109-236), is 
     amended--
       (1) by striking subsection (d); and
       (2) in subsection (a)--
       (A) by striking ``(1)(1) The operator'' and inserting ``(1) 
     The operator'';
       (B) in the paragraph (2) added by section 8(a)(1)(B) of the 
     Mine Improvement and New Emergency Response Act of 2006 
     (Public Law 109-236)--
       (i) by striking ``paragraph (1)'' and inserting 
     ``subsection (a)(1)''; and
       (ii) by redesignating such paragraph as subsection (d) and 
     transferring such subsection so as to appear after subsection 
     (c); and
       (3) in subsection (b)--
       (A) by striking ``Any operator'' and inserting ``(1) Any 
     operator''; and
       (B) in the second sentence, as added by section 8(a)(2) of 
     the Mine Improvement and New Emergency Response Act of 2006 
     (Public Law 109-236), by striking ``Violations'' and 
     inserting the following:
       ``(2) Violations''.

     SEC. 1302. GOING-TO-THE-SUN ROAD.

       (a) In General.--Section 1940 of the Safe, Accountable, 
     Flexible, Efficient Transportation Equity Act: A Legacy for 
     Users (119 Stat. 1511) is amended--
       (1) in subsection (a)--
       (A) by striking paragraphs (1) and (2);
       (B) by redesignating paragraphs (3) through (5) as 
     paragraphs (1) through (3), respectively; and
       (C) by striking ``$10,000,000'' each place that it appears 
     and inserting ``$16,666,666''; and
       (2) by adding at the end the following:
       ``(c) Contract Authority.--Except as otherwise provided in 
     this section, funds authorized to be appropriated under this 
     section shall be available for obligation in the same manner 
     as if the funds were apportioned under chapter 1 of title 23, 
     United States Code.''.
       (b) Rescission.--Section 10212 of the Safe, Accountable, 
     Flexible, Efficient Transportation Equity Act: A Legacy for 
     Users (119 Stat. 1937) is amended by striking 
     ``$8,543,000,000'' each place it appears and inserting 
     ``$8,593,000,000''.

     SEC. 1303. EXCEPTION TO THE LOCAL FURNISHING REQUIREMENT OF 
                   THE TAX-EXEMPT BOND RULES.

       (a) Snettisham Hydroelectric Facility.--For purposes of 
     determining whether any private activity bond issued before 
     May 31, 2006, and used to finance the acquisition of the 
     Snettisham hydroelectric facility is a qualified bond for 
     purposes of section 142(a)(8) of the Internal Revenue Code of 
     1986, the electricity furnished by such facility to the City 
     of Hoonah, Alaska, shall not be taken into account for 
     purposes of section 142(f)(1) of such Code.
       (b) Lake Dorothy Hydroelectric Facility.--For purposes of 
     determining whether any private activity bond issued before 
     May 31, 2006, and used to finance the Lake Dorothy 
     hydroelectric facility is a qualified bond for purposes of 
     section 142(a)(8) of the Internal Revenue Code of 1986, the 
     electricity furnished by such facility to the City of Hoonah, 
     Alaska, shall not be taken into account for purposes of 
     paragraphs (1) and (3) of section 142(f) of such Code.
       (c) Definitions.--For purposes of this section--
       (1) Lake dorothy hydroelectric facility.--The term ``Lake 
     Dorothy hydroelectric facility'' means the hydroelectric 
     facility located approximately 10 miles south of Juneau, 
     Alaska, and commonly referred to as the ``Lake Dorothy 
     project''.
       (2) Snettisham hydroelectric facility.--The term 
     ``Snettisham hydroelectric facility'' means the hydroelectric 
     project described in section 1804 of the Small Business Job 
     Protection Act of 1996.

     SEC. 1304. QUALIFIED TUITION PROGRAMS.

       (a) Permanent Extension of Modifications.--Section 901 of 
     the Economic Growth and Tax Relief Reconciliation Act of 2001 
     (relating to sunset provisions) shall not apply to section 
     402 of such Act (relating to modifications to qualified 
     tuition programs).
       (b) Regulatory Authority to Prevent Abuse.--Section 529 
     (relating to qualified tuition programs) is amended by adding 
     at the end the following new subsection:
       ``(f) Regulations.--Notwithstanding any other provision of 
     this section, the Secretary shall prescribe such regulations 
     as may be necessary or appropriate to carry out the purposes 
     of this section and to prevent abuse of such purposes, 
     including regulations under chapters 11, 12, and 13 of this 
     title.''.

                      TITLE XIV--TARIFF PROVISIONS

     SEC. 1401. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This title may be cited as the 
     ``Miscellaneous Trade and Technical Corrections Act of 
     2006''.
       (b) Table of Contents.--The table of contents of this title 
     is as follows:

                      TITLE XIV--TARIFF PROVISIONS

Sec. 1401. Short title; table of contents.
Sec. 1402. Reference.

         Subtitle A--Temporary Duty Suspensions and Reductions

             Chapter 1--New Duty Suspensions and Reductions

Sec. 1411. Certain non-knit gloves designed for use by auto mechanics.
Sec. 1412. Certain microphones for use in automotive interiors.
Sec. 1413. Acrylic or modacrylic synthetic filament tow.
Sec. 1414. Acrylic or modacrylic synthetic staple fibers, carded, 
              combed, or otherwise processed for spinning.
Sec. 1415. Nitrocellulose.
Sec. 1416. Potassium sorbate.
Sec. 1417. Sorbic acid.
Sec. 1418. Certain capers.
Sec. 1419. Certain pepperoncini prepared or preserved otherwise than by 
              vinegar or acetic acid.
Sec. 1420. Certain capers.
Sec. 1421. Certain pepperoncini prepared or preserved by vinegar or 
              acetic acid in concentrations at 0.5 percent or greater.
Sec. 1422. Certain pepperoncini prepared or preserved otherwise than by 
              vinegar or acetic acid in concentrations less than 0.5 
              percent.
Sec. 1423. Chloral.
Sec. 1424. Imidacloprid technical (imidacloprid).
Sec. 1425. Triadimefon.
Sec. 1426. Polyethylene HE1878.
Sec. 1427. Thiacloprid.
Sec. 1428. Pyrimethanil.

[[Page 16408]]

Sec. 1429. Foramsulfuron.
Sec. 1430. Fenamidone.
Sec. 1431. Cyclanilide technical.
Sec. 1432. Para-benzoquinone.
Sec. 1433. O-Anisidine.
Sec. 1434. 2,4-Xylidine.
Sec. 1435. Crotonaldehyde.
Sec. 1436. Butanedioic acid, dimethyl ester, polymer with 4-hydroxy-
              2,2,6,6,-tetramethyl-1-piperidineethanol.
Sec. 1437. Mixtures of CAS Nos. 106990-43-6 and 65447-77-0.
Sec. 1438. MCPA.
Sec. 1439. Bronate advanced.
Sec. 1440. Bromoxynil octanoate tech.
Sec. 1441. Bromoxynil meo.
Sec. 1442. Hydraulic control units.
Sec. 1443. Shield asy-steering gear.
Sec. 1444. 2,4-Dichloroaniline.
Sec. 1445. 2-Acetylbutyrolactone.
Sec. 1446. Alkylketone.
Sec. 1447. Cyfluthrin (baythroid).
Sec. 1448. Beta-cyfluthrin.
Sec. 1449. Cyclopropane-1,1-dicarboxylic acid, dimethyl ester.
Sec. 1450. Spiroxamine.
Sec. 1451. Spiromesifen.
Sec. 1452. 4-Chlorobenzaldehyde.
Sec. 1453. Oxadiazon.
Sec. 1454. NAHP.
Sec. 1455. Phosphorus thiochloride.
Sec. 1456. Trifloxystrobin.
Sec. 1457. Phosphoric acid, lanthanum salt, cerium terbium-doped.
Sec. 1458. Lutetium oxide.
Sec. 1459. ACM.
Sec. 1460. Permethrin.
Sec. 1461. Thidiazuron.
Sec. 1462. Flutolanil.
Sec. 1463. Resmethrin.
Sec. 1464. Clothianidin.
Sec. 1465. Certain master cylinder assembles.
Sec. 1466. Certain transaxles.
Sec. 1467. Converter asy.
Sec. 1468. Module and bracket asy-power steering.
Sec. 1469. Unit asy-battery hi volt.
Sec. 1470. Certain articles of natural cork.
Sec. 1471. Glyoxylic acid.
Sec. 1472. Cyclopentanone.
Sec. 1473. Mesotrione technical.
Sec. 1474. Malonic acid-dinitrile 50% NMP.
Sec. 1475. Formulations of NOA 446510.
Sec. 1476. DEMBB distilled-ISO tank.
Sec. 1477. Methylionone.
Sec. 1478. Certain acrylic fiber tow.
Sec. 1479. Certain acrylic fiber tow.
Sec. 1480. MKH 6561 isocyanate.
Sec. 1481. Endosulfan.
Sec. 1482. Tetraconazole.
Sec. 1483. M-alcohol.
Sec. 1484. Certain machines for use in the assembly of motorcycle 
              wheels.
Sec. 1485. Deltamethrin.
Sec. 1486. Palm fatty acid distillate.
Sec. 1487. 4-Methoxy-2-methyldiphenylamine.
Sec. 1488. 2-Methylhydroquinone.
Sec. 1489. 1-Fluoro-2-nitrobenzene.
Sec. 1490. Cosmetic bags with a flexible outer surface of reinforced or 
              laminated polyvinyl chloride (PVC).
Sec. 1491. Mixtures of methyl 4-iodo-2-[3-(4-methoxy-6-methyl-1,3,5-
              triazin-2-yl)ureidosulfonyl]benzoate, sodium salt 
              (iodosulfuron methyl, sodium salt).
Sec. 1492. Ethyl 4,5-dihydro-5,5-diphenyl-1,2-oxazole-3-carboxylate 
              (isoxadifen-ethyl).
Sec. 1493. (5-cyclopropyl-4-isoxazolyl)[2-(methylsulfonyl)-4-
              (trifluoromethyl)phenyl]methanone (isoxaflutole).
Sec. 1494. Methyl 2-[(4,6-dimethoxypyrimidin-2-ylcarbamoyl)sulfamoyl]-
              a-(methanesulfonamido)-p-toluate (mesosulfuron-methyl) 
              whether or not mixed with application adjuvants.
Sec. 1495. Mixtures of foramsulfuron and iodosulfuron-methyl-sodium.
Sec. 1496. Vulcuren UPKA 1988.
Sec. 1497. Vullcanox 41010 NA/LG.
Sec. 1498. Vulkazon AFS/LG.
Sec. 1499. P-Anisaldehyde.
Sec. 1500. 1,2-Pentanediol.
Sec. 1501. Agrumex.
Sec. 1502. Cohedur RL.
Sec. 1503. Formulations of prosulfuron.
Sec. 1504. Lewatit.
Sec. 1505. Para-Chlorophenol.
Sec. 1506. Cypermethrin.
Sec. 1507. Ion-exchange resin powder.
Sec. 1508. Ion-exchange resin powder.
Sec. 1509. Desmodur E 14.
Sec. 1510. Desmodur VP LS 2253.
Sec. 1511. Desmodur R-E.
Sec. 1512. Walocel MW 3000 PFV.
Sec. 1513. TSME.
Sec. 1514. Walocel VP-M 20660.
Sec. 1515. Xama 2.
Sec. 1516. Xama 7.
Sec. 1517. Certain cases for toys.
Sec. 1518. Certain cases for toys.
Sec. 1519. Aniline 2.5-disulfonic acid.
Sec. 1520. 1,4-benzenedicarboxylic acid, polymer with n,n'-bis(2-
              aminoethyl)-1,2-ethanediamine, cyclized, methosulfate.
Sec. 1521. Sulfur blue 7.
Sec. 1522. Formaldehyde, reaction products with 1,4-benzenediol and m-
              phenylenediamine, sulfurized.
Sec. 1523. Isocyanatosulfonyl.
Sec. 1524. Isocyanatosulfonyl.
Sec. 1525. Gemifloxacin, gemifloxacin mesylate, and gemifloxacin 
              mesylate sesquihydrate.
Sec. 1526. Butralin.
Sec. 1527. Spirodiclofen.
Sec. 1528. Propamocarb HCL (PREVICUR).
Sec. 1529. Desmodur IL.
Sec. 1530. Chloroacetone.
Sec. 1531. IPN (isophthalonitrile).
Sec. 1532. NOA 446510 technical.
Sec. 1533. Hexythiazox technical.
Sec. 1534. Crelan (self-blocked cycloaliphatic polyuretdione).
Sec. 1535. Aspirin.
Sec. 1536. Desmodur BL XP 2468.
Sec. 1537. Desmodur RF-E.
Sec. 1538. Desmodur HL.
Sec. 1539. D-Mannose.
Sec. 1540. Certain camel hair.
Sec. 1541. Waste of camel hair.
Sec. 1542. Certain camel hair.
Sec. 1543. Woven fabric of vicuna hair.
Sec. 1544. Certain camel hair.
Sec. 1545. Noils of camel hair.
Sec. 1546. Chloroacetic acid, ethyl ester.
Sec. 1547. Chloroacetic acid, sodium salt.
Sec. 1548. Low expansion laboratory glass.
Sec. 1549. Stoppers, lids, and other closures.
Sec. 1550. Pigment yellow 213.
Sec. 1551. Indoxacarb.
Sec. 1552. Dimethyl carbonate.
Sec. 1553. 5-Chloro-1-indanone (EK179).
Sec. 1554. Mixtures of famoxadone and cymoxanil.
Sec. 1555. Decanedioic acid, bis(2,2,6,6-tetramethyl-4-piperidinyl) 
              ester.
Sec. 1556. Acid blue 80.
Sec. 1557. Pigment brown 25.
Sec. 1558. Formulations of azoxystrobin.
Sec. 1559. Formulations of pinoxaden/cloquintocet.
Sec. 1560. Mixtures of difenoconazole/mefenoxam.
Sec. 1561. Fludioxinil technical.
Sec. 1562. Mixtures of clodinafop-propargyl.
Sec. 1563. Avermectin b, 1,4"-deoxy-4"-methylamino-, (4"r)-, benzoate.
Sec. 1564. Cloquintocet-mexyl.
Sec. 1565. Metalaxyl-M technical.
Sec. 1566. Cyproconazole technical.
Sec. 1567. Pinoxaden technical.
Sec. 1568. Mixtures of tralkoxydim.
Sec. 1569. Certain chemicals.
Sec. 1570. Mixtures of ()-(cis and trans)-1-[[2-(2,4-
              dichlorophenyl)-4-propyl-1,3-dioxolan-2-yl]-methyl]-1h-
              1,2,4-triazole.
Sec. 1571. Paraquat dichloride.
Sec. 1572. Certain basketballs.
Sec. 1573. Certain leather basketballs.
Sec. 1574. Certain rubber basketballs.
Sec. 1575. Certain volleyballs.
Sec. 1576. 4-Chloro-3-[[3-(4-methoxyphenyl)-1,3-dioxopropyl]-amino]-
              dodecyl ester.
Sec. 1577. Linuron.
Sec. 1578. N,N-Dimethylpiperidinium chloride (mepiquat chloride).
Sec. 1579. Diuron.
Sec. 1580. Formulated product Krovar I DF.
Sec. 1581. Triasulfuron technical.
Sec. 1582. Brodifacoum technical.
Sec. 1583. Pymetrozine technical.
Sec. 1584. Formulations of thiamethoxam, difenoconazole, fludioxinil, 
              and mefenoxam.
Sec. 1585. Trifloxysulfuron-sodium technical.
Sec. 1586. 2 Benzylthio-3-ethyl sulfonyl pyridine.
Sec. 1587. 2-Amino-4-methoxy-6-methyl-1,3,5-triazine.
Sec. 1588. Formulated products containing mixtures of the active 
              ingredient 2-chloro-n-[[(4-methoxy-6-methyl-1,3,5-
              triazin-2yl) amino]carbonyl] benzenesulfonamide and 
              application adjuvants.
Sec. 1589. 2-methyl-4-methoxy-6-methylamino-1,3,5-triazine.
Sec. 1590. Mixtures of sodium-2-chloro-6-[(4,6 dimethoxypyrimidin-2-
              yl)thio]benzoate and application adjuvants (pyrithiobac-
              sodium).
Sec. 1591. Certain decorative plates, decorative sculptures, decorative 
              plaques, and architectural miniatures.
Sec. 1592. Certain music boxes.
Sec. 1593. 2-Methyl-4-chlorophenoxyacetic acid.
Sec. 1594. Phenmedipham.
Sec. 1595. Desmedipham.
Sec. 1596. Certain footwear with open toes or heels.
Sec. 1597. Certain work footwear.
Sec. 1598. Certain refracting and reflecting telescopes.
Sec. 1600. Certain work footwear.
Sec. 1601. Certain footwear for men.
Sec. 1602. Certain rubber or plastic footwear.
Sec. 1604. Zinc dimethyldithiocarbamate.
Sec. 1605. Certain liquid crystal device (LCD) panel assemblies.
Sec. 1606. Certain watertube boilers and reactor vessel heads.

          Chapter 2--Existing Duty Suspensions and Reductions

Sec. 1611. Extension of certain existing duty suspensions and 
              reductions.

                  Subtitle B--Other Tariff Provisions

       Chapter 1--Liquidation Or Reliquidation of Certain Entries

Sec. 1621. Certain tramway cars and associated spare parts.

[[Page 16409]]

Sec. 1622. Reliquidation of certain entries of candles.
Sec. 1623. Certain entries of roller chain.
Sec. 1624. Certain entries of soundspa clock radios.

                  Chapter 2--Miscellaneous Provisions

Sec. 1631. Vessel repair duties.
Sec. 1632. Suspension of new shipper review provision.
Sec. 1633. Extension and modification of duty suspension on wool 
              products; wool research fund; wool duty refunds.
Sec. 1634. Authorities relating to DR-CAFTA Agreement.
Sec. 1635. Technical amendments to Customs modernization.

                       Subtitle C--Effective Date

Sec. 1641. Effective date.

     SEC. 1402. REFERENCE.

       Except as otherwise expressly provided, whenever in this 
     title an amendment or repeal is expressed in terms of an 
     amendment to, or repeal of, a chapter, subchapter, note, 
     additional U.S. note, heading, subheading, or other 
     provision, the reference shall be considered to be made to a 
     chapter, subchapter, note, additional U.S. note, heading, 
     subheading, or other provision of the Harmonized Tariff 
     Schedule of the United States (19 U.S.C. 3007).

         Subtitle A--Temporary Duty Suspensions and Reductions

             CHAPTER 1--NEW DUTY SUSPENSIONS AND REDUCTIONS

     SEC. 1411. CERTAIN NON-KNIT GLOVES DESIGNED FOR USE BY AUTO 
                   MECHANICS.

       (a) In General.--Subchapter II of chapter 99 is amended by 
     inserting in numerical sequence the following new headings:


``      9902.14.01      Mechanics' work     2.8%         No change        No change        On or before 12/
                         gloves, valued                                                     31/2009
                         not over $3.50
                         per pair
                         (provided for in
                         subheading
                         6216.00.58)......
        9902.14.02      Mechanics' work     2.8%         No change        No change        On or before 12/  ''.
                         gloves, valued                                                     31/2009
                         over $3.50 but
                         not over $3.70
                         per pair
                         (provided for in
                         subheading
                         6216.00.58)......
        9902.14.03      Mechanics' work     2.8%         No change        No change        On or before 12/  ''.
                         gloves, valued                                                     31/2009
                         over $3.70 but
                         not over $4.99
                         per pair
                         (provided for in
                         subheading
                         6216.00.58)......
        9902.14.04      Mechanics' work     2.8%         No change        No change        On or before 12/  ''.
                         gloves, valued                                                     31/2009
                         over $4.99 but
                         not over $7.72
                         per pair
                         (provided for in
                         subheading
                         6216.00.58)......
        9902.14.05      Mechanics' work     2.8%         No change        No change        On or before 12/  ''.
                         gloves, valued                                                     31/2009
                         over $7.72 per
                         pair (provided
                         for in subheading
                         6216.00.58)......

       (b) Amendment to U.S. Notes.--Subchapter II of chapter 99 
     is amended by adding at the end of the U.S. Notes to such 
     subchapter the following new U.S. Note:
       ``18. For purposes of headings 9902.14.01, 9902.14.02, 
     9902.14.03, 9902.14.04, and 9902.14.05, the term `mechanics' 
     work gloves' means gloves, of man-made fibers, having 
     synthetic leather palms and fingers; fourchettes of synthetic 
     leather or of fabric of nylon or elastomeric yarn; backs 
     comprising either one layer of knitted fabric of elastomeric 
     yarn or three layers, with the outer layer of knitted fabric 
     of elastomeric yarn, the center layer of foam and the inner 
     layer of tricot fabric; the foregoing, whether or not 
     including an thermoplastic rubber logo or pad on the back; 
     and elastic wrist straps with molded thermoplastic rubber 
     hook-and-loop enclosures.''.

     SEC. 1412. CERTAIN MICROPHONES FOR USE IN AUTOMOTIVE 
                   INTERIORS.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.17      Unidirectional      Free         No change        No change        On or before 12/  ''.
                         (cardioid)                                                         31/2009
                         electret
                         condenser
                         microphone
                         modules for use
                         in motor vehicles
                         provided for in
                         headings 8701
                         through 8705
                         (other than such
                         modules designed
                         for handheld,
                         microphone stand,
                         or lapel use),
                         the foregoing
                         each including
                         wire leads for
                         external
                         connection,
                         whether or not
                         including a multi-
                         pin board level
                         type connector
                         but not including
                         a battery
                         compartment;
                         having a typical
                         frequency
                         response of 250
                         Hertz through
                         7,000 Hertz with
                         no more than a 20
                         decibel deviation
                         in that frequency
                         range and an
                         electrostatic
                         discharge
                         immunity of 4,000
                         V (contact) and
                         8,000 V (air);
                         and capable of
                         operation and
                         storage in the
                         temperature range
                         of -40C through
                         85C and a
                         humidity of not
                         over 95 percent
                         (provided for in
                         subheading
                         8518.10.80)......

     SEC. 1413. ACRYLIC OR MODACRYLIC SYNTHETIC FILAMENT TOW.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.21       Synthetic          6.8%         No change        No change        On or before 12/  ''.
                         filament tow:                                                      31/2009
                         acrylic or
                         modacrylic
                         (provided for in
                         subheading
                         5501.30.00)......

     SEC. 1414. ACRYLIC OR MODACRYLIC SYNTHETIC STAPLE FIBERS, 
                   CARDED, COMBED, OR OTHERWISE PROCESSED FOR 
                   SPINNING.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.22       Synthetic staple   Free         No change        No change        On or before 12/  ''.
                         fibers, carded,                                                    31/2009
                         combed, or
                         otherwise
                         processed for
                         spinning: acrylic
                         or modacrylic
                         (provided for in
                         subheading
                         5506.30.00)......

     SEC. 1415. NITROCELLULOSE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:

[[Page 16410]]



``      9902.10.23      Cellulose nitrates  4.4%         No change        No change        On or before 12/  ''.
                         (nitrocellulose,                                                   31/2009
                         including
                         collodions) (CAS
                         9004-70-0)
                         (provided for in
                         subheading
                         3912.20.00)......

     SEC. 1416. POTASSIUM SORBATE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.24      Potassium sorbate   1.4%         No change        No change        On or before 12/  ''.
                         (CAS No. 24634-61-                                                 31/2009
                         5) (provided for
                         in subheading
                         2916.19.10)......

     SEC. 1417. SORBIC ACID.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.25      Sorbic acid (CAS    1.9%         No change        No change        On or before 12/  ''.
                         No. 110-44-1)                                                      31/2009
                         (provided for in
                         subheading
                         2916.19.20)......

     SEC. 1418. CERTAIN CAPERS.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.26       Capers, prepared   Free         No change        No change        On or before 12/  ''.
                         or preserved by                                                    31/2009
                         vinegar other
                         than such goods
                         in immediate
                         containers each
                         holding 3.4 kg or
                         less (provided
                         for in subheading
                         2001.90.20)......

     SEC. 1419. CERTAIN PEPPERONCINI PREPARED OR PRESERVED 
                   OTHERWISE THAN BY VINEGAR OR ACETIC ACID.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.27       Pepperoncini,      Free         No change        No change        On or before 12/  ''.
                         prepared or                                                        31/2009
                         preserved
                         otherwise than by
                         vinegar, not
                         frozen (provided
                         for in subheading
                         2005.90.55)......

     SEC. 1420. CERTAIN CAPERS.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.28       Capers, prepared   Free         No change        No change        On or before 12/  ''.
                         or preserved by                                                    31/2009
                         vinegar in
                         immediate
                         containers each
                         holding more than
                         3.4 kg (provided
                         for in subheading
                         2001.90.10)......

     SEC. 1421. CERTAIN PEPPERONCINI PREPARED OR PRESERVED BY 
                   VINEGAR OR ACETIC ACID IN CONCENTRATIONS AT 0.5 
                   PERCENT OR GREATER.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.29       Pepperoncini,      2.2%         No change        No change        On or before 12/  ''.
                         prepared or                                                        31/2009
                         preserved by
                         vinegar (provided
                         for in subheading
                         2001.90.38)......

     SEC. 1422. CERTAIN PEPPERONCINI PREPARED OR PRESERVED 
                   OTHERWISE THAN BY VINEGAR OR ACETIC ACID IN 
                   CONCENTRATIONS LESS THAN 0.5 PERCENT.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.30      Giardiniera,        Free         No change        No change        On or before 12/  ''.
                         prepared or                                                        31/2009
                         preserved
                         otherwise than by
                         vinegar, not
                         frozen (provided
                         for in subheading
                         2005.90.55)......

     SEC. 1423. CHLORAL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.31      Trichloroacetaldeh  Free         No change        No change        On or before 12/  ''.
                         yde (CAS No. 75-                                                   31/2009
                         87-6) (provided
                         for in subheading
                         2913.00.50)......

     SEC. 1424. IMIDACLOPRID TECHNICAL (IMIDACLOPRID).

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.32      1-[(6-Chloro-3-     Free         No change        No change        On or before 12/  ''.
                         pyrdinyl)methyl]-                                                  31/2009
                         N-nitro-2-
                         imidazolidinimine
                         (Imidacloprid)
                         (CAS No. 138261-
                         41-3) (provided
                         for in subheading
                         2933.39.27)......

     SEC. 1425. TRIADIMEFON.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


[[Page 16411]]



``      9902.10.33      1-(4-               Free         No change        No change        On or before 12/  ''.
                         Chlorophenoxy)-3,                                                  31/2009
                         3-dimethyl-1-(1H-
                         1,2,4-triazol-1-
                         y1)-2-butanone
                         (CAS No. 43121-43-
                         3) (Triadimefon)
                         (provided for in
                         subheading
                         2933.99.22)......

     SEC. 1426. POLYETHYLENE HE1878.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.34      Polyethylene        3.6%         No change        No change        On or before 12/  ''.
                         HE1878 (CAS No.                                                    31/2009
                         25087-34-7), with
                         l-butene as
                         comonomer
                         (provided for in
                         subheading
                         3901.20.50)......

     SEC. 1427. THIACLOPRID.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.35      (Z)-[3- [(6-chloro- Free         No change        No change        On or before 12/  ''.
                         3- pyridinyl)                                                      31/2009
                         methyl]-2-
                         thiazolidinyliden
                         e] cyanamide
                         (thiacloprid)
                         (CAS No. 111988-
                         49-9) (provided
                         for in subheading
                         2934.10.10)......

     SEC. 1428. PYRIMETHANIL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.36      4,6-Dimethyl-N-     Free         No change        No change        On or before 12/  ''.
                         phenyl-2-                                                          31/2009
                         pyrimidinamine
                         (pyrimethanil)
                         (CAS No. 53112-28-
                         0) (provided for
                         in subheading
                         2933.59.15)......

     SEC. 1429. FORAMSULFURON.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.37      Foramsulfuron       2.6%         No change        No change        On or before 12/  ''.
                         (Benzamide, 2-                                                     31/2009
                         (((((4,6-
                         dimethoxy-2-
                         pyrimidinyl)amino
                         )
                         carbonyl)amino)su
                         lfonyl)-4-
                         (formylamino)-
                         N,N-dimethyl-,)
                         (CAS No. 173159-
                         57-4), in bulk or
                         put up in forms
                         or packaging for
                         retail sale
                         (provided for in
                         subheading
                         2935.00.75 or
                         3808.30.15)......

     SEC. 1430. FENAMIDONE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.38      (5S)-3,5-Dihydro-5- Free         No change        No change        On or before 12/  ''.
                          methyl-2-                                                         31/2009
                         (methylthio)- 5-
                         phenyl-3-
                         (phenylamino)- 4H-
                         imidazol-4-one
                         (Fenamidone) (CAS
                         No. 161326-34-7)
                         (provided for in
                         subheading
                         2933.29.35)......

     SEC. 1431. CYCLANILIDE TECHNICAL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.39      1-(2,4-Dichloro-    Free         No change        No change        On or before 12/  ''.
                         phenylaminocarbon                                                  31/2009
                         yl)-
                         cyclopropanecarbo
                         xylic acid
                         (Cyclanilide)
                         (CAS No. 113136-
                         77-9) (provided
                         for in subheading
                         2924.29.47)......

     SEC. 1432. PARA-BENZOQUINONE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.40      1,4-Benzoquinone    Free         No change        No change        On or before 12/  ''.
                         (CAS No. 106-51-                                                   31/2009
                         4) (provided for
                         in subheading
                         2914.69.90)......

     SEC. 1433. O-ANISIDINE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.41       o-Anisidine (CAS   Free         No change        No change        On or before 12/  ''.
                         No. 90-04-4)                                                       31/2009
                         (provided for in
                         subheading
                         2922.22.10)......

     SEC. 1434. 2,4-XYLIDINE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.43       2,4-Xylidine (CAS  Free         No change        No change        On or before 12/  ''.
                         No. 95-68-1)                                                       31/2009
                         (provided for in
                         subheading
                         2921.49.10)......

     SEC. 1435. CROTONALDEHYDE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


[[Page 16412]]



``      9902.10.44       Crotonaldehyde (2- Free         No change        No change        On or before 12/  ''.
                         butenaldehyde)                                                     31/2009
                         (CAS No. 4170-30-
                         3) (provided for
                         in subheading
                         2912.19.50)......

     SEC. 1436. BUTANEDIOIC ACID, DIMETHYL ESTER, POLYMER WITH 4-
                   HYDROXY-2,2,6,6,-TETRAMETHYL-1-
                   PIPERIDINEETHANOL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.47      Butanedioic acid,   Free         No change        No change        On or before 12/  ''.
                         dimethyl ester,                                                    31/2009
                         polymer with 4-
                         hydroxy-2,2,6,6,-
                         tetramethyl-1-
                         piperidineethanol
                         (CAS No. 65447-77-
                         0) (provided for
                         in subheading
                         3907.99.00)......

     SEC. 1437. MIXTURES OF CAS NOS. 106990-43-6 AND 65447-77-0.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.48       1,3,5-Triazine-    Free         No change        No change        On or before 12/  ''.
                         2,4,6-triamine,                                                    31/2009
                         N,N-[1,2-
                         ethanediylbis[[[4
                         ,6-bis[butyl
                         (1,2,2,6,6-
                         pentamethyl-4-
                         piperidinyl)amino
                         ]-1,3,5-triazine-
                         2-yl]imino]-3,1-
                         propanediyl]]bis[
                         N,N-dibutyl-N,N-
                         bis(1,2,2,6,6-
                         pentamethyl-4-
                         piperidinyl)-
                         (CAS No. 106990-
                         43-6) and
                         Butanedioic acid,
                         dimethylester
                         polymer with 4-
                         hyroxy-2,2,6,6-
                         tetramethyl-1-
                         piperdine ethanol
                         (CAS No. 65447-77-
                         0) (Provided for
                         in subheading
                         3812.30.90)......

     SEC. 1438. MCPA.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.54      2-Ethylhexyl (4-    Free         No change        No change        On or before 12/  ''.
                         chloro-2-                                                          31/2009
                         methylphenoxy)ace
                         tate (CAS No.
                         29450-45-1)
                         (provided for in
                         subheading
                         2918.90.20)......

     SEC. 1439. BRONATE ADVANCED.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.55      Formulations of     2.8%         No change        No change        On or before 12/  ''.
                         2,6-dibromo-4-                                                     31/2009
                         cyanophenyl
                         octanoate (CAS
                         No. 1689-99-2),
                         2, 6-dibromo-4-
                         cyanophenyl
                         heptanoate (CAS
                         No. 56634-95-8),
                         and 2-ethylhexyl
                         (4-chloro-2-
                         methylphenoxy)ace
                         tate (CAS No.
                         29450-45-1)
                         (provided for in
                         subheading
                         3808.30.15)......

     SEC. 1440. BROMOXYNIL OCTANOATE TECH.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.56      2,6-dibromo-4-      Free         No change        No change        On or before 12/  ''.
                         cyanophenyl                                                        31/2009
                         octanoate (CAS
                         No. 1689-99-2)
                         (provided for in
                         subheading
                         2926.90.25)......

     SEC. 1441. BROMOXYNIL MEO.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.57      2,6-Dibromo-4-      Free         No change        No change        On or before 12/  ''.
                         cyanophenyl                                                        31/2009
                         octanoate/
                         heptanoate (CAS
                         Nos.1689-99-2 and
                         56634-95-8)
                         (provided for in
                         subheading
                         3808.30.15)......

     SEC. 1442. HYDRAULIC CONTROL UNITS.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.62      Hydraulic control   Free         No change        No change        On or before 12/  ''.
                         units designed                                                     31/2009
                         for use in
                         braking systems
                         of hybrid motor
                         vehicles of
                         heading 8703
                         (provided for in
                         subheading
                         9032.89.60)......

     SEC. 1443. SHIELD ASY-STEERING GEAR.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.63      Steering gear       Free         No change        No change        On or before 12/  ''.
                         assemblies for                                                     31/2009
                         single-pinion
                         constant-ratio
                         electronic power
                         assisted steering
                         systems rated at
                         80 amperes at
                         12V, the
                         foregoing
                         designed for use
                         in hybrid motor
                         vehicles of
                         heading 8703
                         (provided for in
                         subheading
                         8708.99.73)......

     SEC. 1444. 2,4-DICHLOROANILINE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


[[Page 16413]]



``      9902.10.64      2,4-                Free         No change        No change        On or before 12/  ''.
                         Dichloroaniline                                                    31/2009
                         (CAS No. 554-00-
                         7) (provided for
                         in subheading
                         2921.42.18)......

     SEC. 1445. 2-ACETYLBUTYROLACTONE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.65      2-                  Free         No change        No change        On or before 12/  ''.
                         Acetylbutyrolacto                                                  31/2009
                         ne (CAS No. 517-
                         23-7) (provided
                         for in subheading
                         2932.29.50)......

     SEC. 1446. ALKYLKETONE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.66      1-(4-Chlorophenyl)- Free         No change        No change        On or before 12/  ''.
                         4, 4-dimethyl-3-                                                   31/2009
                         pentanone (CAS
                         No. 66346-01-8)
                         (provided for in
                         subheading
                         2914.70.40)......

     SEC. 1447. CYFLUTHRIN (BAYTHROID).

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.67      Cyano(4-fluoro-3-   3.5%         No change        No change        On or before 12/  ''.
                         phenoxyphenyl)met                                                  31/2009
                         hyl 3-(2,2-
                         dichloroethenyl)-
                         2,2-
                         dimethylcycloprop
                         anecarboxylate
                         (Cyfluthrin,
                         excluding b-
                         Cyfluthrin) (CAS
                         No. 68359-37-5)
                         (provided for in
                         subheading
                         2926.90.30)......

