[Congressional Record (Bound Edition), Volume 160 (2014), Part 2]
[Senate]
[Pages 2086-2095]
[From the U.S. Government Publishing Office, www.gpo.gov]




     COOPERATIVE AND SMALL EMPLOYER CHARITY PENSION FLEXIBILITY ACT

  Mr. REID. Mr. President, I ask unanimous consent the Senate proceed 
to Calendar No. 230, S. 1302; that the committee-reported substitute be 
considered; the Harkin-Roberts substitute amendment which is at the 
desk be agreed to; the committee-reported substitute, as amended, be 
agreed to; the bill, as amended, be read a third time and passed, the 
motions to reconsider be considered made and laid upon the table, with 
no intervening action or debate; further, that if the Senate receives a 
bill from the House that is identical to the text of S. 1302 as passed 
by the Senate, then the House bill be read three times and passed with 
no intervening action or debate.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senate proceeded to consider the bill (S. 1302) to amend the 
Employee Retirement Income Security Act of 1974 and the Internal 
Revenue Code of 1986 to provide for cooperative and small employer 
charity pension plans, which had been reported from the Committee on 
Health, Education, Labor, and Pensions, with an amendment to strike all 
after the enacting clause and insert in lieu thereof the following:

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the 
     ``Cooperative and Small Employer Charity Pension Flexibility 
     Act''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Congressional findings and declarations of policy.
Sec. 3. Definition of cooperative and small employer charity pension 
              plans.
Sec. 4. Funding rules applicable to cooperative and small employer 
              charity pension plans.
Sec. 5. Transparency.
Sec. 6. Elections.
Sec. 7. Sponsor education and assistance.
Sec. 8. Effective date.

     SEC. 2. CONGRESSIONAL FINDINGS AND DECLARATIONS OF POLICY.

       Congress finds as follows:
       (1) Defined benefit pension plans are a cost-effective way 
     for cooperative associations and charities to provide their 
     employees with economic security in retirement.
       (2) Many cooperative associations and charitable 
     organizations are only able to provide their employees with 
     defined benefit pension plans because those organizations are 
     able to pool their resources using the multiple employer plan 
     structure.
       (3) The pension funding rules should encourage cooperative 
     associations and charities to continue to provide their 
     employees with pension benefits.

     SEC. 3. DEFINITION OF COOPERATIVE AND SMALL EMPLOYER CHARITY 
                   PENSION PLANS.

       (a) Amendment to ERISA.--Section 210 of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1060) is 
     amended by adding at the end the following new subsection:
       ``(f) Cooperative and Small Employer Charity Pension 
     Plans.--
       ``(1) In general.--For purposes of this title, except as 
     provided in this subsection, a CSEC plan is an employee 
     pension benefit plan (other than a multiemployer plan) that 
     is a defined benefit plan--
       ``(A) to which section 104 of the Pension Protection Act of 
     2006 applies, without regard to--
       ``(i) section 104(a)(2) of such Act;
       ``(ii) the amendments to such section 104 by section 202(b) 
     of the Preservation of Access to Care for Medicare 
     Beneficiaries and Pension Relief Act of 2010; and
       ``(iii) paragraph (3)(B); or
       ``(B) that, as of January 1, 2013, was maintained by more 
     than one employer and all of the employers were organizations 
     described in section 501(c)(3) of the Internal Revenue Code 
     of 1986.
       ``(2) Aggregation.--All employers that are treated as a 
     single employer under subsection (b) or (c) of section 414 of 
     the Internal Revenue Code of 1986 shall be treated as a 
     single employer for purposes of determining if a plan was 
     maintained by more than one employer under paragraph 
     (1)(B).''.
       (b) Amendment to Code.--Section 414 of the Internal Revenue 
     Code of 1986 is amended by adding at the end the following 
     new subsection:
       ``(y) Cooperative and Small Employer Charity Pension 
     Plans.--
       ``(1) In general.--For purposes of this title, except as 
     provided in this subsection, a CSEC plan is a defined benefit 
     plan (other than a multiemployer plan)--
       ``(A) to which section 104 of the Pension Protection Act of 
     2006 applies, without regard to--
       ``(i) section 104(a)(2) of such Act;
       ``(ii) the amendments to such section 104 by section 202(b) 
     of the Preservation of Access to Care for Medicare 
     Beneficiaries and Pension Relief Act of 2010; and
       ``(iii) paragraph (3)(B); or
       ``(B) that, as of January 1, 2013, was maintained by more 
     than one employer and all of the employers were organizations 
     described in section 501(c)(3).
       ``(2) Aggregation.--All employers that are treated as a 
     single employer under subsection (b) or (c) shall be treated 
     as a single employer for purposes of determining if a plan 
     was maintained by more than one employer under paragraph 
     (1)(B).''.

     SEC. 4. FUNDING RULES APPLICABLE TO COOPERATIVE AND SMALL 
                   EMPLOYER CHARITY PENSION PLANS.

       (a) Amendments to ERISA.--
       (1) Minimum funding standards under erisa.--Part 3 of title 
     I of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1081 et seq.) is amended by adding at the end the 
     following new section:

     ``SEC. 306. MINIMUM FUNDING STANDARDS.

       ``(a) General Rule.--For purposes of section 302, the term 
     `accumulated funding deficiency' for a CSEC plan means the 
     excess of the total charges to the funding standard account 
     for all plan years (beginning with the first plan year to 
     which section 302 applies) over the total credits to such 
     account for such years or, if less, the excess of the total 
     charges to the alternative minimum funding standard account 
     for such plan years over the total credits to such account 
     for such years.
       ``(b) Funding Standard Account.--
       ``(1) Account required.--Each plan to which this section 
     applies shall establish and maintain a funding standard 
     account. Such account shall be credited and charged solely as 
     provided in this section.
       ``(2) Charges to account.--For a plan year, the funding 
     standard account shall be charged with the sum of--
       ``(A) the normal cost of the plan for the plan year,
       ``(B) the amounts necessary to amortize in equal annual 
     installments (until fully amortized)--
       ``(i) in the case of a plan in existence on January 1, 
     1974, the unfunded past service liability under the plan on 
     the first day of the first plan year to which section 302 
     applies, over a period of 40 plan years,
       ``(ii) in the case of a plan which comes into existence 
     after January 1, 1974, but before the first day of the first 
     plan year beginning after December 31, 2013, the unfunded 
     past service liability under the plan on the first day of the 
     first plan year to which section 302 applies, over a period 
     of 30 plan years,
       ``(iii) in the case of a plan that is subject to section 
     303 for the last plan year beginning before January 1, 2014, 
     the sum of--

[[Page 2087]]

       ``(I) the plan's funding standard carryover balance and 
     prefunding balance (as such terms are defined in section 
     303(f)) as of the end of such plan year, and
       ``(II) the unfunded past service liability under the plan 
     for the first plan year beginning after December 31, 2013,