     SEC. 1448. BETA-CYFLUTHRIN.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.68      Reaction mixture    Free         No change        No change        On or before 12/  ''.
                         comprising the                                                     31/2009
                         enantiomeric pair
                         (R)-a-cyano-4-
                         fluoro-3-
                         phenoxybenzyl
                         (1S,3S)-3-(2,2-
                         dichlorovinyl)-2,
                         2-
                         dimethylcycloprop
                         anecarboxylate
                         and (S)-a-cyano-4-
                         fluoro-3-
                         phenoxybenzyl
                         (1R,3R)-3-(2,2-
                         dichlorovinyl)-2,
                         2-
                         dimethylcycloprop
                         anecarboxylate in
                         ratio 1:2 with
                         the enantiomeric
                         pair (R)-a-cyano-
                         4-fluoro-3-
                         phenoxybenzyl
                         (1S,3R)-3-(2,2-
                         dichlorovinyl)-2,
                         2-
                         dimethylcycloprop
                         anecarboxylate
                         and (S)-a-cyano-4-
                         fluoro-3-
                         phenoxybenzyl
                         (1R,3S)-3-(2,2-
                         dichlorovinyl)-2,
                         2-
                         dimethylcycloprop
                         anecarboxylate (b-
                         Cyfluthrin) (CAS
                         No. 68359-37-5)
                         (provided for in
                         subheading
                         2926.90.30)......

     SEC. 1449. CYCLOPROPANE-1,1-DICARBOXYLIC ACID, DIMETHYL 
                   ESTER.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.69      Cyclopropane-1,1-   1.8%         No change        No change        On or before 12/  ''.
                         dicarboxylic                                                       31/2009
                         acid, dimethyl
                         ester (CAS No.
                         6914-71-2)
                         (provided for in
                         subheading
                         2917.20.00)......

     SEC. 1450. SPIROXAMINE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.70      8-(1,1-             Free         No change        No change        On or before 12/  ''.
                         Dimethylethyl)-N-                                                  31/2009
                         ethyl-N-propyl-
                         1,4-
                         dioxaspiro[4,5]de
                         cane-2-
                         methanamine (CAS
                         118134-30-8)
                         (provided for in
                         subheading
                         2932.99.90)......

     SEC. 1451. SPIROMESIFEN.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.71      3,3-                Free         No change        No change        On or before 12/  ''.
                         Dimethylbutanoic                                                   31/2009
                         acid, 2-oxo-3-
                         (2,4,6-
                         trimethylphenyl)-
                         1-
                         oxaspiro[4.4]non-
                         3-en-yl ester
                         (CAS 283594-90-1)
                         (provided for in
                         subheading
                         2932.29.10)......

     SEC. 1452. 4-CHLOROBENZALDEHYDE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.72      4-                  Free         No change        No change        On or before 12/  ''.
                         Chlorobenzaldehyd                                                  31/2009
                         e (CAS No. 104-88-
                         1) (provided for
                         in subheading
                         2913.00.40)......

     SEC. 1453. OXADIAZON.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


[[Page 16414]]



``      9902.10.73      5-tert-butyl-3-     Free         No change        No change        On or before 12/  ''.
                         (2,4-dichloro-5-                                                   31/2009
                         isopropoxyphenyl)
                         -1,3,4-oxadiazol-
                         2(3H)-one
                         (Oxadiazon) (CAS
                         No. 19666-30-9)
                         (provided for in
                         subheading
                         2934.99.11)......

     SEC. 1454. NAHP.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.74      2-(1,1-             Free         No change        No change        On or before 12/  ''.
                         Dimethylethyl)-5-                                                  31/2009
                         hydroxypyrimidine
                         , sodium salt
                         (CAS No. 146237-
                         62-9) (provided
                         for in subheading
                         2933.59.70)......

     SEC. 1455. PHOSPHORUS THIOCHLORIDE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.75      Phosphorus          Free         No change        No change        On or before 12/  ''.
                         Thiochloride (CAS                                                  31/2009
                         No. 3982-91-0)
                         (provided for in
                         subheading
                         2851.00.00)......

     SEC. 1456. TRIFLOXYSTROBIN.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.76.     Methyl (E)-         2.4%         No change        No change        On or before 12/  ''.
                         methoxyimino-{(E)                                                  31/2009
                         -a-[1-(a,a,a-
                         trifluoro-m-
                         tolyl)
                         ethylideneaminoox
                         y] -o-
                         tolyl}acetate
                         (Trifloxystrobin)
                         (CAS No. 141517-
                         21-7) (provided
                         for in subheading
                         2929.90.20)......

     SEC. 1457. PHOSPHORIC ACID, LANTHANUM SALT, CERIUM TERBIUM-
                   DOPED.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.77       Phosphoric acid,   Free         No change        No change        On or before 12/  ''.
                         lanthanum salt,                                                    31/2009
                         cerium terbium-
                         doped (CAS No.
                         95823-34-0)
                         (provided for in
                         subheading
                         2846.90.80)......

     SEC. 1458. LUTETIUM OXIDE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.78       Lutetium oxide     Free         No change        No change        On or before 12/  ''.
                         (CAS No. 12032-20-                                                 31/2009
                         1) (provided for
                         in subheading
                         2846.90.80)......

     SEC. 1459. ACM.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.79       (3-Acetoxy-3-      0.7%         No change        No change        On or before 12/  ''.
                         cyanopropyl)                                                       31/2009
                         methylphosphinic
                         acid, butyl ester
                         (CAS No. 167004-
                         78-6) (provided
                         for in subheading
                         2931.00.90)......

     SEC. 1460. PERMETHRIN.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.80       (3-                Free         No change        No change        On or before 12/  ''.
                         Phenoxyphenyl)met                                                  31/2009
                         hyl 3-(2,2-
                         dichloroethenyl)-
                         2,2-
                         dimethylcycloprop
                         anecarboxylate
                         (Permethrin) (CAS
                         No. 52645-53-1)
                         (provided for in
                         subheading
                         2916.20.50)......

     SEC. 1461. THIDIAZURON.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.81       N-Phenyl-N -       Free         No change        No change        On or before 12/  ''.
                         (1,2,3-thiadiazol-                                                 31/2009
                         5-yl)urea
                         (Thidiazuron) CAS
                         No. 51707-55-2),
                         whether or not
                         mixed with
                         application
                         adjuvants
                         (provided for in
                         subheading
                         2934.99.15 or
                         3808.30.15)......

     SEC. 1462. FLUTOLANIL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.82       N-[3-(1-           Free         No change        No change        On or before 12/  ''.
                         Methylethoxy)phen                                                  31/2009
                         yl]-2-
                         (trifluoromethyl)
                         benzamide
                         (Flutolanil) (CAS
                         No. 66332-96-5)
                         (provided for in
                         subheading
                         2924.29.47)......

     SEC. 1463. RESMETHRIN.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


[[Page 16415]]



``      9902.10.83       [5-(Phenylmethyl)- Free         No change        No change        On or before 12/  ''.
                         3-furanyl]methyl                                                   31/2009
                         2,2-dimethyl-3-(2-
                         methyl-1-
                         propenyl)
                         cyclopropanecarbo
                         xylate
                         (Resmethrin) (CAS
                         No. 10453-86-8)
                         (provided for in
                         subheading
                         2932.19.10)......

     SEC. 1464. CLOTHIANIDIN.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.84       (E)-1-(2-Chloro-   5.4%         No change        No change        On or before 12/  ''.
                         1,3-thiazol-5-                                                     31/2009
                         ylmethyl)-3-
                         methyl-2-
                         nitroguanidine
                         (Clothianidin)
                         (CAS No. 210880-
                         92-5) (provided
                         for in subheading
                         2934.10.90)......

     SEC. 1465. CERTAIN MASTER CYLINDER ASSEMBLES.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.92      Master cylinder     Free         No change        No change        On or before 12/  ''.
                         assemblies for                                                     31/2009
                         braking systems,
                         not incorporating
                         a vacuum booster,
                         the foregoing
                         designed for use
                         in hybrid motor
                         vehicles of
                         heading 8703
                         (provided for in
                         subheading
                         8708.39.50)......

     SEC. 1466. CERTAIN TRANSAXLES.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.93      Transaxles, each    1.5%         No change        No change        On or before 12/  ''.
                         incorporating an                                                   31/2009
                         integral
                         electronic
                         controller, the
                         foregoing
                         designed for use
                         in hybrid motor
                         vehicles of
                         heading 8703
                         (provided for in
                         subheading
                         8708.40.20)......

     SEC. 1467. CONVERTER ASY.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.94       Static converters  Free         No change        No change        On or before 12/  ''.
                         capable of                                                         31/2009
                         converting 300 V
                         direct current to
                         12 V direct
                         current, designed
                         for use in hybrid
                         motor vehicles of
                         heading 8703
                         (provided for in
                         subheading
                         8504.40.95)......

     SEC. 1468. MODULE AND BRACKET ASY-POWER STEERING.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.95      Controllers for     Free         No change        No change        On or before 12/  ''.
                         electronic power                                                   31/2009
                         assisted steering
                         systems, rated at
                         80 amperes at 12
                         V, designed for
                         use in hybrid
                         motor vehicles of
                         heading 8703
                         (provided for in
                         subheading
                         8537.10.90)......

     SEC. 1469. UNIT ASY-BATTERY HI VOLT.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.96      Nickel metal-       2.8%         No change        No change        On or before 12/  ''.
                         hydride storage                                                    31/2009
                         batteries,
                         exceeding 300 V,
                         the foregoing
                         designed for use
                         in hybrid motor
                         vehicles of
                         heading 8703
                         (provided for in
                         subheading
                         8507.80.80)......

     SEC. 1470. CERTAIN ARTICLES OF NATURAL CORK.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.10.99      Articles of         6%           No change        No change        On or before 12/  ''.
                         natural cork, not                                                  31/2009
                         elsewhere
                         specified or
                         included
                         (provided for in
                         subheading
                         4503.90.60)......

     SEC. 1471. GLYOXYLIC ACID.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.01       Glyoxylic acid     1.6%         No change        No change        On or before 12/  ''.
                         (CAS No. 298-12-                                                   31/2009
                         4) (provided for
                         in subheading
                         2918.30.90)......

     SEC. 1472. CYCLOPENTANONE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.02       Cyclopentanone     Free         No change        No change        On or before 12/  ''.
                         (CAS No. 120-92-                                                   31/2009
                         3) (provided for
                         in subheading
                         2914.29.50)......


[[Page 16416]]

     SEC. 1473. MESOTRIONE TECHNICAL.

       (a) Calendar Year 2006.--Subchapter II of chapter 99 is 
     amended by inserting in numerical sequence the following new 
     heading:


``      9902.11.03       2-[4-              6.04%        No change        No change        On or before 12/  ''.
                         (Methylsulfonyl)-                                                  31/2006
                         2-nitrobenzoyl]-
                         1,3-
                         cyclohexanedione
                         (Mesotrione) (CAS
                         No. 104206-82-8)
                         (provided for in
                         subheading
                         2930.90.10)......

       (b) Calendar Year 2007.--
       (1) In general.--Heading 9902.11.03, as added by subsection 
     (a), is amended--
       (A) by striking ``6.04%'' and inserting ``6.08%''; and
       (B) by striking ``12/31/2006'' and inserting ``12/31/
     2007''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall take effect on January 1, 2007.
       (c) Calendar Years 2008 and 2009.--
       (1) In general.--Heading 9902.11.03, as added by subsection 
     (a) and amended by subsection (b), is further amended--
       (A) by striking ``6.08%'' and inserting ``6.11%''; and
       (B) by striking ``12/31/2007'' and inserting ``12/31/
     2009''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall take effect on January 1, 2008.

     SEC. 1474. MALONIC ACID-DINITRILE 50% NMP.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.04       50% solution of    Free         No change        No change        On or before 12/  ''.
                         malononitrile in                                                   31/2009
                         methyl-2-
                         pyrrolidone
                         solvent (CAS Nos.
                         109-77-3 and 872-
                         50-4) (provided
                         for in subheading
                         3824.90.9190)....

     SEC. 1475. FORMULATIONS OF NOA 446510.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.05       Formulations of    Free         No change        No change        On or before 12/  ''.
                         NOA 446510 which                                                   31/2009
                         include NOA
                         446510 Technical,
                         2-(4-chloro-
                         phenyl) -N-[2-(3-
                         methoxy-4-prop-2-
                         ynyloxy-phenyl)
                         ethyl]-2-prop-2-
                         ynyloxyacetamide
                         (CAS No. 374726-
                         62-2) (provided
                         for in subheading
                         3808.20.15)......

     SEC. 1476. DEMBB DISTILLED-ISO TANK.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.06      2-Bromo-1,3-        Free         No change        No change        On or before 12/  ''.
                         diethyl-5-                                                         31/2009
                         methylbenzene
                         (CAS No. 314084-
                         61-2) (DEMBB)
                         (provided for in
                         subheading
                         2903.69.80)......

     SEC. 1477. METHYLIONONE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.10       3-Methyl-4-(2,6,6- Free         No change        No change        On or before 12/  ''.
                         trimethylcyclohex-                                                 31/2009
                         2-enyl)but-3-en-2-
                         one
                         (Methylionone)
                         (CAS No. 1335-46-
                         2) (provided for
                         in subheading
                         2914.23.00.......

     SEC. 1478. CERTAIN ACRYLIC FIBER TOW.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.11       Acrylic fiber tow  Free         No change        No change        On or before 12/  ''.
                         (polyacrylonitril                                                  31/2009
                         e tow) containing
                         by weight a
                         minimum of 92
                         percent
                         acrylonitrile,
                         not more than 0.1
                         percent zinc and
                         from 4 to 8
                         percent water,
                         imported in the
                         form of from 1 to
                         12 sub-bundles
                         crimped together,
                         each containing
                         24,000 filaments
                         (plus or minus
                         0.06 percent) and
                         with average
                         filament denier
                         of 1.5 decitex
                         (plus or minus
                         0.08 percent)
                         (provided for in
                         subheading
                         5501.30.00)......

     SEC. 1479. CERTAIN ACRYLIC FIBER TOW.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.12       Acrylic fiber tow  Free         No change        No change        On or before 12/  ''.
                         (polyacrylonitril                                                  31/2009
                         e tow) containing
                         by weight a
                         minimum of 92
                         percent
                         acrylonitrile,
                         not more than 0.1
                         percent zinc and
                         from 2 to 8
                         percent water,
                         imported in the
                         form of 6 sub-
                         bundles crimped
                         together, each
                         containing 45,000
                         filaments (plus
                         or minus 0.06
                         percent) and with
                         average filament
                         denier of either
                         1.48 decitex
                         (plus or minus
                         0.08 percent) or
                         1.32 decitex
                         (plus or minus
                         0.09 percent)
                         (provided for in
                         subheading
                         5501.30.00)......

     SEC. 1480. MKH 6561 ISOCYANATE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


[[Page 16417]]



``      9902.11.13       2-(Carbomethoxy)   Free         No change        No change        On or before 12/  ''.
                         benzenesulfonyl                                                    31/2009
                         isocyanate (CAS
                         No. 74222-95-0)
                         (provided for in
                         subheading
                         2930.90.29)......

     SEC. 1481. ENDOSULFAN.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.14      6,7,8,9,10,10-      Free         No change        No change        On or before 12/  ''.
                         Hexachlorohexahyd                                                  31/2009
                         romethano-2,4,3-
                         benzodioxathiepin-
                         3-oxide
                         (Endosulfan) (CAS
                         No. 115-29-7)
                         (provided for in
                         subheading
                         2920.90.50 or
                         3808.10.50)......

     SEC. 1482. TETRACONAZOLE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.15       1-[2-(2,4-         Free         No change        No change        On or before 12/  ''.
                         dichlorophenyl)-3-                                                 31/2009
                         (1,1,2,2-
                         tetrafluoroethoxy
                         )propyl]-1H-1,2,4-
                         triazole
                         (Tetraconazole)
                         (CAS No. 112281-
                         77-3) (provided
                         for in subheading
                         2933.99.22)......

     SEC. 1483. M-ALCOHOL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.16       2-(2,4-            1%           No change        No change        On or before 12/  ''.
                         Dichlorophenyl)-3-                                                 31/2009
                         (1H-1,2,4-triazol-
                         1-yl)propanol
                         (CAS No. 112281-
                         82-0) (provided
                         for in subheading
                         2933.99.82)......

     SEC. 1484. CERTAIN MACHINES FOR USE IN THE ASSEMBLY OF 
                   MOTORCYCLE WHEELS.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.17      Wheel spoke         Free         No change        No change        On or before 12/  ''.
                         tightening                                                         31/2009
                         machines
                         (provided for in
                         subheading
                         8479.89.98), for
                         use with wheels
                         of vehicles of
                         heading 8711.....

     SEC. 1485. DELTAMETHRIN.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.26       (S)-a-Cyano-3-     Free         No change        No change        On or before 12/  ''.
                         phenoxybenzyl                                                      31/2009
                         (1R,3R)-3-(2,2-
                         dibromovinyl)-2,2-
                         dimethylcycloprop
                         anecarboxylate
                         (Deltamethrin)
                         (CAS No. 52918-63-
                         5) (provided for
                         in subheading
                         2926.90.30)......

     SEC. 1486. PALM FATTY ACID DISTILLATE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.32      Monocarboxylic      1%           No change        No change        On or before 12/  ''.
                         fatty acids                                                        31/2009
                         derived from palm
                         oil (provided for
                         in subheading
                         3823.19.20)......

     SEC. 1487. 4-METHOXY-2-METHYLDIPHENYLAMINE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.35      4-Methoxy-2-        1.1%         No change        No change        On or before 12/  ''.
                         methyldiphenylami                                                  31/2009
                         ne (CAS No. 41317-
                         15-1) (provided
                         for in subheading
                         2922.29.60)......

     SEC. 1488. 2-METHYLHYDROQUINONE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.36       2-                 Free         No change        No change        On or before 12/  ''.
                         Methylhydroquinon                                                  31/2009
                         e (CAS No. 95-71-
                         6) (provided for
                         in subheading
                         2907.29.90)......

     SEC. 1489. 1-FLUORO-2-NITROBENZENE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.37       1-Fluoro-2-        Free         No change        No change        On or before 12/  ''.
                         nitrobenzene (CAS                                                  31/2009
                         No. 1493-27-2)
                         (provided for in
                         subheading
                         2904.90.30)......

     SEC. 1490. COSMETIC BAGS WITH A FLEXIBLE OUTER SURFACE OF 
                   REINFORCED OR LAMINATED POLYVINYL CHLORIDE 
                   (PVC).

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


[[Page 16418]]



``      9902.11.43      Vanity cases that   13.3%        No change        No change        On or before 12/  ''.
                         are of a soft                                                      31/2009
                         sided
                         construction, of
                         reinforced or
                         laminated
                         polyvinyl
                         chloride
                         plastics, and are
                         of a kind
                         normally carried
                         in the pocket or
                         in the handbag
                         and used to
                         contain and apply
                         cosmetic
                         preparations
                         (provided for in
                         subheading
                         4202.12.20)......

     SEC. 1491. MIXTURES OF METHYL 4-IODO-2-[3-(4-METHOXY-6-
                   METHYL-1,3,5-TRIAZIN-2-
                   YL)UREIDOSULFONYL]BENZOATE, SODIUM SALT 
                   (IODOSULFURON METHYL, SODIUM SALT).

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.44       Mixtures of        Free         No change        No change        On or before 12/  ''.
                         methyl 4-iodo-2-                                                   31/2009
                         [3-(4-methoxy-6-
                         methyl-1,3,5-
                         triazin-2-yl)
                         ureidosulfonyl]be
                         nzoate, sodium
                         salt
                         (Iodosulfuron
                         methyl, sodium
                         salt) (CAS No.
                         144550-36-7) and
                         application
                         adjuvants
                         (provided for in
                         subheading
                         3808.30.15)......

     SEC. 1492. ETHYL 4,5-DIHYDRO-5,5-DIPHENYL-1,2-OXAZOLE-3-
                   CARBOXYLATE (ISOXADIFEN-ETHYL).

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.45       Ethyl 4,5-dihydro- Free         No change        No change        On or before 12/  ''.
                         5,5-diphenyl-1,2-                                                  31/2009
                         oxazole-3-
                         carboxylate
                         (Isoxadifen-
                         ethyl) (CAS No.
                         163520-33-0)
                         (provided for in
                         subheading
                         2934.99.39)......

     SEC. 1493. (5-CYCLOPROPYL-4-ISOXAZOLYL) [2-(METHYLSULFONYL) -
                   4-(TRIFLUOROMETHYL) PHENYL] METHANONE 
                   (ISOXAFLUTOLE).

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.46       (5-cyclopropyl-4-  4.8%         No change        No change        On or before 12/  ''.
                         isoxazolyl) [2-                                                    31/2009
                         (methylsulfonyl)-
                         4-
                         (trifluoromethyl)
                         phenyl]methanone
                         (Isoxaflutole)
                         (CAS No. 141112-
                         29-0) (provided
                         for in subheading
                         2934.99.15)......

     SEC. 1494. METHYL 2-[(4,6- DIMETHOXYPYRIMIDIN-2-YLCARBAMOYL) 
                   SULFAMOYL]-A-(METHANESULFONAMIDO) -P-TOLUATE 
                   (MESOSULFURON-METHYL) WHETHER OR NOT MIXED WITH 
                   APPLICATION ADJUVANTS.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.48       Methyl 2-[(4,6-    Free         No change        No change        On or before 12/  ''.
                         dimethoxypyrimidi                                                  31/2009
                         n-2-ylcarbamoyl)
                         sulfamoyl] -a-
                         (methanesulfonami
                         do) -p-toluate
                         (Mesosulfuron-
                         methyl) (CAS No.
                         208465-21-8)
                         whether or not
                         mixed with
                         application
                         adjuvants
                         (provided for in
                         subheading
                         2935.00.75 or
                         3808.30.15)......

     SEC. 1495. MIXTURES OF FORAMSULFURON AND IODOSULFURON-METHYL-
                   SODIUM.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.49       Mixtures of N,N-   Free         No change        No change        On or before 12/  ''.
                         dimethyl-2[3-(4,6-                                                 31/2009
                         dimethoxypyrimidi
                         n-2-yl)
                         ureidosulfonyl] -
                         4-
                         formylaminobenzam
                         ide
                         (Foramsulfuron)
                         (CAS No. 173159-
                         57-4), methyl 4-
                         iodo-2-[3-(4-
                         methoxy-6- methyl-
                         1,3,5-triazin-2-
                         yl)
                         ureidosulfonyl]be
                         nzoate, sodium
                         salt
                         (Iodosulfuron-
                         methyl-sodium)
                         (CAS No. 144550-
                         36-7) and
                         application
                         adjuvants
                         (provided for in
                         subheading
                         3808.30.15)......

     SEC. 1496. VULCUREN UPKA 1988.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.54       1,6-Bis(N,N'-      Free         No change        No change        On or before 12/  ''.
                         dibenzylthiocarba                                                  31/2009
                         moyldithio)hexane
                         (CAS No. 151900-
                         44-6) (provided
                         for in subheading
                         2930.20.20)......

     SEC. 1497. VULLCANOX 41010 NA/LG.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.55      N-Isopropyl-N'-     Free         No change        No change        On or before 12/  ''.
                         phenyl-p-                                                          31/2009
                         phenylenediamine
                         (CAS No. 101-72-
                         4) (provided for
                         in subheading
                         2921.51.50)......

     SEC. 1498. VULKAZON AFS/LG.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.56       Pentaerythritolbi  Free         No change        No change        On or before 12/  ''.
                         s(tetrahydrobenza                                                  31/2009
                         ldehyde acetal)
                         (CAS No. 6600-31-
                         3) (provided for
                         in subheading
                         2932.99.90)......


[[Page 16419]]

     SEC. 1499. P-ANISALDEHYDE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.57      P-Anisaldehyde      Free         No change        No change        On or before 12/  ''.
                         (CAS No. 123-11-                                                   31/2009
                         5) (Benzoldehyde,
                         4-methoxy-)
                         (provided for in
                         subheading
                         2912.49.10)......

     SEC. 1500. 1,2-PENTANEDIOL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.60       1,2-Pentanediol    Free         No change        No change        On or before 12/  ''.
                         (CAS No. 5343-92-                                                  31/2009
                         0) (provided for
                         in subheading
                         2905.39.90)......

     SEC. 1501. AGRUMEX.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following:


``      9902.11.62      o-tert-             Free         No change        No change        On or before 12/  ''.
                         Butylcyclohexyl                                                    31/2009
                         acetate, cis form
                         (CAS No. 20298-69-
                         9) (Agrumex)
                         (Cyclohexanol, 2-
                         (1,1-dimethyl-)
                         (provided for in
                         subheading
                         2915.39.45)......

     SEC. 1502. COHEDUR RL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.63       Mixtures of        Free         No change        No change        On or before 12/  ''.
                         resorcinol (CAS                                                    31/2009
                         No. 108-46-3),
                         hexamethylolmelam
                         ine ether (CAS
                         No. 3089-11-0)
                         and dibutyl
                         phthalate (CAS
                         No. 84-74-2)
                         (provided for in
                         subheading
                         3824.90.28)......

     SEC. 1503. FORMULATIONS OF PROSULFURON.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.64       Mixtures of        Free         No change        No change        On or before 12/  ''.
                         Prosulfuron (1-(4-                                                 31/2009
                         methoxy-6-methyl-
                         1,3,5-triazin-2-
                         yl)-3-[2-(3,3,3-
                         trifluoropropyl)-
                         phenylsulfonyl]ur
                         ea ) (CAS No.
                         94125-34-5) and
                         application
                         adjuvants
                         (provided for in
                         subheading
                         3808.30.15)......

     SEC. 1504. LEWATIT.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.71      Ion-exchange        Free         No change        No change        On or before 12/  ''.
                         resins (cationic                                                   31/2009
                         H form),
                         consisting of
                         copolymers of
                         acrylic acid and
                         diethylene glycol
                         divinyl ether
                         (CAS No. 359785-
                         58-3) (provided
                         for in subheading
                         3914.00.60)......

     SEC. 1505. PARA-CHLOROPHENOL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.72      para-Chlorophenol   Free         No change        No change        On or before 12/  ''.
                         (CAS No. 106-48-                                                   31/2009
                         9) (provided for
                         in subheading
                         2908.10.60)......

     SEC. 1506. CYPERMETHRIN.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.74      Cyano(3-            Free         No change        No change        On or before 12/  ''.
                         phenoxyphenyl)met                                                  31/2009
                         hyl 3-(2,2-
                         dichloroethenyl)-
                         2,2-
                         dimethylcycloprop
                         anecarboxylate
                         (Cypermethrin)
                         (CAS No. 52315-07-
                         8) (provided for
                         in subheading
                         2926.90.30)......

     SEC. 1507. ION-EXCHANGE RESIN POWDER.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.78       Ion-exchange       Free         No change        No change        On or before 12/  ''.
                         resin powder                                                       31/2009
                         comprised of a
                         copolymer of
                         methacrylic acid
                         cross-linked with
                         divinylbenzene,
                         in the hydrogen
                         ionic form, of a
                         nominal partical
                         size between
                         0.025mm and 0.150
                         mm, dried to less
                         than 5% moisture
                         (CAS No. 50602-21-
                         6)(provided for
                         in subheading
                         3914.00.60)......

     SEC. 1508. ION-EXCHANGE RESIN POWDER.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


[[Page 16420]]



``      9902.11.79       Ion-exchange       Free         No change        No change        On or before 12/  ''.
                         resin powder                                                       31/2009
                         comprised of a
                         copolymer of
                         methacrylic acid
                         cross-linked with
                         divinylbenzene,
                         in the potassium
                         ionic form, of a
                         nominal particle
                         size between
                         0.025mm and 0.150
                         mm, dried to less
                         than 10% moisture
                         (CAS No. 65405-55-
                         2) (provided for
                         in subheading
                         3914.00.60)......

     SEC. 1509. DESMODUR E 14.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.80      1,2,3-              Free         No change        No change        On or before 12/  ''.
                         Propanetriol,                                                      31/2009
                         polymer with 2,4-
                         diisocyanato-1-
                         methylbenzene, 2-
                         ethyl-2-
                         (hydroxymethyl)-1
                         ,3-propanediol,
                         methyloxirane and
                         oxirane (CAS No.
                         127821-00-5)
                         (provided for in
                         subheading
                         3909.50.50)......

     SEC. 1510. DESMODUR VP LS 2253.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.82      Hexane, 1,6-        Free         No change        No change        On or before 12/  ''.
                         diisocyanato-,                                                     31/2009
                         homopolymer, 3,5-
                         dimethyl-1H-
                         pyrazole-blocked
                         (CAS No. 163206-
                         31-3) (provided
                         for in subheading
                         3911.90.90)......

     SEC. 1511. DESMODUR R-E.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.83      4,4, 4-TT Desmodur  Free         No change        No change        On or before 12/  ''.
                         R-E in solvent                                                     31/2009
                         (CAS No. 2422-91-
                         5) in solvent
                         (provided for in
                         subheading
                         3824.90.28)......

     SEC. 1512. WALOCEL MW 3000 PFV.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.84      Methyl              Free         No change        No change        On or before 12/  ''.
                         hydroxyethyl                                                       31/2009
                         cellulose
                         products
                         containing 30% or
                         greater content
                         of 2-hydroxyethyl
                         methyl ether
                         cellulose
                         (``MHEC'' )
                         reaction products
                         with glyoxal (CAS
                         No. 68441-63-4)
                         (provided for in
                         subheading
                         3912.39.00)......

     SEC. 1513. TSME.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.85      ortho/para-         Free         No change        No change        On or before 12/  ''.
                         Toluenesulfonic                                                    31/2009
                         acid, methyl
                         ester (TSME) (CAS
                         Nos. 23373-38-8
                         and 80-48-8)
                         (provided for in
                         subheading
                         2904.10.32)......

     SEC. 1514. WALOCEL VP-M 20660.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.86      Methyl              Free         No change        No change        On or before 12/  ''.
                         Hydroxyethyl                                                       31/2009
                         Cellulose with a
                         77% or greater
                         content of 2-
                         hydroxyethyl
                         methyl ether
                         cellulose (CAS
                         No. 9032-42-2)
                         (provided for in
                         subheading
                         3912.39.00)......

     SEC. 1515. XAMA 2.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.87      Trimethylopropane   Free         No change        No change        On or before 12/  ''.
                         tris(3-                                                            31/2009
                         aziridinylpropano
                         ate) (CAS No.
                         52234-82-9)
                         (provided for in
                         subheading
                         2933.99.97)......

     SEC. 1516. XAMA 7.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.88      Polyfunctional      Free         No change        No change        On or before 12/  ''.
                         aziridine (CAS                                                     31/2009
                         No. 57116-45-7)
                         (provided for in
                         subheading
                         2933.99.97)......

     SEC. 1517. CERTAIN CASES FOR TOYS.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


[[Page 16421]]



``      9902.11.90      Cases or            Free         No change        No change        On or before 12/  ''.
                         containers                                                         31/2009
                         (provided for in
                         subheading
                         4202.92.90 and
                         not including
                         goods described
                         in heading
                         9902.01.81),
                         specially shaped
                         or fitted for,
                         and with
                         labeling, logo or
                         other descriptive
                         information on
                         the exterior of
                         the case or
                         container
                         indicating its
                         intention to be
                         used for,
                         electronic
                         drawing toys or
                         electronic games
                         of heading 9503
                         or 9504..........

     SEC. 1518. CERTAIN CASES FOR TOYS.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.91      Cases or            Free         No change        No change        On or before 12/  ''.
                         containers                                                         31/2009
                         (provided for in
                         subheadings
                         4402.12.80 or
                         4202.92.90),
                         having one or
                         more molded
                         plastic holders,
                         clips or
                         fasteners, for
                         holding a doll or
                         dolls, whether or
                         not the case or
                         container is also
                         capable of
                         holding other
                         goods............

     SEC. 1519. ANILINE 2.5-DISULFONIC ACID.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.92      Aniline 2,5-        Free         No change        No change        On or before 12/  ''.
                         disulfonic acid                                                    31/2009
                         (CAS No. 98-44-2)
                         (1,4-
                         Benzenedisnlfonic
                         acid, 2-amino-)
                         (provided for in
                         subheading
                         2921.42.90)......

     SEC. 1520. 1,4-BENZENEDICARBOXYLIC ACID, POLYMER WITH N,N'-
                   BIS(2-AMINOETHYL)-1,2-ETHANEDIAMINE, CYCLIZED, 
                   METHOSULFATE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.93       1,4-               Free         No change        No change        On or before 12/  ''.
                         Benzenedicarboxyl                                                  31/2009
                         ic acid, polymer
                         With N,N-Bis(2-
                         aminoethyl)-1,2-
                         ethanediamine,
                         cyclized,
                         methosulfate (CAS
                         No. 68187-22-4)
                         (provided for in
                         subheading
                         3908.90.70)......

     SEC. 1521. SULFUR BLUE 7.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.94      4-[(4-Amino- 3-     Free         No change        No change        On or before 12/  ''.
                         methylphenyl)                                                      31/2009
                         amino]phenol,
                         reaction products
                         with sodium
                         sulfide (Sulfur
                         Blue 7) (CAS No.
                         1327-57-7)
                         (provided for in
                         subheading
                         3204.19.50)......

     SEC. 1522. FORMALDEHYDE, REACTION PRODUCTS WITH 1,4-
                   BENZENEDIOL AND M-PHENYLENEDIAMINE, SULFURIZED.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.95       Formaldehyde,      Free         No change        No change        On or before 12/  ''.
                         reaction products                                                  31/2009
                         with 1,4-
                         benzenediol and m-
                         phenylenediamine,
                         sulfurized (CAS
                         No. 110392-46-6)
                         (provided for in
                         subheading
                         3204.19.50)......

     SEC. 1523. ISOCYANATOSULFONYL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.96      2-                  Free         No change        No change        On or before 12/  ''.
                         (Isocyanatosulfon                                                  31/2009
                         yl)benzoic acid,
                         ethyl ester (CAS
                         No. 77375-79-2)
                         (provided for in
                         subheading
                         2930.90.29)......

     SEC. 1524. ISOCYANATOSULFONYL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.97      2-                  Free         No change        No change        On or before 12/  ''.
                         (Isocyanatosulfon                                                  31/2009
                         yl)benzoic acid,
                         methyl ester (CAS
                         No. 74222-95-0)
                         (provided for in
                         subheading
                         2930.90.29)......

     SEC. 1525. GEMIFLOXACIN, GEMIFLOXACIN MESYLATE, AND 
                   GEMIFLOXACIN MESYLATE SESQUIHYDRATE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.11.99      Gemifloxacin (CAS   Free         No change        No change        On or before 12/  ''.
                         No. 175463-14-6);                                                  31/2009
                         gemifloxacin
                         mesylate (CAS No.
                         210353-53-0 or
                         204519-65-3); and
                         gemifloxacin
                         mesylate
                         sesquihydrate
                         (CAS No. 210353-
                         56-3 ) (the
                         foregoing
                         provided for in
                         subheading
                         2933.99.46)......

     SEC. 1526. BUTRALIN.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


[[Page 16422]]



``      9902.12.01      Butralin (CAS No.   Free         No change        No change        On or before 12/  ''.
                         33629-47-9)                                                        31/2009
                         (Benzenamine, 4-
                         (1,1-
                         dimethylethyl)-N-
                         (1-methylpropyl)-
                         2,6-dintro-)
                         (provided for in
                         subheading
                         2921.43.90)......

     SEC. 1527. SPIRODICLOFEN.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.12.02      2,2-                Free         No change        No change        On or before 12/  ''.
                         Dimethylbutanoic                                                   31/2009
                         acid, 3-(2,4-
                         dichlorophenyl)-2-
                         oxo-1-
                         oxaspiro(4.5)dec-
                         3-en-4-yl ester
                         (Spirodiclofen)
                         (CAS No. 148477-
                         71-8) (provided
                         for in subheading
                         2932.29.10)......

     SEC. 1528. PROPAMOCARB HCL (PREVICUR).

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.12.03      Mixtures of propyl  Free         No change        No change        On or before 12/  ''.
                         3-(dimethylamino)                                                  31/2009
                         propylcarbamate
                         monohydrochloride
                         (Propamocarb
                         hydrochloride)
                         (CAS No. 25606-41-
                         1) and
                         application
                         adjuvants
                         (provided for in
                         subheading
                         3808.20.50)......

     SEC. 1529. DESMODUR IL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.12.04      Poly(toluene        Free         No change        No change        On or before 12/  ''.
                         diisocyanate)                                                      31/2009
                         (CAS No. 26006-20-
                         2) dissolved in
                         organic solvents
                         (provided for in
                         subheading
                         3911.90.45)......

     SEC. 1530. CHLOROACETONE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.12.05      1-Chloro-2-         Free         No change        No change        On or before 12/  ''.
                         propanone (CAS                                                     31/2009
                         No. 78-95-5)
                         (provided for in
                         subheading
                         2914.70.90)......

     SEC. 1531. IPN (ISOPHTHALONITRILE).

       (a) Calendar Year 2006.--Subchapter II of chapter 99 is 
     amended by inserting in numerical sequence the following new 
     heading:


``      9902.12.06      1,3-                3.04%        No change        No change        On or before 12/  ''.
                         Benzenedicarbonit                                                  31/2006
                         rile (CAS No. 626-
                         17-5) (provided
                         for in subheading
                         2926.90.48)......

       (b) Calendar Year 2007.--
       (1) In general.--Heading 9902.12.06, as added by subsection 
     (a), is amended--
       (A) by striking ``3.04%'' and inserting ``3.23%''; and
       (B) by striking ``On or before 12/31/2006'' and inserting 
     ``On or before 12/31/2007''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall take effect on January 1, 2007.
       (c) Calendar Years 2008 and 2009.--
       (1) In general.--Heading 9902.12.06, as added by subsection 
     (a) and amended by subsection (b), is further amended--
       (A) by striking ``3.23%'' and inserting ``3.4%''; and
       (B) by striking ``On or before 12/31/2007'' and inserting 
     ``On or before 12/31/2009''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall take effect on January 1, 2008.

     SEC. 1532. NOA 446510 TECHNICAL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.12.07      4-Chloro-N- [2-[3-  1.2%         No change        No change        On or before 12/  ''.
                         methoxy-4-(2-                                                      31/2009
                         propynyloxy)
                         phenyl]ethyl]-a-
                         (2-
                         propynyloxy)benze
                         neacetamide
                         (Mandipropamid)
                         (CAS No. 374726-
                         62-2) (provided
                         for in subheading
                         2924.29.47)......

     SEC. 1533. HEXYTHIAZOX TECHNICAL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.12.08      trans-5-(4-         Free         No change        No change        On or before 12/  ''.
                         Chlorophenyl)-N-                                                   31/2009
                         cyclohexyl-4-
                         methyl-2-
                         oxothiazolidine-3-
                         carboxamide
                         (Hexythiazox
                         Technical) (CAS
                         No. 78587-05-0)
                         (provided for in
                         subheading
                         2934.10.10)......

     SEC. 1534. CRELAN (SELF-BLOCKED CYCLOALIPHATIC 
                   POLYURETDIONE).

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


[[Page 16423]]



``      9902.12.10      2-Oxepanone         Free         No change        No change        On or before 12/  ''.
                         polymer with 1,4-                                                  31/2009
                         butanediol and 5-
                         isocyanato-1-
                         (isocyanatomethyl
                         )-1,3,3-
                         trimethylcyclohex
                         ane, 2-ethyl-1-
                         hexanol-blocked
                         (CAS No. 189020-
                         69-7) (provided
                         for in subheading
                         3909.50.50)......

     SEC. 1535. ASPIRIN.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.12.11      o-Acetylsalicylic   3.0%         No change        No change        On or before 12/  ''.
                         acid (aspirin)                                                     31/2009
                         (CAS No. 50-78-2)
                         (provided for in
                         subheading
                         2918.22.10)......

     SEC. 1536. DESMODUR BL XP 2468.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.12.12      Copolymer of        Free         No change        No change        On or before 12/  ''.
                         methyl ethyl                                                       31/2009
                         ketoxime and
                         toluenediisocyana
                         te (CAS No.
                         352462-03-4)
                         (provided for in
                         subheading
                         3911.90.45)......

     SEC. 1537. DESMODUR RF-E.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.12.17      Mixtures of tris(4- Free         No change        No change        On or before 12/  ''.
                         isocyanatophenyl)                                                  31/2009
                         thiophosphate
                         (CAS No. 4151-51-
                         3) and ethyl
                         acetate and
                         monochlorobenzene
                         as solvents
                         (provided for in
                         subheading
                         3824.90.28)......

     SEC. 1538. DESMODUR HL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.12.18      Benzene, 1,3-       Free         No change        No change        On or before 12/  ''.
                         diisocyanatomethy                                                  31/2009
                         l-, polymer with
                         1,6-
                         diisocyanatohexan
                         e (CAS No. 63368-
                         95-6) dissolved
                         in n-butyl
                         acetate (provided
                         for in subheading
                         3911.90.45)......

     SEC. 1539. D-MANNOSE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.12.19      D-Mannose (CAS No.  Free         No change        No change        On or before 12/  ''.
                         3458-28-4)                                                         31/2009
                         (provided for in
                         subheading
                         2940.00.60)......

     SEC. 1540. CERTAIN CAMEL HAIR.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.12.20       Camel hair,        Free         No change        No change        On or before 12/  ''.
                         processed beyond                                                   31/2009
                         the degreased or
                         carbonized
                         condition
                         (provided for in
                         subheading
                         5102.19.90)......

     SEC. 1541. WASTE OF CAMEL HAIR.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.12.21       Waste of camel     Free         No change        No change        On or before 12/  ''.
                         hair (provided                                                     31/2009
                         for in subheading
                         5103.20.00)......

     SEC. 1542. CERTAIN CAMEL HAIR.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``      9902.12.22       Camel hair carded  Free         No change        No change        On or before 12/  ''.
                         or combed                                                          31/2009
                         (provided for in
                         subheading
                         5105.39.00)......

     SEC. 1543. WOVEN FABRIC OF VICUNA HAIR.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.12.23     Woven fabrics     Free           No change      No change      On or before 12/31/2009    ''
                     containing 85                                                                             .
                     percent or more
                     by weight of
                     vicuna hair
                     (provided for
                     in subheadings
                     5111.11.70,
                     5111.19.60,
                     5112.11.60, or
                     5112.19.95)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1544. CERTAIN CAMEL HAIR.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.12.24     Camel hair, not   Free           No change      No change      On or before 12/31/2009    ''
                     processed in                                                                              .
                     any manner
                     beyond the
                     degreased or
                     carbonized
                     condition
                     (provided for
                     in subheading
                     5102.19.20)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1545. NOILS OF CAMEL HAIR.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


[[Page 16424]]



``   9902.12.25     Noils of camel    Free           No change      No change      On or before 12/31/2009    ''
                     hair (provided                                                                            .
                     for in
                     subheading
                     5103.10.00)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1546. CHLOROACETIC ACID, ETHYL ESTER.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.12.33     Chloroacetic      Free           No change      No change      On or before 12/31/2009    ''
                     acid, ethyl                                                                               .
                     ester (CAS No.
                     105-39-5)
                     (provided for
                     in subheading
                     2915.40.50)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1547. CHLOROACETIC ACID, SODIUM SALT.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.12.34     Chloroacetic      Free           No change      No change      On or before 12/31/2009    ''
                     acid, sodium                                                                              .
                     salt (CAS No.
                     3926-62-3)
                     (provided for
                     in subheading
                     2915.40.50)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1548. LOW EXPANSION LABORATORY GLASS.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.12.39     Laboratory,       3.6%           No change      No change      On or before 12/31/2009    ''
                     hygienic, or                                                                              .
                     pharmaceutical
                     glassware,
                     whether or not
                     graduated or
                     calibrated, of
                     low expansion
                     borosilicate
                     glass or
                     alumino-
                     borosilicate
                     glass, having a
                     linear
                     coefficient of
                     expansion not
                     exceeding 3.3 x
                     10\7\ per
                     Kelvin within a
                     temperature
                     range of 0 to
                     300 C (provided
                     for in
                     subheading
                     7017.20.00)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1549. STOPPERS, LIDS, AND OTHER CLOSURES.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.12.40     Stoppers, lids,   Free           No change      No change      On or before 12/31/2009    ''
                     and other                                                                                 .
                     closures of low
                     expansion
                     borosilicate
                     glass or
                     alumino-
                     borosilicate
                     glass, having a
                     linear
                     coefficient of
                     expansion not
                     exceeding 3.3 x
                     10\7\ per
                     Kelvin within a
                     temperature
                     range of 0 to
                     300 C, produced
                     by automatic
                     machine
                     (provided for
                     in subheading
                     7010.20.20) or
                     produced by
                     hand (provided
                     for in
                     subheading
                     7010.20.30)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1550. PIGMENT YELLOW 213.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.12.41     1,4-              Free           No change      No change      On or before 12/31/2009    ''
                     Benzenedicarbox                                                                           .
                     ylic acid, 2-
                     [[2-oxo-1-
                     [[1,2,3,4-
                     tetrahydro-7-
                     methoxy-2,3-
                     dioxo-6-
                     quinoxalinyl)
                     amino]carbonyl]
                     propyl]azo]-,
                     dimethyl ester
                     (Pigment Yellow
                     213) (CAS No.
                     220198-21-0)
                     (provided for
                     in subheading
                     3204.17.60)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1551. INDOXACARB.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.12.42     (4aS) -7-Chloro-  Free           No change      No change      On or before 12/31/2009    ''
                     2, 5-dihydro-2-                                                                           .
                     [[(methoxycarbo
                     nyl)[4-
                     (trifluorometho
                     xy) phenyl]
                     amino]
                     carbonyl]-
                     indeno [1,2-
                     e][1,3,4]
                     oxadiazine-4a
                     (3H)-carboxylic
                     acid methyl
                     ester (CAS No.
                     173584-44-6)
                     (provided for
                     in subheading
                     2934.99.16)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1552. DIMETHYL CARBONATE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.12.43     Dimethyl          Free           No change      No change      On or before 12/31/2009    ''
                     carbonate (CAS                                                                            .
                     No. 616-38-6)
                     (provided for
                     in subheading
                     2920.90.50)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1553. 5-CHLORO-1-INDANONE (EK179).

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.12.44     5-Chloro-1-       Free           No change      No change      On or before 12/31/2009    ''
                     indanone (CAS                                                                             .
                     No. 42348-86-7)
                     (provided for
                     in subheading
                     2914.39.90)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1554. MIXTURES OF FAMOXADONE AND CYMOXANIL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.12.45     Mixtures of 5-    Free           No change      No change      On or before 12/31/2009    ''
                     methyl-5-(4-                                                                              .
                     phenoxyphenyl)-
                     3-(phenylamino)-
                     2,4-
                     oxazolidinedion
                     e] (famoxadone)
                     (CAS No. 131807-
                     57-3), 2-cyano-
                     N-
                     [(ethylamino)ca
                     rbonyl]-2-
                     (methoxyimino)a
                     cetamide
                     (Cymoxanil)
                     (CAS No. 57966-
                     95-7) and
                     application
                     adjuvants
                     (provided for
                     in subheading
                     3808.20.15)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1555. DECANEDIOIC ACID, BIS(2,2,6,6-TETRAMETHYL-4-
                   PIPERIDINYL) ESTER.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.12.47     Decanedioic       Free           No change      No change      On or Before 12/31/2009    ''
                     acid,                                                                                     .
                     bis(2,2,6,6-
                     tetramethyl-4-
                     piperidinyl)
                     ester (CAS No.
                     52829-07-9)
                     (provided for
                     in subheading
                     2933.39.91)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1556. ACID BLUE 80.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.12.49     Acid Blue 80      Free           No change      No change      On or before 12/31/2009    ''
                     (CAS No. 4474-                                                                            .
                     24-2) (provided
                     for in
                     subheading
                     3204.12.50)....
----------------------------------------------------------------------------------------------------------------

       

     SEC. 1557. PIGMENT BROWN 25.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.12.50     Pigment Brown 25  Free           No change      No change      On or before 12/31/2009    ''
                     (CAS No. 6992-                                                                            .
                     11-6) (provided
                     for in
                     subheading
                     3204.17.04)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1558. FORMULATIONS OF AZOXYSTROBIN.

       (a) Calendar Year 2006.--Subchapter II of chapter 99 is 
     amended by inserting in numerical sequence the following new 
     heading:


[[Page 16425]]



``   9902.12.51     Mixtures of       6.14%          No change      No change      On or before 12/31/2006    ''
                     benzeneacetic                                                                             .
                     acid, (a E)- 2-
                     [[6-(2-
                     cyanophenoxy) -
                     4-pyrimidinyl]
                     oxy]-a-
                     (methoxymethyle
                     ne)-, methyl
                     ester
                     (Azoxystrobin)
                     (CAS No. 131860-
                     33-8) and
                     application
                     adjuvants
                     (provided for
                     in subheading
                     3808.20.15)....
----------------------------------------------------------------------------------------------------------------

       (b) Calendar Year 2007.--
       (1) In general.--Heading 9902.12.51, as added by subsection 
     (a), is amended--
       (A) by striking ``6.14%'' and inserting ``6.15%''; and
       (B) by striking ``On or before 12/31/2006'' and inserting 
     ``On or before 12/31/2007''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall take effect on January 1, 2007.
       (c) Calendar Years 2008 and 2009.--
       (1) In general.--Heading 9902.12.51, as added by subsection 
     (a) and amended by subsection (b), is further amended--
       (A) by striking ``6.15%'' and inserting ``6.17%''; and
       (B) by striking ``On or before 12/31/2007'' and inserting 
     ``On or before 12/31/2009''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall take effect on January 1, 2008.

     SEC. 1559. FORMULATIONS OF PINOXADEN/CLOQUINTOCET.

       (a) Calendar Years 2006 and 2007.--Subchapter II of chapter 
     99 is amended by inserting in numerical sequence the 
     following new heading:


``   9902.12.52     Mixtures of       Free           No change      No change      On or before 12/31/2007    ''
                     8(2,6-diethyl-p-                                                                          .
                     tolyl)-1,2,4,5-
                     tetrahydro-7-
                     oxo-7H-
                     pyrazolo[[1,2-
                     d][1,4,5]
                     oxadiazepin-9-
                     yl 2,2-
                     dimethylpropion
                     ate (Pinoxaden)
                     (CAS No. 243973-
                     20-8), acetic
                     acid, [5-chloro-
                     8-
                     quinolinyl]oxy]-
                     , 1-methylhexyl
                     ester
                     (Cloquintocet)
                     (CAS No. 99607-
                     70-2) and
                     application
                     adjuvants
                     (provided for
                     in subheading
                     3808.30.15)....
----------------------------------------------------------------------------------------------------------------

       (b) Calendar Years 2008 and 2009.--
       (1) In general.--Heading 9902.12.52, as added by subsection 
     (a), is further amended--
       (A) by striking ``Free'' and inserting ``1.74%''; and
       (B) by striking ``On or before 12/31/2007'' and inserting 
     ``On or before 12/31/2009''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall take effect on January 1, 2008.

     SEC. 1560. MIXTURES OF DIFENOCONAZOLE/MEFENOXAM.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.12.53     Mixtures of 1H-   Free           No change      No change      On or before 12/31/2009    ''
                     1,2,4-triazole,                                                                           .
                     1-((2-
                     chlorophenoxy)p
                     henyl)-4-methyl-
                     1,3-dioxolan-2-
                     yl)methyl)-
                     (Difenoconazole
                     ) (CAS No.
                     119446-68-3),
                     (R,S)-2-((2,6-
                     dimethylphenyl)
                     methoxyacetylam
                     ino) propionic
                     acid, methyl
                     ester
                     (Mefenoxam)
                     (CAS Nos. 70630-
                     17-0, and 69516-
                     34-3) and
                     application
                     adjuvants
                     (provided for
                     in subheading
                     3808.20.15)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1561. FLUDIOXINIL TECHNICAL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.12.54     1H-Pyrrole-3-     1.6%           No change      No change      On or before 12/31/2009    ''
                     carbonitrile, 4-                                                                          .
                     (2,2-difluoro-
                     1,3-benzodioxol-
                     4-yl)-
                     (fludioxinil)
                     (CAS No. 131341-
                     86-1) (provided
                     for in
                     subheading
                     2934.99.12)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1562. MIXTURES OF CLODINAFOP-PROPARGYL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.12.55     Mixtures of       1.7%           No change      No change      On or before 12/31/2009    ''
                     propionic acid,                                                                           .
                     2-(4-((5-chloro-
                     3-fluoro-2-
                     pyridynyl)oxy)p
                     henoxy-2-
                     propynyl ester,
                     (clodinafop-
                     propargyl) (CAS
                     No. 105512-06-
                     9) (provided
                     for in
                     subheading
                     3808.30.15)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1563. AVERMECTIN B, 1,4"-DEOXY-4"-METHYLAMINO-, (4"R)-, 
                   BENZOATE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.12.56     Avermectin B,     Free           No change      No change      On or before 12/31/2009    ''
                     1,4"-deoxy-4"-                                                                            .
                     methylamino-,
                     (4"R)-,
                     benzoate (CAS
                     No. 155569-91-
                     8) (provided
                     for in
                     subheading
                     3824.90.91 or
                     2932.29.50)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1564. CLOQUINTOCET-MEXYL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.12.57     Acetic acid, 5-   Free           No change      No change      On or before 12/31/2009    ''
                     chloro-8-                                                                                 .
                     quinolinoxy-, 1-
                     methylhexyl
                     ester
                     (Cloquintocet-
                     mexyl) (CAS No.
                     99607-70-2)
                     (provided for
                     in subheading
                     2933.49.30)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1565. METALAXYL-M TECHNICAL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.12.58     (R,S)-2-((2,6-    Free           No change      No change      On or before 12/31/2009    ''
                     Dimethylphenyl)                                                                           .
                     methoxyacetylam
                     ino) propionic
                     acid, methyl
                     ester
                     (Metalaxyl-M
                     and L-
                     Metalaxylfenoxa
                     m) (CAS Nos.
                     70630-17-0 and
                     69516-34-3)
                     (provided for
                     in subheading
                     2924.29.47)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1566. CYPROCONAZOLE TECHNICAL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.12.59     [a-(4-            Free           No change      No change      On or before 12/31/2009    ''
                     Chlorophenyl)-a-                                                                          .
                     (1-
                     cyclopropylethy
                     l)-1H-1-1,2,4-
                     triazole-1-
                     ethanol
                     (Cyproconazole)
                     (CAS No. 94361-
                     06-5) (provided
                     for in
                     subheading
                     2934.99.12)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1567. PINOXADEN TECHNICAL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.12.60     8-(2,6-Diethyl-4- 1.8%           No change      No change      On or before 12/31/2009    ''
                     methylphenyl)-1                                                                           .
                     ,2,4,5-
                     tetrahydro-7-
                     oxo-7H-
                     pyrazolo[1,2-
                     d][1,4,5]oxadia
                     zepin-9-yl 2,2-
                     dimethylpropano
                     ate (Pinoxaden)
                     (CAS No. 243973-
                     20-8) (provided
                     for in
                     subheading
                     2934.99.15)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1568. MIXTURES OF TRALKOXYDIM.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.12.61     Mixtures of 2-[1- Free           No change      No change      On or before 12/31/2009    ''
                     (ethoxyimino)pr                                                                           .
                     opyl]-3-hydroxy-
                     5-(2,4,6-
                     trimethylphenyl
                     )-2-cyclohexen-
                     1-one
                     (Tralkoxydim)
                     (CAS No. 87820-
                     88-0) as the
                     active
                     ingredient and
                     application
                     adjuvants
                     (provided for
                     in subheading
                     3808.30.15)....
----------------------------------------------------------------------------------------------------------------

    

[[Page 16426]]



     SEC. 1569. CERTAIN CHEMICALS.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new headings:


``   9902.12.72     Mixtures of zinc  Free           No change      No change      On or before 12/31/2009
                     dialkyldithioph
                     osphate (CAS
                     No. 6990-43-8)
                     with an
                     elastomer
                     binder of
                     ethylene-
                     propylene-diene
                     monomer and
                     ethyl vinyl
                     acetate,
                     dispersing
                     agents and
                     silica
                     (provided for
                     in subheading
                     3812.10.50)....
     9902.12.73     Mixtures of       Free           No change      No change      On or before 12/31/2009    ..
                     dithiocarbamate
                     , thiazole,
                     thiuram and
                     thiourea with
                     an elastomer
                     binder of
                     ethylene-
                     propylene-diene
                     monomer and
                     ethyl vinyl
                     acetate, and
                     dispersing
                     agents
                     (provided for
                     in subheading
                     3812.10.50)....
     9902.12.74     Mixtures of       Free           No change      No change      On or before 12/31/2009
                     caprolactam
                     disulfide (CAS
                     No. 23847-08-7)
                     with an
                     elastomer
                     binder of
                     ethylene-
                     propylene-diene
                     monomer and
                     ethyl vinyl
                     acetate, and
                     dispersing
                     agents
                     (provided for
                     in subheading
                     3812.10.50)....
     9902.12.75     Mixtures of N-    Free           No change      No change      On or before 12/31/2009
                     (3,4-dichloro-
                     phenyl)-N,N-
                     dimethylurea
                     (CAS No. 330-54-
                     1) with
                     acrylate rubber
                     (provided for
                     in subheading
                     3812.10.50)....
     9902.12.76     Mixtures of zinc  Free           No change      No change      On or before 12/31/2009
                     dicyanato
                     diamine (CAS
                     No. 122012-52-
                     6) with an
                     elastomer
                     binder of
                     ethylene-
                     propylene-diene
                     monomer and
                     ethyl vinyl
                     acetate, and
                     dispersing
                     agents
                     (provided for
                     in subheading
                     3812.10.50)....
     9902.12.77     4,8-Dicyclohexyl  Free           No change      No change      On or before 12/31/2009
                     -6-2,10-
                     dimethyl -12H-
                     dibenzo
                     [d,g][1,3,2]
                     dioxaphosphocin
                     (CAS No. 73912-
                     21-7) (provided
                     for in
                     subheading
                     2920.90.50)....
     9902.12.78     Mixtures of       Free           No change      No change      On or before 12/31/2009
                     benzenesulfonic
                     acid, dodecyl-,
                     with 2-
                     aminoethanol
                     (CAS No. 26836-
                     07-7) and Poly
                     (oxy-1,2-
                     ethanediyl), a-
                     [1-oxo-9-
                     octadecenyl]-w-
                     hydroxy-, (9Z)
                     (CAS No. 9004-
                     96-0) (provided
                     for in
                     subheading
                     3402.90.50)....
     9902.12.79     1,3-Dihydro-3,3-  Free           No change      No change      On or before 12/31/2009    ''
                     bis (4-hydroxy-                                                                           .
                     m-tolyl)-2H-
                     indol-2-one
                     (CAS No. 47465-
                     97-4) (provided
                     for in
                     subheading
                     2933.79.08)....
----------------------------------------------------------------------------------------------------------------

    

     SEC. 1570. MIXTURES OF ()-(CIS AND TRANS)-1-[[2-
                   (2,4-DICHLOROPHENYL)-4-PROPYL-1,3-DIOXOLAN-2-
                   YL]-METHYL]-1H-1,2,4-TRIAZOLE.

       (a) In General.--Subchapter II of chapter 99 is amended by 
     inserting in numerical sequence the following new heading:


``   9902.12.80     Mixtures of       1.1%           No change      No change      On or before 12/31/2009    ''
                     ()-                                                                           .
                     (cis and trans)-
                     1-[[2-(2,4-
                     Dichlorophenyl)
                     -4-propyl-1,3-
                     dioxolan-2-yl]-
                     methyl]-1H-
                     1,2,4-triazole
                     (CAS No. 60207-
                     90-1) and
                     application
                     adjuvants
                     (provided for
                     in subheading
                     3808.20.15)....
----------------------------------------------------------------------------------------------------------------


       (b) Conforming amendment.--Subchapter II of chapter 99 is 
     amended by striking heading 9902.32.04.

     SEC. 1571. PARAQUAT DICHLORIDE.

       (a) In General.--Subchapter II of chapter 99 is amended by 
     inserting in numerical sequence the following new heading:


``   9902.13.06     Paraquat          3.59%          No change      No change      On or before 12/31/2006    ''
                     dichloride                                                                                .
                     (1,1'dimethyl-
                     4,4'-
                     bipyridinium
                     dichloride)
                     (CAS No. 1910-
                     42-5) (provided
                     for in
                     subheading
                     2933.39.23)....
----------------------------------------------------------------------------------------------------------------

       (b) Calendar Year 2007.--
       (1) In general.--Heading 9902.13.06, as added by subsection 
     (a), is amended--
       (A) by striking ``3.59%'' and inserting ``4.02%''; and
       (B) by striking ``On or before 12/31/2006'' and inserting 
     ``On or before 12/31/2007''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall take effect on January 1, 2007.
       (c) Calendar Years 2008 and 2009.--
       (1) In general.--Heading 9902.13.06, as added by subsection 
     (a) and amended by subsection (b), is further amended--
       (A) by striking ``4.02%'' and inserting ``4.41%''; and
       (B) by striking ``On or before 12/31/2007'' and inserting 
     ``On or before 12/31/2009''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall take effect on January 1, 2008.

     SEC. 1572. CERTAIN BASKETBALLS.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.07     Basketballs,      0.9%           No change      No change      On or before 12/31/2009    ''
                     having an                                                                                 .
                     external
                     surface other
                     than leather,
                     rubber, or
                     synthetic
                     (provided for
                     in subheading
                     9506.62.80)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1573. CERTAIN LEATHER BASKETBALLS.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.08     Leather           Free           No change      No change      On or before 12/31/2009    ''
                     basketballs                                                                               .
                     (provided for
                     in subheading
                     9506.62.80)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1574. CERTAIN RUBBER BASKETBALLS.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.09     Rubber            1.5%           No change      No change      On or before 12/31/2009    ''
                     basketballs                                                                               .
                     (provided for
                     in subheading
                     9506.62.80)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1575. CERTAIN VOLLEYBALLS.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.10     Volleyballs       Free           No change      No change      On or before 12/31/2009    ''
                     (provided for                                                                             .
                     in subheading
                     9506.62.80)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1576. 4-CHLORO-3-[[3-(4-METHOXYPHENYL)-1,3-DIOXOPROPYL]-
                   AMINO]-DODECYL ESTER.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.11     4-Chloro-3-[[3-   Free           No change      No change      On or before 12/31/2009    ''
                     (4-                                                                                       .
                     methoxyphenyl)-
                     1,3-
                     dioxopropyl]-
                     amino]-dodecyl
                     ester (CAS No.
                     33942-96-0)
                     (provided for
                     in subheading
                     2924.29.71)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1577. LINURON.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.24     3-(3,4-           Free           No change      No change      On or before 12/31/2009    ''
                     Dichlorophenyl)                                                                           .
                     -1-methoxy-1-
                     methylurea (CAS
                     No. 330-55-2)
                     (Linuron)
                     (provided for
                     in subheading
                     2924.21.16)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1578. N,N-DIMETHYLPIPERIDINIUM CHLORIDE (MEPIQUAT 
                   CHLORIDE).

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


[[Page 16427]]



``   9902.13.25     N,N-              Free           No change      No change      On or before 12/31/2009    ''
                     Dimethylpiperid                                                                           .
                     inium chloride
                     (Mepiquat
                     chloride) (CAS
                     No. 24307-26-4)
                     (provided for
                     in subheading
                     2933.39.25)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1579. DIURON.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.26     Formulations of   Free           No change      No change      On or before 12/31/2009    ''
                     3-(3,4-                                                                                   .
                     dichlorophenyl)
                     -1,1-
                     dimethylurea
                     (CAS No. 330-54-
                     1) (Diuron) and
                     application
                     adjuvants
                     (provided for
                     in subheading
                     3808.30.15)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1580. FORMULATED PRODUCT KROVAR I DF.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.27     Formulations      2.5%           No change      No change      On or before 12/31/2009    ''
                     containing 5-                                                                             .
                     bromo-3-sec-
                     butyl-6-
                     methyluracil
                     (Bromacil) (CAS
                     No. 314-40-9),
                     3-(3,4-
                     Dichlorophenyl)
                     -1,1-
                     dimethylurea
                     (Diuron) (CAS
                     No. 330-54-1),
                     and application
                     adjuvants
                     (provided for
                     in subheading
                     3808.30.15)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1581. TRIASULFURON TECHNICAL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.28     3-(6-Methoxy-4-   Free           No change      No change      On or before 12/31/2009    ''
                     methyl-1,3,5-                                                                             .
                     triazin-2-yl)-1-
                     [2-(2-
                     chloroethoxy)
                     phenylsulfonyl]
                     urea
                     (Triasulfuron)
                     (CAS No. 82097-
                     50-5) (provided
                     for in
                     subheading
                     2935.00.75)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1582. BRODIFACOUM TECHNICAL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.29     3-[3-(4'-         Free           No change      No change      On or before 12/31/2009    ''
                     Bromo[1,1'-                                                                               .
                     biphenyl]-4-yl)-
                     1,2,3,4-
                     tetrahydro-1-
                     naphthalenyl]-4-
                     hydroxy-2H-1-
                     benzopyran- 2-
                     one
                     (Brodifacoum)
                     (CAS No. 56073-
                     10-0) (provided
                     for in
                     subheading
                     2932.29.10)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1583. PYMETROZINE TECHNICAL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.30     1,2,4-Triazin-    Free           No change      No change      On or before 12/31/2009    ''
                     3(2H)-one, 4,5-                                                                           .
                     dihydro-6-
                     methyl-4-[(3-
                     pyridinylmethyl
                     ene)amino]-
                     (Pymetrozine)
                     (CAS No. 123312-
                     89-0) (provided
                     for in
                     subheading
                     2933.69.60)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1584. FORMULATIONS OF THIAMETHOXAM, DIFENOCONAZOLE, 
                   FLUDIOXINIL, AND MEFENOXAM.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.31     Formulations of   Free           No change      No change      On or before 12/31/2009    ''
                     3-[(2-chloro-5-                                                                           .
                     thiazolyl)methy
                     l]tetrahydro-5-
                     methyl-N-nitro-
                     1,3,5-oxadiazin-
                     4-imine)
                     (Thiamethoxam)
                     (CAS No. 153719-
                     23-4 ); 1H-
                     1,2,4-triazole,
                     1-[[2-[2-chloro-
                     4-(4-
                     chlorophenoxy)p
                     henyl]-4-methyl-
                      1,3-dioxolan-2-
                     yl]methyl]-
                     (Difenoconazole
                     ) (CAS No.
                     119446-68-3);
                     1H-Pyrrole-3-
                     carbonitrile, 4-
                     (2,2-difluoro-
                     1,3-benzodioxol-
                     4-yl)-
                     (Fludioxinil)
                     (CAS No. 131341-
                     86-1); and
                     (R,S)-2-[(2,6-
                     dimethylphenylm
                     ethoxy)acetylam
                     ino]-propionic
                     acid methyl
                     ester
                     (Mefenoxam)
                     (CAS Nos. 70630-
                     17-0 and 69516-
                     34-3) (provided
                     for in
                     subheading
                     3808.20.15)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1585. TRIFLOXYSULFURON-SODIUM TECHNICAL.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.32     N-[[(4,6-         Free           No change      No change      On or before 12/31/2009    ''
                     Dimethoxy-2-                                                                              .
                     pyrimidinyl)ami
                     no]carbonyl]-3-
                     (2,2,2-
                     trifluoroethoxy
                     )-2-
                     pyridinesulfona
                     mide monosodium
                     salt (CAS No.
                     199119-58-9)
                     (trifloxysulfur
                     on-sodium)
                     (provided for
                     in subheading
                     2935.00.75)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1586. 2 BENZYLTHIO-3-ETHYL SULFONYL PYRIDINE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.41     2-Benzylthio-3-   Free           No change      No change      On or before 12/31/2009    ''
                     ethyl sulfonyl                                                                            .
                     pyridine (CAS
                     No. 175729-82-
                     5) (provided
                     for in
                     subheading
                     2933.39.61)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1587. 2-AMINO-4-METHOXY-6-METHYL-1,3,5-TRIAZINE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.42     2-Amino-4-        Free           No change      No change      On or before 12/31/2009    ''
                     methoxy-6-                                                                                .
                     methyl-1,3,5-
                     triazine (CAS
                     No. 1668-54-8)
                     (provided for
                     in subheading
                     2933.69.60)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1588. FORMULATED PRODUCTS CONTAINING MIXTURES OF THE 
                   ACTIVE INGREDIENT 2-CHLORO-N-[[(4-METHOXY-6-
                   METHYL-1,3,5-TRIAZIN-2YL) AMINO]CARBONYL] 
                   BENZENESULFONAMIDE AND APPLICATION ADJUVANTS.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.43     Formulated        Free           No change      No change      On or before 12/31/2009    ''
                     products                                                                                  .
                     containing
                     mixtures of the
                     active
                     ingredient 2-
                     chloro-N-[[(4-
                     methoxy-6-
                     methyl-1,3,5-
                     triazin-2yl)
                     amino]carbonyl]
                     benzenesulfonam
                     ide and
                     application
                     adjuvants
                     (Chlorosulfuon)
                     (CAS No. 64902-
                     72-3) (provided
                     for in
                     subheading
                     3808.30.15)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1589. 2-METHYL-4-METHOXY-6-METHYLAMINO-1,3,5-TRIAZINE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.44     2-Methyl-4-       Free           No change      No change      On or before 12/31/2009    ''
                     methoxy-6-                                                                                .
                     methylamino-
                     1,3,5-triazine
                     (CAS No. 5248-
                     39-5) (provided
                     for in
                     subheading
                     2933.69.60)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1590. MIXTURES OF SODIUM-2-CHLORO-6-[(4,6 
                   DIMETHOXYPYRIMIDIN-2-YL)THIO]BENZOATE AND 
                   APPLICATION ADJUVANTS (PYRITHIOBAC-SODIUM).