     over a period of 15 years,
       ``(iv) separately, with respect to each plan year, the net 
     increase (if any) in unfunded past service liability under 
     the plan arising from plan amendments adopted in such year, 
     over a period of 15 plan years,
       ``(v) separately, with respect to each plan year, the net 
     experience loss (if any) under the plan, over a period of 5 
     plan years, and
       ``(vi) separately, with respect to each plan year, the net 
     loss (if any) resulting from changes in actuarial assumptions 
     used under the plan, over a period of 10 plan years,
       ``(C) the amount necessary to amortize each waived funding 
     deficiency (within the meaning of section 302(c)(3)) for each 
     prior plan year in equal annual installments (until fully 
     amortized) over a period of 5 plan years,
       ``(D) the amount necessary to amortize in equal annual 
     installments (until fully amortized) over a period of 5 plan 
     years any amount credited to the funding standard account 
     under paragraph (3)(D), and
       ``(E) the amount necessary to amortize in equal annual 
     installments (until fully amortized) over a period of 20 
     years the contributions which would be required to be made 
     under the plan but for the provisions of section 
     302(c)(7)(A)(i)(I) (as in effect on the day before the 
     enactment of the Pension Protection Act of 2006).
       ``(3) Credits to account.--For a plan year, the funding 
     standard account shall be credited with the sum of--
       ``(A) the amount considered contributed by the employer to 
     or under the plan for the plan year,
       ``(B) the amount necessary to amortize in equal annual 
     installments (until fully amortized)--
       ``(i) separately, with respect to each plan year, the net 
     decrease (if any) in unfunded past service liability under 
     the plan arising from plan amendments adopted in such year, 
     over a period of 15 plan years,
       ``(ii) separately, with respect to each plan year, the net 
     experience gain (if any) under the plan, over a period of 5 
     plan years, and
       ``(iii) separately, with respect to each plan year, the net 
     gain (if any) resulting from changes in actuarial assumptions 
     used under the plan, over a period of 10 plan years,
       ``(C) the amount of the waived funding deficiency (within 
     the meaning of section 302(c)(3)) for the plan year,
       ``(D) in the case of a plan year for which the accumulated 
     funding deficiency is determined under the funding standard 
     account if such plan year follows a plan year for which such 
     deficiency was determined under the alternative minimum 
     funding standard, the excess (if any) of any debit balance in 
     the funding standard account (determined without regard to 
     this subparagraph) over any debit balance in the alternative 
     minimum funding standard account, and
       ``(E) for the first plan year beginning after December 31, 
     2013, in the case of a plan that is subject to section 303 
     for the last plan year beginning before January 1, 2014, the 
     sum of the plan's funding standard carryover balance and 
     prefunding balance (as such terms are defined in section 
     302(f)) as of the end of the last plan year beginning before 
     January 1, 2014.
       ``(4) Combining and offsetting amounts to be amortized.--
     Under regulations prescribed by the Secretary of the 
     Treasury, amounts required to be amortized under paragraph 
     (2) or paragraph (3), as the case may be--
       ``(A) may be combined into one amount under such paragraph 
     to be amortized over a period determined on the basis of the 
     remaining amortization period for all items entering into 
     such combined amount, and
       ``(B) may be offset against amounts required to be 
     amortized under the other such paragraph, with the resulting 
     amount to be amortized over a period determined on the basis 
     of the remaining amortization periods for all items entering 
     into whichever of the two amounts being offset is the 
     greater.
       ``(5) Interest.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the funding standard account (and items therein) shall be 
     charged or credited (as determined under regulations 
     prescribed by the Secretary of the Treasury) with interest at 
     the appropriate rate consistent with the rate or rates of 
     interest used under the plan to determine costs.
       ``(B) Exception.--The interest rate used for purposes of 
     computing the amortization charge described in subsection 
     (b)(2)(C) or for purposes of any arrangement under subsection 
     (d) for any plan year shall be the greater of (i) 150 percent 
     of the Federal mid-term rate (as in effect under section 1274 
     of the Internal Revenue Code of 1986 for the 1st month of 
     such plan year), or (ii) the rate of interest determined 
     under subparagraph (A).
       ``(6) Amortization schedules in effect.--Amortization 
     schedules for amounts described in paragraphs (2) and (3) 
     that are in effect as of the last day of the last plan year 
     beginning before January 1, 2014, by reason of section 104 of 
     the Pension Protection Act of 2006 shall remain in effect 
     pursuant to their terms and this section, except that such 
     amounts shall not be amortized again under this section. In 
     the case of a plan that is subject to section 303 for the 
     last plan year beginning before January 1, 2014, any 
     amortization schedules and bases for plan years beginning 
     before such date shall be reduced to zero.
       ``(c) Special Rules.--
       ``(1) Determinations to be made under funding method.--For 
     purposes of this section, normal costs, accrued liability, 
     past service liabilities, and experience gains and losses 
     shall be determined under the funding method used to 
     determine costs under the plan.
       ``(2) Valuation of assets.--
       ``(A) In general.--For purposes of this section, the value 
     of the plan's assets shall be determined on the basis of any 
     reasonable actuarial method of valuation which takes into 
     account fair market value and which is permitted under 
     regulations prescribed by the Secretary of the Treasury.
       ``(B) Dedicated bond portfolio.--The Secretary of the 
     Treasury may by regulations provide that the value of any 
     dedicated bond portfolio of a plan shall be determined by 
     using the interest rate under section 302(b)(5) (as in effect 
     on the day before the enactment of the Pension Protection Act 
     of 2006).
       ``(3) Actuarial assumptions must be reasonable.--For 
     purposes of this section, all costs, liabilities, rates of 
     interest, and other factors under the plan shall be 
     determined on the basis of actuarial assumptions and 
     methods--
       ``(A) each of which is reasonable (taking into account the 
     experience of the plan and reasonable expectations) or which, 
     in the aggregate, result in a total contribution equivalent 
     to that which would be determined if each such assumption and 
     method were reasonable, and
       ``(B) which, in combination, offer the actuary's best 
     estimate of anticipated experience under the plan.
       ``(4) Treatment of certain changes as experience gain or 
     loss.--For purposes of this section, if--
       ``(A) a change in benefits under the Social Security Act or 
     in other retirement benefits created under Federal or State 
     law, or
       ``(B) a change in the definition of the term `wages' under 
     section 3121 of the Internal Revenue Code of 1986 or a change 
     in the amount of such wages taken into account under 
     regulations prescribed for purposes of section 401(a)(5) of 
     such Code,

     results in an increase or decrease in accrued liability under 
     a plan, such increase or decrease shall be treated as an 
     experience loss or gain.
       ``(5) Funding method and plan year.--
       ``(A) Funding methods available.--All funding methods 
     available to CSEC plans under section 302 (as in effect on 
     the day before the enactment of the Pension Protection Act of 
     2006) shall continue to be available under this section.
       ``(B) Not affected by cessation of benefit accruals.--The 
     availability of any funding method, including all spread gain 
     funding methods, shall not be affected by whether benefit 
     accruals under a plan have ceased. Except as otherwise 
     provided in subparagraph (C) or in regulations prescribed by 
     the Secretary of the Treasury, if benefit accruals have 
     ceased under a plan, the spread gain funding methods may be 
     applied by amortizing over the average expected future lives 
     of all participants.
       ``(C) Minimum amount.--In the case of a plan amortizing 
     over the average expected future lives of all participants 
     pursuant to the second sentence of subparagraph (B), such 
     amortization amount for any plan year shall not be less than 
     the sum of--
       ``(i) the amount determined by amortizing, as of the first 
     year for which the plan amortizes over the average future 
     lives of all participants, the entire unfunded past service 
     liability in equal installments over 15 years, and
       ``(ii) the amount determined by amortizing any increase or 
     decrease in such unfunded past service liability in any 
     subsequent year, other than an increase or decrease 
     attributable to contributions or expected experience, in 
     equal installments over 15 years.
       ``(D) Changes.--If the funding method for a plan is 
     changed, the new funding method shall become the funding 
     method used to determine costs and liabilities under the plan 
     only if the change is approved by the Secretary of the 
     Treasury. The preceding sentence shall not apply to any 
     change made pursuant to, or permitted by, the second sentence 
     of subparagraph (B) if such change is made for the first plan 
     year beginning after December 31, 2013. Any such change may 
     be made without the approval of the Secretary of the 
     Treasury. If the plan year for a plan is changed, the new 
     plan year shall become the plan year for the plan only if the 
     change is approved by the Secretary of the Treasury.
       ``(E) Approval required for certain changes in assumptions 
     by certain single-employer plans subject to additional 
     funding requirement.--
       ``(i) In general.--No actuarial assumption (other than the 
     assumptions described in subsection (h)(3)) used to determine 
     the current liability for a plan to which this subparagraph 
     applies may be changed without the approval of the Secretary.
       ``(ii) Plans to which subparagraph applies.--This 
     subparagraph shall apply to a plan only if--

       ``(I) the plan is a CSEC plan,
       ``(II) the aggregate unfunded vested benefits as of the 
     close of the preceding plan year (as determined under section 
     4006(a)(3)(E)(iii)) of such plan and all other plans 
     maintained by the contributing sponsors (as defined in 
     section 4001(a)(13)) and members of such sponsors' controlled 
     groups (as defined in section 4001(a)(14)) which are covered 
     by title IV (disregarding

[[Page 2088]]

     plans with no unfunded vested benefits) exceed $50,000,000, 
     and
       ``(III) the change in assumptions (determined after taking 
     into account any changes in interest rate and mortality 
     table) results in a decrease in the funding shortfall of the 
     plan for the current plan year that exceeds $50,000,000, or 
     that exceeds $5,000,000 and that is 5 percent or more of the 
     current liability of the plan before such change.