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


[[Page 16428]]



``   9902.13.45     Mixtures of       3.5%           No change      No change      On or before 12/31/2009    ''
                     sodium-2-chloro-                                                                          .
                     6-[(4,6
                     dimethoxypyrimi
                     din-2-
                     yl)thio]benzoat
                     e (CAS No.
                     123343-16-8)
                     and application
                     adjuvants
                     (Pyrithiobac-
                     sodium)
                     (provided for
                     in subheading
                     3808.30.15)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1591. CERTAIN DECORATIVE PLATES, DECORATIVE SCULPTURES, 
                   DECORATIVE PLAQUES, AND ARCHITECTURAL 
                   MINIATURES.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.46     Decorative        Free           No change      No change      12/31/2009                 ''
                     plates, whether                                                                           .
                     or not with
                     decorative rim
                     or attached
                     sculpture;
                     decorative
                     sculptures,
                     each with plate
                     or plaque
                     attached, and
                     decorative
                     plaques each
                     not over 7.65
                     cm in
                     thickness;
                     architectural
                     miniatures,
                     whether or not
                     put up in sets;
                     all the
                     foregoing of
                     resin materials
                     and containing
                     agglomerated
                     stone, put up
                     for mail order
                     retail sale,
                     whether for
                     wall or
                     tabletop
                     display and
                     each weighing
                     not over 1.36
                     kg together
                     with their
                     retail
                     packaging
                     (provided for
                     in subheading
                     3926.40.00)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1592. CERTAIN MUSIC BOXES.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.47     Music boxes with  Free           No change      No change      On or before 12/31/2009    ''
                     mechanical                                                                                .
                     musical
                     movements,
                     presented in
                     the immediate
                     packaging for
                     shipment to the
                     ultimate
                     purchaser, and
                     each weighing
                     not over 6 kg
                     together with
                     retail
                     packaging
                     (provided for
                     in subheading
                     9208.10.00)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1593. 2-METHYL-4-CHLOROPHENOXYACETIC ACID.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.60     2-Methyl-4-       Free           No change      No change      On or before 12/31/2009    ''
                     chlorophenoxyac                                                                           .
                     etic acid (CAS
                     No. 94-74-6)
                     (provided for
                     in subheading
                     2918.90.20)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1594. PHENMEDIPHAM.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.76     3-                Free           No change      No change      On or before 12/31/2009    ''
                     Methylcarbonyla                                                                           .
                     minophenyl-3-
                     methyl-
                     carbanilate
                     (Phenmedipham)
                     (CAS No. 13684-
                     63-4) in bulk
                     or mixed with
                     application
                     adjuvants
                     (provided for
                     in subheadings
                     2924.29.47 and
                     3808.30.15)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1595. DESMEDIPHAM.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.77     3-                Free           No change      No change      On or before 12/31/2009    ''
                     Ethoxycarbonyla                                                                           .
                     minophenyl-N-
                     phenylcarbamate
                     (Desmedipham)
                     (CAS No. 13684-
                     56-5) in bulk
                     or mixed with
                     application
                     adjuvants
                     (provided for
                     in subheadings
                     2924.29.43 and
                     3808.30.15)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1596. CERTAIN FOOTWEAR WITH OPEN TOES OR HEELS.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.78     Footwear with     Free           No change      No change      On or before 12/31/2009    ''
                     outer soles of                                                                            .
                     rubber or
                     plastics and
                     uppers of
                     vegetable
                     fibers, with
                     open toes or
                     open heels,
                     other than
                     house slippers
                     (provided for
                     in subheading
                     6404.19.25)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1597. CERTAIN WORK FOOTWEAR.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.85     House slippers    Free           No change      No change      On or before 12/31/2009    ''
                     with outer                                                                                .
                     soles of
                     rubber,
                     plastics,
                     leather or
                     composition
                     leather and
                     uppers of
                     leather, valued
                     not over $2.50/
                     pair (provided
                     for in
                     subheading
                     6403.99.75);
                     Sports
                     footwear;
                     tennis shoes,
                     basketball
                     shoes, gym
                     shoes, training
                     shoes and the
                     like, all the
                     foregoing with
                     outer soles of
                     rubber or
                     plastics and
                     uppers of
                     textile
                     materials for
                     women (provided
                     for in
                     subheading
                     6404.11.20)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1598. CERTAIN REFRACTING AND REFLECTING TELESCOPES.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.86     Refracting        Free           No change      No change      On or before 12/31/2009    ''
                     telescopes with                                                                           .
                     50 mm or
                     smaller
                     objective
                     lenses and
                     reflecting
                     telescopes with
                     76 mm or
                     smaller
                     mirrors, and
                     parts and
                     accessories
                     thereof
                     (provided for
                     in subheading
                     9005.80.40 or
                     9005.90.80)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1600. CERTAIN WORK FOOTWEAR.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.90     Welt footwear     Free           No change      No change      On or before 12/31/2009    ''
                     with outer                                                                                .
                     soles of
                     rubber,
                     plastics,
                     leather or
                     composition
                     leather and
                     uppers of
                     pigskin,
                     incorporating a
                     protective
                     metal toe-cap
                     (provided for
                     in subheading
                     6403.40.30)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1601. CERTAIN FOOTWEAR FOR MEN.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.91     Other footwear    4.5%           No change      No change      On or before 12/31/2009    ''
                     with uppers of                                                                            .
                     vegetable
                     fibers, for men
                     (provided for
                     in subheading
                     6405.20.30)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1602. CERTAIN RUBBER OR PLASTIC FOOTWEAR.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.13.92     Other footwear    6.5%           No change      No change      On or before 12/31/2009    ''
                     with uppers of                                                                            .
                     vegetable
                     fibers, other
                     than such
                     footwear for
                     men or women
                     (provided for
                     in subheading
                     6405.20.30)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1604. ZINC DIMETHYLDITHIOCARBAMATE.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


[[Page 16429]]



``   9902.13.97     Zinc              Free           No change      No change      On or before 12/31/2009    ''
                     dimethyldithioc                                                                           .
                     arbamate
                     (Ziram) (CAS
                     No. 137-30-4)
                     (provided for
                     in subheading
                     3808.20.28)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1605. CERTAIN LIQUID CRYSTAL DEVICE (LCD) PANEL 
                   ASSEMBLIES.

       Subchapter II of chapter 99 is amended by inserting in 
     numerical sequence the following new heading:


``   9902.85.21     Liquid Crystal    Free           No change      No change      On or before 12/31/2009    ''
                     Device (LCD)                                                                              .
                     panel
                     assemblies for
                     use in LCD
                     direct view
                     televisions
                     (provided for
                     in subheading
                     9013.80.90)....
----------------------------------------------------------------------------------------------------------------

     SEC. 1606. CERTAIN WATERTUBE BOILERS AND REACTOR VESSEL 
                   HEADS.

       (a) Watertube Boilers.--Subchapter II of chapter 99 is 
     amended by inserting in numerical sequence the following new 
     heading:


``   9902.84.01     Watertube         Free           No change      No change      On or before 12/31/2010    ''
                     boilers with a                                                                            .
                     steam
                     production
                     exceeding 45 t
                     per hour, for
                     use in nuclear
                     facilities
                     entered after
                     12/31/2008 and
                     on or before 12/
                     31/2010 if the
                     contract for
                     the purchase of
                     such watertube
                     boilers was
                     entered into on
                     or before 7/31/
                     2006 (provided
                     for in
                     subheading
                     8402.11.00)....
----------------------------------------------------------------------------------------------------------------

       (b) Reactor Vessel Heads.--Subchapter II of chapter 99 is 
     amended by inserting in numerical sequence the following new 
     heading:


``   9902.84.04     Reactor vessel    Free           No change      No change      On or before 12/31/2010    ''
                     heads and                                                                                 .
                     pressurizers
                     for nuclear
                     reactors
                     entered after
                     12/31/2008 and
                     on or before 12/
                     31/2010 if the
                     contract for
                     the purchase of
                     such heads and
                     pressurizers
                     was entered
                     into on or
                     before 7/31/
                     2006 (provided
                     for in
                     subheading
                     8401.40.00)....
----------------------------------------------------------------------------------------------------------------

          CHAPTER 2--EXISTING DUTY SUSPENSIONS AND REDUCTIONS

     SEC. 1611. EXTENSION OF CERTAIN EXISTING DUTY SUSPENSIONS AND 
                   REDUCTIONS.

       (a) Existing Duty Suspensions and Reduction.--Each of the 
     following headings is amended by striking the date in the 
     effective period column and inserting ``12/31/2009'':
       (1) Heading 9902.39.08 (relating to ORGASOL polyamide 
     powders).
       (2) Heading 9902.30.90 (relating to 3-amino-2'-(sulfato-
     ethyl sulfonyl) ethyl benzamide).
       (3) Heading 9902.32.91 (relating to MUB 738 INT).
       (4) Heading 9902.30.31 (relating to 5-amino-N-(2-
     hydroxyethyl)-2,3-xylenesulfonamide).
       (5) Heading 9902.01.83 (relating to Ethoprop).
       (6) Heading 9902.01.73 (relating to Fosetyl-Al).
       (7) Heading 9902.03.38 (relating to Flufenacet (FOE 
     hydroxy)).
       (8) Heading 9902.02.02 (relating to Methidathion 
     Technical).
       (9) Heading 9902.02.12 (relating to difenoconazole).
       (10) Heading 9902.02.09 (relating to Lambda-Cyhalothrin).
       (11) Heading 9902.02.08 (relating to cyprodinil).
       (12) Heading 9902.02.04 (relating to Wakil XL).
       (13) Heading 9902.02.06 (relating to Azoxystrobin 
     Technical).
       (14) Heading 9902.02.05 (relating to mucochloric acid).
       (15) Heading 9902.03.06 (relating to high tenacity multiple 
     (folded) or cabled yarn of viscose rayon).
       (16) Heading 9902.05.07 (relating to high tenacity single 
     yarn of viscose rayon with a decitex equal to or greater than 
     1,000).
       (17) Heading 9902.38.31 (relating to Vulkalent E/C).
       (18) Heading 9902.01.71 (relating to hexanedioic acid, 
     polymer with 1,3-benzenedimethanamine).
       (19) Heading 9902.29.93 (relating to Trinexapac-ethyl).
       (20) Heading 9902.38.52 (relating to formulations of 
     triasulfuron).
       (21) Heading 9902.39.30 (relating to certain ion-exchange 
     resins).
       (22) Heading 9902.32.82 (relating to 2,6 Dichlorotoluene).
       (23) Heading 9902.02.33 (relating to Ion exchange resin 
     comprising a compolymer of styrene crosslinked with 
     ethenylbenzene, aminophosphonic acid sodium form).
       (24) Heading 9902.02.32 (relating toIon exchange resin 
     comprising a copolymer of styrene crosslinked with 
     divinylbenzene, iminodiacetic acid, sodium form)).
       (25) Heading 9902.01.78 (relating to certain bags for 
     toys).
       (26) Heading 9902.01.81 (relating to cases for certain 
     children's products).
       (27) Heading 9902.01.80 (relating to certain children's 
     products).
       (28) Heading 9902.29.34 (relating to certain light 
     absorbing photo dyes).
       (29) Heading 9902.85.04 (relating to certain R-core 
     transformers).
       (30) Heading 9902.03.04 (relating to reduced vat blue 43).
       (31) Heading 9902.03.03 (relating to sulfur black 1).
       (32) Heading 9902.01.22 (relating to DMSIP).
       (33) Heading 9902.29.35 (relating to 2-
     (Methoxycarbonyl)benzylsulfonamide).
       (34) Heading 9902.02.52 (relating to Imidacloprid 
     pesticides).
       (35) Heading 9902.38.15 (relating to Baytron C-R).
       (36) Heading 9902.29.87 (relating to 3,4-
     Ethylenedioxythiophene).
       (37) Heading 9902.01.90 (relating to certain filament 
     yarns).
       (38) Heading 9902.01.91 (relating to certain filament 
     yarns).
       (39) Heading 9902.71.08 (relating to certain semi-
     manufactured forms of gold).
       (40) Heading 9902.04.10 (relating to Crotonic Acid).
       (41) Heading 9902.04.09 (relating to 3,6,9-
     Trioxaundecanedioic acid).
       (42) Heading 9902.02.51 (relating to benzoic acid, 2-amino-
     4-[[(2,5-dichlorophenyl)amino]carbonyl]-, methyl ester).
       (43) Heading 9902.32.73 (relating to Solvent blue 124).
       (44) Heading 9902.32.55 (relating to Methyl thioglycolate 
     (MTG)).
       (45) Heading 9902.01.48 (relating to Ethyl pyruvate).
       (46) Heading 9902.04.11 (relating to 1,3-
     Benzenedicarboxamide, N, N'-Bis (2,2,6,6-tetramethyl-4-
     piperidinyl)-).
       (47) Heading 9902.04.07 (relating to reaction products of 
     phosphorus trichloride with 1,1'-biphenyl and 2,4-bis(1,1-
     dimethylethyl)phenol).
       (48) Heading 9902.04.05 (relating to preparations based on 
     ethanediamide, N-(2-ethoxyphenyl)-N'-(4-isodecylphenyl)-).
       (49) Heading 9902.04.06 (relating to 1-Acetyl-4-(3-dodecyl-
     2,5-dioxo-1-pyrrolidinyl)-2,2,6,6-tetramethylpiperidine).
       (50) Heading 9902.04.12 (relating to 3-Dodecyl-1-(2,2,6,6-
     tetramethyl-4-piperidinyl)-2,5-pyrrolidinedione).
       (51) Heading 9902.29.70 (relating to 
     Tetraacetylethylenediamine).
       (52) Heading 9902.34.01 (relating to sodium petroleum 
     sulfonate).
       (53) Heading 9902.02.75 (relating to esters and sodium 
     esters of parahydroxybenzoic acid).
       (54) Heading 9902.30.16 (relating to Diclofop methyl).
       (55) Heading 9902.33.61 (relating to ((3-
     ((Dimethylamino)carbonyl)-2-pyridinyl)sulfonyl) carbamic 
     acid, phenyl ester).
       (56) Heading 9902.01.45 (relating to Esfenvalerate).
       (57) Heading 9902.05.01 (relating to Methyl 2-[[[[[4-
     (dimethylamino)-6- (2,2,2-trifluoroethoxy)-1,3,5-triazin-2-
     yl]-amino]carbonyl]amino]sulfonyl]-3-methylbenzoate and 
     application adjuvants).
       (58) Heading 9902.01.44 (relating to Benzyl carbazate).
       (59) Heading 9902.05.14 (relating to Pyromellitic 
     Dianhydride).
       (60) Heading 9902.05.13 (relating to 4,4'-Oxydiphthalic 
     Anhydride).
       (61) Heading 9902.05.12 (relating to 4,4'-Oxydianiline).
       (62) Heading 9902.05.11 (relating to 3,3',4,4'-
     Biphenyltetracarboxylic Dianhydride).
       (63) Heading 9902.29.80 (relating to 1-[[2-(2,4- 
     dichlorophenyl)-4-propyl-1,3-dioxolan-2-yl]-methyl]-1H-1,2,4-
     triazole).
       (64) Heading 9902.05.19 (relating to ethofumesate).
       (65) Heading 9902.02.60 (relating to Nemacur VL).
       (66) Heading 9902.03.77 (relating to thiophanate methyl).
       (67) Heading 9902.84.14 (relating to ceiling fans).
       (b) Other Modifications.--
       (1) 2-Chlorobenzyl chloride.--Heading 9902.01.56 is 
     amended--
       (A) by striking ``2903.69.70'' and inserting 
     ``2903.69.80''; and
       (B) by striking ``12/31/2006'' and inserting ``12/31/
     2009''.
       (2) Triethylene glycol bis[3-(3-tert-butyl-4-hydroxy-5-
     methylphenyl)propionate] .--Heading 9902.01.88 is amended--
       (A) by striking ``Free'' and inserting ``4.1%''; and
       (B) by striking ``12/31/2006'' and inserting ``12/31/
     2009''.
       (3) Formulations of triasulfuron and dicamba.--Heading 
     9902.38.21 is amended--

[[Page 16430]]

       (A) in the article description column--
       (i) by inserting ``(Triasulfuron)'' before ``(CAS No. 
     82097-50-5)''; and
       (ii) by inserting ``(Dicamba)'' before ``(CAS No. 1918-00-
     9)''; and
       (B) by striking ``12/31/2003'' and inserting ``12/31/
     2009''.
       (4) 11-Aminoundecanoic acid.--Heading 9902.32.49 is 
     amended--
       (A) by striking ``Free'' and inserting ``2.3%''; and
       (B) by striking ``12/31/2006'' and inserting ``12/31/
     2009''.
       (5) PHBA.--Heading 9902.29.03 is amended--
       (A) by striking ``Free'' and inserting ``3.1%''; and
       (B) by striking ``12/31/2006'' and inserting ``12/31/
     2009''.
       (6) Acetamiprid Technical.--Heading 9902.03.92 is amended--
       (A) by striking ``Free'' and inserting ``2.5%''; and
       (B) by striking ``12/31/2006'' and inserting ``12/31/
     2009''.
       (7) Baytron and baytron p.--Heading 9902.39.15 is amended--
       (A) by inserting ``, whether or not containing binder resin 
     and organic solvent'' before ``(CAS No.''; and
       (B) by striking ``12/31/2006'' and inserting ``12/31/
     2009''.
       (8) Iprodione.--Heading 9902.01.51 is amended--
       (A) by striking ``4.1%'' and inserting ``2.0%''; and
       (B) by striking ``12/31/2006'' and inserting ``12/31/
     2009''.
       (9) Ethanediamide, N-(2-ethoxyphenyl)-N'-(2-ethylphenyl)-
     ).--Heading 9902.04.13 is amended--
       (A) by striking ``2924.29.76'' and inserting 
     ``2924.29.71''; and
       (B) by striking ``12/31/2006'' and inserting ``12/31/
     2009''.
       (10) Thiamethoxam technical.--Heading 9902.03.11 is 
     amended--
       (A) by striking ``3.2%'' and inserting ``3.0%''; and
       (B) by striking ``12/31/2006'' and inserting ``12/31/
     2009''.
       (11) 1,3-Bis(4-aminophenoxy)benzene (RODA).--Heading 
     9902.05.15 is amended--
       (A) by inserting ``(RODA)'' after ``benzene''; and
       (B) by striking ``12/31/2006'' and inserting ``12/31/
     2009''.
       (12) Mixtures of n-[[(4,6-dimethoxypyrimidin-2-
     yl)amino]carbonyl]-3-(ethylsulfonyl)-2-pyridinesulfonamide 
     and application adjuvants.--Heading 9902.33.60 is amended--
       (A) by striking the article description and inserting the 
     following: ``Mixtures of N-[[(4,6-dimethoxypyrimidin-2-
     yl)amino]carbonyl]-3-(ethylsulfonyl)-2-pyridinesulfonamide 
     and application adjuvants (CAS No. 122931-48-0) (provided for 
     in subheading 3808.30.15)''; and
       (B) by striking ``12/31/2003'' and inserting ``12/31/
     2009''.

                  Subtitle B--Other Tariff Provisions

       CHAPTER 1--LIQUIDATION OR RELIQUIDATION OF CERTAIN ENTRIES

     SEC. 1621. CERTAIN TRAMWAY CARS AND ASSOCIATED SPARE PARTS.

       (a) In General.--The Commissioner of the Bureau of Customs 
     and Border Protection of the Department of Homeland Security 
     shall admit free of duty 3 tramway cars (provided for in 
     subheading 8603.10.00 of the Harmonized Tariff Schedule of 
     the United States) manufactured in Ostrava, Czech Republic, 
     for the use by the city of Portland, Oregon, and imported 
     pursuant to a contract with the city of Portland, Oregon, and 
     associated spare parts for such tramway cars (provided for in 
     applicable subheadings of heading 8607 or other headings of 
     the Harmonized Tariff Schedule of the United States) imported 
     pursuant to such contract, the foregoing to be entered into 
     the customs territory of the United States by not later than 
     December 31, 2006.
       (b) Reliquidation; Refund of Amounts Owed.-- If the 
     liquidation of the entry of any of the tramway cars or 
     associated spare parts described in subsection (a) becomes 
     final before the date of the enactment of this Act, the 
     Commissioner of the Bureau of Customs and Border Protection, 
     notwithstanding any other provision of law, shall--
       (1) within 15 days after such date, reliquidate the entry 
     in accordance with the provisions of this section; and
       (2) at the time of such reliquidation, make the appropriate 
     refund of any duty paid with respect to the entry.

     SEC. 1622. RELIQUIDATION OF CERTAIN ENTRIES OF CANDLES.

       (a) Reliquidation of Entries.--Notwithstanding sections 514 
     and 520 of the Tariff Act of 1930 (19 U.S.C. 1514 and 1520) 
     or any other provision of law, the Bureau of Customs and 
     Border Protection shall, not later than 90 days after the 
     date of the enactment of this Act--
       (1) reliquidate the entries listed in subsection (b) 
     without assessment of antidumping duties or interest; and
       (2) refund any antidumping duties and interest which were 
     previously paid on such entries.
       (b) Affected Entries.--The entries referred to in 
     subsection (a) are the following:


 
          Entry number               Date of entry           Port
 
110-3447557-3                     03/18/00..........  Los Angeles
110-3447591-2                     03/19/00..........  Los Angeles
110-3447595-3                     03/19/00..........  Los Angeles
110-1201638-1                     03/21/00..........  Detroit
110-1201639-9                     03/21/00..........  Detroit
110-1201640-7                     03/21/00..........  Detroit
110-3447613-4                     03/21/00..........  Los Angeles
110-1201697-7                     03/23/00..........  Detroit
110-1201695-1                     03/23/00..........  Detroit
110-1201696-9                     03/23/00..........  Detroit
110-1201756-1                     03/27/00..........  Detroit
110-1201757-9                     03/27/00..........  Detroit
110-1201758-7                     03/27/00..........  Detroit
110-1740905-2                     03/30/00..........  Los Angeles
110-1740943-3                     03/30/00..........  Los Angeles
110-1201845-2                     03/31/00..........  Detroit
110-1201813-0                     04/03/00..........  Detroit
110-1201814-8                     04/03/00..........  Detroit
110-1201815-5                     04/03/00..........  Detroit
110-1201875-9                     04/04/00..........  Detroit
110-1201868-4                     04/04/00..........  Detroit
110-1201858-5                     04/04/00..........  Detroit
110-3447959-1                     04/11/00..........  Los Angeles
110-3447958-3                     04/11/00..........  Los Angeles
110-3759536-9                     04/12/00..........  Detroit
110-3759561-7                     04/12/00..........  Detroit
110-3759542-7                     04/12/00..........  Detroit
110-3759540-1                     04/12/00..........  Detroit
110-3447977-3                     04/12/00..........  Los Angeles
110-3759539-3                     04/12/00..........  Detroit
110-3448045-8                     04/14/00..........  Los Angeles
110-3448046-6                     04/14/00..........  Los Angeles
110-3448110-0                     04/20/00..........  Los Angeles
110-3759670-6                     04/25/00..........  Detroit
110-3759673-0                     04/25/00..........  Detroit
110-3759669-8                     04/25/00..........  Detroit
110-3759667-2                     04/25/00..........  Detroit
110-3759671-4                     04/25/00..........  Detroit
110-3759668-0                     04/25/00..........  Detroit
110-3448241-3                     04/27/00..........  Los Angeles
110-3448247-0                     04/27/00..........  Los Angeles
110-3448276-9                     04/28/00..........  Memphis
110-3448274-4                     04/28/00..........  Memphis
110-3448282-7                     05/04/00..........  Memphis
101-4081779-1                     05/07/00..........  Memphis
101-4088945-1                     05/23/00..........  Memphis
101-4089954-3                     05/23/00..........  Memphis
101-4088960-0                     05/23/00..........  Memphis
101-4092192-4                     05/25/00..........  Memphis
101-4089312-3                     05/26/00..........  Detroit
101-4089942-7                     05/26/00..........  Detroit
101-4089893-2                     05/26/00..........  Detroit
101-4092221-1                     05/26/00..........  Memphis
101-4089697-7                     05/26/00..........  Los Angeles
101-4092215-3                     05/26/00..........  Memphis
101-4086053-6                     05/26/00..........  Los Angeles
101-4122700-8                     07/27/00..........  Los Angeles
101-4122707-3                     07/27/00..........  Los Angeles
101-4122712-3                     07/27/00..........  Los Angeles
101-4127147-7                     08/03/00..........  Los Angeles
101-4132485-4                     08/09/00..........  Norfolk
101-4129989-0                     08/11/00..........  Detroit
101-4130345-2                     08/17/00..........  Detroit
101-4129976-7                     08/23/00..........  Detroit
101-4149476-4                     09/06/00..........  Los Angeles
101-4149483-0                     09/06/00..........  Los Angeles
101-4149493-9                     09/06/00..........  Los Angeles
101-4148595-2                     09/08/00..........  Detroit
101-4153301-7                     09/18/00..........  Detroit
101-4154523-5                     09/14/00..........  Los Angeles
101-4153389-2                     09/18/00..........  Detroit
101-4157161-1                     09/20/00..........  Norfolk
101-4153333-0                     09/21/00..........  Detroit
101-4155542-4                     09/26/00..........  Detroit
101-4166291-5                     10/07/00..........  Los Angeles
101-4167325-0                     10/09/00..........  Detroit
101-4167363-1                     10/12/00..........  Detroit
101-4164567-0                     10/13/00..........  Norfolk
101-4168049-5                     10/14/00..........  Los Angeles
101-4172904-5                     10/21/00..........  Los Angeles
101-4175579-2                     10/30/00..........  Los Angeles
101-4183996-8                     11/07/00..........  Detroit
101-4183234-4                     11/09/00..........  Detroit
101-4183251-8                     11/09/00..........  Detroit
101-4183253-4                     11/09/00..........  Detroit
101-4183257-5                     11/09/00..........  Detroit
101-4183264-1                     11/09/00..........  Detroit
101-4183264-1                     11/09/00..........  Detroit
101-4184811-8                     11/13/00..........  Los Angeles
101-4184819-1                     11/13/00..........  Los Angeles
101-4189001-1                     11/14/00..........  Tampa
101-4185526-1                     11/16/00..........  Detroit
101-4185535-2                     11/16/00..........  Detroit
101-4186580-7                     11/20/00..........  Detroit
101-4189830-3                     11/20/00..........  Detroit
101-4189774-3                     11/21/00..........  Detroit
101-4191183-3                     11/24/00..........  Los Angeles
101-4191188-2                     11/24/00..........  Los Angeles
101-4191193-2                     11/24/00..........  Los Angeles
101-4194796-9                     11/29/00..........  Detroit
101-4194801-7                     11/29/00..........  Detroit
101-4196383-4                     12/01/00..........  Los Angeles
101-4196389-1                     12/01/00..........  Los Angeles
101-4199308-8                     12/13/00..........  Detroit
 

     SEC. 1623. CERTAIN ENTRIES OF ROLLER CHAIN.

       (a) Liquidation or Reliquidation of Entries.--
     Notwithstanding sections 514 and 520 of the Tariff Act of 
     1930 (19 U.S.C. 1514 and 1520) or any other provision of law, 
     the Bureau of Customs and Border Protection shall, not later 
     than 90 days after the date of enactment of this Act, 
     liquidate or reliquidate the entries listed in subsection (b) 
     without assessment of interest and shall refund any interest 
     which was previously paid.
       (b) Affected Entries.--The entries referred to in 
     subsections (a) and (b) are the following:


[[Page 16431]]



 
          Entry number               Date of entry           Port
 
858442975                         08/21/85..........  Chicago
868558147                         01/28/86..........  Chicago
868565499                         03/14/86..........  Chicago
858440922                         07/31/85..........  Chicago
868565499                         03/14/86..........  Chicago
868558147                         01/28/86..........  Chicago
858442975                         08/21/85..........  Chicago
858440922                         07/31/85..........  Chicago
847648353                         06/18/84..........  Chicago
858268324                         01/04/85..........  Chicago
858264302                         11/08/84..........  Chicago
858265107                         11/19/84..........  Chicago
847650150                         07/18/84..........  Chicago
847412877                         05/09/84..........  Chicago
837078386                         03/21/83..........  Chicago
837077691                         02/07/83..........  Chicago
837077701                         02/07/83..........  Chicago
826735834                         01/13/82..........  Chicago
826736309                         01/18/82..........  Chicago
821020081                         02/12/82..........  Chicago
821020052                         02/17/82..........  Chicago
821026768                         04/13/82..........  Chicago
827119569                         06/18/82..........  Chicago
837075114                         10/06/82..........  Chicago
826727088                         10/14/81..........  Chicago
837124777                         05/19/83..........  Chicago
847405240                         11/28/83..........  Chicago
837127606                         08/18/83..........  Chicago
837125132                         06/08/83..........  Chicago
847406100                         12/22/83..........  Chicago
847404034                         11/02/83..........  Chicago
837128090                         09/07/83..........  Chicago
837126762                         08/05/83..........  Chicago
837125569                         06/22/83..........  Chicago
837078991                         04/12/83..........  Chicago
837129222                         10/03/83..........  Chicago
847406414                         12/29/83..........  Chicago
847408014                         01/31/84..........  Chicago
868569204                         07/03/86..........  Chicago
868730813                         08/14/86..........  Chicago
 

     SEC. 1624. CERTAIN ENTRIES OF SOUNDSPA CLOCK RADIOS.

       (a) In General.--Notwithstanding section 514 of the Tariff 
     Act of 1930 (19 U.S.C. 1514) or any other provision of law, 
     the Bureau of Customs and Border Protection shall, not later 
     than 90 days after the date of the enactment of this Act--
       (1) reliquidate each entry described in subsection (c) 
     containing any merchandise which, on the date of original 
     liquidation, was classified under subheading 8527.19.50 of 
     the Harmonized Tariff Schedule of the United States; and
       (2) make such reliquidation at the rate of duty that would 
     have been applicable to such merchandise if the merchandise 
     had been liquidated under subheading 8527.19.10 of such 
     Schedule on the date of entry of the merchandise.
       (b) Refund of Amounts Owed.--Any amounts owed by the United 
     States under subsection (a) shall be refunded with interest.
       (c) Affected Entries.--The entries referred to in 
     subsection (a) are as follows:

       Entry number
       110-1199345-7
       110-1199542-9
       110-1199558-5
       110-1201694-4
       110-3759754-8
       110-3759785-2
       101-4082299-9
       101-4088073-2
       101-4089053-3
       101-4120875-0
       101-4133671-8
       101-4138302-5
       101-4145092-3
       101-4148477-3
       101-4153108-6
       101-4159322-7
       101-4158601-5
       101-4163243-9
       101-4164448-3
       101-4168318-4
       101-4172197-6
       101-4172489-7
       101-4193123-7
       101-4264820-2
       101-4271724-7
       101-4277850-4
       101-4287672-0
       101-4301588-0
       101-4306238-7
       101-4306235-3
       101-6011727-0
       101-6012796-4
       101-6015492-7
       101-6021099-2
       101-6026903-0
       101-6024120-3
       101-6028079-7
       101-6027052-5
       101-6036728-9
       101-6048069-4
       101-6079830-1
       101-6082949-4
       101-6115954-5
       101-6119379-1
       101-6127048-2
       101-6150035-9
       101-6148556-9
       101-6172630-1
       101-6172406-6
       101-6186497-9
       101-4208407-7
       101-6035939-3

                  CHAPTER 2--MISCELLANEOUS PROVISIONS

     SEC. 1631. VESSEL REPAIR DUTIES.

       (a) Exemption.--Section 466(h) of the Tariff Act of 1930 
     (19 U.S.C. 1466(h)) is amended by striking paragraph (4) and 
     inserting the following:
       ``(4) the cost of equipment, repair parts, and materials 
     that are installed on a vessel documented under the laws of 
     the United States and engaged in the foreign or coasting 
     trade, if the installation is done by members of the regular 
     crew of such vessel while the vessel is on the high seas, in 
     foreign waters, or in a foreign port, and does not involve 
     foreign shipyard repairs by foreign labor.''.
       (b) Amendment to HTS.--The U.S. Notes to subchapter XVIII 
     of chapter 98 of the Harmonized Tariff Schedule of the United 
     States are amended by amending U.S. Note 2 to read as 
     follows:
       ``2. Notwithstanding the provisions of subheadings 
     9818.00.03 through 9818.00.07, no duty shall apply to the 
     cost of equipment, repair parts, and materials that are 
     installed in a vessel documented under the laws of the United 
     States and engaged in the foreign or coasting trade, if the 
     installation is done by members of the regular crew of such 
     vessel while the vessel is on the high seas, in foreign 
     waters, or in a foreign port and does not involve foreign 
     shipyard repairs by foreign labor. Declaration and entry 
     shall not be required with respect to such installation, 
     equipment, parts, and materials.''.
       (c) Effective Date.--The amendments made by this section 
     apply to vessel equipment, repair parts, and materials 
     installed on or after April 25, 2001.

     SEC. 1632. SUSPENSION OF NEW SHIPPER REVIEW PROVISION.

       (a) Suspension of the Availability of Bonds to New 
     Shippers.--Clause (iii) of section 751(a)(2)(B) of the Tariff 
     Act of 1930 (19 U.S.C. 1675(a)(2)(B)(iii)) shall not be 
     effective during the period beginning on April 1, 2006, and 
     ending on June 30, 2009.
       (b) Report on the Impact of the Suspension.--Not later than 
     December 31, 2008, the Secretary of the Treasury, in 
     consultation with the Secretary of Commerce, the United 
     States Trade Representative, and the Secretary of Homeland 
     Security, shall submit to the Committee on Ways and Means of 
     the House of Representatives and the Committee on Finance of 
     the Senate a report containing--
       (1) recommendations on whether the suspension of section 
     751(a)(2)(B)(iii) of the Tariff Act of 1930 should be 
     extended beyond the date provided in subsection (a); and
       (2) an assessment of the effectiveness of any 
     administrative measure that was implemented to address the 
     difficulties that necessitated the suspension under 
     subsection (a), including--
       (A) any problem in the collection of antidumping duties on 
     imports from new shippers; and
       (B) any burden imposed on legitimate trade and commerce by 
     the suspension of bonds to new shippers.
       (c) Report on Collection Problems and Analysis of Proposed 
     Solutions.--
       (1) Report.--Not later than 180 days after the date of the 
     enactment of this Act, the Secretary of the Treasury, in 
     consultation with the Secretary of Homeland Security and the 
     Secretary of Commerce, shall submit to the Committee on Ways 
     and Means of the House of Representatives and the Committee 
     on Finance of the Senate a report describing--
       (A) any major problem experienced in the collection of 
     duties during the 4 most recent fiscal years for which data 
     are available, including any fraudulent activity intended to 
     avoid payment of duties; and
       (B) an estimate of the total amount of duties that were 
     uncollected during the most recent fiscal year for which data 
     are available, including, with respect to each product, a 
     description of why the duties were uncollected.
       (2) Recommendations.--The report shall include--
       (A) recommendations on any additional action needed to 
     address problems related to the collection of duties; and
       (B) for each recommendation--
       (i) an analysis of how the recommendation would address the 
     specific problem; and
       (ii) an assessment of the impact that implementing the 
     recommendation would have on international trade and commerce 
     (including any additional costs imposed on United States 
     businesses).

     SEC. 1633. EXTENSION AND MODIFICATION OF DUTY SUSPENSION ON 
                   WOOL PRODUCTS; WOOL RESEARCH FUND; WOOL DUTY 
                   REFUNDS.

       (a) Extension of Temporary Duty Reductions.--Each of the 
     following headings of the Harmonized Tariff Schedule of the 
     United States is amended by striking the date in the 
     effective period column and inserting ``12/31/2009'':
       (1) Heading 9902.51.11 (relating to fabrics of worsted 
     wool).
       (2) Heading 9902.51.13 (relating to yarn of combed wool).
       (3) Heading 9902.51.14 (relating to wool fiber, waste, 
     garnetted stock, combed wool, or wool top).
       (4) Heading 9902.51.15 (relating to fabrics of combed 
     wool).
       (5) Heading 9902.51.16 (relating to fabrics of combed 
     wool).
       (b) Extension of Duty Refunds and Wool Research Trust 
     Fund.--
       (1) In general.--Section 4002(c) of the Wool Suit and 
     Textile Trade Extension Act of 2004 (Public Law 108-429; 118 
     Stat. 2603 (7 U.S.C. 7101 note)) is amended--
       (A) in paragraph (3)--

[[Page 16432]]

       (i) by striking ``2 additional payments'' and inserting 
     ``annual additional payments''; and
       (ii) by adding at the end the following:
       ``(C) Each subsequent annual payment to be made after 
     January 1 of each subsequent year, but on or before April 15 
     of such year through calendar year 2010.''; and
       (B) in paragraph (6)--
       (i) in subparagraph (A), by striking ``through 2007'' and 
     inserting ``through 2009''; and
       (ii) by adding at the end the following:
       ``(C) Eligible manufacturers.--Only manufacturers who weave 
     worsted wool fabric in the United States shall be eligible 
     for a grant under this paragraph.''.
       (2) Sunset.--Section 506(f) of the Trade and Development 
     Act of 2000 (Public 106-200; 114 Stat. 303), as amended by 
     section 4002(c)(5) of the Wool Suit and Textile Trade 
     Extension Act of 2004 (Public 108-429; 118 Stat. 2603), is 
     amended by striking ``2008'' and inserting ``2010''.

     SEC. 1634. AUTHORITIES RELATING TO DR-CAFTA AGREEMENT.

       (a) Authority to Implement Certain Amendments to DR-CAFTA 
     Agreement With Nicaragua, El Salvador, Honduras, and 
     Guatemala.--
       (1) Proclamation authority.--The President is authorized to 
     proclaim modifications to the Harmonized Tariff Schedule of 
     the United States as necessary to carry out amendments 
     proposed by the United States and the CAFTA-DR countries to 
     the Agreement, the terms of which are contained in the 
     letters of understanding described in paragraph (2).
       (2) Letters of understanding.--The letters of understanding 
     referred to in paragraph (1) are the following:
       (A) The letter of March 24, 2006, from Nicaraguan Vice 
     Minister of Trade Julio Teran to United States Special 
     Textile Negotiator Scott Quesenberry.
       (B) The letter of March 27, 2006, from United States 
     Special Textile Negotiator Scott Quesenberry to Nicaraguan 
     Vice Minister of Trade Julio Teran.
       (C) The letter of January 27, 2006, from El Salvadoran Vice 
     Minister of Economy Eduardo Ayala to United States Special 
     Textile Negotiator Scott Quesenberry.
       (D) The letter of January 27, 2006, from United States 
     Special Textile Negotiator Scott Quesenberry to El Salvadoran 
     Vice Minister of Economy Eduardo Ayala.
       (E) The letter of March 7, 2006, from Honduran Vice 
     Minister of Foreign Trade Jorge Rosa to United States Special 
     Textile Negotiator Scott Quesenberry.
       (F) The letter of March 7, 2006, from United States Special 
     Textile Negotiator Scott Quesenberry to Honduran Vice 
     Minister of Foreign Trade Jorge Rosa.
       (G) The letter of June 23, 2006, from Guatemalan Minister 
     of Economy Marcio Cuevas Quezada to United States Special 
     Textile Negotiator Scott Quesenberry.
       (H) The letter of June 23, 2006, from United States Special 
     Textile Negotiator Scott Quesenberry to Guatemalan Minister 
     of Economy Marcio Cuevas Quezada.
       (3) Sunset.--The authority of the President to proclaim 
     modifications pursuant to paragraph (1) expires on December 
     31, 2007.
       (b) Authority to Implement Certain Amendments to DR-CAFTA 
     Agreement With Costa Rica and the Dominican Republic.--
       (1) Proclamation authority.--The President is authorized to 
     proclaim modifications to the Harmonized Tariff Schedule of 
     the United States as necessary to carry out amendments 
     proposed by the United States, Costa Rica, and the Dominican 
     Republic to the Agreement, the terms of which are contained 
     in the letters of understanding described in paragraph (2).
       (2) Letters of understanding.--
       (A) In general.--The letters of understanding referred to 
     in paragraph (1) are letters of understanding exchanged 
     between the countries described in paragraph (1) relating to 
     the rules of origin for articles containing pocket bag fabric 
     described in subparagraph (B).
       (B) Pocket bag fabric described.--For purposes of 
     subparagraph (A), the term ``pocket bag fabric'' means pocket 
     bag fabric used in an apparel article classifiable under 
     chapter 61 or 62 of the Harmonized Tariff Schedule of the 
     United States that contains a pocket or pockets.
       (3) Consultation and layover requirements.--Any 
     modification proclaimed by the President pursuant to 
     paragraph (1) shall be subject to the consultation and 
     layover provisions of section 104 of the Dominican Republic-
     Central America-United States Free Trade Agreement 
     Implementation Act (Public Law 109-53; 19 U.S.C. 4014).
       (4) Congressional disapproval.--
       (A) In general.--Any modification proclaimed by the 
     President pursuant to paragraph (1) shall not be effective if 
     a joint resolution described in subparagraph (B) is enacted 
     into law.
       (B) Joint resolution described.--For purposes of 
     subparagraph (A), the term ``joint resolution'' means a joint 
     resolution of Congress, the sole matter after the resolving 
     clause of which is as follows: ``That the Congress 
     disapproves the modification proclaimed by the President 
     contained in the report submitted to the Committee on Finance 
     of the Senate and the Committee on Ways and Means of the 
     House of Representatives pursuant to section 104(2) of the 
     Dominican Republic-Central America-United States Free Trade 
     Agreement Implementation Act (Public Law 109-53; 19 U.S.C. 
     4014(2)) on __________.'', with the blank space being filled 
     with the appropriate date.
       (5) Sunset.--The authority of the President to proclaim 
     modifications pursuant to paragraph (1) expires on December 
     31, 2007.
       (c) Authority Relating to Nicaraguan Tariff Preference 
     Level Under DR-CAFTA Agreement.--
       (1) Certificate of eligibility.--The Commissioner of 
     Customs may require an importer to submit at the time the 
     importer files a claim for preferential tariff treatment 
     under Annex 3.28 of the Agreement a certificate of 
     eligibility, properly completed and signed, or transmitted 
     pursuant to an authorized electronic data interchange system, 
     by an authorized official of the Government of Nicaragua for 
     purposes of implementing the tariff preference level for 
     Nicaragua provided in Annex 3.28 of the Agreement.
       (2) Enforcement of commitments.--The President is 
     authorized to proclaim a reduction in the overall limit in 
     the tariff preference level for Nicaragua provided in Annex 
     3.28 of the Agreement if the President determines that 
     Nicaragua has failed to comply with a commitment under an 
     agreement between the United States and Nicaragua with regard 
     to the administration of such tariff preference level.
       (3) Effective date.--Paragraph (1) applies with respect to 
     entries made on or after April 1, 2006.
       (d) Technical Correction Relating to Co-Production of 
     Certain Textile and Apparel Goods.--Section 205(a)(2) of the 
     Dominican Republic-Central America-United States Free Trade 
     Agreement Implementation Act (19 U.S.C. 4034(a)(2)) is 
     amended by inserting after ``with respect to that country'' 
     the following: ``or any other CAFTA-DR country''.
       (e) Reporting Requirements on Certain Negotiations and 
     Amendments to DR-CAFTA Agreement.--
       (1) In general.--Not later than 30 days after the date of 
     the enactment of this Act, and at least quarterly thereafter, 
     the United States Trade Representative shall submit to the 
     appropriate congressional committees a report on the status 
     of negotiations and amendments proposed by the United States, 
     Nicaragua, El Salvador, Honduras, Guatemala, Costa Rica, and 
     the Dominican Republic to the Agreement regarding any change 
     to the rule of origin or alteration of the tariff treatment 
     of socks described in paragraph (2) or any technical 
     correction described in paragraph (3). In addition, the 
     United States Trade Representative shall provide to the 
     appropriate congressional committees copies of any amendments 
     to be proposed by the United States before the amendments are 
     offered and copies of any amendments received by the United 
     States relating to such negotiations.
       (2) Socks described.--For purposes of paragraph (1), the 
     term ``socks'' means articles classifiable under subheading 
     6111.20.6050, 6111.30.5050, 6111.90.5050, 6115.91.00, 
     6115.92.60, 6115.92.90, 6115.93.60, 6115.93.90, 6115.99.14, 
     or 6115.99.18 of the Harmonized Tariff Schedule of the United 
     States.
       (3) Technical corrections described.--Technical corrections 
     referred to in paragraph (1) are the following:
       (A) Clarification of references to ``elastomeric yarns'' 
     contained in the notes, subheading notes, additional U.S. 
     notes, and statistical notes to chapters 50 to 63 (section 
     XI) of the Harmonized Tariff Schedule of the United States.
       (B) Clarification of the ability to apply short supply 
     provisions to sewing thread, narrow elastics, and visible 
     linings.
       (C) Treatment of women's and girls' woven sleep bottoms 
     under Annex 4.1 of the Agreement.
       (D) Addition of a rule of origin for women's and girls' 
     woven sleep bottoms to reflect the rule of origin provided 
     for in subheading 6207.11.00 of the Harmonized Tariff 
     Schedule of the United States and contained in Annex 4.1 of 
     the Agreement.
       (E) Provision of women's and girls sleep bottoms under 
     Annex 4.1-A of the Agreement.
       (4) Definition.--In this subsection, the term ``appropriate 
     congressional committees'' means the Committee on Ways and 
     Means of the House of Representatives and the Committee on 
     Finance of the Senate
       (5) Sunset.--The requirements of paragraph (1) expire on 
     the date on which any change is made to the rule of origin 
     pursuant to article 3.25 of the Agreement for any good 
     described in paragraph (2), or December 31, 2007, whichever 
     occurs later.
       (f) Definitions.--In this section:
       (1) Agreement.--The term ``Agreement'' has the meaning 
     given the term in section 3(1) of the Dominican Republic-
     Central America-United States Free Trade Agreement 
     Implementation Act (Public Law 109-53; 19 U.S.C. 4002(1)).
       (2) CAFTA-dr country.--The term ``CAFTA-DR country'' has 
     the meaning given the term in section 3(2) of the Dominican 
     Republic-Central America-United States

[[Page 16433]]

     Free Trade Agreement Implementation Act (Public Law 109-53; 
     19 U.S.C. 4002(2)).

     SEC. 1635. TECHNICAL AMENDMENTS TO CUSTOMS MODERNIZATION.

       (a) Entry of Merchandise.--Section 484(a) of the Tariff Act 
     of 1930 (19 U.S.C. 1484(a)) is amended--
       (1) in paragraph (1), by amending subparagraph (A) to read 
     as follows:
       ``(A) make entry therefor by filing with the Bureau of 
     Customs and Border Protection such documentation or, pursuant 
     to an authorized electronic data interchange system, such 
     information as is necessary to enable the Bureau of Customs 
     and Border Protection to determine whether the merchandise 
     may be released from custody of the Bureau of Customs and 
     Border Protection;''; and
       (2) in paragraph (2)(A), in the second sentence, by 
     inserting after ``covering'' the following: ``merchandise 
     released under a special delivery permit pursuant to section 
     448(b) and''.
       (b) Refunds and Errors.--Section 520(a) of the Tariff Act 
     of 1930 (19 U.S.C. 1520(a)) is amended--
       (1) in paragraph (1), by striking the semicolon at the end 
     and inserting a period;
       (2) in paragraph (2), by striking ``; and'' at the end and 
     inserting a period; and
       (3) in paragraph (4)--
       (A) by inserting ``an importer of record declares or'' 
     before ``it is ascertained''; and
       (B) by striking ``by reason of clerical error''.
       (c) Entry From Warehouse.--Section 557(a) of the Tariff Act 
     of 1930 (19 U.S.C. 1557(a)) is amended--
       (1) in paragraph (1)--
       (A) in the second sentence, by inserting after ``the date 
     of importation'' the following: ``, or such longer period of 
     time as the Bureau of Customs and Border Protection may at 
     its discretion permit upon proper request being filed and 
     good cause shown''; and
       (B) in subparagraph (A), by inserting after ``the date of 
     importation'' the following: ``or such longer period of time 
     as the Bureau of Customs and Border Protection may at its 
     discretion permit upon proper request being filed and good 
     cause shown''; and
       (2) in paragraph (2), by inserting after ``the date of 
     importation'' the following: ``, or such longer period of 
     time as the Bureau of Customs and Border Protection may at 
     its discretion permit upon proper request being filed and 
     good cause shown,''.
       (d) Abandoned Goods.--Section 559 of the Tariff Act of 1930 
     (19 U.S.C. 1559) is amended by inserting after ``the date of 
     importation'' each place it appears the following: ``, or 
     such longer period of time as the Bureau of Customs and 
     Border Protection may at its discretion permit upon proper 
     request being filed and good cause shown''.
       (e) Manipulation in Warehouse.--Section 562 of the Tariff 
     Act of 1930 (19 U.S.C. 1562) is amended--
       (1) by amending the first sentence to read as follows: 
     ``Merchandise shall only be withdrawn from a bonded warehouse 
     in such quantity and in such condition as the Secretary of 
     the Treasury shall by regulation prescribe.''; and
       (2) in the second sentence, by striking ``All merchandise 
     so withdrawn'' and all that follows through ``except that 
     upon permission therefor'' and inserting ``Upon permission''.
       (f) Other Technical Amendments.--(1) Section 629(e) of the 
     Tariff Act of 1930 (19 U.S.C. 1629(e)) is amended by striking 
     ``insuring'' and inserting ``ensuring''.
       (2) Section 135(f)(2)(B) of the Trade Act of 1974, as 
     amended by section 2004(i)(1) of the Miscellaneous Trade and 
     Technical Corrections Act of 2004, is amended by striking 
     ``their establishment'' and insert ``its establishment''.
       (3) Section 245(a) of the Trade Act of 1974 (19 U.S.C. 
     2317(a)) is amended by striking ``, other than subchapter 
     D''.
       (4) Section 291(2) of the Trade Act of 1974 (19 U.S.C. 
     2401(2)) is amended--
       (A) by striking ``1001(5)'' and inserting ``1001(e)''; and
       (B) by striking ``1308(5)'' and inserting ``1308(e)''.
       (5) Section 13031(e)(6)(C)(i) of the Consolidated Omnibus 
     Budget Reconciliation Act of 1985 (19 U.S.C. 58c(e)(6)(C)(i)) 
     is amended by striking ``commonly know'' and inserting 
     ``commonly known''.
       (6) Section 2107(a)(4) of the Bipartisan Trade Promotion 
     Authority Act of 2002 (19 U.S.C. 3807(a)(4)) is amended--
       (A) by striking ``paragraph (2)(A)'' and inserting 
     ``paragraphs (2)(A)''; and
       (B) by striking ``paragraph (2)(B)'' and inserting 
     ``paragraphs (2)(B)''.
       (7) Section 514(c)(3) of the Tariff Act of 1930 (19 U.S.C. 
     1514(c)(3)) is amended by moving the last 2 sentences 2 ems 
     to the left as flush left text.

                       Subtitle C--Effective Date

     SEC. 1641. EFFECTIVE DATE.

       Except as otherwise provided in this title, the amendments 
     made by this title shall apply with respect to goods entered, 
     or withdrawn from warehouse for consumption, on or after the 
     15th day after the date of the enactment of this Act.

  The SPEAKER pro tempore (Mr. Putnam). Pursuant to House Resolution 
966, general debate shall not exceed 1 hour, equally divided and 
controlled by the chairman and ranking minority member of the Committee 
on Ways and Means and the Committee on Education and the Workforce.
  The gentleman from California (Mr. Thomas), the gentleman from New 
York (Mr. Rangel), the gentleman from California (Mr. McKeon), and the 
gentleman from California (Mr. George Miller) each will control 15 
minutes.

                              {time}  2130

  Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, the title of this bill, as we indicated, is the Pension 
Protection Act of 2006; but it is much more than that. Within the bill 
also are tax items, trade items, charitable provisions.
  One of the reasons I am pleased to bring this to the floor is that it 
is in essence the combination of more than 5 months of working on a 
very important area of public law that affects tens of millions of 
Americans. It is about the agreement workers have with their employers 
as to what they are going to be able to earn, not for the time they are 
working but for the time they are retired.
  Our current pension system is, frankly, broken. It moved rapidly into 
a known broken situation, and we have responded, not as quickly as 
perhaps we would have liked, but I think we have responded in a way 
that, as we discussed, this bill I think you will find there is, at 
least there was on the conference committee and there should be in this 
House, broad bipartisan support.
  For example, on this side of the aisle, I could say I hold a letter 
from the General Motors Corporation endorsing the changes we are making 
in pension law. And someone would say, aha. But then I would pick up a 
letter and say, I hold a letter from the United Auto Workers who are 
supportive of this pension change. And I could do that for industry 
after industry showing that you not only have the corporate structure 
in support but you have the workers in support.
  This is a bill that makes fundamental changes in transparency, in 
payment arrangements, which means the promise made from employers to 
employees and employees to employers has a greater chance than a long, 
long time of being honored. It is important legislation. The Ways and 
Means Committee will spend some time on the text, trade, and charitable 
provisions, but I want to say that I am very proud of the product that 
has been produced. It will move off this floor, it will move through 
the Senate, and it will be signed by the President. And the time line 
in doing that will save many employees from what would have been a 
certain failure to have pensions if we did not act before we adjourned 
for our summer district work period.
  Mr. Speaker, I reserve the balance of my time.
  Mr. RANGEL. Mr. Speaker, I ask unanimous consent to yield my time to 
be controlled by the gentleman from California (Mr. George Miller).
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from New York?
  There was no objection.
  Mr. GEORGE MILLER of California. I yield 2 minutes to the gentleman 
from Washington (Mr. McDermott).
  Mr. McDERMOTT. Mr. Speaker, this is one of those bills in the middle 
of the night; this is a 21-page summary. There isn't anybody here, 
perhaps four or five conference members may know what is in it. None of 
us have seen the bill, so you have got to trust the leadership.
  Now, this bill imposes new red tape and fees on employers that wish 
to provide their employees with defined benefit pensions. It makes it 
harder to give a defined benefit.
  Those opposing this measure of course will say they believe that the 
bill's new requirements will impose requirements to discourage 
employers from offering a traditional pension plan. Supporters are 
saying this bill will strengthen everything. But if the aim of this 
bill is to strengthen pensions, why does it exempt Halliburton from the 
bill's requirements?
  No one could possibly have read the text of this bill. But we do have 
this 21-page summary, I say, which says that

[[Page 16434]]

the proposal delays the effective action on funding and benefit 
limitation rules for defense contractors. Those who are ripping us off 
in Iraq by the billions are not being brought under this bill. This 
provision was not in the House nor was it in the Senate version of the 
bill.
  If the funding and limitation rules are so good for everyone, which 
is what the majority contends, why aren't they good enough for 
Halliburton? Of course, I know Halliburton is a friend of the Vice 
President. Perhaps we need CSI to come in here to uncover how this bill 
got put together, but we know enough to oppose the bill. This proposal 
continues to promote the philosophy of conservatives, which is that 
people are better off alone. You are on your own, folks. We are going 
to give you a 401(k), and good luck, no defined benefits anymore. This 
is to end pensions as we have known them.
  Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
  It is times like these that you have to resist the temptation of 
saying, okay, let's just go home and not pass this bill. But the 
gentleman from Washington, from Seattle, perhaps wouldn't be able to 
get back if he were flying Northwest Airlines, and so the fervor of his 
speech not to act would in fact have to bump into reality sooner than I 
think he might like.
  Mr. Speaker, I would like to yield the remainder of the time to be 
controlled by the gentleman of Michigan, a fellow conferee on the 
pension conference (Mr. Camp).
  Mr. CAMP of Michigan. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise in strong support of the Pension Protection Act. 
By approving this bill, the House of Representatives is taking an 
important step towards safeguarding employee pensions and reforming the 
current system to ensure all American workers receive their full 
promised retirement benefits. This bill is a significant improvement 
over current law.
  The bill before us today shores up the single defined benefit system 
so that companies cannot escape their obligations. Instead of allowing 
firms to routinely underfund their plans, H.R. 4 requires employers to 
fund 100 percent of their liabilities. The bill also requires employers 
to make up contributions faster than the 30 years under current law.
  More importantly, the Pension Protection Act lives up to its name by 
not allowing companies to make promises to their workers they cannot 
hope to fulfill. If pension plans are critically underfunded, 
executives will no longer be able to commit new pension benefits to 
workers under the false premise that they have the money to make good 
on those faulty assurances.
  In Michigan, the auto industry is critical to our State's economy. I 
want to thank Chairman Thomas and Mr. Leader Boehner for their 
leadership, ensuring Michigan's manufacturers continue to operate 
robust pension plans. I am particularly pleased H.R. 4 has the support 
of United Auto Makers and the United Automobile Workers. I worked hard 
to ensure the auto sector and its workers are not subject to unfair, 
unrealistic rules that would unnecessarily penalize this critical 
sector of the American economy.
  H.R. 4 also provides relief to the struggling airline industry. The 
Pension Protection Act is a huge victory to the pilots, flight 
attendants, baggage handlers, and other employees in the airline 
industry that have worked hard for their pensions and expect them to be 
there upon retirement. This bill allows airline companies that have 
frozen their plans and taken that responsible step more time to make 
good on their commitments and preserve their workers' benefits.
  Absent legislation, some airlines would be forced to terminate their 
pension plans. If this were to happen, the PBGC would incur billions of 
additional pension liability, and employees would receive a fraction of 
their promised benefits. The Pension Protection Act prevents this and 
enables airlines to fully meet the obligations to their workers. I urge 
all of my colleagues to pass this important bill for America's workers.
  Mr. Speaker, I reserve the balance of my time.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 3 minutes to 
the gentleman from New Jersey (Mr. Andrews).
  Mr. ANDREWS. Mr. Speaker, this bill offers much to recommend in 
improving pension law. In particular, I applaud the inclusion of relief 
for multi-employer plans and the clearing up of some of the 
contradictions and ambiguities around hybrid defined benefit plans. But 
I must rise in opposition to this bill for two reasons.
  The first is that the bill makes a mistake that the majority said 
from the very outset it did not want to make, which was to favor one 
industry over another in affording relief for single-employer plans. 
Not only does this bill afford more protection for some industries over 
others, but within an industry, within the airline industry, it 
exhibits I believe unwise favoritism for some airlines over others. The 
majority started this process by saying it did not want to choose 
winners and losers among industries. What in fact I believe it has done 
is to choose winners and losers within an industry, which I think is 
unwise and a bad precedent to set.
  Secondly, I must rise in opposition to this bill because of its 
procedural irregularity. There is a conference which was seated several 
months ago that is dealing with these issues. What is before us tonight 
is a brand-new bill, not a conference report. This does not recognize 
months of negotiation between the two Houses and between the two 
parties. It is a brand-new bill that starts without anyone I think 
truly vetting or understanding.
  And I must say that my Democratic colleagues who are conferees on 
this bill, Mr. Miller, Mr. Rangel, Mr. Payne, among the three of them 
they have 90 years of experience in this House, and they were afforded 
no opportunity to attend a meeting of the conference, to ask a question 
at the conference, to express their views at the conference. This is 
not disrespect to them; it is disrespect to their constituents and to 
the millions of people whose views are represented by Mr. Miller and 
Mr. Rangel and Mr. Payne and others.
  This is an awfully important area of legislation. To rush head on 
with a bill that no one has read, ignoring a conference that has never 
met, that ignores 90 years of experience from Members on this side I 
think is a mistake. So despite the good that I know is in this bill, I 
would urge a ``no'' vote.
  Mr. CAMP of Michigan. Mr. Speaker, I yield 2\1/4\ minutes to the 
gentlewoman from Connecticut, a distinguished member of the Ways and 
Means Committee (Mrs. Johnson).
  Mrs. JOHNSON of Connecticut. Mr. Speaker, I rise in strong support of 
this Pension Protection Act of 2006. Not only does it ensure that 
employers and unions will fund their plans, but it enables individuals 
to make a much greater effort toward providing for their retirement 
security as well.
  Nothing is more important to Americans than the gut-wrenching issue 
of being secure in their old age. It is important to seniors, it is 
important to their families, it is important to young people to know 
that they can plan for the future. And it is a pity that only 50 
percent of America's workers participate in pension plans. This bill 
makes a simple change that will result in 85 to 90 percent of working 
Americans who work for companies with pension plans participating in 
those plans, as opposed to 50 percent. That is big. That is important. 
It is a simple mechanism, but it will help many, many more young people 
get into those pension plans, take advantage of employer contributions, 
and prepare for their retirement.
  It also does something else we don't know much about, we don't pay 
attention to it, we don't think about it: it makes permanent the 
saver's credit. If you don't make much money, putting money aside for 
retirement is really hard. We have a little plan by which the 
government gives you a dollar for every dollar you save for low- and 
middle-income earners. This makes that permanent, and that will enable 
us to grow that program appropriately. It

[[Page 16435]]

also indexes it to inflation so those people can never be robbed of the 
power of this help in saving for their retirement.

                              {time}  2145

  This is not a perfect bill, but it does some really important things 
for working people and it helps us think ahead. We have a lot of people 
with 401(k) plans, and at 65, they are blowing them. One of the things 
this bill does is to encourage new products to plan for our future by 
changing the tax treatment of 401(k) money invested in an annuity that 
can provide a paycheck for life or cover long-term care if needed.
  We need to be thinking anew about all the challenges of retirement, 
not just the income challenge.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to 
the gentleman from Maryland (Mr. Cardin).
  Mr. CARDIN. Mr. Speaker, I thank my friend for yielding me this time.
  Mr. Speaker, I am really conflicted on this bill because there are 
good provisions in it. The provisions which I had the opportunity to 
work with our former colleague, Mr. Portman, provisions that would make 
permanent the changes in the tax law in 2001, makes it easier for 
people to save for their retirement, employers to provide pension 
plans; provisions for automatic enrollment so that employees have a 
better chance of having a retirement savings. The permanency and 
indexing of the saver's credit, I think, is a very important provision. 
The split tax refund, I can go on and on and on.
  But I must tell you, I was listening to Mr. Andrews and I think that 
he raises a very valid point on the process. You have to, at times, 
understand that process is important so we do the right thing here.
  I heard reference to approving a conference report, but this is not a 
conference report. We have a letter from the Senate Members of the 
conference report urging the House Members of the conference committee 
to join them in a product that is different than what we have before us 
today.
  There are concerns in this legislation that I do not know if they 
have been addressed, including the airline industry, including the way 
we treat employers who have well-funded plans today as to whether they 
will continue those plans.
  So, Mr. Speaker, this bill is coming up with no notice, no 
opportunity for us to review it, and without an opportunity for our 
conferees to present their report.
  So I do not know what to tell the Members to do here. I doubt if we 
will have time to review all the provisions that are in this bill. I 
doubt whether we will know exactly what is involved, and we do not have 
the comfort of knowing that it is the product of a conference 
committee. It is a new bill that is before us.
  So I just urge my colleagues to be very careful in consideration of 
this legislation. It is very important legislation. It does some very 
good things, but I am concerned there may be some unintended 
consequences.
  Mr. CAMP of Michigan. Mr. Speaker, I yield 2\1/4\ minutes to the 
gentleman from Arizona (Mr. Hayworth), a distinguished member of the 
Ways and Means Committee.
  Mr. HAYWORTH. Mr. Speaker, I thank my colleague from Michigan for his 
hard work as part of the conference, and I rise in strong support of 
the Pension Protection Act.
  I listened with great interest to the criticisms offered from the 
other side of the aisle, especially my friends from New Jersey and 
California, and indeed, it is somewhat reminiscent of the initial 
evaluation by a Hollywood agent of a young actor. The shorthand note 
was, ``can't sing, can't act, dances a little.'' And of course, it 
turned out to be the great Fred Astaire.
  Now, with all due respect to Mr. Astaire and his song and dance, the 
song and dance offered by the other side, the criticisms, when you take 
a look, focus on process, not policy. Indeed, my friends from New 
Jersey and Maryland readily concede that there are many desirable 
policies in this bill, reforming the outdated single employer defined 
benefit pension plans.
  We heard the chairman of the committee say not only was there a 
letter from General Motors but also from the United Auto Workers, and 
yet we hear the process is somehow terribly flawed and that even within 
the airline industries some airlines are treated differently. Mr. 
Speaker, the different airlines are reacting differently to the 
concerns they face. It is not some sort of vast conspiracy with malice 
aforethought to pick winners and losers. It comes from different 
responses from the businesses involved.
  No, a clear level look at what we are doing says that this is, in 
fact, precisely the bill at this time.
  As to the process, we heard mention made of the other body. We are 
mindful that there are those who aspire to become part of the other 
body, but Mr. Speaker, without impugning any action, although I know we 
have changed the rules, the fact is a lot of folks basically want to 
blow up this agreement.
  We need this bill. It is a good bill. Vote for it.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 3 minutes to 
the gentlewoman from California (Ms. Woolsey).
  Ms. WOOLSEY. Mr. Speaker, if this bill is so great, why are 
executives not being treated the same way as the rank-and-file workers? 
It is hard to believe that in the face of all of the corporate scandals 
that we have been experiencing over the last few years, that this 
legislation still allows for executives to receive a golden parachute. 
Unbelievably, executives who have run their companies into the ground 
can continue to receive large lump sum payments from their underfunded 
pension plans at the same time that the rank-and-file employees' 
benefits have been frozen.
  You heard me right. If a company's plan is underfunded by 80 percent, 
rank-and-file workers cannot receive new benefits or lump sum payments. 
Meanwhile, the restrictions for executives do not start until the plan 
is underfunded by 60 percent. That difference adds up to billions and 
billions of dollars.
  Whatever happened to the captain going down with the ship? The way 
this bill reads the only boat the Republican majority is familiar with 
is the Titanic, because they are giving lifeboats to the first class 
passengers only.
  Mr. Speaker, we live in a country that values equality. Why oh why in 
the world would we allow this pension bill to pass the House treating 
executive pension benefits differently from their workers? What 
happened to what is good for the goose is good for the gander? If 
workers' pensions are underfunded, then so are executives. It is time 
to end the golden parachute or, as the gander goes, the golden egg.
  I urge my colleagues, vote against this conference report and support 
workers benefits.
  Mr. CAMP of Michigan. Mr. Speaker, I yield 2 minutes to the 
gentlewoman from Pennsylvania (Ms. Hart), a distinguished member of the 
Ways and Means Committee.
  Ms. HART. Mr. Speaker, I thank the gentleman for yielding, and I 
especially thank the chairman for answering the call of families across 
the Nation to make 529 qualified tuition programs permanent.
  What are those plans? For those of you who do not know, the 529 
section allows for tax-free college savings. This is something that has 
encouraged so many families to save for college. The figures in assets 
in 529 plans have grown from $13 billion in 2001 to more than $65 
billion today. This has provided for so many families to save for 
education, and it is more important than ever because we know workers 
with the least education have generally experienced the slowest wage 
growth over the past three decades. Making this plan permanent allows 
families to plan for the future and make sure that they will get that 
education.
  Also, the pension changes are so very important. In the communities 
that I represent, we experienced terrible, really unfairness, on 
pension plans when US Airways filed for bankruptcy and turned their 
pension plans over to the PBGC, and unfortunately, their executives 
took a golden parachute.

[[Page 16436]]

  The gentlewoman who just spoke before me was wrong in her statement 
that those executives continue to do this. The plans must be funded 
before these executives could have a special set-aside pension plan for 
themselves. We ended that practice of unfairness of these large company 
executives stealing the money away while their rank-and-file workers 
lose.
  The bill encourages greater transparency for the employees to know 
the health of their pension plan. These are such important changes that 
anyone who does not support it is not supporting the retirement 
security for the people in their district. It is so important that 
people know the status of their finances as they work through their 
working life so they have expectation of their pension, they have 
expectation of how much income they will receive, and this bill will 
help them get there.
  Mr. Speaker, I encourage my colleagues to support this.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield myself 30 
seconds just to correct the record.
  The legislation does not require the funding of these plans. 
Executives can continue to get benefits out of these plans if they are 
only 60 percent funded. The gentlewoman from California was correct. 
Workers can only get benefits if they are 80 percent funded.
  So the executives can continue to draw down the assets of the 
corporations, but the employees cannot.
  Mr. Speaker, I yield 2 minutes to the gentleman from Massachusetts 
(Mr. Neal), a member of the Ways and Means Committee.
  Mr. NEAL of Massachusetts. Mr. Speaker, I thank the gentleman.
  When you hear this argument and this debate, remember, a year ago, 
these are the people that were going to abandon the Social Security 
system. These are the people that were going to throw the Social 
Security system overboard.
  I heard the gentleman from Arizona say, well, there is good things in 
the legislation and there is bad things in the legislation. Does 
anybody remember the S&L issue around here or did we have amnesia? 
There were good things about deregulating the S&Ls, and it cost the 
American taxpayer $500 billion, but a decade later.
  The Wall Street Journal published a poll yesterday. I hear my 
Republican friends talking about how great everything is. How good 
everything is on Wall Street.
  The American people are asked, in what direction is the country 
headed, right or wrong? And by almost two-thirds they say the wrong 
direction. They are paying $3.15 a gallon for gasoline, their health 
care plan is being taken away, and their retirement plan is being 
compromised, if not jeopardized. 401(k) plans are replacing the defined 
benefit that we had all come to know.
  That is where the anxiety is coming from. That is why the American 
people think the country's headed in the wrong direction.
  You are about to hasten the demise of the defined benefit plan by 
embracing this legislation tonight, and I want to say something as well 
to those who are witnessing the debate.
  It has not been vetted through the committee system. It has not been 
presented back and forth between two parties. It is being put up on a 
Friday night, once again because they think you are not watching. That 
is the way the Ways and Means Committee has operated during the last 
few years. That is the way legislation's brought to the floor, no 
opportunity for the minority to ever be heard. We simply put it in 
front of this body, late at night so people cannot witness it, and then 
we move on from there. Whether it is good or bad, we will not have our 
fingerprints on it.
  Mr. CAMP of Michigan. Mr. Speaker, what is the time remaining?
  The SPEAKER pro tempore. The gentleman from Michigan (Mr. Camp) has 
2\3/4\ minutes remaining, and the gentleman from California (Mr. George 
Miller) has 18\1/2\ minutes remaining.
  Mr. CAMP of Michigan. Mr. Speaker, I reserve the balance of my time.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 15 seconds to 
the gentleman from North Carolina (Mr. Etheridge).
  Mr. ETHERIDGE. Mr. Speaker, I thank the gentleman for yielding.
  I served in business for 19 years and have been in public life a long 
time. I have signed a lot of contracts, but never in my life have I 
signed a contract that I have not read. We are asking the Members of 
this body to sign a contract with the American people that we have not 
read.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to 
the gentleman from New York (Mr. Owens).
  Mr. OWENS. Mr. Speaker, we have not an accidental shipwreck here. We 
have a deliberate shipwreck being set up.
  I am not the oldest person in this body tonight, but I have been here 
a long time and seen the great swindle of the savings and loans 
collapse. This is a swindle that will be even bigger.
  We have the full faith and credit somewhere behind the pension 
guaranty fund. It is not there, we are going to put it behind there, 
and it is the American taxpayers who are going to pay when this whole 
pension system collapses.
  I do not know what grand formula is in motion here and who the genius 
is, but the looting of America is going along very well, and this is 
one more step in that direction.
  It is going to be a huge, like an economic asteroid collapsing on the 
economy when this pension benefit guaranty fund collapses as the 
savings and loans did.