       ``(6) Full funding.--If, as of the close of a plan year, a 
     plan would (without regard to this paragraph) have an 
     accumulated funding deficiency (determined without regard to 
     the alternative minimum funding standard account permitted 
     under subsection (e)) in excess of the full funding 
     limitation--
       ``(A) the funding standard account shall be credited with 
     the amount of such excess, and
       ``(B) all amounts described in paragraphs (2)(B), (C), and 
     (D) and (3)(B) of subsection (b) which are required to be 
     amortized shall be considered fully amortized for purposes of 
     such paragraphs.
       ``(7) Full-funding limitation.--For purposes of paragraph 
     (6), the term `full-funding limitation' means the excess (if 
     any) of--
       ``(A) the accrued liability (including normal cost) under 
     the plan (determined under the entry age normal funding 
     method if such accrued liability cannot be directly 
     calculated under the funding method used for the plan), over
       ``(B) the lesser of--
       ``(i) the fair market value of the plan's assets, or
       ``(ii) the value of such assets determined under paragraph 
     (2).
       ``(C) Minimum amount.--
       ``(i) In general.--In no event shall the full-funding 
     limitation determined under subparagraph (A) be less than the 
     excess (if any) of--

       ``(I) 90 percent of the current liability (determined 
     without regard to paragraph (4) of subsection (h)) of the 
     plan (including the expected increase in such current 
     liability due to benefits accruing during the plan year), 
     over
       ``(II) the value of the plan's assets determined under 
     paragraph (2).

       ``(ii) Assets.--For purposes of clause (i), assets shall 
     not be reduced by any credit balance in the funding standard 
     account.
       ``(8) Annual valuation.--
       ``(A) In general.--For purposes of this section, a 
     determination of experience gains and losses and a valuation 
     of the plan's liability shall be made not less frequently 
     than once every year, except that such determination shall be 
     made more frequently to the extent required in particular 
     cases under regulations prescribed by the Secretary of the 
     Treasury.
       ``(B) Valuation date.--
       ``(i) Current year.--Except as provided in clause (ii), the 
     valuation referred to in subparagraph (A) shall be made as of 
     a date within the plan year to which the valuation refers or 
     within one month prior to the beginning of such year.
       ``(ii) Use of prior year valuation.--The valuation referred 
     to in subparagraph (A) may be made as of a date within the 
     plan year prior to the year to which the valuation refers if, 
     as of such date, the value of the assets of the plan are not 
     less than 100 percent of the plan's current liability.
       ``(iii) Adjustments.--Information under clause (ii) shall, 
     in accordance with regulations, be actuarially adjusted to 
     reflect significant differences in participants.
       ``(iv) Limitation.--A change in funding method to use a 
     prior year valuation, as provided in clause (ii), may not be 
     made unless as of the valuation date within the prior plan 
     year, the value of the assets of the plan are not less than 
     125 percent of the plan's current liability.
       ``(9) Time when certain contributions deemed made.--For 
     purposes of this section, any contributions for a plan year 
     made by an employer during the period--
       ``(A) beginning on the day after the last day of such plan 
     year, and
       ``(B) ending on the day which is 8\1/2\ months after the 
     close of the plan year,
     shall be deemed to have been made on such last day.
       ``(10) Anticipation of benefit increases effective in the 
     future.--In determining projected benefits, the funding 
     method of a collectively bargained CSEC plan described in 
     section 413(a) of the Internal Revenue Code of 1986 (other 
     than a multiemployer plan) shall anticipate benefit increases 
     scheduled to take effect during the term of the collective 
     bargaining agreement applicable to the plan.
       ``(d) Extension of Amortization Periods.--The period of 
     years required to amortize any unfunded liability (described 
     in any clause of subsection (b)(2)(B)) of any plan may be 
     extended by the Secretary for a period of time (not in excess 
     of 10 years) if such Secretary determines that such extension 
     would carry out the purposes of this Act and provide adequate 
     protection for participants under the plan and their 
     beneficiaries, and if such Secretary determines that the 
     failure to permit such extension would result in--
       ``(1) a substantial risk to the voluntary continuation of 
     the plan, or
       ``(2) a substantial curtailment of pension benefit levels 
     or employee compensation.
       ``(e) Alternative Minimum Funding Standard.--
       ``(1) In general.--A CSEC plan which uses a funding method 
     that requires contributions in all years not less than those 
     required under the entry age normal funding method may 
     maintain an alternative minimum funding standard account for 
     any plan year. Such account shall be credited and charged 
     solely as provided in this subsection.
       ``(2) Charges and credits to account.--For a plan year the 
     alternative minimum funding standard account shall be--
       ``(A) charged with the sum of--
       ``(i) the lesser of normal cost under the funding method 
     used under the plan or normal cost determined under the unit 
     credit method,
       ``(ii) the excess, if any, of the present value of accrued 
     benefits under the plan over the fair market value of the 
     assets, and
       ``(iii) an amount equal to the excess (if any) of credits 
     to the alternative minimum standard account for all prior 
     plan years over charges to such account for all such years, 
     and
       ``(B) credited with the amount considered contributed by 
     the employer to or under the plan for the plan year.
       ``(3) Special rules.--The alternative minimum funding 
     standard account (and items therein) shall be charged or 
     credited with interest in the manner provided under 
     subsection (b)(5) with respect to the funding standard 
     account.
       ``(f) Quarterly Contributions Required.--
       ``(1) In general.--If a CSEC plan which has a funded 
     current liability percentage for the preceding plan year of 
     less than 100 percent fails to pay the full amount of a 
     required installment for the plan year, then the rate of 
     interest charged to the funding standard account under 
     subsection (b)(5) with respect to the amount of the 
     underpayment for the period of the underpayment shall be 
     equal to the greater of--
       ``(A) 175 percent of the Federal mid-term rate (as in 
     effect under section 1274 of the Internal Revenue Code of 
     1986 for the 1st month of such plan year), or
       ``(B) the rate of interest used under the plan in 
     determining costs.
       ``(2) Amount of underpayment, period of underpayment.--For 
     purposes of paragraph (1)--
       ``(A) Amount.--The amount of the underpayment shall be the 
     excess of--
       ``(i) the required installment, over
       ``(ii) the amount (if any) of the installment contributed 
     to or under the plan on or before the due date for the 
     installment.
       ``(B) Period of underpayment.--The period for which 
     interest is charged under this subsection with regard to any 
     portion of the underpayment shall run from the due date for 
     the installment to the date on which such portion is 
     contributed to or under the plan (determined without regard 
     to subsection (c)(9)).
       ``(C) Order of crediting contributions.--For purposes of 
     subparagraph (A)(ii), contributions shall be credited against 
     unpaid required installments in the order in which such 
     installments are required to be paid.
       ``(3) Number of required installments; due dates.--For 
     purposes of this subsection--
       ``(A) Payable in 4 installments.--There shall be 4 required 
     installments for each plan year.
       ``(B) Time for payment of installments.--


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

       ``(4) Amount of required installment.--For purposes of this 
     subsection--
       ``(A) In general.--The amount of any required installment 
     shall be 25 percent of the required annual payment.
       ``(B) Required annual payment.--For purposes of 
     subparagraph (A), the term `required annual payment' means 
     the lesser of--
       ``(i) 90 percent of the amount required to be contributed 
     to or under the plan by the employer for the plan year under 
     section 302 (without regard to any waiver under subsection 
     (c) thereof), or
       ``(ii) 100 percent of the amount so required for the 
     preceding plan year.