                              {time}  2200

  We can't even get a figure as to how many billions of dollars were 
lost in the savings and loans. If you go looking for it, it is 
nebulous. But at least $1 trillion of taxpayer money has gone down the 
drain, and is still going, partially because it was funded with 30-year 
bonds.
  I watched while it unfolded. And the savings and loans criminals, 
really, were not punished. It was a great example of how you could 
steal millions and get away with it. Silverado Bank comes to mind, 
because we had relatives of the administration involved in that one, 
and on and on it goes, with Members of Congress on the boards, and all 
kinds of things that happened, and they got away with it.
  Now we have corporate America having mismanaged these pensions all 
this time, having looted them in many different ways. Enron certainly 
shows us how they can do that in quite a clear fashion. But there are 
many other different ways that the people in control have looted the 
pension funds, destroying them, and they are going to ask the American 
people to bail them out. That is what is most devastating about 
tonight.
  Mr. CAMP of Michigan. Mr. Speaker, I yield 1\1/2\ minutes to the 
distinguished gentleman from the Ways and Means Committee, the 
gentleman from Wisconsin (Mr. Ryan).
  Mr. RYAN of Wisconsin. Mr. Speaker, I am sitting here listening to 
this debate and I am wondering, what bill are they talking about? Are 
they talking about the bill that 70 Democrats voted for earlier in the 
year that got 294 votes? Are they talking about the bill that is 
endorsed by the United Auto Workers, by the building trades? Are they 
talking about the bill that was negotiated between Democrats and 
Republicans, between the House and the other body? Because that is the 
bill we are talking about right here. This bill was written with the 
input from labor, with the input from management, with the input from 
employees and employers.
  What is wrong? What needs to be fixed? Well, you know what needs to 
be fixed? If an employer promises their employee they are going to fund 
their pension, by golly, that is exactly what they should do. That is 
what this bill does. It makes sure they do in fact fund that pension 
100 percent.
  If an employer wants to prefund their employees' pension, wants to do 
good by helping them ahead of time, we want to change the rules so they 
can do that. And you know what, if an employer wants to exploit 
loopholes and

[[Page 16437]]

rip off their employees, shortchange their pension, as the current law 
allows employers to do, we have got to stop them from doing that. And 
that is what this bill does.
  That is why this bill is supported by unions, by management, by 
Republicans, by Democrats, by the House and the other body. This is a 
bill that is a good bill that has been negotiated for a year, and I 
urge its passage.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 4 minutes to 
the gentleman from North Dakota (Mr. Pomeroy).
  Mr. POMEROY. I am pleased to follow the preceding speaker, who like 
me is on the Ways and Means Committee. He knows darn well the Ways and 
Means Committee had nothing to do with this bill. This bill has been 
marked up in a nontransparent conference committee, and then last 
night, on the eve of the vote, the Republicans walked and didn't vote. 
It is utter nonsense the gamesmanship that has been played.
  But there have been deals cut. A lot of deals have been cut. So some 
unions cut their deal and they are for it; some companies are for it; 
some industries are for it. And I don't have any problem with any of 
them. What I have a problem with, with this bill, is the great majority 
of plans, covering 20 million workers in the workforce today, with 
pension protection, pensions that they are counting on to pay that 
monthly payment in old age.
  We have seen this argument before. Remember last year, when the 
President wanted to privatize Social Security? Suddenly, we heard about 
how Social Security was on the rocks; we had to end Social Security as 
we knew it to save it. We had to privatize it to protect it. This is 
the same thing that is going on now. They are saying pensions are on 
the rocks. We have to pass this bill to save pensions.
  Baloney. Don't believe a word of it. Jane Bryant Quinn, noted 
commentator on financial matters, writes in a recent column about the 
recovering health of pension funding. ``Plans are coming back to 
sounder footing, thanks to rising interest rates, massive corporate 
catch-up contributions to their plans, limitations on benefits and the 
recovery in the markets.''
  And in addition to that, my colleagues, we passed a big premium 
increase in that budget and so more money is coming in yet. But none of 
that is mentioned. And so there is a lot of confusion on the floor.
  Does this bill toughen that funding requirement or not? It is the 
wrong question, my colleagues, and I used to be a solvency regulator as 
a former insurance commissioner. The right question here is: Will this 
bill continue pensions or will this bill make their freezing and 
termination more likely? And on that, consider the words of David Wyss, 
chief economist for Standard & Poor's. ``The more that is required of 
plans, the sooner they will go extinct.'' Private pensions are going 
the way of the Dodo.
  Because, you see, when you make funding too onerous or too 
unpredictable, you force the executives to cancel or terminate or 
freeze the plan. And that is exactly what is at foot. So the enemies of 
pensions can stand on the floor and say they are protecting workers by 
increasing funding, but they know all along they are going to cause the 
freezing of plans.
  We have a trend here that is very worrisome, because my friends, this 
is the mounting number of frozen pension plans. And I am telling you, 
if we pass this bill, this number is going to skyrocket. Indeed, one 
trade group with expertise in this area predicts 60 percent of the 
plans might freeze if the bill is passed.
  Let me tell you what happens when a plan freezes. It means that you 
no longer get to count future years' earnings in your retirement 
benefit. So baby boomers in the workforce today, following this debate, 
you are going to get killed under this bill. You are not going to get 
final rate of pay as considering your pension benefit. Instead, you are 
going to get a reduced pension than you ever counted on, and they are 
going to swap you for a 401(k).
  Is that a fair trade? Well, Jane Bryant Quinn's column says that 
workers in this situation may take an annual company contribution in 
their 401(k) of 15 percent to be equal. Now, how many of you know of 
401(k)'s where they put in 15 percent?
  So what we are seeing here, directed right at the baby boom workers, 
is a bill that will cause the freezing of their pension, the reduction 
of their benefit, and yet the majority, in their hypocrisy, has the 
nerve to suggest they are doing it to protect workers. Kill this bill. 
Protect worker pensions.
  Mr. CAMP of Michigan. Mr. Speaker, I yield myself the balance of my 
time.
  I urge Members to vote for this Pension Protection Act because this 
bill reforms the current system. What we have seen through the years in 
the steel industry and some of the airline industry, and the auto 
industry is on the brink, we have seen plans terminated and put over on 
the PBGC. Everybody loses there, certainly potentially the American 
taxpayer, but more importantly, the workers in those companies end up 
not receiving the benefits they remember promised.
  This legislation requires plans to be fully funded. That is an 
important step forward. It also ensures that the plans have a realistic 
reflection of the value of their plan so that we don't have some rule 
that doesn't make any sense that values a plan at an unrealistic 
amount. The plans are fully funded at a mark-to-market amount that 
actually reflects the value of the market.
  This bill represents a compromise between the House and Senate on 
multiemployer provisions, which strengthens the multiemployer plans as 
well as the defined benefit plans. This legislation also would allow 
shutdown benefits if plans are funded above a certain level, which are 
so important as we have this changing dynamic in our economy that will 
continue to protect our workers.
  This legislation is better than current law, reforms current law, 
strengthens our plans, and will ensure that plans are not terminated 
and put on the PBGC.
  Mr. Speaker, I yield back the balance of my time.
  Mr. GEORGE MILLER of California. Mr. Speaker, I reserve the balance 
of my time.
  Mr. McKEON. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in support of H.R. 4, the Pension Protection Act, 
and I ask my colleagues to join me in doing the same. We followed a 
long road to get to this point, and there have been many bumps along 
the way. But when you are considering such substantial legislation, 
such fundamental reforms, especially in a bill where we haven't had 
reforms like this for over 20 years, that is to be expected.
  At the end of the day, however, what we have brought to the floor 
tonight represents the reform package agreed upon by House and Senate 
pension conference principals after many, many meetings. After a long 
and sometimes difficult process, this bill provides us just what we 
were looking for at the outset: Reforms that significantly strengthen 
outdated worker pension laws for workers, retirees, and taxpayers. And 
that is a major and a long, overdue victory.
  In the fall of 2004, nearly 2 years ago, the House Education 
Workforce Committee, led by then-Chairman Boehner, unveiled six 
principles to fix our Nation's outdated pension laws. These pillars 
represented the foundation for the defined benefit pension overhaul 
Congress was about to embark upon, and our committee pledged to 
incorporate them into the final legislative product we would send to 
President Bush. Mr. Speaker, the Pension Protection Act meets that 
pledge.
  We pledged to craft a bill that provides certainty by establishing a 
permanent interest rate to more accurately calculate employers' pension 
liabilities so they fund their pension promises. We have done just 
that.
  We pledged to craft a bill that relies on common sense by enabling 
employers to build a cushion in their pension plans during good 
economic times. And we have done just that.
  We pledged to craft a bill that establishes stability by enclosing 
funding loopholes and ensuring employers make adequate and consistent 
cash

[[Page 16438]]

payments to their plans. And we have done just that.
  We pledged to craft a bill that promises greater transparency by 
giving employees timely and straightforward information about the 
health of their plans. And we have done just that.
  We pledged to craft a bill that values honesty by ending the practice 
of allowing employers and union leaders, when faced with a severely 
underfunded pension plan, to dig their hole even deeper by promising 
extra benefits to employees and retirees. And we have done just that.
  And, finally, we pledged to craft a bill that enhances retirement 
security portability by ensuring that hybrid plans, such as cash 
balance pensions, which offer portable, more generous worker benefits, 
remain a viable part of the defined benefits system. And we have done 
just that.
  In short, this bill will reform broken pension rules that no longer 
serve the interests of workers who count on their retirement savings 
being there for them when they need it. I am proud to have played a 
role in crafting it, and I thank Chairman Thomas, my neighbor from 
California, chairman of the Ways and Means Committee, and, in 
particular, my former chairman, Leader Boehner, for leading the charge 
on this important issue. Going all the way back to his days as 
Employer-Employee Relations Subcommittee Chair, our majority leader has 
been a tireless advocate for the reforms we are considering tonight, 
and I thank him for his commitment.
  I also want to thank my committee staff for their work on this 
legislation. Ed Gilroy, Jim Paretti, Steve Perrotta, and Mr. Boehner's 
pension policy adviser, Stacey Dion. They have been truly remarkable 
throughout this process, putting in innumerable hours, and we literally 
would not be here tonight without them.
  Mr. Speaker, I urge swift passage of H.R. 4, both here in the House 
this evening and in the Senate next week.
  Mr. Speaker, I reserve the balance of my time.
  Mr. GEORGE MILLER of California. Mr. Speaker, I continue to reserve 
the balance of my time.
  Mr. McKEON. Mr. Speaker, I am happy to yield 3 minutes to a member of 
the committee, a member of the conference committee, and thank him for 
his work on this bill, the gentleman from Minnesota (Mr. Kline).
  Mr. KLINE. Mr. Speaker, I thank the gentleman, my chairman, for 
yielding.
  Mr. Speaker, I rise today in very strong support of H.R. 4, the 
Pension Protection Act of 2006. This legislation provides security and 
peace of mind for working families across our Nation. Many Americans 
have worked their entire lives for their pensions, and nothing is more 
important to them than making sure these obligations are met. This 
legislation protects the interest of workers, retirees, and taxpayers, 
and it helps employers continue to offer these benefits.
  As vice chairman of the Employer-Employee Relations Subcommittee, I 
have worked over the last few years with my colleagues to reform these 
antiquated pension laws. This legislation reflects our negotiations 
with House and Senate leaders concluded in recent days. I am proud to 
have championed the inclusion of airline relief in this final package.

                              {time}  2215

  The Pension Protection Act strikes the necessary balance between the 
many diverse groups with an interest in a healthy pension system. The 
passage of this bill protects the pensions of more than 9,000 Northwest 
Airline pension plan participants who live in my district alone. I am 
honored to represent these individuals here in Congress and to support 
this much needed legislation on their behalf and on behalf of all my 
constituents.
  Without this legislation, Mr. Speaker, it is not a matter of if the 
airline terminates its plans; it is a matter of when. This bill will 
allow Northwest Airlines to emerge from bankruptcy with its pension 
plans intact.
  Curtis Shoemake, a 30-year Northwest Airline pilot from Minnesota, 
summed up the situation when he remarked, ``It's a win-win for 
everybody. It's a win because it protects our pensions. It's a win 
because the PBGC is not burdened with the termination of our pension. 
I'm hopeful that Congress will step up to the plate and do the right 
thing.''
  Tonight, Mr. Speaker, I am asking my colleagues to join me in doing 
the right thing. Let's take the next step toward solving our Nation's 
pension crisis. Vote for this legislation and strengthen America's 
pension system for the workers of today and of tomorrow.
  Mr. GEORGE MILLER of California. Mr. Speaker, I continue to reserve 
the balance of my time.
  Mr. McKEON. Mr. Speaker, I yield 1 minute to the chairman of the Ways 
and Means Committee, Mr. Thomas.
  Mr. THOMAS. I thank the gentleman very much.
  Mr. Speaker, of necessity, this bill, H.R. 4, governing pension rules 
is very complex. A detailed, plain-English explanation is available 
from the Joint Committee on Taxation and will be a key resource in 
understanding the intent underlying the bill's provisions and, 
therefore, obviously of the legislative intent behind the bill.
  Mr. McKEON. I am happy to yield 3 minutes to a subcommittee chairman 
of the Education Committee, a member of the conference committee, a 
good friend of mine from Texas, a hero of this country, Mr. Sam 
Johnson.
  Mr. SAM JOHNSON of Texas. Thank you, Mr. Chairman, for that time.
  I normally don't do this, but I rise in opposition to this pension 
bill on which I am a conferee. The original House pension bill had no 
specific industry relief. In the House bill we did not pick winners and 
losers.
  However, the Senate bill did contain specific airline industry 
relief. The four legacy carriers that maintain pension plans were all 
treated the same. Within that industry, there was no picking winners 
and losers. Yet this bill that we are debating chooses to favor two 
bankrupt airlines, Delta and Northwest. I appreciate the comments 
previous on Northwest. I think they need the help. It gives them extra 
relief for having run their pension plans even into the ground.
  The two airlines that are not threatening the retirement security of 
their employees, American and Continental, are being punished for 
having gotten wage and benefit concessions from their employees during 
very hard-fought, but successful, negotiations. American Airlines has 
been working closely with their pilots, flight attendants, and ground 
crews to be sure that this is an airline that keeps flying and keeps 
its promises to its employees.
  Yet the bill debated here tonight will give Delta and Northwest a 
huge competitive advantage. I will vote against this bill because all 
four legacy carriers should get the same interest rate, I believe, for 
unfunded promises.
  The Senate bill and the draft conference report that has been 
circulated by the Senate would provide for parity for all four airlines 
on the interest rate. Those who support this deal say American and 
Continental are being greedy. I say American and Continental need the 
same interest rate as the other two or they are going to be hundreds of 
millions of dollars at a disadvantage against their direct competitors. 
As a matter of fact, American just reported, I think, somewhere around 
$300 million profit in this year, and $600 million is what they would 
be cost by this bill each year.
  I am standing with the Texas delegation and airlines that keep their 
word. Our Texas airlines have worked hard to keep their word with their 
employees. This Congress must give equal treatment for our major 
airlines.
  I urge a ``no'' vote.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 2 minutes to 
the gentleman from Massachusetts (Mr. Tierney).
  Mr. TIERNEY. I thank the gentleman for yielding.
  Mr. Speaker, I think that there are some provisions in this bill that 
merit our hesitation before we proceed forward on it here tonight. This 
will be the second bill that we have passed in this House on the same 
subject, and both of them have missed opportunities.

[[Page 16439]]

  This bill misses an opportunity to encourage companies to keep 
offering traditional pensions to their employees. As my colleague Mr. 
Neal from Massachusetts said earlier, it could be the demise of the 
defined contribution plan, defined benefit plan for employees, a plan 
that many, many people rely on and the best type of pension/retirement 
plan that people could have. This in the face of a majority of this 
body and a White House that are already intent on attacking and 
privatizing Social Security.
  This bill misses an opportunity to protect taxpayers from footing the 
bill for the bailout of the Pension Benefit Guaranty Corporation. The 
PBGC estimates that this bill will increase its deficit by $2 billion 
over the next 10 years.
  This bill misses an opportunity to prevent companies from using 
bankruptcy to dump workers' pension plans, and we have seen that happen 
too often in a number of instances very recently. We had every 
opportunity to put provisions in this bill that would force companies 
to try alternative means and other financing and ways to stop from 
having to dump their plan into bankruptcy and therefore hurt their 
retirees. We fail to do it in this bill.
  The bill misses an opportunity to save pension benefits for older 
workers by allowing conversion to cash balance plans without protecting 
those that are 45 years or older, and estimates are that they stand to 
lose up to half of the accumulated value in their pension plans.
  And the bill misses an opportunity to stop companies from awarding 
lavish retirement compensation packages to executives at the same time 
they cut workers' benefits. The fact of the matter is that the 
executives that are responsible for driving these plans into the ground 
ought to have their fate and their retirement hooked onto the fate of 
their employees so that they will make sure that these plans succeed 
every possible time.
  And the bill misses an opportunity to protect workers' pension 
assets. The investment advice exemptions in the bill don't adequately 
protect against conflicted investment advice.
  Mr. Speaker, they miss opportunity after opportunity. We can do 
better. Let it go back to conference, let's correct it, and let's come 
out with a good pension plan to protect America's workers.
  Mr. McKEON. I yield to the gentleman from Georgia, a member of the 
committee, for purposes of a unanimous consent request.
  Mr. PRICE of Georgia. Mr. Speaker, I want to commend the leader and 
the chairman for their hard work on this. I rise in support of H.R. 4.
  Mr. McKEON. At this time I would like to yield to my good friend from 
across the aisle, the ranking member of the Transportation Committee, 
Mr. Oberstar, for 2 minutes.
  Mr. OBERSTAR. I thank the gentleman for yielding.
  As the chairman of the Ways and Means committee said earlier, he did 
say that the pension system is broken. I wouldn't say it is quite 
broken, but it does have some cracks. We forget that when ERISA was 
enacted in 1973, it was hailed in particular in my district by my 
predecessor for whom I was administrative assistant as the great 
salvation for iron ore mines that were about to go into bankruptcy and 
for workers whose pension plans would have been lost without PBGC set 
up under ERISA.
  We find now that there are some oversights that should have been 
plugged over the years and failings that should have been corrected. 
But they weren't done. And now we are at a situation where there is an 
opportunity to make an adjustment and that is in the airline sector.
  If the steel industry had been as responsible as I submit Northwest 
Airlines has been and Delta in working with their employees to protect 
the pensions, freeze the pensions, require the company to pay in over a 
period of time, we wouldn't have billions of dollars in unfunded 
liabilities for the steel industry in the PBGC, and we would have more 
steel industry still operating and more workers getting their fair 
pensions.
  Now, the plan that Northwest has set before its workers was 
negotiated with the pilots, the flight attendants and the machinists, 
and they said, We'll freeze the plan, but we'll continue to pay into it 
so that you get the full amount you're entitled to and then we'll 
substitute a defined contribution plan.
  Now, two other carriers, American and Continental, say that is unfair 
to them. But what is unfair to them would be if we do nothing tonight, 
defeat this bill, and then Northwest simply turns over in the month of 
August their pension plan to the PBGC and thousands of employees from 
both Northwest and Delta are out of luck, they lose huge amounts of 
money over the balance of their retirement years, and then American and 
Continental have a real disparity in competition because those 
companies don't have that burden of liability to pay.
  So pass this bill and give those carriers an opportunity to do the 
right thing.
  Mr. McKEON. May I inquire how much time remains.
  The SPEAKER pro tempore. The gentleman from California (Mr. McKeon) 
has 3\1/2\ minutes remaining. The gentleman from California (Mr. George 
Miller) has 10\1/4\ minutes remaining.
  Mr. McKEON. Mr. Speaker, I am happy to yield at this time 2\1/2\ 
minutes to a member of the committee, Mr. Ehlers from Michigan.
  Mr. EHLERS. This is a very complex issue, and we have worked on this 
bill for a considerable amount of time in the Committee on Education 
and the Workforce, of which I am a member.
  I am puzzled, because there is a little confusion on the floor 
tonight about the airlines issue, and I hope I can help to clarify 
that. The impression that has been given, and I have heard it in other 
discussions and not just in this debate, that there is one plan here 
for Northwest and Delta and a different plan here for Continental and 
American Airlines. That is simply not true.
  There are two plans, but it does not specify which airlines. Any of 
the airlines can pick one of the two plans. It is an open choice. One 
plan is for an airline which chooses to freeze their pensions. In that 
case, they will pay what they owe to the PBGC at a certain rate of 
interest over a certain period of time. In the other plan, airlines do 
not have to freeze their pensions and they pay their obligation to the 
PBGC at a certain rate over a certain amount of time.
  Now, those rates and times are different because the two plans are 
different. The liabilities of the airlines are different. But 
Continental or American Airlines can choose to use the frozen plan with 
no problem whatsoever. If they think Northwest and Delta are getting a 
better deal, they can join them. They can freeze their plans and get 
the same repayment rate, same interest rate, same time to repay as 
Northwest and Delta. It is very simple. Two plans, but no airline is 
tied to a particular plan. They can make the choice they wish. In fact, 
Continental is using both plans.
  And so the argument that we are being unfair and are picking winners 
and losers among the airlines simply does not apply in this case. As 
Mr. Oberstar said, this is a fair arrangement which will preserve the 
pension funds for the employees of the airlines and will prevent a 
further load from being assigned to the PBGC, the Pension Benefit 
Guaranty Corporation, which would lose a lot of government money and 
which we may have to bail out if we do not adopt this plan.
  I urge an ``aye'' vote.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield myself such 
time as I may consume.
  Mr. Speaker and Members of the House, this is a complicated piece of 
legislation and Members of the House and Members of the Senate have 
struggled with it for some period of time. That struggle really hasn't 
been completed yet because this legislation was taken from the 
conference committee and it is here tonight to be passed unilaterally 
within the House and be presented to the Senate in the future.
  It is difficult to understand all of the things that have been done 
in this legislation, certainly for the Democratic

[[Page 16440]]

Members of the House since we were not included in this conference 
committee. We were not invited into any of the sessions, nor was the 
information shared with us as it was developed during the conference 
committee because they chose to run it simply on a partisan basis among 
the House conferees.

                              {time}  2230

  But I think it is clear to understand also that this legislation 
does, in fact, as my colleague from Massachusetts said, miss a number 
of opportunities. And that is why we are concerned with it tonight.
  We understand the changes that have been made that allow companies to 
continue to underfund those pension plans and then increase the 
contributions that those plans will have to make in later years, and it 
is pretty clear that as businesses sit down and make the decisions 
about the allocation of resources and they look at those increased 
contributions, the burden will really push them in the direction of 
freezing or terminating their plans. That is why we see the quote that 
was given this last day or so, ``We will see an unprecedented number of 
companies freezing their plans in 2007 because they will recognize the 
difficulties of the new pension regime.'' That comes from the American 
Benefits Council, which deals with so many of these plans, because this 
tilts the table toward the decisions by companies to terminate or to 
freeze those plans.
  And if that happens, of course, we have been warned now, under this 
legislation by the Pension Benefit Guaranty Corporation that as they 
contribute less to those plans and then make that decision, it also 
heightens the likelihood that these underfunding problems will become 
worse, according to this legislation as represented to us by the 
Pension Benefit Guaranty Corporation. And they also make it clear the 
Pension Benefit Guaranty Corporation that absorbs these plans on behalf 
of a safety net paid for by other plans that as they suffer from a huge 
deficit, a $23 billion deficit, they expect that this legislation that 
is before us tonight will add some $2 billion to that deficit over the 
next 10 years.
  But there are other decisions that the conferees could have made or 
that you could have made in drafting this bill as you brought it to the 
floor. You could have erred on the side of working people. You could 
have made a decision that in these plans that are distressed and 
underfunded that we would, in fact, treat the employees and the 
executives alike. But we set two different standards. We said that if 
your plan is not 80 percent funded, then the employees can get no 
additional benefits in terms of their retirement out of that plan. But 
if a plan is only 60 percent funded, executives can continue to draw 
and add on and accrue pension benefits. So we have set two different 
standards here. Both people, I assume, are working very hard for the 
success of that corporation. One is just going to get treated entirely 
differently than the other. It is a matter of simple fairness. A matter 
of simple equity. But when we see the greatest disparities in the 
history of this country for a long time now, when we see these 
disparities, this bill increases those disparities between the 
executives and the employees.
  You could have made a decision not to harm the pilots that were 
harmed after 9/11 because they were forced to retire early. Federal law 
made them retire at 60. Then 9/11 and the high fuel costs come along, 
and that drives United Airlines into bankruptcy, a bankruptcy I didn't 
agree with, but they went into bankruptcy; so you lost 40 percent of 
your pension. PBGC took over their plan, but you lost an additional 
amount because you retired at 60. Those pilots had no chance. We could 
have taken care of them in this bill. One would have thought that that 
was somewhat of a humane thing to do, a compassionate thing to do. They 
were victims of 9/11. They were victims of the downturn in the travel 
economy after 9/11. They were victims of high fuel costs. They did not 
do anything wrong, and Federal law forced them to retire. But we just 
blew off their cause in this legislation.
  The issue of older workers, a missed opportunity there, to make sure, 
as we transition from defined benefits plans to cash balance plans, 
that we would protect the oldest of those workers, the closest to 
retirement, that we would make sure that they would be taken care of 
because, as we know, people who are 55, 60 years old, 5 years from 
retirement, have very little opportunity to accumulate the kind of 
economic resources that are necessary to match the retirement that they 
were expecting. You didn't have to do it. It was recommended by the 
administration.
  The Secretary of Treasury, former Secretary Mr. Snow, said it should 
be done. He said he did it in his corporation at CSX. He voted to do it 
as a member of the board of Verizon. It was done by Honeywell. It was 
done by Wells Fargo Bank. It was a compassionate thing to do. They 
still realized the savings that they wanted by changing their pension 
plans, and I do not object to their doing that. I just thought that we 
could make an effort to try to protect those people who the GAO tells 
us would lose almost half of their benefits with those kinds of 
conversions. But that was not done in this legislation.
  So I really think that we ought to understand that those kinds of 
decisions really do harm a number of people that could have been helped 
in this legislation, a significant number of people that could have 
been helped in this legislation. And we could have done some more to 
try to help keep these plans out of the PBGC.
  We could have also made sure that before people went to bankruptcy in 
the manner in which United did, that they would have made the last 
ditch effort, the kind of effort that we just talked about earlier, 
where airlines made these kinds of efforts to freeze their plans, but 
they did not. But I think before we rush to bankruptcy and then we turn 
these plans over to the PBGC and maybe ultimately to the taxpayer that 
there ought to be a burden, there ought to be a showing, there ought to 
be evidence that, in fact, you made every effort. I am not asking you 
to destroy the company. I am asking you to make the kind of effort that 
we saw others make but they chose not to make it at United, and as a 
result of that, those machinists, those flight attendants, the pilots, 
the ramp workers, and so many others have taken such a serious hit on 
their pension benefits with no ability to recover. So those are my 
objections to this legislation.
  We started this session with an unprecedented attack on Social 
Security. And as people started to look at that attack, and they saw 
the Federal privatization of Social Security, they started to look at 
their own pension plans, and they realized, as what we are doing with 
here today, that their own pension plans are very insecure. There is 
probably no employer in this country that can tell you that that 
pension plan will be there for their employees 75 years from now, 65 
years from now, and be paying out 80 percent of the benefits. So people 
have come to realize that they need retirement security. And I do not 
believe that this legislation provides that kind of security that 
individuals need.
  I recognize the transitions in pension plans. I recognize the changes 
in pension plans. But I really think that this legislation, in many 
ways, was drafted looking in the rear-view mirror as opposed to the 
future of these plans and how we encourage savings and how we encourage 
participation.
  There is no question this legislation deals with some of those 
issues, but I do not believe that we did the kind of job that will 
serve us well in the future.
  And I would encourage Members to oppose this legislation. We will 
have a motion to recommit, a motion that will protect those older 
workers, a motion that will treat those airlines the same. If they all 
freeze their plans, they should get the same number of years to do 
that, and we think it will provide them a greater margin of safety if 
they do that, and provide for that kind of transition and the 
protection of those pension plans as they originally requested, as the 
Senate originally

[[Page 16441]]

voted to do. But the conferees didn't go there, and certainly this 
legislation being offered in the House tonight didn't go there. But 
that will be offered in a few minutes.
  I urge opposition to this legislation.
  Mr. Speaker, I yield back the balance of my time.
  Mr. McKEON. Mr. Speaker, it gives me great pleasure to yield the 
balance of my time to our majority leader, who started this project as 
a subcommittee chairman and then full committee chairman of the 
Education Committee, Mr. Boehner from Ohio.
  Mr. BOEHNER. Mr. Speaker, let me thank my colleague for yielding.
  And, Mr. Miller, let me say hello to you and thank you for your loyal 
opposition. Even though over the last 7 years that we have worked on 
this project together, much of what is in here you should be very proud 
of because you and Mr. Andrews, Mr. Thomas, Mr. McKeon, Mr. Johnson, 
and others, all of us, over the last 6 or 7 years, have spent a lot of 
time bringing this bill together.
  And I am pleased that this bill is on the floor tonight. It could be 
here in a different form. It could be here in a different way. But the 
fact is that we have worked together in a bipartisan way to craft a 
very good bill to protect American workers' pensions.
  Simply put, I think these reforms that we have put in place tonight 
represent the most sweeping changes to America's pension system in 30 
years. And they will ensure that workers and retirees can continue to 
count on their hard-earned retirement benefits. And these reforms, I 
think, deserve the support of every Member in this House.
  Over the past few years, we have seen more and more companies get out 
of their pension system, freeze their pension plan, go bankrupt, turn 
it over to the Pension Benefit Guaranty Corporation, and put the 
pension benefits for American workers in jeopardy. And what we are 
attempting to do tonight, in a bipartisan way, is to protect the 
American workers and the benefits that they have earned and try to make 
sure that the commitments that companies make to their workers are 
kept. And the way to do that is to make sure that we put more money 
into these pension funds.
  Now, my friend from California, who was down here arguing against 
this bill, had a two-sided argument. One, the bill is too strong. We 
are going to require companies to put more money into their pension 
plans, and as a result, they are going to freeze their plans. Yet on 
the other hand, he is complaining that we are not protecting the 
interests of the American worker. Now, we spent years on this, both of 
us together, and we know the only way you get there is to walk a very 
fine line, to make sure that promises made to American workers are 
kept, that plans are better funded, and that we try to prevent a 
taxpayer bailout of the Pension Benefit Guaranty Corporation.
  As my colleague from California said, 7 years ago, when I was bounced 
out of the Republican leadership after the 1998 election, I became 
chairman of the Employer-Employee Relations Subcommittee of the 
Education and the Workforce Committee, a subcommittee most of you have 
never heard of. And my ranking member was my good friend from New 
Jersey, Mr. Andrews, and we began a series of hearings in 1999 to 
uncover what was happening in the pension system in America today. And 
we had dozens of hearings and worked hard. And some of the things that 
we learned, I think we have dealt with very comprehensively in this 
bill.
  The bill ensures that employers better fund their pension plans. It 
closes loopholes that allow underfunded plans to skip their pension 
payments. It prohibits employers and union leaders from digging the 
hole even deeper by promising extra benefits when their plans are 
severely underfunded. The bill enhances disclosure to give workers and 
retirees more information about the condition of their own pension fund 
that they are a member of. It protects taxpayers from a multi-billion 
dollar bailout of the Pension Benefit Guaranty Corporation. It better 
protects multi-employer pension plans for both workers and the 
employers who fund them. And it gives access to critical investment 
advice for those who have 401(K) plans and IRAs.
  I want to also mention the last issue, the fact that one of the 
issues I have worked on for these 7 years and never given up on is 
trying to get critical investment advice into those who have self-
directed plans. My colleague from Massachusetts sits over there with a 
smile on his face because we worked on this together, although he 
disagrees with me. He is still my friend. But helping those who have to 
make decisions in their 401(k) plan or their IRA is critically 
important if we want to help them get the type of retirement security 
that they want for themselves. We all know that many of these plans are 
underfunded.
  There is not enough diversification in their portfolios, and if we 
don't get real investment advice and personalized investment advice 
into their hands, we know they are not going to have the type of 
retirement that they are expecting. Thankfully, those provisions are 
included in this bill to help make sure that investment advice gets 
there.
  Another big issue is bringing legal certainty to those cash balance 
plans, these hybrid plans. It is not a defined benefit plan; it is not 
a 401(K). And over 2,000 companies in America today have these hybrid 
pension plans, and they are in some legal jeopardy. And I think we have 
struck the right balance in this legislation to protect the interest of 
older workers that are in defined benefit plans as these conversions 
take place.
  Now, not every Member favors every provision of this bill, as my 
friend from California pointed out. And if I had to write this bill 
myself, it would be different than what we see today. The fact is that 
I think we have made good on our promise to help American workers keep 
their retirement benefits they have earned, to make sure that those 
commitments are kept.
  I want to thank my friend from California, Chairman Bill Thomas, whom 
I have worked on this proposal with for the last 5 years. We all know 
Bill is a sweet, lovable human being. This is his last year as chairman 
of the Ways and Means Committee. And I have got to tell you that all of 
us in the House, whether we agree with Bill or disagree with Bill every 
day, Bill is someone who works hard, puts his mind to it, and no one 
has worked harder in bringing this bill to the floor tonight than my 
colleague and friend from California, Mr. Thomas.

                              {time}  2245

  Also I want to thank Chairman McKeon, the man who took my place as 
Chairman of the Education and Workforce Committee some 6 months ago, 
for his hard work.
  I want to thank my staff. Stacey Dion, Stacey, everybody that has 
worked on this knows Stacey. She has been one of the principal authors 
of this. I want to thank Paula Nowakowski, Jo-Marie St. Martin, Kevin 
Smith, Mike Sommers, Greg Maurer, Dave Schnittger and George Canty on 
my staff for all of their work on this bill now and in the past.
  I also have to thank some of my former staff on the Education and the 
Workforce Committee, Ed Gilroy, Steve Forde, Jim Paretti and Steve 
Perrotta, for all of the work they have done continuing to assist not 
only me when I was chairman, but Mr. McKeon as well.
  Let me also thank the staff from the Ways and Means Committee and our 
Democrat staff who have worked hard over many years to get us to this 
point.
  This is a very important bill. I think all of my colleagues on both 
sides of the aisle know it is a very important bill.
  When we started this process, Mr. Andrews and I in 1999, it wasn't 
many months into this when we asked ourselves, why haven't these laws 
been cleaned up and straightened out? Well, Mr. Andrews, I can tell 
you, I found out why, because it is hard work and there are a lot of 
people who have a lot of different interests.
  But at the end of the day, the work that we started I think is going 
to pay dividends tonight, because what we have here is a process and a 
product that has been developed together that

[[Page 16442]]

will in fact meet the goals that we set out to do. And it wouldn't have 
happened without the work of a lot of Members on both sides of the 
aisle.
  With that, Mr. Speaker, I ask my colleagues to support this bill, to 
defeat the motion to recommit, and move this bill to the Senate and on 
to the President's desk.
  Mr. BLUMENAUER. Mr. Speaker, there is probably no issue of more 
critical interest to the majority of the people that I represent than 
retirement security. We are facing a growing crisis in this country 
because of the way pension plans have been mismanaged and the stresses 
that are coming from demographic changes, in particular the pending 
retirement of the baby-boomers. We've already seen many of these 
programs disrupted to the serious disadvantage of hardworking men and 
women who through no fault of their own are facing a much more 
difficult time in retirement.
  I am sad in this instance that this bill does not make the simple 
adjustment that all employees' pensions are treated the same whether 
they are an executive or metalworker or longshoreman. That would have 
been a simple reform providing equity and would have forced more 
attention and energy on the part of top executives to protect the 
integrity of their pension programs. However this is not the case.
  I am frustrated that this comes at the last minute with little chance 
for review and without the full participation from conferees on both 
sides of the aisle. Frankly, my staff and I and the people in my 
district have had very little time to be able to fully analyze the 
consequences of this legislation. This is not the best we can do, but 
it looks to me like it's the best we can expect for now. I am quite 
confident this is not the last word and I will vote in favor while 
continuing to work to do a better job for American industry and its 
workers.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise in opposition to H.R. 
4, the Pension Protection Act of 2005. I support the Miller/Rangel 
motion for several reasons. Specifically, I oppose the bill because I 
am not satisfied that it adequately protects older workers' benefits in 
cash balance conversions and ensures that airline pilots do not see 
unfair cuts to their PBGC benefits because of the FAA's mandatory 
retirement rules and agree to the Senate provisions on airlines. I 
believe the bill can be designed better to prevent pension plan dumping 
and to treat equally executive compensation and worker and executive 
pensions equally.


     PROVISIONS PROTECTING OLDER WORKERS' BENEFITS IN CASH BALANCE 
                              CONVERSIONS

  These provisions prohibit discrimination against older workers by the 
practice of offsetting previously earned pension benefits against new 
benefits under the plan, also known as ``wearaway'' of older worker 
benefits. They also provide fair rules to protect workers' pensions in 
conversions of traditional pension plans to cash balance pension plans. 
In a recent study, the GAO found that, without these transition 
protections, almost all workers could lose up to 50 percent of their 
expected pension benefits in a cash balance conversion.


 PROVISIONS THAT ENSURE THAT AIRLINE PILOTS DO NOT SEE UNFAIR CUTS TO 
  THEIR PBGC BENEFITS BECAUSE OF THE FAA's MANDATORY RETIREMENT RULES

  Under FAA rules, airline pilots are required to retire at age 60, and 
if they retire earlier than age 60, they cannot go back to work once 
they hit age 60. When a pilot pension plan is terminated and sent to 
the PBGC, the PBGC considers age 65 to be the normal retirement age, 
treats age 60 as an early retirement, and cuts pilots guaranteed 
benefits as a result. These provisions would require the PBGC to treat 
age 60 as the normal retirement age for pilots and adjust their 
guaranteed benefits accordingly. The motion would limit this treatment 
to those pension plans which were terminated after September 11, 2001. 
It could come no sooner. United Airlines pilots are seeing their 
pensions cut by tens of thousands of dollars each year under the PBGC 
rules. Their retirement nest eggs have been decimated. They are hit 
twice--once by the company's unfair dumping and again by the PBGC's 
benefit reductions.


                         PROTECTION OF AIRLINES

  The airlines have been hurt by skyrocketing fuel prices and 9/11. It 
would be devastating to hundreds of thousands of workers across the 
Nation if more airlines are permitted to dump their plans into the 
PBGC. These provisions give airlines the ability to keep their plans 
going by stretching out payments over 20 years instead of 7 years.


          PROVISIONS DESIGNED TO PREVENT PENSION PLAN DUMPING

  These provisions allow the PBGC and Treasury Secretary to enter into 
an alternative funding agreement with an employer if its pension plan 
is in danger of being terminated. If workers and retirees are facing 
the destruction of their pension plans, Congress should give the PBGC 
and Treasury Departments the flexibility to work out alternatives to 
termination. If such alternatives to simply dumping a plan were 
available during the United Airlines crisis, the largest pension 
termination in history might have been averted.


   PROVISIONS ON EXECUTIVE COMPENSATION AND WORK TO TREAT WORKER AND 
                       EXECUTIVE PENSIONS EQUALLY

  Under the House bill, workers see benefit restrictions when a pension 
plan falls below 80 percent funding. Executives, on the other hand, 
only see limited benefit restrictions much later--at less than 60 
percent funding. The Senate bill achieves greater parity than the House 
bill in how workers and executives are treated. Over the last several 
years, we have seen repeated cases where executives have protected or 
even enhanced their own golden parachutes, while cutting or eliminating 
workers' pensions. It is time for these unfair practices to end. If it 
is good enough for the sailor, it is good enough for the captain.


                               CONCLUSION

  For these reasons, I oppose H.R. 4 and urge my colleagues to join me.
  Mr. KIND. Mr. Speaker, I rise in support of the legislation before us 
tonight. The Pension Benefit Guaranty Corporation, PBGC, is dangerously 
underfunded, current pension law is antiquated, and this Congress must 
do all it can to shore up America's private pension system.
  The bill addresses the concerns of both workers and employers and 
makes necessary changes to shore up the Federal pension system. Among 
the welcomed reforms are greater transparency and accountability in the 
PBGC, the special consideration given to airlines, and the overall 
tightening of rules so that companies will meet their financial 
obligations to their employees and retirees.
  As a cochair of the New Democrat Coalition, I believe it is important 
to reform pensions so that promises to workers are kept, taxpayers are 
not left footing the bill, and companies can continue to be good actors 
and offer pension plans. In addition, any discussion of pension reform 
must include an increased emphasis on personal responsibility.
  Americans are not saving enough for retirement. In fact, the national 
savings rate is at its lowest level since the 1930s, declining from 9.4 
percent in 1970 to just 1 percent in 2004. In response to these weak 
savings rates, we need to create new, simpler incentives for middle-
class Americans to save. Fewer than 40 percent of U.S. workers have 
calculated how much they will need to retire, 30 percent have not saved 
anything for retirement, and only 20 percent feel very confident about 
having enough money to live comfortably in retirement. Therefore, I am 
pleased by provisions in this bill making the saver's credit permanent 
and encouraging automatic enrollment in 401Ks.
  This legislation makes the necessary reforms to strengthen the 
Federal pension system to the benefit of workers, retirees and 
taxpayers alike.
  Mr. LEVIN. Mr. Speaker, House Republicans are bringing this bill, 
rather than a final conference report, for one reason and one reason 
only--to prevent the inclusion of long-overdue provisions to extend 
important business tax credits that reward things like research and 
development and efforts to hire low-wage workers. Those credits expired 
7 months ago and are now hostage to the Republican quest to pass tax 
cuts for a tiny number of incredibly wealthy families. That is an 
outrage.
  However much I deplore the process by which this bill was rushed to 
the floor, and however flawed it may be, it does include some 
critically important and very time-sensitive provisions, and its worst 
elements have been significantly improved since the original Bush 
administration proposal. For that reason, I have decided to vote in 
favor of this bill.
  The bill includes provisions which must be enacted quickly if we hope 
to save pension benefits for large numbers of workers in the airline 
industry and in the building trades and other industries with multi-
employer pension plans.
  Without a provision in this bill which would give airlines more time 
to fully fund their pension plans, Northwest Airlines has said it will 
have to terminate its pension plan and turn it over to the Federal 
Pension Benefit Guaranty Corporation. That's a bad outcome for 
everyone. It's a bad outcome for Northwest employees, because many of 
them will not receive their full earned pensions if that happens. It's 
a bad outcome for taxpayers, because we will assume Northwest's debt, 
even though the company is eager to pay it, given time.
  The bill also includes long-overdue reforms to multi-employer pension 
plan law. These

[[Page 16443]]

long-overdue reforms will allow multi-employer pension plans to address 
what for some plans is a short-term funding crisis, and will give all 
plans flexibility they didn't have before to advance fund and guard 
against a future crisis. Republican leaders unfairly dropped multi-
employer pension plan reform from the pension reform bill that 
addressed similar problems for single-employer plans several years ago.
  This final bill also represents a substantial improvement over the 
original proposal put forth by the Bush administration, and the bills 
that passed the House and Senate. Under the improved bill:
  Companies will be spared the extreme funding unpredictability 
proposed by the Bush administration, which advocated forcing companies 
to respond to every short-term fluctuation in interest rates and 
workforce composition, without any ``smoothing'' of interest rates at 
all.
  A provision which would have unfairly classified pension plans as 
``at risk'' and subject to penalty if the company had a poor credit 
rating, even if the plan itself was well-funded, has been removed. That 
provision might have forced companies like General Motors to divert 
resources from addressing business challenges and into an already well-
funded pension plan.
  Plans will be allowed to amortize both gains and losses in their 
pension plans over time, and will be able to use accurate assumptions 
about early retirement to predict future liabilities so that the plans 
are properly funded.
  The flawed Bush administration proposal to deny all workers plant 
shutdown benefits was mitigated, though not removed, and the conferees 
adopted provisions from the Senate bill which we hope will prevent 
employers from using pension plan underfunding as a tactic to cut 
retirement benefits negotiated in collective bargaining.
  Despite my decision to support the bill and address immediate needs, 
I must admit I continue to have deep reservations about this bill's 
long-term impact on our defined benefit pension system, which provides 
guaranteed retirement income for millions of Americans. Knowing how 
committed President Bush and his allies in the House are to Social 
Security privatization increases my concerns, especially given the way 
this bill came to the House floor.
  The final bill includes fundamental changes to the way companies 
determine their contributions to pension plans. The new ``yield curve'' 
methodology proposed by the Bush administration is completely untested, 
and is likely to make required pension obligations much more 
unpredictable. Many companies have suggested that this new 
unpredictability may be the final straw that leads them to terminate 
their guaranteed pension plans.
  The final bill includes a requirement that companies subtract credit 
balances they earned by making advance pension contributions before 
calculating their plan funding level, a change which will provide a 
strong disincentive to advance fund, since advance contributions will 
be treated as if they don't exist in the future. Advance funding is 
critical if companies are to balance the need to fully fund retirement 
benefits with the need to direct resources to current operations in 
difficult times.
  The final bill included provisions which may make workers pay the 
price when companies don't fund their pensions, including provisions 
which restrict benefits for workers when plants shut down and a 
dangerous provision which would allow deeply underfunded multiemployer 
pension plans to cut benefits that workers have already earned. The 
bill also misses a real opportunity to enact better protections for 
workers whose companies declare bankruptcy and terminate their pension 
plans.
  I regret that this bill was not crafted in a Congress that genuinely 
believed in guaranteed retirement benefits and preserving them for the 
future. There is much bad with the good, and much of the effort that 
went into this bill was directed toward mitigating problems with the 
original bill, rather than addressing real problems with retirement 
security. I hope that in the next Congress, we will be in a position to 
pass legislation that will strengthen retirement security for all 
workers.
  Mr. TIBERI. Mr. Speaker, H.R. 4 provides significant reforms of ERISA 
prohibited transaction rules. These new exemptions are in addition to 
exemptions that have already been granted by the Secretary of Labor or 
are included in the ERISA statute.
  I am supportive of the relief for the use of electronic communication 
networks and similar trading venues. This reflects the availability of 
new technology to make trading more efficient. ERISA plans are 
incurring higher execution costs because of the difficulty of sending 
ERISA plan trades to electronic trading systems. Greater access to 
electronic trading can provide ERISA plan participants with the same 
benefits that are available to non-ERISA plans and other institutional 
investors.
  The legislation requires plan fiduciary authorization and prior 
notice before an ECN or similar trading venue can be used if the 
manager or his affiliate has an ownership interest in the trading 
venue. However, it recognizes that prior notice and authorization is 
not required for exchanges or venues where a manager or its affiliate 
have an ownership interest that is insignificant, such as under 10 
percent. In addition, as under current law, a transaction executed on 
an exchange or automated public quotation system will not result in a 
prohibited transaction, even if it is owned in part by an affiliate of 
an investment manager.
  Ms. McCOLLUM of Minnesota. Mr. Speaker, I support final passage of 
this pension legislation because we must do something today to protect 
working families so that the pension promises that were made to them 
are honored. I am proud today to stand with the employees and groups 
who are in support of this legislation, including the Affliated Unions 
of the Building and Construction Trades Department, AFL-CIO, 
International Association of Machinists, UNITE/HERE, the United 
Brotherhood of Carpenters and Joiners of America, and many others. And, 
I join with all of my Republican and Democratic colleagues from the 
Minnesota delegation in broad bipartisan support for this bill.
  Without this legislation, Northwest Airlines, a major Minnesota-based 
employer and key player in the economic vitality of the region, will 
not be able to come out of bankruptcy with its pension plans intact. I 
support this legislation because it will help to ensure Northwest 
Airlines keeps flying and that their employees can keep working and 
ensure that their pensions are funded.
  This bill is not perfect. In addition to much needed relief for 
airline employees, this bill includes provisions that will make it 
easier for working families to save for their retirements by 
encouraging automatic enrollment in retirement savings. It is critical 
that families are supported in their efforts to create a strong 
foundation of savings for their futures.
  Working men and women have waited far too long for Congress to pass 
legislation to protect pension benefits and to honor the promise of 
pensions. Pension legislation should have been done many months ago. 
This Congress's failure to act in a more timely way will potentially 
make worse current and future employer bankruptcies and will impact the 
strength of all retirement benefits. It is shameful that this 
Republican Congress has put partisan politics ahead of the well-being 
of working men and women and those who have already retired.
  I am concerned that this pension bill before us today has been 
introduced with no notice and there has been no opportunity for Members 
to review the provisions. Instead of bringing forward the bill that 
Congress has been working on now for more than a year, House 
Republicans have brought this bill forward.
  It is outrageous that House Democrats were excluded in the conference 
committee negotiations between the House and the Senate. After missing 
three deadlines to complete their work, House Republicans, instead, 
were more interested in thinking of ways to attach their extreme tax 
cuts for America's wealthiest onto what should have been clean, common 
sense, bipartisan legislation. Their tactics were so extreme that their 
colleagues in the Senate were unwilling to go along with it. So, here 
we are now at the eleventh hour doing what we can to salvage pension 
legislation.
  Today, I wish I were rising to support passage of a bill that will 
guarantee quick action to save the pensions of millions of workers, but 
instead, once again, partisan politics will slow down the much needed 
action on pension reform. Even with House passage of the bill, we can't 
guarantee anything to America's workers because this legislation was 
taken from the conference committee and now it must pass the Senate 
with no changes in order for it to move to the President's desk for his 
approval. If the Senate wants to change anything in the bill, American 
workers will have to continue to wait for Congress to act.
  I do share some of the concerns expressed by my colleagues. There are 
some missed opportunities--including the failure to address executive 
compensation and provisions concerning the investment advice for those 
who have 401(K) plans and IRAS. The investment advice exemptions in the 
bill do not adequately protect against conflicted investment advice.
  Despite some legitimate reservations voiced by groups I respect, this 
bill contains good provisions--important provisions that must be passed 
now so that employers can keep the pension promises made to their 
employees.
  The SPEAKER pro tempore. All time for debate has expired.

[[Page 16444]]

  Pursuant to House Resolution 966, the bill is considered read and the 
previous question is ordered.
  The question is on the engrossment and third reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.


     Motion to Recommit Offered by Mr. George Miller of California

  Mr. GEORGE MILLER of California. Mr. Speaker, I offer a motion to 
recommit.
  The SPEAKER pro tempore. Is the gentleman opposed to the bill?
  Mr. GEORGE MILLER of California. I am in its current form.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  The Clerk read as follows:

       Mr. George Miller of California moves to recommit the bill 
     H.R. 4 to the Committee on Education and the Workforce with 
     instructions to report the same back to the House forthwith 
     with the following amendment:
       At the end of title I add the following:

               Subtitle C--Age Requirement for Employers

     SEC. 121. AGE REQUIREMENT FOR EMPLOYERS.

       (a) Single-Employer Plan Benefits Guaranteed.--Section 
     4022(b) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1322(b)) is amended in the flush matter 
     following paragraph (3), by adding at the end the following: 
     ``If, at the time of termination of a plan under this title, 
     regulations prescribed by the Federal Aviation Administration 
     require an individual to separate from service as a 
     commercial airline pilot after attaining any age before age 
     65, paragraph (3) shall be applied to an individual who is a 
     participant in the plan by reason of such service by 
     substituting such age for age 65.''.
       (b) Multiemployer Plan Benefits Guaranteed.--Section 
     4022B(a) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1322b(a)) is amended by adding at the end the 
     following: ``If, at the time of termination of a plan under 
     this title, regulations prescribed by the Federal Aviation 
     Administration require an individual to separate from service 
     as a commercial airline pilot after attaining any age before 
     age 65, this subsection shall be applied to an individual who 
     is a participant in the plan by reason of such service by 
     substituting such age for age 65.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to benefits payable on or after the date of 
     enactment of this Act, but only with respect to plan 
     terminations occurring after September 11, 2001.
       Strike section 402 and insert the following:

     SEC. 402. SPECIAL FUNDING RULES FOR PLANS MAINTAINED BY 
                   COMMERCIAL AIRLINES THAT ARE AMENDED TO CEASE 
                   FUTURE BENEFIT ACCRUALS.

       (a) In General.--If an election is made to have this 
     section apply to an eligible plan--
       (1) in the case of any applicable plan year beginning 
     before January 1, 2007, the plan shall not have an 
     accumulated funding deficiency for purposes of section 302 of 
     the Employee Retirement Income Security Act of 1974 and 
     sections 412 and 4971 of the Internal Revenue Code of 1986 if 
     contributions to the plan for the plan year are not less than 
     the minimum required contribution determined under subsection 
     (d) for the plan for the plan year, and
       (2) in the case of any applicable plan year beginning on or 
     after January 1, 2007, the minimum required contribution 
     determined under sections 303 of such Act and 430 of such 
     Code shall, for purposes of sections 302 and 303 of such Act 
     and sections 412, 430, and 4971 of such Code, be equal to the 
     minimum required contribution determined under subsection (d) 
     for the plan for the plan year.
       (b) Eligible Plan.--For purposes of this section--
       (1) In general.--The term ``eligible plan'' means a defined 
     benefit plan (other than a multiemployer plan) to which 
     sections 302 of such Act and 412 of such Code applies--
       (A) which is sponsored by an employer--
       (i) which is a commercial airline passenger airline, or
       (ii) the principal business of which is providing catering 
     services to a commercial passenger airline, and
       (B) with respect to which the requirements of paragraphs 
     (2) and (3) are met.
       (2) Accrual restrictions.--
       (A) In general.--The requirements of this paragraph are met 
     if, effective as of the first day of the first applicable 
     plan year and at all times thereafter while an election under 
     this section is in effect, the plan provides that--
       (i) the accrued benefit, any death or disability benefit, 
     and any social security supplement described in the last 
     sentence of section 411(a)(9) of such Code and section 
     204(b)(1)(G) of such Act, of each participant are frozen at 
     the amount of such benefit or supplement immediately before 
     such first day, and
       (ii) all other benefits under the plan are eliminated,

     but only to the extent the freezing or elimination of such 
     benefits would have been permitted under section 411(d)(6) of 
     such Code and section 204(g) of such Act if they had been 
     implemented by a plan amendment adopted immediately before 
     such first day.
       (B) Increases in section 415 limits disregarded.--If a plan 
     provides that an accrued benefit of a participant which has 
     been subject to any limitation under section 415 of such Code 
     will be increased if such limitation is increased, the plan 
     shall not be treated as meeting the requirements of this 
     paragraph unless, effective as of the first day of the first 
     applicable plan year and at all times thereafter while an 
     election under this section is in effect, the plan provides 
     that any such increase shall not take effect. A plan shall 
     not fail to meet the requirements of section 411(d)(6) of 
     such Code and section 204(g) of such Act solely because the 
     plan is amended to meet the requirements of this 
     subparagraph.
       (3) Restriction on applicable benefit increases.--
       (A) In general.--The requirements of this paragraph are met 
     if no applicable benefit increase takes effect at any time 
     during the period beginning on July 26, 2005, and ending on 
     the day before the first day of the first applicable plan 
     year.
       (B) Applicable benefit increase.--For purposes of this 
     paragraph, the term ``applicable benefit increase'' means, 
     with respect to any plan year, any increase in liabilities of 
     the plan by plan amendment (or otherwise provided in 
     regulations provided by the Secretary) which, but for this 
     paragraph, would occur during the plan year by reason of--
       (i) any increase in benefits,
       (ii) any change in the accrual of benefits, or
       (iii) any change in the rate at which benefits become 
     nonforfeitable under the plan.
       (4) Exception for imputed disability service.--Paragraphs 
     (2) and (3) shall not apply to any accrual or increase with 
     respect to imputed service provided to a participant during 
     any period of the participant's disability occurring on or 
     after the effective date of the plan amendment providing the 
     restrictions under paragraph (2) if the participant--
       (A) was receiving disability benefits as of such date, or
       (B) was receiving sick pay and subsequently determined to 
     be eligible for disability benefits as of such date.
       (c) Elections and Related Terms.--
       (1) In general.--A plan sponsor shall make the election 
     under subsection (a) at such time and in such manner as the 
     Secretary of the Treasury may prescribe. Except as provided 
     in subsection (h)(5), such election, once made, may be 
     revoked only with the consent of such Secretary.
       (2) Years for which election made.--
       (A) In general.--The plan sponsor may select the first plan 
     year to which the election under subsection (a) applies from 
     among plan years ending after the date of the election. The 
     election shall apply to such plan year and all subsequent 
     years.
       (B) Election of new plan year.--The plan sponsor may 
     specify a new plan year in the election under subsection (a) 
     and the plan year of the plan may be changed to such new plan 
     year without the approval of the Secretary of the Treasury.
       (3) Applicable plan year.--The term ``applicable plan 
     year'' means each plan year to which the election under 
     subsection (a) applies under paragraph (1).
       (d) Minimum Required Contribution.--
       (1) In general.--In the case of any applicable plan year 
     during the amortization period, the minimum required 
     contribution shall be the amount necessary to amortize the 
     unfunded liability of the plan, determined as of the first 
     day of the plan year, in equal annual installments (until 
     fully amortized) over the remainder of the amortization 
     period. Such amount shall be separately determined for each 
     applicable plan year.
       (2) Years after amortization period.--In the case of any 
     plan year beginning after the end of the amortization period, 
     section 302(a)(2)(A) of such Act and section 412(a)(2)(A) of 
     such Code shall apply to such plan, but the prefunding 
     balance as of the first day of the first of such years under 
     section 303(f) of such Act and section 430(f) of such Code 
     shall be zero.
       (3) Definitions.--For purposes of this section--
       (A) Unfunded liability.--The term ``unfunded liability'' 
     means the unfunded accrued liability under the plan, 
     determined under the unit credit funding method.
       (B) Amortization period.--The term ``amortization period'' 
     means the 20-plan year period beginning with the first 
     applicable plan year.
       (4) Other rules.--In determining the minimum required 
     contribution and amortization amount under this subsection--
       (A) the provisions of section 302(c)(3) of such Act and 
     section 412(c)(3) of such Code, as in effect before the date 
     of enactment of this section, shall apply,
       (B) the rate of interest under section 302(b) of such Act 
     and section 412(b) of such Code, as so in effect, shall be 
     used for all calculations requiring an interest rate, and
       (C) the value of plan assets shall be equal to their fair 
     market value.
       (5) Special rule for certain plan spinoffs.--For purposes 
     of subsection (a), if,

[[Page 16445]]

     with respect to any eligible plan to which this subsection 
     applies--
       (A) any applicable plan year includes the date of the 
     enactment of this Act,
       (B) a plan was spun off from the eligible plan during the 
     plan year but before such date of enactment,

     the minimum required contribution under subsection (a)(1) for 
     the eligible plan for such applicable plan year shall be 
     determined as if the plans were a single plan for that plan 
     year (based on the full 12-month plan year in effect prior to 
     the spin-off). The employer shall designate the allocation of 
     the minimum required contribution between such plans for the 
     applicable plan year and direct the appropriate reallocation 
     between the plans of any contributions for the applicable 
     plan year.
       (e) Funding Standard Account and Prefunding Balance.--Any 
     charge or credit in the funding standard account under 
     section 302 of such Act or section 412 of such Code, and any 
     prefunding balance under section 303 of such Act or section 
     430 of such Code, as of the day before the first day of the 
     first applicable plan year, shall be reduced to zero.
       (f) Amendments to Other Provisions.--
       (1) Qualification requirement.--Section 401(a)(36) of the 
     Internal Revenue Code of 1986, as added by section 402 of 
     this Act, is amended by adding at the end the following: 
     ``This paragraph shall also apply to any plan during any 
     period during which an amortization schedule under section 
     403 of the Pension Security and Transparency Act of 2005 is 
     in effect.''
       (2) PBGC liability limited.--Section 4022 of the Employee 
     Retirement Income Security Act of 1974, as amended by this 
     Act, is amended by adding at the end the following new 
     subsection:
       ``(h) Special Rule for Plans Electing Certain Funding 
     Requirements.--During any period in which an election by a 
     plan under section 403 of the Pension Security and 
     Transparency Act of 2005 is in effect, then this section and 
     section 4044(a)(3) shall be applied by treating the first day 
     of the first applicable plan year as the termination date of 
     the plan. This subsection shall not apply to any plan for 
     which an election under section 403(h) of such Act is in 
     effect.''.
       (3) Limitation on deductions under certain plans.--Section 
     404(a)(7)(C)(iii) of the Internal Revenue Code of 1986, as 
     added by this Act, is amended by adding at the end the 
     following new sentence: ``This clause shall also apply to any 
     plan for a plan year if an election under section 403 of the 
     Pension Security and Transparency Act of 2005 is in effect 
     for such year.''
       (4) Notice.--In the case of a plan amendment adopted in 
     order to comply with this section, any notice required under 
     section 204(h) of such Act or section 4980F(e) of such Code 
     shall be provided within 15 days of the effective date of 
     such plan amendment. This subsection shall not apply to any 
     plan unless such plan is maintained pursuant to one or more 
     collective bargaining agreements between employee 
     representatives and 1 or more employers.
       (g) Special Rules for Termination of Eligible Plans.--
     During any period an election is in effect under this section 
     with respect to an eligible plan, the Pension Benefit 
     Guaranty Corporation shall, before it seeks or approves a 
     termination of such plan under section 4041(c) or 4042 of the 
     Employee Retirement Income Security Act of 1974--
       (1) make a determination under section 4041(c)(4) or 
     4042(i) of such Act whether the termination would be 
     necessary if the Secretary of the Treasury were to enter into 
     an agreement under section 4047(a) of such Act which provides 
     an alternative funding agreement to replace the amortization 
     schedule under this section, and
       (2) if the Corporation determines such an agreement would 
     make such termination unnecessary, take all necessary actions 
     to ensure the agreement is entered into.

     The Pension Benefit Guaranty Corporation shall make the 
     determination under paragraph (1) within 90 days of receiving 
     all information needed in connection with a request for a 
     termination (or if no such request is made, within 90 days of 
     consideration of the termination by the Corporation).
       (h) Certain Benefit Accruals and Increases Allowed if 
     Additional Contributions Made To Cover Costs.--
       (1) In general.--If an employer elects the application of 
     this subsection--
       (A) the requirements of paragraphs (2) and (3) of 
     subsection (b) shall not apply with respect to any eligible 
     plan maintained by the employer and specified in the 
     election, and
       (B) the minimum required contribution under subsection (d) 
     for any plan year with respect to the plan shall be increased 
     by the amounts described in paragraphs (2) and (3).

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

 TITLE VII--TREATMENT OF CASH BALANCE AND OTHER HYBRID DEFINED BENEFIT 
                             PENSION PLANS

     SEC. 701. PROSPECTIVE APPLICATION OF AGE DISCRIMINATION, 
                   CONVERSION, AND PRESENT VALUE ASSUMPTION RULES.

       (a) Application of Age Discrimination Prohibitions.--
       (1) Amendment of erisa.--Section 204(b) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1054(b)) is 
     amended by adding at the end the following:
       ``(5) Special rules for cash balance and other hybrid 
     defined benefit plans.--
       ``(A) In general.--A qualified cash balance plan shall not 
     be treated as violating the requirements of paragraph (1)(H) 
     merely because it may reasonably be expected that the period 
     over which interest credits will be made to a participant's 
     accumulation account (or its equivalent) is longer for a 
     younger participant. This paragraph shall not apply to any 
     plan if the rate of any pay credit or interest credit to such 
     an account under the plan decreases by reason of the 
     participant's attainment of any age.
       ``(B) Qualified cash balance plan.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `qualified cash balance plan' 
     means a cash balance plan which meets the vesting requirement 
     under clause (ii) and the interest credit requirement under 
     clause (iii).
       ``(ii) Vesting requirements.--A plan meets the requirements 
     of this clause if an employee who has completed at least 3 
     years

[[Page 16446]]

     of service has a nonforfeitable right to 100 percent of the 
     employee's accrued benefit derived from employer 
     contributions.
       ``(iii) Interest credits.--A plan meets the requirements of 
     this clause if the terms of the plan provide that any 
     interest credit (or equivalent amount) for any plan year 
     shall be at a rate which--

       ``(I) is not less than the applicable Federal mid-term 
     interest rate (as determined under section 1274(d)(1) of the 
     Internal Revenue Code of 1986), and
       ``(II) is not greater than the greater of the rate 
     determined under subclause (I) or a rate equal to the rate of 
     interest on amounts invested conservatively in long-term 
     investment grade corporate bonds.

       ``(iv) Determination of rates.--For purposes of clause 
     (iii)(II), the rate of interest on amounts invested 
     conservatively in long-term investment grade corporate bonds 
     shall be determined by the Secretary of the Treasury on the 
     basis of 2 or more indices that are selected periodically by 
     the Secretary of the Treasury. The Secretary of the Treasury 
     shall make publicly available the indices and methodology 
     used to determine the rate.
       ``(v) Variable rate of interest.--If the interest credit 
     rate under the plan is a variable rate, the plan shall 
     provide that, upon the termination of the plan, the rate of 
     interest used to determine accrued benefits under the plan 
     shall be equal to the average of the rates of interest used 
     under the plan during the 5-year period ending on the 
     termination date.
       ``(C) Cash balance plan.--For purposes of this paragraph, 
     the term `cash balance plan' means a defined benefit plan 
     under which--
       ``(i) the accrued benefit is determined by reference to the 
     balance of a hypothetical accumulation account, and
       ``(ii) pay credits and interest credits are credited to 
     such account.
       ``(D) Regulations to include similar or other hybrid 
     plans.--
       ``(i) Cash balance plan.--The Secretary of the Treasury 
     shall issue regulations which include in the definition of 
     cash balance plan any defined benefit plan (or any portion of 
     such a plan) which has an effect similar to a cash balance 
     plan. Such regulations may provide that if a plan sponsor 
     represents in communications to participants and 
     beneficiaries that a plan amendment results in a plan being 
     described in the preceding sentence, such plan shall be 
     treated as a cash balance plan.
       ``(ii) Qualified cash balance plan.--The Secretary of the 
     Treasury may in the regulations issued under clause (i) 
     provide for the treatment of a cash balance plan as a 
     qualified cash balance plan in cases where the cash balance 
     plan has an effect similar to the qualified cash balance 
     plan.''.
       (2) Age discrimination in employment act.--Section 4(i)(2) 
     of the Age Discrimination of Employment Act of 1967 (29 
     U.S.C. 623(i)(2)) is amended--
       (A) by inserting ``(A)'' after ``(2)'', and
       (B) by adding at the end the following new subparagraph:
       ``(B) A defined benefit plan which is treated as a 
     qualified cash balance plan for purposes of section 204(b)(5) 
     of the Employee Retirement Income Security Act of 1974 shall 
     not be treated as violating the requirements of paragraph 
     (1)(A) merely because it may reasonably be expected that the 
     period over which interest credits will be made under the 
     plan to a participant's accumulation account (or its 
     equivalent) is longer for a younger participant. This 
     subparagraph shall not apply to any plan if the rate of any 
     pay credit or interest credit to such an account under the 
     plan decreases by reason of the participant's attainment of 
     any age.''.
       (3) Amendment of internal revenue code.--Section 411(b) of 
     the Internal Revenue Code of 1986 (relating to accrued 
     benefit requirements) is amended by adding at the end the 
     following:
       ``(5) Special rules for cash balance and other hybrid 
     defined benefit plans.--
       ``(A) In general.--A qualified cash balance plan shall not 
     be treated as violating the requirements of paragraph (1)(H) 
     merely because it may reasonably be expected that the period 
     over which interest credits will be made to a participant's 
     accumulation account (or its equivalent) is longer for a 
     younger participant. This paragraph shall not apply to any 
     plan if the rate of any pay credit or interest credit to such 
     an account under the plan decreases by reason of the 
     participant's attainment of any age.
       ``(B) Qualified cash balance plan.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `qualified cash balance plan' 
     means a cash balance plan which meets the vesting requirement 
     under clause (ii) and the interest credit requirement under 
     clause (iii).
       ``(ii) Vesting requirements.--A plan meets the requirements 
     of this clause if an employee who has completed at least 3 
     years of service has a nonforfeitable right to 100 percent of 
     the employee's accrued benefit derived from employer 
     contributions.
       ``(iii) Interest credits.--A plan meets the requirements of 
     this clause if the terms of the plan provide that any 
     interest credit (or equivalent amount) for any plan year 
     shall be at a rate which--

       ``(I) is not less than the applicable Federal mid-term 
     interest rate (as determined under section 1274(d)(1)), and
       ``(II) is not greater than the greater of the rate 
     determined under subclause (I) or a rate equal to the rate of 
     interest on amounts invested conservatively in long-term 
     investment grade corporate bonds.

       ``(iv) Determination of rates.--For purposes of clause 
     (iii)(II), the rate of interest on amounts invested 
     conservatively in long-term investment grade corporate bonds 
     shall be determined by the Secretary on the basis of 2 or 
     more indices that are selected periodically by the Secretary. 
     The Secretary shall make publicly available the indices and 
     methodology used to determine the rate.
       ``(v) Variable rate of interest.--If the interest credit 
     rate under the plan is a variable rate, the plan shall 
     provide that, upon the termination of the plan, the rate of 
     interest used to determine accrued benefits under the plan 
     shall be equal to the average of the rates of interest used 
     under the plan during the 5-year period ending on the 
     termination date.
       ``(C) Cash balance plan.--For purposes of this paragraph, 
     the term `cash balance plan' means a defined benefit plan 
     under which--
       ``(i) the accrued benefit is determined by reference to the 
     balance of a hypothetical accumulation account, and
       ``(ii) pay credits and interest credits are credited to 
     such account.
       ``(D) Regulations to include similar or other hybrid 
     plans.--
       ``(i) Cash balance plan.--The Secretary shall issue 
     regulations which include in the definition of cash balance 
     plan any defined benefit plan (or any portion of such a plan) 
     which has an effect similar to a cash balance plan. Such 
     regulations may provide that if a plan sponsor represents in 
     communications to participants and beneficiaries that a plan 
     amendment results in a plan being described in the preceding 
     sentence, such plan shall be treated as a cash balance plan.
       ``(ii) Qualified cash balance plan.--The Secretary may in 
     the regulations issued under clause (i) provide for the 
     treatment of a cash balance plan as a qualified cash balance 
     plan in cases where the cash balance plan has an effect 
     similar to the qualified cash balance plan.''.
       (b) Rules Applicable to Accrued Benefits Under Converted 
     Plans.--
       (1) Amendment of erisa.--Section 204(g) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)) is 
     amended by adding at the end the following new paragraph:
       ``(6) Treatment of conversions to cash balance or other 
     hybrid plans.--
       ``(A) In general.--For purposes of this subsection, an 
     applicable plan amendment shall be treated as reducing the 
     accrued benefit of a participant if, under the terms of the 
     plan as in effect after the amendment, the accrued benefit of 
     any participant who was a participant as of the effective 
     date of the amendment may at any time be less than the 
     accrued benefit determined under the method under 
     subparagraph (B), (C), or (D) which is specified in the plan 
     and applies uniformly to all participants. An applicable plan 
     amendment shall in no event be treated as meeting the 
     requirements of any such subparagraph if the conversion 
     described in subparagraph (G)(i) is into a cash balance plan 
     other than a qualified cash balance plan (as defined in 
     subsection (b)(5)(B)).
       ``(B) No wearaway.--
       ``(i) In general.--The accrued benefit determined under 
     this subparagraph is the sum of--

       ``(I) the participant's accrued benefit for years of 
     service before the effective date of the amendment, 
     determined under the terms of the plan as in effect before 
     the amendment, plus
       ``(II) except as provided in clause (ii), the participant's 
     accrued benefit for years of service after the effective date 
     of the amendment, determined under the terms of the plan as 
     in effect after the amendment.

       ``(ii) Required amounts for certain periods.--
     Notwithstanding clause (i)(II), the plan shall provide that 
     either--

       ``(I) the accrued benefit of all participants for each of 
     the first 5 plan years to which the amendment applies shall 
     be equal to the greater of the accrued benefit determined 
     under the terms of the plan as in effect both before and 
     after the amendment, or
       ``(II) the accrued benefit for periods after the effective 
     date of the amendment of all participants who, as of the 
     effective date of the amendment, had attained the age of 40 
     and had a combined age and years of service under the plan of 
     not less than 55 shall be determined under either of the 
     methods described in clause (iii) which is selected by the 
     plan and which is specified in the amendment.

       ``(iii) Applicable method.--For purposes of clause 
     (ii)(II), the plan shall select 1 of the following methods:

       ``(I) The accrued benefit shall be equal to the greater of 
     the accrued benefit determined under the terms of the plan as 
     in effect both before and after the amendment.
       ``(II) At the election of the participant, the accrued 
     benefit shall be determined under the terms of the plan as in 
     effect either before or after the amendment.

       ``(C) Greater of old or new or election of either.--The 
     accrued benefit determined under this subparagraph is the 
     accrued benefit determined under 1 of the following

[[Page 16447]]

     methods which is selected by the plan and which is specified 
     in the amendment:
       ``(i) The accrued benefit shall be equal to the greater of 
     the accrued benefit determined under the terms of the plan as 
     in effect both before and after the amendment.
       ``(ii) At the election of the participant, the accrued 
     benefit shall be determined under the terms of the plan as in 
     effect either before or after the amendment.
       ``(D) Method prescribed by secretary.--The accrued benefit 
     determined under this subparagraph shall be determined under 
     regulations prescribed by the Secretary which are consistent 
     with the purposes of this paragraph and which may require a 
     plan to provide a credit of additional amounts or increases 
     in initial account balances in amounts substantially 
     equivalent to the benefits that would be required to be 
     provided to meet the requirements of subparagraphs (B) or 
     (C).
       ``(E) Inclusion of prior accrued benefit into initial 
     account balance.--
       ``(i) In general.--If, for purposes of subparagraphs (B), 
     (C), or (D), an applicable plan amendment provides that an 
     amount will be initially credited to a participant's 
     accumulation account (or its equivalent) on the effective 
     date of the amendment with respect to the participant's 
     accrued benefit for periods before such date, the 
     requirements of such subparagraph shall be treated as met 
     with respect to such accrued benefit if the amount initially 
     credited is not less than the present value of the 
     participant's accrued benefit determined by using the 
     applicable mortality table and the lower of the applicable 
     interest rate under section 205(g)(3)(A), or the interest 
     rate used to credit interest under the plan, as of such date.
       ``(ii) Adjustments for certain subsidized benefits.--For 
     purposes of subparagraph (B), if any early retirement benefit 
     or retirement-type subsidy (within the meaning of paragraph 
     (6)(B)(i)) is not included in the initial account balance 
     under clause (i), the plan shall credit the accumulation 
     account with the amount of such benefit or subsidy for the 
     plan year in which the participant retires if, as of such 
     time, the participant has met the age, years of service, and 
     other requirements under the plan for entitlement to such 
     benefit or subsidy.
       ``(F) Requirements where participant offered choice.--If a 
     plan provides a participant with an election described in 
     subparagraph (B)(iii)(II) or (C)(ii), the following rules 
     shall apply:
       ``(i) Notice.--The plan shall not be treated as meeting the 
     requirements of either such subparagraph unless the plan 
     provides the participant a notice of the right to make such 
     election which includes information (meeting such 
     requirements as may be prescribed by the Secretary of the 
     Treasury)--

       ``(I) by which the participant may project benefits under 
     the formulas from which the participant may choose and may 
     model the impact of any such choice, and
       ``(II) with respect to circumstances under which a 
     participant may not receive the projected accrued benefits by 
     reason of a plan termination or otherwise.