     Clause (ii) shall not apply if the preceding plan year was 
     not a year of 12 months.
       ``(5) Liquidity requirement.--
       ``(A) In general.--A plan to which this paragraph applies 
     shall be treated as failing to pay the full amount of any 
     required installment to the extent that the value of the 
     liquid assets paid in such installment is less than the 
     liquidity shortfall (whether or not such liquidity shortfall 
     exceeds the amount of such installment required to be paid 
     but for this paragraph).
       ``(B) Plans to which paragraph applies.--This paragraph 
     shall apply to a CSEC plan other than a plan described in 
     section 302(d)(6)(A) (as in effect on the day before the 
     enactment of the Pension Protection Act of 2006) which--
       ``(i) is required to pay installments under this subsection 
     for a plan year, and
       ``(ii) has a liquidity shortfall for any quarter during 
     such plan year.
       ``(C) Period of underpayment.--For purposes of paragraph 
     (1), any portion of an installment that is treated as not 
     paid under subparagraph (A) shall continue to be treated as 
     unpaid until the close of the quarter in which the due date 
     for such installment occurs.
       ``(D) Limitation on increase.--If the amount of any 
     required installment is increased by reason of subparagraph 
     (A), in no event shall such increase exceed the amount which, 
     when added to prior installments for the plan year, is 
     necessary to increase the funded current liability

[[Page 2089]]

     percentage (taking into account the expected increase in 
     current liability due to benefits accruing during the plan 
     year) to 100 percent.
       ``(E) Definitions.--For purposes of this paragraph:
       ``(i) Liquidity shortfall.--The term `liquidity shortfall' 
     means, with respect to any required installment, an amount 
     equal to the excess (as of the last day of the quarter for 
     which such installment is made) of the base amount with 
     respect to such quarter over the value (as of such last day) 
     of the plan's liquid assets.
       ``(ii) Base amount.--

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

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

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

       ``(v) Liquid assets.--The term `liquid assets' means cash, 
     marketable securities and such other assets as specified by 
     the Secretary of the Treasury in regulations.
       ``(vi) Quarter.--The term `quarter' means, with respect to 
     any required installment, the 3-month period preceding the 
     month in which the due date for such installment occurs.
       ``(F) Regulations.--The Secretary of the Treasury may 
     prescribe such regulations as are necessary to carry out this 
     paragraph.
       ``(6) Fiscal years and short years.--
       ``(A) Fiscal years.--In applying this subsection to a plan 
     year beginning on any date other than January 1, there shall 
     be substituted for the months specified in this subsection, 
     the months which correspond thereto.
       ``(B) Short plan year.--This subsection shall be applied to 
     plan years of less than 12 months in accordance with 
     regulations prescribed by the Secretary of the Treasury.
       ``(g) Imposition of Lien Where Failure To Make Required 
     Contributions.--
       ``(1) In general.--In the case of a plan to which this 
     section applies, if--
       ``(A) any person fails to make a required installment under 
     subsection (f) or any other payment required under this 
     section before the due date for such installment or other 
     payment, and
       ``(B) the unpaid balance of such installment or other 
     payment (including interest), when added to the aggregate 
     unpaid balance of all preceding such installments or other 
     payments for which payment was not made before the due date 
     (including interest), exceeds $1,000,000,

     then there shall be a lien in favor of the plan in the amount 
     determined under paragraph (3) upon all property and rights 
     to property, whether real or personal, belonging to such 
     person and any other person who is a member of the same 
     controlled group of which such person is a member.
       ``(2) Plans to which subsection applies.--This subsection 
     shall apply to a CSEC plan for any plan year for which the 
     funded current liability percentage of such plan is less than 
     100 percent. This subsection shall not apply to any plan to 
     which section 4021 does not apply (as such section is in 
     effect on the date of the enactment of the Retirement 
     Protection Act of 1994).
       ``(3) Amount of lien.--For purposes of paragraph (1), the 
     amount of the lien shall be equal to the aggregate unpaid 
     balance of required installments and other payments required 
     under this section (including interest)--
       ``(A) for plan years beginning after 1987, and
       ``(B) for which payment has not been made before the due 
     date.
       ``(4) Notice of failure; lien.--
       ``(A) Notice of failure.--A person committing a failure 
     described in paragraph (1) shall notify the Pension Benefit 
     Guaranty Corporation of such failure within 10 days of the 
     due date for the required installment or other payment.
       ``(B) Period of lien.--The lien imposed by paragraph (1) 
     shall arise on the due date for the required installment or 
     other payment and shall continue until the last day of the 
     first plan year in which the plan ceases to be described in 
     paragraph (1)(B). Such lien shall continue to run without 
     regard to whether such plan continues to be described in 
     paragraph (2) during the period referred to in the preceding 
     sentence.
       ``(C) Certain rules to apply.--Any amount with respect to 
     which a lien is imposed under paragraph (1) shall be treated 
     as taxes due and owing the United States and rules similar to 
     the rules of subsections (c), (d), and (e) of section 4068 
     shall apply with respect to a lien imposed by subsection (a) 
     and the amount with respect to such lien.
       ``(5) Enforcement.--Any lien created under paragraph (1) 
     may be perfected and enforced only by the Pension Benefit 
     Guaranty Corporation, or at the direction of the Pension 
     Benefit Guaranty Corporation, by any contributing employer 
     (or any member of the controlled group of the contributing 
     employer).
       ``(6) Definitions.--For purposes of this subsection--
       ``(A) Due date; required installment.--The terms `due date' 
     and `required installment' have the meanings given such terms 
     by subsection (f), except that in the case of a payment other 
     than a required installment, the due date shall be the date 
     such payment is required to be made under this section.
       ``(B) Controlled group.--The term `controlled group' means 
     any group treated as a single employer under subsections (b), 
     (c), (m), and (o) of section 414 of the Internal Revenue Code 
     of 1986.
       ``(h) Current Liability.--For purposes of this section--
       ``(1) In general.--The term `current liability' means all 
     liabilities to employees and their beneficiaries under the 
     plan.
       ``(2) Treatment of unpredictable contingent event 
     benefits.--
       ``(A) In general.--For purposes of paragraph (1), any 
     unpredictable contingent event benefit shall not be taken 
     into account until the event on which the benefit is 
     contingent occurs.
       ``(B) Unpredictable contingent event benefit.--The term 
     `unpredictable contingent event benefit' means any benefit 
     contingent on an event other than--
       ``(i) age, service, compensation, death, or disability, or
       ``(ii) an event which is reasonably and reliably 
     predictable (as determined by the Secretary of the Treasury).
       ``(3) Interest rate and mortality assumptions used.--
       ``(A) Interest rate.--The rate of interest used to 
     determine current liability under this section shall be the 
     third segment rate determined under section 303(h)(2)(C).
       ``(B) Mortality tables.--
       ``(i) Secretarial authority.--The Secretary of the Treasury 
     may by regulation prescribe mortality tables to be used in 
     determining current liability under this subsection. Such 
     tables shall be based upon the actual experience of pension 
     plans and projected trends in such experience. In prescribing 
     such tables, the Secretary of the Treasury shall take into 
     account results of available independent studies of mortality 
     of individuals covered by pension plans.
       ``(ii) Periodic review.--The Secretary of the Treasury 
     shall periodically (at least every 5 years) review any tables 
     in effect under this subsection and shall, to the extent the 
     Secretary of the Treasury determines necessary, by regulation 
     update the tables to reflect the actual experience of pension 
     plans and projected trends in such experience.
       ``(C) Separate mortality tables for the disabled.--
     Notwithstanding subparagraph (B)--
       ``(i) In general.--In the case of plan years beginning 
     after December 31, 1995, the Secretary of the Treasury shall 
     establish mortality tables which may be used (in lieu of the 
     tables under subparagraph (B)) to determine current liability 
     under this subsection for individuals who are entitled to 
     benefits under the plan on account of disability. The 
     Secretary of the Treasury shall establish separate tables for 
     individuals whose disabilities occur in plan years beginning 
     before January 1, 1995, and for individuals whose 
     disabilities occur in plan years beginning on or after such 
     date.
       ``(ii) Special rule for disabilities occurring after 
     1994.--In the case of disabilities occurring in plan years 
     beginning after December 31, 1994, the tables under clause 
     (i) shall apply only with respect to individuals described in 
     such subclause who are disabled within the meaning of title 
     II of the Social Security Act and the regulations thereunder.
       ``(4) Certain service disregarded.--
       ``(A) In general.--In the case of a participant to whom 
     this paragraph applies, only the applicable percentage of the 
     years of service before such individual became a participant 
     shall be taken into account in computing the current 
     liability of the plan.
       ``(B) Applicable percentage.--For purposes of this 
     subparagraph, the applicable percentage shall be determined 
     as follows:


 
                                             The applicable  percentage
   ``If the years of  participation are:                 is:
 
1.........................................  20
2.........................................  40
3.........................................  60
4.........................................  80
5 or more.................................  100.
 