       ``(ii) Significant reduction of rate of accrual.--The plan 
     shall provide that if, during any of the first 5 plan years 
     during which such an election is in effect, the plan adopts 
     an amendment which results in a significant reduction in the 
     rate of future benefit accrual (within the meaning of section 
     204(h)), the accrued benefit of the participant shall be 
     determined as if the participant had made the election which 
     resulted in the greatest accrued benefit.
       ``(iii) Benefits must not be contingent on election.--The 
     plan shall not be treated as meeting the requirements of 
     either such subparagraph if any other benefit is conditioned 
     (directly or indirectly) on such election.
       ``(G) Applicable plan amendment.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `applicable plan amendment' 
     means an amendment to a defined benefit plan which has the 
     effect of converting the plan to a cash balance plan.
       ``(ii) Special rule for coordinated benefits.--If the 
     benefits of 2 or more defined benefit plans established or 
     maintained by an employer are coordinated in such a manner as 
     to have the effect of the adoption of an amendment described 
     in clause (i), the sponsor of the defined benefit plan or 
     plans providing for such coordination shall be treated as 
     having adopted such a plan amendment as of the date such 
     coordination begins.
       ``(iii) Multiple amendments.--The Secretary of the Treasury 
     shall issue regulations to prevent the avoidance of the 
     purposes of this paragraph through the use of 2 or more plan 
     amendments rather than a single amendment.
       ``(iv) Cash balance plan.--For purposes of this paragraph, 
     the term `cash balance plan' has the meaning given such term 
     by subsection (b)(5)(C).
       ``(v) Coordination with accrual rules.--If a plan amendment 
     is treated as meeting the requirements of this paragraph with 
     respect to any participant because such participant is 
     eligible to continue to accrue benefits in the same manner as 
     under the terms of the plan in effect before the amendment, 
     the Secretary of the Treasury shall prescribe regulations 
     under which the plan shall not be treated as failing to meet 
     the requirements of subparagraph (A), (B), or (C) of section 
     204(b)(1) if the requirements of this paragraph are met.
       ``(H) Application of certain rules to early-retirement 
     benefits.--Rules similar to the rules of clauses (i), (ii), 
     and (iii) of subparagraph (B) and subparagraph (C) shall 
     apply in the case of any early retirement benefit or 
     retirement-type subsidy (within the meaning of section 
     204(g)(2)(A)).''.
       (2) Amendment of internal revenue code.--Section 411(d) of 
     the Internal Revenue Code of 1986 (relating to special rules) 
     is amended by adding at the end the following new paragraph:
       ``(7) Treatment of conversions to cash balance or other 
     hybrid plans.--
       ``(A) In general.--For purposes of paragraph (6), an 
     applicable plan amendment shall be treated as reducing the 
     accrued benefit of a participant if, under the terms of the 
     plan as in effect after the amendment, the accrued benefit of 
     any participant who was a participant as of the effective 
     date of the amendment may at any time be less than the 
     accrued benefit determined under the method under 
     subparagraph (B), (C), or (D) which is specified in the plan 
     and applies uniformly to all participants. An applicable plan 
     amendment shall in no event be treated as meeting the 
     requirements of any such subparagraph if the conversion 
     described in subparagraph (G)(i) is into a cash balance plan 
     other than a qualified cash balance plan (as defined in 
     subsection (b)(5)(B)).
       ``(B) No wearaway.--
       ``(i) In general.--The accrued benefit determined under 
     this subparagraph is the sum of--

       ``(I) the participant's accrued benefit for years of 
     service before the effective date of the amendment, 
     determined under the terms of the plan as in effect before 
     the amendment, plus
       ``(II) except as provided in clause (ii), the participant's 
     accrued benefit for years of service after the effective date 
     of the amendment, determined under the terms of the plan as 
     in effect after the amendment.

     A similar rule shall apply in the case of any early 
     retirement benefit or retirement-type subsidy (within the 
     meaning of section 411(d)(6)(B)(i)).
       ``(ii) Required amounts for certain periods.--
     Notwithstanding clause (i)(II), the plan shall provide that 
     either--

       ``(I) the accrued benefit of all participants for each of 
     the first 5 plan years to which the amendment applies shall 
     be equal to the greater of the accrued benefit determined 
     under the terms of the plan as in effect both before and 
     after the amendment, or
       ``(II) the accrued benefit for periods after the effective 
     date of the amendment of all participants who, as of the 
     effective date of the amendment, had attained the age of 40 
     and had a combined age and years of service under the plan of 
     not less than 55 shall be determined under either of the 
     methods described in clause (iii) which is selected by the 
     plan and which is specified in the amendment.

       ``(iii) Applicable method.--For purposes of clause 
     (ii)(II), the plan shall select 1 of the following methods:

       ``(I) The accrued benefit shall be equal to the greater of 
     the accrued benefit determined under the terms of the plan as 
     in effect both before and after the amendment.
       ``(II) At the election of the participant, the accrued 
     benefit shall be determined under the terms of the plan as in 
     effect either before or after the amendment.

       ``(C) Greater of old or new or election of either.--The 
     accrued benefit determined under this subparagraph is the 
     accrued benefit determined under 1 of the following methods 
     which is selected by the plan and which is specified in the 
     amendment:
       ``(i) The accrued benefit shall be equal to the greater of 
     the accrued benefit determined under the terms of the plan as 
     in effect both before and after the amendment.
       ``(ii) At the election of the participant, the accrued 
     benefit shall be determined under the terms of the plan as in 
     effect either before or after the amendment.
       ``(D) Method prescribed by secretary.--The accrued benefit 
     determined under this subparagraph shall be determined under 
     regulations prescribed by the Secretary which are consistent 
     with the purposes of this paragraph and which may require a 
     plan to provide a credit of additional amounts or increases 
     in initial account balances in amounts substantially 
     equivalent to the benefits that would be required to be 
     provided to meet the requirements of subparagraphs (B) or 
     (C).
       ``(E) Inclusion of prior accrued benefit into initial 
     account balance.--
       ``(i) In general.--If, for purposes of subparagraphs (B), 
     (C), or (D), an applicable plan amendment provides that an 
     amount will be initially credited to a participant's 
     accumulation account (or its equivalent) on the effective 
     date of the amendment with respect to the participant's 
     accrued benefit for periods before such date, the 
     requirements of such subparagraph shall be treated as met 
     with respect to such accrued benefit if the amount initially 
     credited is not less than the present value of the 
     participant's accrued benefit determined by using the 
     applicable mortality table and the lower of the applicable 
     interest rate under section 417(e)(3)(A), or

[[Page 16448]]

     the interest rate used to credit interest under the plan, as 
     of such date.
       ``(ii) Adjustments for certain subsidized benefits.--For 
     purposes of subparagraph (B), if any early retirement benefit 
     or retirement-type subsidy (within the meaning of paragraph 
     (6)(B)(i)) is not included in the initial account balance 
     under clause (i), the plan shall credit the accumulation 
     account with the amount of such benefit or subsidy for the 
     plan year in which the participant retires if, as of such 
     time, the participant has met the age, years of service, and 
     other requirements under the plan for entitlement to such 
     benefit or subsidy.
       ``(F) Requirements where participant offered choice.--If a 
     plan provides a participant with an election described in 
     subparagraph (B)(iii)(II) or (C)(ii), the following rules 
     shall apply:
       ``(i) Notice.--The plan shall not be treated as meeting the 
     requirements of either such subparagraph unless the plan 
     provides the participant a notice of the right to make such 
     election which includes information (meeting such 
     requirements as may be prescribed by the Secretary)--

       ``(I) by which the participant may project benefits under 
     the formulas from which the participant may choose and may 
     model the impact of any such choice, and
       ``(II) with respect to circumstances under which a 
     participant may not receive the projected accrued benefits by 
     reason of a plan termination or otherwise.

       ``(ii) Significant reduction of rate of accrual.--The plan 
     shall provide that if, during any of the first 5 plan years 
     during which such an election is in effect, the plan adopts 
     an amendment which results in a significant reduction in the 
     rate of future benefit accrual (within the meaning of section 
     4980F(e)), the accrued benefit of the participant shall be 
     determined as if the participant had made the election which 
     resulted in the greatest accrued benefit.
       ``(iii) Benefits must not be contingent on election.--The 
     plan shall not be treated as meeting the requirements of 
     either such subparagraph if any other benefit is conditioned 
     (directly or indirectly) on such election.
       ``(G) Applicable plan amendment.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `applicable plan amendment' 
     means an amendment to a defined benefit plan which has the 
     effect of converting the plan to a cash balance plan.
       ``(ii) Special rule for coordinated benefits.--If the 
     benefits of 2 or more defined benefit plans established or 
     maintained by an employer are coordinated in such a manner as 
     to have the effect of the adoption of an amendment described 
     in clause (i), the sponsor of the defined benefit plan or 
     plans providing for such coordination shall be treated as 
     having adopted such a plan amendment as of the date such 
     coordination begins.
       ``(iii) Multiple amendments.--The Secretary shall issue 
     regulations to prevent the avoidance of the purposes of this 
     paragraph through the use of 2 or more plan amendments rather 
     than a single amendment.
       ``(iv) Cash balance plan.--For purposes of this paragraph, 
     the term `cash balance plan' has the meaning given such term 
     by subsection (b)(5)(C).
       ``(v) Coordination with accrual and nondiscrimination 
     rules.--If a plan amendment is treated as meeting the 
     requirements of this paragraph with respect to any 
     participant because such participant is eligible to continue 
     to accrue benefits in the same manner as under the terms of 
     the plan in effect before the amendment, the Secretary shall 
     prescribe regulations under which--

       ``(I) the plan shall not be treated as failing to meet the 
     requirements of subparagraph (A), (B), or (C) of section 
     411(b)(1) if the requirements of this paragraph are met, and
       ``(II) the plan shall, subject to such terms and conditions 
     as may be provided in such regulations, not be treated as 
     failing to meet the requirements of section 401(a)(4) merely 
     because the plan provides any accrual or benefit which is 
     required to be provided under subparagraph (B), (C), or (D) 
     or because only participants as of the effective date of the 
     amendment are so eligible, except that this subclause shall 
     only apply if the plan met the requirements of section 
     401(a)(4) under the terms of the plan as in effect before the 
     amendment.

       ``(H) Application of certain rules to early-retirement 
     benefits.--Rules similar to the rules of clauses (i), (ii), 
     and (iii) of subparagraph (B) and subparagraph (C) shall 
     apply in the case of any early retirement benefit or 
     retirement-type subsidy (within the meaning of section 
     411(d)(6)(B)(i)).''.
       (c) Assumptions Used in Computing Present Value of Accrued 
     Benefit.--
       (1) Amendment of erisa.--Section 205(g)(3) of such Act (29 
     U.S.C. 1055(g)(3)), is amended--
       (A) by striking ``or (B)'' in subparagraph (A)(i) and 
     inserting ``, (B), or (C)'', and
       (B) by adding at the end the following new subparagraph:
       ``(C) Present value of accrued benefit under cash balance 
     plan.--Except as provided in regulations, in the case of a 
     qualified cash balance plan (as defined in section 
     204(g)(6)(B)), the present value of the accrued benefit of 
     any participant shall, for purposes of paragraphs (1) and 
     (2), be equal to the balance in the participant's 
     accumulation account (or its equivalent) as of the time the 
     present value determination is being made.''.
       (2) Amendment of internal revenue code.--Section 417(e)(3) 
     of such Code, is amended--
       (A) by striking ``or (B)'' in subparagraph (A)(i) and 
     inserting ``, (B), or (C)'', and
       (B) by adding at the end the following new subparagraph:
       ``(C) Present value of accrued benefit under cash balance 
     plan.--Except as provided in regulations, in the case of a 
     qualified cash balance plan (as defined in section 
     411(d)(7)(B)), the present value of the accrued benefit of 
     any participant shall, for purposes of paragraphs (1) and 
     (2), be equal to the balance in the participant's 
     accumulation account (or its equivalent) as of the time the 
     present value determination is being made.''
       (d) No Inference.--Nothing in the amendments made by this 
     section shall be construed to infer the proper treatment of 
     cash balance plans or conversions to cash balance plans under 
     sections 204(b)(1)(H) of the Employee Retirement Income 
     Security Act of 1974, 4(i)(1) of the Age Discrimination in 
     Employment Act of 1967, and 411(b)(1)(H) of the Internal 
     Revenue Code of 1986, as in effect before such amendments.

  Mr. GEORGE MILLER of California (during the reading). Mr. Speaker, I 
ask unanimous consent that the motion to recommit be considered as read 
and printed in the Record.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  Mr. THOMAS. Mr. Speaker, reserving the right to object, I know some 
people complained about having only a number of hours to read the bill, 
but this was just handed to me, and I am tempted to say that perhaps 30 
seconds ought to be allowed, because it could have been handed anytime 
during the debate. But I know you were very busy over there, so you 
were only able to get it to us at the close of debate. We appreciate 
that.
  Mr. Speaker, I withdraw my reservation of objection.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  There was no objection.
  The SPEAKER pro tempore. The gentleman is recognized for 5 minutes.
  Mr. GEORGE MILLER of California. Mr. Speaker, this motion does two 
things. First, it sends the pension bill back to committee to include 
all of the airline protection provisions that were included in the 
Senate-passed pension bill. Second, it seeks to send back to the 
committee to add the Senate-passed provisions providing for the 
transition protections for older workers affected by cash balance 
conversions.
  Both of these are critical to protecting America's workers' pensions 
and their retirement security. All across America, employees are 
worried sick about their retirement nest egg. They have seen big 
airlines like U.S. Air and United cut and run on their obligations to 
pay promised benefits and are wondering if they are next.
  The House bill protects Delta and Northwest and enables them to 
extend their pension payments over 17 years at the plan's interest 
rate. However, the bill only provides American and Continental a 10-
year payment and at a much lower interest rate, making their pension 
payments much higher. We would extend the same period of time, work-out 
time, for the airlines if they chose to provide for the freezing of 
their plans.
  The bill does nothing for airline pilots who are forced to retire at 
age 60 and who received PBGC pensions reduced by 35 percent because of 
their age. All airlines were hurt by 9/11 and the skyrocketing fuel 
prices and the downturn in the economy.
  It would be devastating to hundreds of thousands of workers across 
the Nation if more airlines were permitted to dump their plans into the 
PBGC. When this happens, the big losers are the employees. Look at what 
happened to the pilots at United, for example. They had vested pension 
benefits cut in half. The average pilot lost $1,270 a month. That is 
why we offer these protections.
  Finally, the motion would report back this pension bill to provide 
for the protection of older workers who are facing conversions in cash 
balance plans. This means the older workers who the companies are now 
putting on notice that they will lower their benefits will now get a 
substitute plan called a cash balance plan.

[[Page 16449]]

  Despite overwhelming votes in support of protecting older workers' 
pensions in the House and Senate, Republican leadership has excluded 
these vital transition protections. Many workers will lose hundreds of 
dollars a month in expected retirement benefits. Many of these workers 
will be in excess of 50 years of age, and it is highly unlikely they 
will be able to recover the retirement benefits that they have been 
counting on for many years, that they signed a contract for in exchange 
for their labor with their employers.
  Today, the Congress is getting ready to tell them they are not going 
to make the employers live up to their agreements, and we are not going 
to even provide a transition to soften the economic blow when those 
agreements are changed.
  Here is what AARP CEO William Novelli said about the backroom 
Republican deal for older workers: ``AARP cannot support legislation 
that would undermine the age discrimination laws and prevent the 
reduction of pension benefits for older workers, thus discouraging 
older workers from continuing to participate in the workforce,'' unless 
they get a second job to make up for the loss of their retirement, of 
course. ``Our members and older workers in general care a great detail 
about these issues.'' That is why we brought this motion to recommit.
  Again, time and again the House and Senate have voted to provide 
these protections for older workers. We would have carried that message 
to the conference committee, but we were not allowed into those 
discussions and apparently the conference committee couldn't hear the 
Members of this House on the bipartisan basis that voted overwhelmingly 
to provide these protections, both to the airlines and to the older 
workers.
  Mr. Speaker, I yield back the balance of my time.
  Mr. THOMAS. Mr. Speaker, I rise in opposition to the motion to 
recommit.
  The SPEAKER pro tempore. The gentleman is recognized for 5 minutes.
  Mr. THOMAS. Mr. Speaker, I have in high regard those Members who 
focus on issues which they are concerned about in the pension bill, and 
I know that there are a number of sections that people could focus on 
in terms of their concern about the bill. And I know it is absolutely, 
totally a coincidence that one Member on this side of the aisle spoke 
against the bill.
  Yet, as I am going through this particular motion to recommit, page 
after page after page refers to, you got it, the airline provisions. So 
I am quite sure on the basis of wanting to go through a 1,000-page bill 
to create a motion to recommit, that the fact that the one area that 
appears to be a bit sensitive on this side of the aisle is what the 
motion to recommit is all about.
  I guess in that regard I hold in minimum high regard, on something as 
important as this legislation, to get it on the books as quickly as we 
can, that this motion to recommit is focused in a way, in my opinion, 
to advance political interests rather than policy interests.
  I guess I am just a little bit bewildered when the gentleman from 
Ohio, the majority leader, handed me a letter, because as a conferee I 
received a letter that said we want you in the areas of key concern to 
be supportive of what we do in this pension bill.
  There were two signatures on that letter. One was the majority 
leader, the gentleman from Ohio. The other one was the senior Senator 
from Massachusetts, Senator Kennedy, urging us to make sure key 
provisions in the pension bill are preserved, because we want to 
preserve those, and not the whole bill, or in fact send the Senate the 
whole bill because Senator Kennedy will be supportive of this bill once 
it is received in the Senate.
  The idea that members of the conference don't know what is in it and 
aren't supportive is absolutely and totally refuted by the signature of 
the senior Senator from Massachusetts, Senator Kennedy.
  Mr. Speaker, I yield to the majority leader, the gentleman from Ohio 
(Mr. Boehner).
  Mr. BOEHNER. Mr. Speaker, let me thank my colleague for yielding.
  There is a very delicate balance in this bill. My colleague from 
California talked about the airline provisions. I am going to talk 
about one of the most important provisions in this bill, and that is 
the protection for hybrid plans, or cash balance pension plans.
  This was a very difficult issue in the House; it was a very difficult 
issue in the conference. It has been worked out in a bipartisan way to 
the satisfaction of those on the farthest on the left in the Senate and 
the farthest on the right in the House. And to rewrite this provision 
in a motion to recommit I think is irresponsible.
  I would say to my colleagues who have worked on this bipartisan 
pension bill for a long time, the balance of this bill is right. Let's 
support the underlying bill and reject the motion to recommit.
  Mrs. JACKSON-LEE of Texas. Mr. Speaker, I rise in support of the 
Miller/Rangel Motion to Recommit with Instructions to Conferees on H.R. 
4, the ``Pension Protection Act of 2005.'' I support the Miller/Rangel 
motion for several reasons. Specifically, I agree that conferees should 
be instructed to agree to the Senate provisions: (1) protecting older 
workers' benefits in cash balance conversions; (2) ensuring that 
airline pilots do not see unfair cuts to their PBGC benefits because of 
the FAA's mandatory retirement rules and agree to the Senate provisions 
on airlines; (3) designed to prevent pension plan dumping; (4) on 
executive compensation and work to treat worker and executive pensions 
equally.


 AGREE TO THE SENATE PROVISIONS PROTECTING OLDER WORKERS' BENEFITS IN 
                        CASH BALANCE CONVERSIONS

  These provisions prohibit discrimination against older workers by the 
practice of offsetting previously earned pension benefits against new 
benefits under the plan, also known as ``wearaway'' of older worker 
benefits. They also provide fair rules to protect workers' pensions in 
conversions of traditional pension plans to cash balance pension plans. 
In a recent study, the GAG found that, without these transition 
protections, almost all workers could lose up to 50 percent of their 
expected pension benefits in a cash balance conversion.


 AGREE TO THE SENATE PROVISIONS THAT ENSURE THAT AIRLINE PILOTS DO NOT 
 SEE UNFAIR CUTS TO THEIR PBGC BENEFITS BECAUSE OF THE FAA's MANDATORY 
                            RETIREMENT RULES

  Under FAA rules, airline pilots are required to retire at age 60, and 
if they retire earlier than age 60, they cannot go back to work once 
they hit age 60. When a pilot pension plan is terminated and sent to 
the PBGC, the PBGC considers age 65 to be the normal retirement age, 
treats age 60 as an early retirement, and cuts pilots guaranteed 
benefits as a result. These provisions would require the PBGC to treat 
age 60 as the normal retirement age for pilots and adjust their 
guaranteed benefits accordingly. The motion would limit this treatment 
to those pension plans which were terminated after September 11, 2001. 
It could come no sooner. United Airlines pilots are seeing their 
pensions cut by tens of thousands of dollars each year under the PBGC 
rules. Their retirement nest eggs have been decimated. They are hit 
twice--once by the company's unfair dumping and again by the PBGC's 
benefit reductions.


               AGREE TO THE SENATE PROVISIONS ON AIRLINES

  The airlines have been hurt by skyrocketing fuel prices and 9/11. It 
would be devastating to hundreds of thousands of workers across the 
nation if more airlines are permitted to dump their plans into the 
PBGC. These provisions give airlines the ability to keep their plans 
going by stretching out payments over 20 years instead of 7 years.


AGREE TO THE SENATE PROVISIONS DESIGNED TO PREVENT PENSION PLAN DUMPING

  These provisions allow the PBGC and Treasury Secretary to enter into 
an alternative funding agreement with an employer if its pension plan 
is in danger of being terminated. If workers and retirees are facing 
the destruction of their pension plans, Congress should give the PBGC 
and Treasury Departments the flexibility to work out alternatives to 
termination. If such alternatives to simply dumping a plan were 
available during the United Airlines crisis, the largest pension 
termination in history might have been averted.


 AGREE TO THE SENATE PROVISIONS ON EXECUTIVE COMPENSATION AND WORK TO 
              TREAT WORKER AND EXECUTIVE PENSIONS EQUALLY

  Under the House bill, workers see benefit restrictions when a pension 
plan falls below 80 percent funding. Executives, on the other hand, 
only see limited benefit restrictions much later--at less than 60 
percent funding. The Senate bill achieves greater parity than the House 
bill in how workers and executives are treated. Over the last several 
years, we have seen repeated cases where executives

[[Page 16450]]

have protected or even enhanced their own golden parachutes, while 
cutting or eliminating workers' pensions. It is time for these unfair 
practices to end. If it is good enough for the sailor, it is good 
enough for the captain.


                               CONCLUSION

  For these reasons, I support the Motion to Recommit with Instructions 
on H.R. 4 and urge my colleagues to support it also.
  Mr. THOMAS. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. Without objection, the previous question is 
ordered on the motion to recommit.
  There was no objection.
  The SPEAKER pro tempore. The question is on the motion to recommit.
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Mr. GEORGE MILLER of California. Mr. Speaker, on that I demand the 
yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 and clause 9 of rule 
XX, this 15-minute vote on the motion to recommit will be followed by 
5-minute votes on passage of H.R. 4, if ordered, and suspending the 
rules on H. Res. 844.
  The vote was taken by electronic device, and there were--yeas 189, 
nays 222, not voting 22, as follows:

                             [Roll No. 421]

                               YEAS--189

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baird
     Baldwin
     Barrow
     Bean
     Becerra
     Berkley
     Berman
     Berry
     Bishop (NY)
     Blumenauer
     Boren
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brown (OH)
     Brown, Corrine
     Butterfield
     Capps
     Capuano
     Cardin
     Cardoza
     Carnahan
     Case
     Chandler
     Clay
     Cleaver
     Clyburn
     Conyers
     Cooper
     Costa
     Costello
     Cramer
     Crowley
     Cuellar
     Cummings
     Davis (AL)
     Davis (CA)
     Davis (FL)
     Davis (IL)
     Davis (TN)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Dicks
     Doggett
     Doyle
     Edwards
     Emanuel
     Engel
     Eshoo
     Etheridge
     Farr
     Fattah
     Filner
     Ford
     Frank (MA)
     Gonzalez
     Green, Al
     Green, Gene
     Grijalva
     Gutierrez
     Harman
     Hastings (FL)
     Herseth
     Higgins
     Hinchey
     Hinojosa
     Holden
     Holt
     Honda
     Hooley
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick (MI)
     Kind
     Kucinich
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lipinski
     Lofgren, Zoe
     Lowey
     Lynch
     Maloney
     Markey
     Marshall
     Matheson
     Matsui
     McCarthy
     McCollum (MN)
     McDermott
     McGovern
     McIntyre
     McNulty
     Meek (FL)
     Meeks (NY)
     Melancon
     Michaud
     Millender-McDonald
     Miller (NC)
     Miller, George
     Mollohan
     Moore (KS)
     Moore (WI)
     Moran (VA)
     Murtha
     Nadler
     Napolitano
     Neal (MA)
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Paul
     Pelosi
     Peterson (MN)
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Ross
     Rothman
     Roybal-Allard
     Ruppersberger
     Rush
     Ryan (OH)
     Sabo
     Sanchez, Linda T.
     Sanchez, Loretta
     Sanders
     Schakowsky
     Schiff
     Schwartz (PA)
     Scott (VA)
     Serrano
     Sherman
     Skelton
     Slaughter
     Smith (WA)
     Snyder
     Solis
     Spratt
     Strickland
     Stupak
     Tanner
     Tauscher
     Taylor (MS)
     Thompson (CA)
     Thompson (MS)
     Tierney
     Towns
     Udall (CO)
     Udall (NM)
     Van Hollen
     Velazquez
     Visclosky
     Wasserman Schultz
     Waters
     Watson
     Watt
     Waxman
     Weiner
     Wexler
     Woolsey
     Wu
     Wynn

                               NAYS--222

     Aderholt
     Akin
     Alexander
     Bachus
     Baker
     Barrett (SC)
     Bartlett (MD)
     Barton (TX)
     Bass
     Beauprez
     Biggert
     Bilbray
     Bishop (GA)
     Bishop (UT)
     Blackburn
     Blunt
     Boehner
     Bonilla
     Bonner
     Bono
     Boozman
     Boustany
     Bradley (NH)
     Brady (TX)
     Brown (SC)
     Brown-Waite, Ginny
     Burgess
     Burton (IN)
     Calvert
     Camp (MI)
     Campbell (CA)
     Cannon
     Cantor
     Capito
     Carter
     Castle
     Chabot
     Chocola
     Cole (OK)
     Conaway
     Crenshaw
     Cubin
     Culberson
     Davis (KY)
     Davis, Tom
     Dent
     Diaz-Balart, L.
     Diaz-Balart, M.
     Dingell
     Doolittle
     Drake
     Dreier
     Duncan
     Ehlers
     Emerson
     English (PA)
     Everett
     Feeney
     Ferguson
     Fitzpatrick (PA)
     Flake
     Foley
     Forbes
     Fortenberry
     Fossella
     Foxx
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Garrett (NJ)
     Gerlach
     Gibbons
     Gilchrest
     Gillmor
     Gingrey
     Goode
     Goodlatte
     Granger
     Graves
     Green (WI)
     Gutknecht
     Hall
     Harris
     Hart
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Hensarling
     Herger
     Hobson
     Hoekstra
     Hostettler
     Hulshof
     Hunter
     Hyde
     Inglis (SC)
     Issa
     Jenkins
     Jindal
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Keller
     Kelly
     Kennedy (MN)
     King (IA)
     King (NY)
     Kingston
     Kirk
     Kline
     Knollenberg
     Kolbe
     Kuhl (NY)
     LaHood
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     LoBiondo
     Lucas
     Lungren, Daniel E.
     Mack
     Manzullo
     Marchant
     McCaul (TX)
     McCotter
     McCrery
     McHenry
     McHugh
     McKeon
     McMorris
     Mica
     Miller (FL)
     Miller (MI)
     Miller, Gary
     Moran (KS)
     Murphy
     Musgrave
     Myrick
     Neugebauer
     Ney
     Norwood
     Nunes
     Nussle
     Oberstar
     Osborne
     Otter
     Pearce
     Pence
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Poe
     Pombo
     Porter
     Price (GA)
     Pryce (OH)
     Putnam
     Radanovich
     Ramstad
     Regula
     Rehberg
     Reichert
     Renzi
     Reynolds
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Royce
     Ryan (WI)
     Ryun (KS)
     Saxton
     Schmidt
     Schwarz (MI)
     Scott (GA)
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Smith (NJ)
     Smith (TX)
     Sodrel
     Souder
     Stearns
     Sullivan
     Sweeney
     Tancredo
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Tiahrt
     Tiberi
     Turner
     Upton
     Walden (OR)
     Walsh
     Wamp
     Weldon (FL)
     Weldon (PA)
     Weller
     Westmoreland
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Young (AK)
     Young (FL)

                             NOT VOTING--22

     Baca
     Bilirakis
     Boehlert
     Buyer
     Carson
     Coble
     Davis, Jo Ann
     Deal (GA)
     Evans
     Gohmert
     Gordon
     Istook
     Jones (NC)
     Lewis (GA)
     Linder
     McKinney
     Meehan
     Northup
     Oxley
     Payne
     Salazar
     Stark

                              {time}  2327

  Messrs. SAXTON, TAYLOR of North Carolina, DINGELL, FOLEY, BISHOP of 
Georgia, and Miss McMORRIS changed their vote from ``yea'' to ``nay.''
  Messrs. GENE GREEN of Texas, EMANUEL, WEXLER, CLEAVER, BROWN of Ohio, 
and HOYER changed their vote from ``nay'' to ``yea.''
  So the motion to instruct was rejected.
  The result of the vote was announced as above recorded.
  The SPEAKER pro tempore. The question is on the passage of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.


                             Recorded Vote

  Mr. RANGEL. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The SPEAKER pro tempore. This will be a 5-minute vote.
  The vote was taken by electronic device, and there were--ayes 279, 
noes 131, answered ``present'' 1, not voting 22, as follows:

                             [Roll No. 422]

                               AYES--279

     Ackerman
     Aderholt
     Akin
     Alexander
     Bachus
     Baker
     Barrett (SC)
     Barrow
     Bartlett (MD)
     Bass
     Bean
     Beauprez
     Berry
     Biggert
     Bilbray
     Bishop (GA)
     Bishop (UT)
     Blackburn
     Blumenauer
     Blunt
     Boehner
     Bonner
     Bono
     Boozman
     Boren
     Boswell
     Boucher
     Boustany
     Boyd
     Bradley (NH)
     Brown (SC)
     Brown-Waite, Ginny
     Burton (IN)
     Butterfield
     Calvert
     Camp (MI)
     Campbell (CA)
     Cannon
     Cantor
     Capito
     Cardoza
     Case
     Castle
     Chabot
     Chandler
     Chocola
     Clay
     Cleaver
     Clyburn
     Cole (OK)
     Conyers
     Cooper
     Costa
     Cramer
     Crenshaw
     Crowley
     Cubin
     Cuellar
     Davis (AL)
     Davis (KY)
     Davis (TN)
     Davis, Tom
     DeFazio
     Delahunt
     Dent
     Diaz-Balart, L.
     Diaz-Balart, M.
     Dicks
     Dingell
     Doolittle
     Drake
     Dreier
     Duncan
     Ehlers
     Emanuel
     Emerson
     Engel
     English (PA)
     Everett
     Feeney
     Ferguson
     Fitzpatrick (PA)
     Foley
     Forbes
     Ford
     Fortenberry
     Fossella
     Foxx
     Franks (AZ)
     Frelinghuysen
     Gallegly
     Garrett (NJ)
     Gerlach
     Gibbons
     Gilchrest
     Gillmor
     Gingrey
     Goode
     Goodlatte
     Granger
     Graves
     Green (WI)
     Gutknecht
     Harman
     Harris
     Hart
     Hastert
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Herseth
     Higgins
     Hobson
     Hoekstra
     Hooley
     Hostettler
     Hulshof
     Hunter
     Hyde
     Inglis (SC)
     Israel
     Issa
     Jefferson
     Jenkins
     Jindal
     Johnson (CT)
     Johnson (IL)
     Kaptur
     Keller

[[Page 16451]]


     Kelly
     Kennedy (MN)
     Kildee
     Kilpatrick (MI)
     Kind
     King (IA)
     King (NY)
     Kingston
     Kirk
     Kline
     Knollenberg
     Kolbe
     Kuhl (NY)
     LaHood
     Latham
     LaTourette
     Leach
     Levin
     Lewis (CA)
     Lewis (KY)
     Lipinski
     LoBiondo
     Lucas
     Lungren, Daniel E.
     Lynch
     Mack
     Manzullo
     Marchant
     Marshall
     Matheson
     Matsui
     McCarthy
     McCollum (MN)
     McCotter
     McCrery
     McHenry
     McHugh
     McIntyre
     McKeon
     McMorris
     Meek (FL)
     Meeks (NY)
     Melancon
     Mica
     Miller (FL)
     Miller (MI)
     Miller, Gary
     Moore (KS)
     Moran (KS)
     Murphy
     Musgrave
     Myrick
     Ney
     Norwood
     Nunes
     Nussle
     Oberstar
     Osborne
     Otter
     Pearce
     Pence
     Peterson (MN)
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Pombo
     Porter
     Price (GA)
     Pryce (OH)
     Putnam
     Radanovich
     Rahall
     Ramstad
     Regula
     Rehberg
     Reichert
     Renzi
     Reynolds
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Ross
     Rothman
     Royce
     Ruppersberger
     Rush
     Ryan (WI)
     Ryun (KS)
     Sabo
     Saxton
     Schmidt
     Schwarz (MI)
     Scott (GA)
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simmons
     Simpson
     Skelton
     Smith (NJ)
     Smith (TX)
     Sodrel
     Souder
     Stearns
     Strickland
     Stupak
     Sullivan
     Sweeney
     Tancredo
     Tanner
     Tauscher
     Taylor (NC)
     Terry
     Thomas
     Thompson (CA)
     Thompson (MS)
     Tiahrt
     Tiberi
     Towns
     Turner
     Udall (CO)
     Upton
     Velazquez
     Walden (OR)
     Walsh
     Wamp
     Weldon (FL)
     Weldon (PA)
     Weller
     Westmoreland
     Whitfield
     Wicker
     Wilson (NM)
     Wilson (SC)
     Wolf
     Wu
     Wynn
     Young (AK)
     Young (FL)

                               NOES--131

     Abercrombie
     Allen
     Andrews
     Baldwin
     Barton (TX)
     Becerra
     Berkley
     Berman
     Bishop (NY)
     Bonilla
     Brady (PA)
     Brady (TX)
     Brown (OH)
     Brown, Corrine
     Burgess
     Capps
     Capuano
     Cardin
     Carnahan
     Carter
     Conaway
     Costello
     Culberson
     Cummings
     Davis (CA)
     Davis (FL)
     Davis (IL)
     DeGette
     DeLauro
     Doggett
     Doyle
     Edwards
     Eshoo
     Etheridge
     Farr
     Fattah
     Filner
     Flake
     Frank (MA)
     Gonzalez
     Green, Al
     Green, Gene
     Grijalva
     Gutierrez
     Hall
     Hastings (FL)
     Hensarling
     Hinchey
     Hinojosa
     Holden
     Holt
     Honda
     Hoyer
     Inslee
     Jackson (IL)
     Jackson-Lee (TX)
     Johnson, E. B.
     Johnson, Sam
     Jones (OH)
     Kanjorski
     Kennedy (RI)
     Kucinich
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Lee
     Lofgren, Zoe
     Lowey
     Maloney
     Markey
     McCaul (TX)
     McDermott
     McGovern
     McNulty
     Michaud
     Millender-McDonald
     Miller (NC)
     Miller, George
     Mollohan
     Moore (WI)
     Moran (VA)
     Murtha
     Nadler
     Napolitano
     Neal (MA)
     Neugebauer
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Paul
     Pelosi
     Poe
     Pomeroy
     Price (NC)
     Rangel
     Reyes
     Roybal-Allard
     Ryan (OH)
     Sanchez, Linda T.
     Sanchez, Loretta
     Sanders
     Schakowsky
     Schiff
     Schwartz (PA)
     Scott (VA)
     Serrano
     Sherman
     Slaughter
     Smith (WA)
     Snyder
     Solis
     Spratt
     Taylor (MS)
     Thornberry
     Tierney
     Udall (NM)
     Van Hollen
     Visclosky
     Wasserman Schultz
     Waters
     Watson
     Watt
     Waxman
     Weiner
     Wexler
     Woolsey

                        ANSWERED ``PRESENT''--1

       
     Baird
       

                             NOT VOTING--22

     Baca
     Bilirakis
     Boehlert
     Buyer
     Carson
     Coble
     Davis, Jo Ann
     Deal (GA)
     Evans
     Gohmert
     Gordon
     Istook
     Jones (NC)
     Lewis (GA)
     Linder
     McKinney
     Meehan
     Northup
     Oxley
     Payne
     Salazar
     Stark


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (during the vote). Members are advised there 
are 2 minutes remaining in this vote.

                              {time}  2334

  Mr. HALL changed his vote from ``aye'' to ``no.''
  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.

                          ____________________