       ``(C) Participants to whom paragraph applies.--This 
     subparagraph shall apply to any participant who, at the time 
     of becoming a participant--
       ``(i) has not accrued any other benefit under any defined 
     benefit plan (whether or not terminated) maintained by the 
     employer or a member of the same controlled group of which 
     the employer is a member,
       ``(ii) who first becomes a participant under the plan in a 
     plan year beginning after December 31, 1987, and
       ``(iii) has years of service greater than the minimum years 
     of service necessary for eligibility to participate in the 
     plan.
       ``(D) Election.--An employer may elect not to have this 
     subparagraph apply. Such an election, once made, may be 
     revoked only with the consent of the Secretary of the 
     Treasury.
       ``(i) Funded Current Liability Percentage.--For purposes of 
     this section, the term

[[Page 2090]]

     `funded current liability percentage' means, with respect to 
     any plan year, the percentage which--
       ``(1) the value of the plan's assets determined under 
     subsection (c)(2), is of
       ``(2) the current liability under the plan.
       ``(j) Transition.--The Secretary of the Treasury may 
     prescribe such rules as are necessary or appropriate with 
     respect to the transition of a CSEC plan from the application 
     of section 303 to the application of this section.''.
       (2) Separate rules for csec plans.--
       (A) In general.--Paragraph (2) of section 302(a) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1082(a)) is amended by striking ``and'' at the end of 
     subparagraph (B), by striking the period at the end of 
     subparagraph (C) and inserting ``, and'', and by inserting at 
     the end thereof the following new subparagraph:
       ``(D) in the case of a CSEC plan, the employers make 
     contributions to or under the plan for any plan year which, 
     in the aggregate, are sufficient to ensure that the plan does 
     not have an accumulated funding deficiency under section 306 
     as of the end of the plan year.''.
       (B) Conforming amendments.--Section 302 of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1082) is 
     amended--
       (i) by striking ``multiemployer plan'' the first place it 
     appears in clause (i) of subsection (c)(1)(A) and the last 
     place it appears in paragraph (2) of subsection (d), and 
     inserting ``multiemployer plan or a CSEC plan'',
       (ii) by striking ``303(j)'' in paragraph (1) of subsection 
     (b) and inserting ``303(j) or under 306(f)'',
       (iii)(I) by striking ``and'' at the end of clause (i) of 
     subsection (c)(1)(B),
       (II) by striking the period at the end of clause (ii) of 
     subsection (c)(1)(B), and inserting ``, and'', and
       (III) by inserting the following new clause after clause 
     (ii) of subsection (c)(1)(B):
       ``(iii) in the case of a CSEC plan, the funding standard 
     account shall be credited under section 306(b)(3)(C) with the 
     amount of the waived funding deficiency and such amount shall 
     be amortized as required under section 306(b)(2)(C).'',
       (iv) by striking ``under paragraph (1)'' in clause (i) of 
     subsection (c)(4)(A) and inserting ``under paragraph (1) or 
     for granting an extension under section 306(d)'',
       (v) by striking ``waiver under this subsection'' in 
     subparagraph (B) of subsection (c)(4) and inserting ``waiver 
     under this subsection or an extension under 306(d)'',
       (vi) by striking ``waiver or modification'' in subclause 
     (I) of subsection (c)(4)(B)(i) and inserting ``waiver, 
     modification, or extension'',
       (vii) by striking ``waivers'' in the heading of subsection 
     (c)(4)(C) and of clause (ii) of subsection (c)(4)(C) and 
     inserting ``waivers or extensions'',
       (viii) by striking ``section 304(d)'' in subparagraph (A) 
     of subsection (c)(7) and in paragraph (2) of subsection (d) 
     and inserting ``section 304(d) or section 306(d)'',
       (ix) by striking ``and'' at the end of subclause (I) of 
     subsection (c)(4)(C)(i) and adding ``or the accumulated 
     funding deficiency under section 306, whichever is 
     applicable,'',
       (x) by striking ``303(e)(2),'' in subclause (II) of 
     subsection (c)(4)(C)(i) and inserting ``303(e)(2) or 
     306(b)(2)(C), whichever is applicable, and'',
       (xi) by adding immediately after subclause (II) of 
     subsection (c)(4)(C)(i) the following new subclause:

       ``(III) the total amounts not paid by reason of an 
     extension in effect under section 306(d),'',

       (xii) by striking ``for waivers of'' in clause (ii) of 
     subsection (c)(4)(C) and inserting ``for waivers or 
     extensions with respect to'', and
       (xiii) by striking ``single-employer plan'' in subparagraph 
     (A) of subsection (a)(2) and in clause (i) of subsection 
     (c)(1)(B) and inserting ``single-employer plan (other than a 
     CSEC plan)''.
       (3) Benefit restrictions.--
       (A) In general.--Subsection (g) of section 206 of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1056) is amended by adding at the end thereof the following 
     new paragraph:
       ``(12) CSEC plans.--This subsection shall not apply to a 
     CSEC plan (as defined in section 210(f)).''.
       (B) Effective date.--Any restriction under section 206(g) 
     of the Employee Retirement Income Security Act of 1974 that 
     is in effect with respect to a CSEC plan as of the last day 
     of the last plan year beginning before January 1, 2014, shall 
     cease to apply as of the first day of the following plan 
     year.
       (4) Benefit increases.--Paragraph (3) of section 204(i) of 
     the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1054(i)) is amended by striking ``multiemployer 
     plans'' and inserting ``multiemployer plans or CSEC plans''.
       (5) Section 103.--Subparagraph (B) of section 103(d)(8) of 
     the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1023(d)(8)) is amended by striking ``303(h) and 
     304(c)(3)'' and inserting ``303(h), 304(c)(3), and 
     306(c)(3)''.
       (6) Section 4003.--Subparagraph (B) of section 4003(e)(1) 
     of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1303(e)(1)) is amended by striking ``303(k)(1)(A) and 
     (B) of this Act or section 430(k)(1)(A) and (B) of the 
     Internal Revenue Code of 1986'' and inserting ``303(k)(1)(A) 
     and (B) or 306(g)(1)(A) and (B) of this Act or section 
     430(k)(1)(A) and (B) or 433(g)(1)(A) and (B) of the Internal 
     Revenue Code of 1986''.
       (7) Section 4010.--Paragraph (2) of section 4010(b) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1310(b)) is amended by striking ``303(k)(1)(A) and (B) of 
     this Act or section 430(k)(1)(A) and (B) of the Internal 
     Revenue Code of 1986'' and inserting ``303(k)(1)(A) and (B) 
     or 306(g)(1)(A) and (B) of this Act or section 430(k)(1)(A) 
     and (B) or 433(g)(1)(A) and (B) of the Internal Revenue Code 
     of 1986''.
       (8) Section 4071.--Section 4071 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1371) is amended by 
     striking ``section 303(k)(4)'' and inserting ``section 
     303(k)(4) or 306(g)(4)''.
       (b) Amendments to Code.--
       (1) Minimum funding standards under the internal revenue 
     code.--Subpart A of part III of subchapter D of chapter 1 of 
     subtitle A of the Internal Revenue Code of 1986 is amended by 
     adding at the end the following new section:

     ``SEC. 433. MINIMUM FUNDING STANDARDS.

       ``(a) General Rule.--For purposes of section 412, the term 
     `accumulated funding deficiency' for a CSEC plan means the 
     excess of the total charges to the funding standard account 
     for all plan years (beginning with the first plan year to 
     which section 412 applies) over the total credits to such 
     account for such years or, if less, the excess of the total 
     charges to the alternative minimum funding standard account 
     for such plan years over the total credits to such account 
     for such years.
       ``(b) Funding Standard Account.--
       ``(1) Account required.--Each plan to which this section 
     applies shall establish and maintain a funding standard 
     account. Such account shall be credited and charged solely as 
     provided in this section.
       ``(2) Charges to account.--For a plan year, the funding 
     standard account shall be charged with the sum of--
       ``(A) the normal cost of the plan for the plan year,
       ``(B) the amounts necessary to amortize in equal annual 
     installments (until fully amortized)--
       ``(i) in the case of a plan in existence on January 1, 
     1974, the unfunded past service liability under the plan on 
     the first day of the first plan year to which section 412 
     applies, over a period of 40 plan years,
       ``(ii) in the case of a plan which comes into existence 
     after January 1, 1974, but before the first day of the first 
     plan year beginning after December 31, 2013, the unfunded 
     past service liability under the plan on the first day of the 
     first plan year to which section 412 applies, over a period 
     of 30 plan years,
       ``(iii) in the case of a plan that is subject to section 
     430 for the last plan year beginning before January 1, 2014, 
     the sum of--

       ``(I) the plan's funding standard carryover balance and 
     prefunding balance (as such terms are defined in section 
     430(f)) as of the end of such plan year, and
       ``(II) the unfunded past service liability under the plan 
     for the first plan year beginning after December 31, 2013,

     over a period of 15 years,
       ``(iv) separately, with respect to each plan year, the net 
     increase (if any) in unfunded past service liability under 
     the plan arising from plan amendments adopted in such year, 
     over a period of 15 plan years,
       ``(v) separately, with respect to each plan year, the net 
     experience loss (if any) under the plan, over a period of 5 
     plan years, and
       ``(vi) separately, with respect to each plan year, the net 
     loss (if any) resulting from changes in actuarial assumptions 
     used under the plan, over a period of 10 plan years,
       ``(C) the amount necessary to amortize each waived funding 
     deficiency (within the meaning of section 412(c)(3)) for each 
     prior plan year in equal annual installments (until fully 
     amortized) over a period of 5 plan years,
       ``(D) the amount necessary to amortize in equal annual 
     installments (until fully amortized) over a period of 5 plan 
     years any amount credited to the funding standard account 
     under paragraph (3)(D), and
       ``(E) the amount necessary to amortize in equal annual 
     installments (until fully amortized) over a period of 20 
     years the contributions which would be required to be made 
     under the plan but for the provisions of section 
     412(c)(7)(A)(i)(I) (as in effect on the day before the 
     enactment of the Pension Protection Act of 2006).
       ``(3) Credits to account.--For a plan year, the funding 
     standard account shall be credited with the sum of--
       ``(A) the amount considered contributed by the employer to 
     or under the plan for the plan year,
       ``(B) the amount necessary to amortize in equal annual 
     installments (until fully amortized)--
       ``(i) separately, with respect to each plan year, the net 
     decrease (if any) in unfunded past service liability under 
     the plan arising from plan amendments adopted in such year, 
     over a period of 15 plan years,
       ``(ii) separately, with respect to each plan year, the net 
     experience gain (if any) under the plan, over a period of 5 
     plan years, and
       ``(iii) separately, with respect to each plan year, the net 
     gain (if any) resulting from changes in actuarial assumptions 
     used under the plan, over a period of 10 plan years,
       ``(C) the amount of the waived funding deficiency (within 
     the meaning of section 412(c)(3)) for the plan year,
       ``(D) in the case of a plan year for which the accumulated 
     funding deficiency is determined under the funding standard 
     account if such plan year follows a plan year for which such 
     deficiency was determined under the alternative minimum 
     funding standard, the excess (if any) of any debit balance in 
     the funding standard

[[Page 2091]]

     account (determined without regard to this subparagraph) over 
     any debit balance in the alternative minimum funding standard 
     account, and
       ``(E) for the first plan year beginning after December 31, 
     2013, in the case of a plan that is subject to section 430 
     for the last plan year beginning before January 1, 2014, the 
     sum of the plan's funding standard carryover balance and 
     prefunding balance (as such terms are defined in section 
     430(f)) as of the end of the last plan year beginning before 
     January 1, 2014.
       ``(4) Combining and offsetting amounts to be amortized.--
     Under regulations prescribed by the Secretary, amounts 
     required to be amortized under paragraph (2) or paragraph 
     (3), as the case may be--
       ``(A) may be combined into one amount under such paragraph 
     to be amortized over a period determined on the basis of the 
     remaining amortization period for all items entering into 
     such combined amount, and
       ``(B) may be offset against amounts required to be 
     amortized under the other such paragraph, with the resulting 
     amount to be amortized over a period determined on the basis 
     of the remaining amortization periods for all items entering 
     into whichever of the two amounts being offset is the 
     greater.
       ``(5) Interest.--
       ``(A) Except as provided in subparagraph (B), the funding 
     standard account (and items therein) shall be charged or 
     credited (as determined under regulations prescribed by the 
     Secretary) with interest at the appropriate rate consistent 
     with the rate or rates of interest used under the plan to 
     determine costs.
       ``(B) The interest rate used for purposes of computing the 
     amortization charge described in subsection (b)(2)(C) or for 
     purposes of any arrangement under subsection (d) for any plan 
     year shall be the greater of--
       ``(i) 150 percent of the Federal mid-term rate (as in 
     effect under section 1274 for the 1st month of such plan 
     year), or
       ``(ii) the rate of interest determined under subparagraph 
     (A).
       ``(6) Amortization schedules in effect.--Amortization 
     schedules for amounts described in paragraphs (2) and (3) 
     that are in effect as of the last day of the last plan year 
     beginning before January 1, 2014, by reason of section 104 of 
     the Pension Protection Act of 2006 shall remain in effect 
     pursuant to their terms and this section, except that such 
     amounts shall not be amortized again under this section. In 
     the case of a plan that is subject to section 430 for the 
     last plan year beginning before January 1, 2014, any 
     amortization schedules and bases for plan years beginning 
     before such date shall be reduced to zero.
       ``(c) Special Rules.--
       ``(1) Determinations to be made under funding method.--For 
     purposes of this section, normal costs, accrued liability, 
     past service liabilities, and experience gains and losses 
     shall be determined under the funding method used to 
     determine costs under the plan.
       ``(2) Valuation of assets.--
       ``(A) In general.--For purposes of this section, the value 
     of the plan's assets shall be determined on the basis of any 
     reasonable actuarial method of valuation which takes into 
     account fair market value and which is permitted under 
     regulations prescribed by the Secretary.
       ``(B) Dedicated bond portfolio.--The Secretary may by 
     regulations provide that the value of any dedicated bond 
     portfolio of a plan shall be determined by using the interest 
     rate under section 412(b)(5) (as in effect on the day before 
     the enactment of the Pension Protection Act of 2006).
       ``(3) Actuarial assumptions must be reasonable.--For 
     purposes of this section, all costs, liabilities, rates of 
     interest, and other factors under the plan shall be 
     determined on the basis of actuarial assumptions and 
     methods--
       ``(A) each of which is reasonable (taking into account the 
     experience of the plan and reasonable expectations) or which, 
     in the aggregate, result in a total contribution equivalent 
     to that which would be determined if each such assumption and 
     method were reasonable, and
       ``(B) which, in combination, offer the actuary's best 
     estimate of anticipated experience under the plan.
       ``(4) Treatment of certain changes as experience gain or 
     loss.--For purposes of this section, if--
       ``(A) a change in benefits under the Social Security Act or 
     in other retirement benefits created under Federal or State 
     law, or
       ``(B) a change in the definition of the term `wages' under 
     section 3121 or a change in the amount of such wages taken 
     into account under regulations prescribed for purposes of 
     section 401(a)(5),

     results in an increase or decrease in accrued liability under 
     a plan, such increase or decrease shall be treated as an 
     experience loss or gain.

       ``(5) Funding method and plan year.--
       ``(A) Funding methods available.--All funding methods 
     available to CSEC plans under section 412 (as in effect on 
     the day before the enactment of the Pension Protection Act of 
     2006) shall continue to be available under this section.
       ``(B) Not affected by cessation of benefit accruals.--The 
     availability of any funding method, including all spread gain 
     funding methods, shall not be affected by whether benefit 
     accruals under a plan have ceased. Except as otherwise 
     provided in subparagraph (C) or in regulations prescribed by 
     the Secretary, if benefit accruals have ceased under a plan, 
     the spread gain funding methods may be applied by amortizing 
     over the average expected future lives of all participants.
       ``(C) Minimum amount.--In the case of a plan amortizing 
     over the average expected future lives of all participants 
     pursuant to the second sentence of subparagraph (B), such 
     amortization amount for any plan year shall not be less than 
     the sum of--
       ``(i) the amount determined by amortizing, as of the first 
     year for which the plan amortizes over the average future 
     lives of all participants, the entire unfunded past service 
     liability in equal installments over 15 years, and
       ``(ii) the amount determined by amortizing any increase or 
     decrease in such unfunded past service liability in any 
     subsequent year, other than an increase or decrease 
     attributable to contributions or expected experience, in 
     equal installments over 15 years.
       ``(D) Changes.--If the funding method for a plan is 
     changed, the new funding method shall become the funding 
     method used to determine costs and liabilities under the plan 
     only if the change is approved by the Secretary. The 
     preceding sentence shall not apply to any change made 
     pursuant to, or permitted by, the second sentence of 
     subparagraph (B) if such change is made for the first plan 
     year beginning after December 31, 2013. Any such change may 
     be made without the approval of the Secretary. If the plan 
     year for a plan is changed, the new plan year shall become 
     the plan year for the plan only if the change is approved by 
     the Secretary.
       ``(E) Approval required for certain changes in assumptions 
     by certain single-employer plans subject to additional 
     funding requirement.--
       ``(i) In general.--No actuarial assumption (other than the 
     assumptions described in subsection (h)(3)) used to determine 
     the current liability for a plan to which this subparagraph 
     applies may be changed without the approval of the Secretary.
       ``(ii) Plans to which subparagraph applies.--This 
     subparagraph shall apply to a plan only if--

       ``(I) the plan is a CSEC plan,
       ``(II) the aggregate unfunded vested benefits as of the 
     close of the preceding plan year (as determined under section 
     4006(a)(3)(E)(iii) of the Employee Retirement Income Security 
     Act of 1974) of such plan and all other plans maintained by 
     the contributing sponsors (as defined in section 4001(a)(13) 
     of such Act) and members of such sponsors' controlled groups 
     (as defined in section 4001(a)(14) of such Act) which are 
     covered by title IV (disregarding plans with no unfunded 
     vested benefits) exceed $50,000,000, and
       ``(III) the change in assumptions (determined after taking 
     into account any changes in interest rate and mortality 
     table) results in a decrease in the funding shortfall of the 
     plan for the current plan year that exceeds $50,000,000, or 
     that exceeds $5,000,000 and that is 5 percent or more of the 
     current liability of the plan before such change.

       ``(6) Full funding.--If, as of the close of a plan year, a 
     plan would (without regard to this paragraph) have an 
     accumulated funding deficiency (determined without regard to 
     the alternative minimum funding standard account permitted 
     under subsection (e)) in excess of the full funding 
     limitation--
       ``(A) the funding standard account shall be credited with 
     the amount of such excess, and
       ``(B) all amounts described in paragraphs (2)(B), (C), and 
     (D) and (3)(B) of subsection (b) which are required to be 
     amortized shall be considered fully amortized for purposes of 
     such paragraphs.
       ``(7) Full-funding limitation.--For purposes of paragraph 
     (6), the term `full-funding limitation' means the excess (if 
     any) of--
       ``(A) the accrued liability (including normal cost) under 
     the plan (determined under the entry age normal funding 
     method if such accrued liability cannot be directly 
     calculated under the funding method used for the plan), over
       ``(B) the lesser of--
       ``(i) the fair market value of the plan's assets, or
       ``(ii) the value of such assets determined under paragraph 
     (2).
       ``(C) Minimum amount.--
       ``(i) In general.--In no event shall the full-funding 
     limitation determined under subparagraph (A) be less than the 
     excess (if any) of--

       ``(I) 90 percent of the current liability (determined 
     without regard to paragraph (4) of subsection (h)) of the 
     plan (including the expected increase in such current 
     liability due to benefits accruing during the plan year), 
     over
       ``(II) the value of the plan's assets determined under 
     paragraph (2).

       ``(ii) Assets.--For purposes of clause (i), assets shall 
     not be reduced by any credit balance in the funding standard 
     account.
       ``(8) Annual valuation.--
       ``(A) In general.--For purposes of this section, a 
     determination of experience gains and losses and a valuation 
     of the plan's liability shall be made not less frequently 
     than once every year, except that such determination shall be 
     made more frequently to the extent required in particular 
     cases under regulations prescribed by the Secretary.
       ``(B) Valuation date.--
       ``(i) Current year.--Except as provided in clause (ii), the 
     valuation referred to in subparagraph (A) shall be made as of 
     a date within the plan year to which the valuation refers or 
     within one month prior to the beginning of such year.
       ``(ii) Use of prior year valuation.--The valuation referred 
     to in subparagraph (A) may

[[Page 2092]]

     be made as of a date within the plan year prior to the year 
     to which the valuation refers if, as of such date, the value 
     of the assets of the plan are not less than 100 percent of 
     the plan's current liability.
       ``(iii) Adjustments.--Information under clause (ii) shall, 
     in accordance with regulations, be actuarially adjusted to 
     reflect significant differences in participants.
       ``(iv) Limitation.--A change in funding method to use a 
     prior year valuation, as provided in clause (ii), may not be 
     made unless as of the valuation date within the prior plan 
     year, the value of the assets of the plan are not less than 
     125 percent of the plan's current liability.
       ``(9) Time when certain contributions deemed made.--For 
     purposes of this section, any contributions for a plan year 
     made by an employer during the period--
       ``(A) beginning on the day after the last day of such plan 
     year, and
       ``(B) ending on the day which is 8\1/2\ months after the 
     close of the plan year,

     shall be deemed to have been made on such last day.
       ``(10) Anticipation of benefit increases effective in the 
     future.--In determining projected benefits, the funding 
     method of a collectively bargained CSEC plan described in 
     section 413(a) (other than a multiemployer plan) shall 
     anticipate benefit increases scheduled to take effect during 
     the term of the collective bargaining agreement applicable to 
     the plan.
       ``(d) Extension of Amortization Periods.--The period of 
     years required to amortize any unfunded liability (described 
     in any clause of subsection (b)(2)(B)) of any plan may be 
     extended by the Secretary of Labor for a period of time (not 
     in excess of 10 years) if such Secretary determines that such 
     extension would carry out the purposes of the Employee 
     Retirement Income Security Act of 1974 and provide adequate 
     protection for participants under the plan, and their 
     beneficiaries and if such Secretary determines that the 
     failure to permit such extension would result in--
       ``(1) a substantial risk to the voluntary continuation of 
     the plan, or
       ``(2) a substantial curtailment of pension benefit levels 
     or employee compensation.
       ``(e) Alternative Minimum Funding Standard.--
       ``(1) In general.--A CSEC plan which uses a funding method 
     that requires contributions in all years not less than those 
     required under the entry age normal funding method may 
     maintain an alternative minimum funding standard account for 
     any plan year. Such account shall be credited and charged 
     solely as provided in this subsection.
       ``(2) Charges and credits to account.--For a plan year the 
     alternative minimum funding standard account shall be--
       ``(A) charged with the sum of--
       ``(i) the lesser of normal cost under the funding method 
     used under the plan or normal cost determined under the unit 
     credit method,
       ``(ii) the excess, if any, of the present value of accrued 
     benefits under the plan over the fair market value of the 
     assets, and
       ``(iii) an amount equal to the excess (if any) of credits 
     to the alternative minimum standard account for all prior 
     plan years over charges to such account for all such years, 
     and
       ``(B) credited with the amount considered contributed by 
     the employer to or under the plan for the plan year.
       ``(3) Special rules.--The alternative minimum funding 
     standard account (and items therein) shall be charged or 
     credited with interest in the manner provided under 
     subsection (b)(5) with respect to the funding standard 
     account.
       ``(f) Quarterly Contributions Required.--
       ``(1) In general.--If a CSEC plan which has a funded 
     current liability percentage for the preceding plan year of 
     less than 100 percent fails to pay the full amount of a 
     required installment for the plan year, then the rate of 
     interest charged to the funding standard account under 
     subsection (b)(5) with respect to the amount of the 
     underpayment for the period of the underpayment shall be 
     equal to the greater of--
       ``(A) 175 percent of the Federal mid-term rate (as in 
     effect under section 1274 for the 1st month of such plan 
     year), or
       ``(B) the rate of interest used under the plan in 
     determining costs.
       ``(2) Amount of underpayment, period of underpayment.--For 
     purposes of paragraph (1)--
       ``(A) Amount.--The amount of the underpayment shall be the 
     excess of--
       ``(i) the required installment, over
       ``(ii) the amount (if any) of the installment contributed 
     to or under the plan on or before the due date for the 
     installment.
       ``(B) Period of underpayment.--The period for which 
     interest is charged under this subsection with regard to any 
     portion of the underpayment shall run from the due date for 
     the installment to the date on which such portion is 
     contributed to or under the plan (determined without regard 
     to subsection (c)(9)).
       ``(C) Order of crediting contributions.--For purposes of 
     subparagraph (A)(ii), contributions shall be credited against 
     unpaid required installments in the order in which such 
     installments are required to be paid.
       ``(3) Number of required installments; due dates.--For 
     purposes of this subsection--
       ``(A) Payable in 4 installments.--There shall be 4 required 
     installments for each plan year.
       ``(B) Time for payment of installments.--


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

       ``(4) Amount of required installment.--For purposes of this 
     subsection--
       ``(A) In general.--The amount of any required installment 
     shall be 25 percent of the required annual payment.
       ``(B) Required annual payment.--For purposes of 
     subparagraph (A), the term `required annual payment' means 
     the lesser of--
       ``(i) 90 percent of the amount required to be contributed 
     to or under the plan by the employer for the plan year under 
     section 412 (without regard to any waiver under subsection 
     (c) thereof), or
       ``(ii) 100 percent of the amount so required for the 
     preceding plan year.

     Clause (ii) shall not apply if the preceding plan year was 
     not a year of 12 months.
       ``(5) Liquidity requirement.--
       ``(A) In general.--A plan to which this paragraph applies 
     shall be treated as failing to pay the full amount of any 
     required installment to the extent that the value of the 
     liquid assets paid in such installment is less than the 
     liquidity shortfall (whether or not such liquidity shortfall 
     exceeds the amount of such installment required to be paid 
     but for this paragraph).
       ``(B) Plans to which paragraph applies.--This paragraph 
     shall apply to a CSEC plan other than a plan described in 
     section 412(l)(6)(A) (as in effect on the day before the 
     enactment of the Pension Protection Act of 2006) which--
       ``(i) is required to pay installments under this subsection 
     for a plan year, and
       ``(ii) has a liquidity shortfall for any quarter during 
     such plan year.
       ``(C) Period of underpayment.--For purposes of paragraph 
     (1), any portion of an installment that is treated as not 
     paid under subparagraph (A) shall continue to be treated as 
     unpaid until the close of the quarter in which the due date 
     for such installment occurs.
       ``(D) Limitation on increase.--If the amount of any 
     required installment is increased by reason of subparagraph 
     (A), in no event shall such increase exceed the amount which, 
     when added to prior installments for the plan year, is 
     necessary to increase the funded current liability percentage 
     (taking into account the expected increase in current 
     liability due to benefits accruing during the plan year) to 
     100 percent.
       ``(E) Definitions.--For purposes of this paragraph:
       ``(i) Liquidity shortfall.--The term `liquidity shortfall' 
     means, with respect to any required installment, an amount 
     equal to the excess (as of the last day of the quarter for 
     which such installment is made) of the base amount with 
     respect to such quarter over the value (as of such last day) 
     of the plan's liquid assets.
       ``(ii) Base amount.--

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

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

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

       ``(v) Liquid assets.--The term `liquid assets' means cash, 
     marketable securities and such other assets as specified by 
     the Secretary in regulations.
       ``(vi) Quarter.--The term `quarter' means, with respect to 
     any required installment, the 3-month period preceding the 
     month in which the due date for such installment occurs.
       ``(F) Regulations.--The Secretary may prescribe such 
     regulations as are necessary to carry out this paragraph.
       ``(6) Fiscal years and short years.--
       ``(A) Fiscal years.--In applying this subsection to a plan 
     year beginning on any date other than January 1, there shall 
     be substituted for the months specified in this subsection, 
     the months which correspond thereto.
       ``(B) Short plan year.--This subsection shall be applied to 
     plan years of less than 12 months in accordance with 
     regulations prescribed by the Secretary.
       ``(g) Imposition of Lien Where Failure To Make Required 
     Contributions.--
       ``(1) In general.--In the case of a plan to which this 
     section applies, if--
       ``(A) any person fails to make a required installment under 
     subsection (f) or any other payment required under this 
     section before the due date for such installment or other 
     payment, and

[[Page 2093]]

       ``(B) the unpaid balance of such installment or other 
     payment (including interest), when added to the aggregate 
     unpaid balance of all preceding such installments or other 
     payments for which payment was not made before the due date 
     (including interest), exceeds $1,000,000,

     then there shall be a lien in favor of the plan in the amount 
     determined under paragraph (3) upon all property and rights 
     to property, whether real or personal, belonging to such 
     person and any other person who is a member of the same 
     controlled group of which such person is a member.
       ``(2) Plans to which subsection applies.--This subsection 
     shall apply to a CSEC plan for any plan year for which the 
     funded current liability percentage of such plan is less than 
     100 percent. This subsection shall not apply to any plan to 
     which section 4021 of the Employee Retirement Income Security 
     Act of 1974 does not apply (as such section is in effect on 
     the date of the enactment of the Retirement Protection Act of 
     1994).
       ``(3) Amount of lien.--For purposes of paragraph (1), the 
     amount of the lien shall be equal to the aggregate unpaid 
     balance of required installments and other payments required 
     under this section (including interest)--
       ``(A) for plan years beginning after 1987, and
       ``(B) for which payment has not been made before the due 
     date.
       ``(4) Notice of failure; lien.--
       ``(A) Notice of failure.--A person committing a failure 
     described in paragraph (1) shall notify the Pension Benefit 
     Guaranty Corporation of such failure within 10 days of the 
     due date for the required installment or other payment.
       ``(B) Period of lien.--The lien imposed by paragraph (1) 
     shall arise on the due date for the required installment or 
     other payment and shall continue until the last day of the 
     first plan year in which the plan ceases to be described in 
     paragraph (1)(B). Such lien shall continue to run without 
     regard to whether such plan continues to be described in 
     paragraph (2) during the period referred to in the preceding 
     sentence.
       ``(C) Certain rules to apply.--Any amount with respect to 
     which a lien is imposed under paragraph (1) shall be treated 
     as taxes due and owing the United States and rules similar to 
     the rules of subsections (c), (d), and (e) of section 4068 of 
     the Employee Retirement Income Security Act of 1974 shall 
     apply with respect to a lien imposed by subsection (a) and 
     the amount with respect to such lien.
       ``(5) Enforcement.--Any lien created under paragraph (1) 
     may be perfected and enforced only by the Pension Benefit 
     Guaranty Corporation, or at the direction of the Pension 
     Benefit Guaranty Corporation, by any contributing employer 
     (or any member of the controlled group of the contributing 
     employer).
       ``(6) Definitions.--For purposes of this subsection--
       ``(A) Due date; required installment.--The terms `due date' 
     and `required installment' have the meanings given such terms 
     by subsection (f), except that in the case of a payment other 
     than a required installment, the due date shall be the date 
     such payment is required to be made under this section.
       ``(B) Controlled group.--The term `controlled group' means 
     any group treated as a single employer under subsections (b), 
     (c), (m), and (o) of section 414.
       ``(h) Current Liability.--For purposes of this section--
       ``(1) In general.--The term `current liability' means all 
     liabilities to employees and their beneficiaries under the 
     plan.
       ``(2) Treatment of unpredictable contingent event 
     benefits.--
       ``(A) In general.--For purposes of paragraph (1), any 
     unpredictable contingent event benefit shall not be taken 
     into account until the event on which the benefit is 
     contingent occurs.
       ``(B) Unpredictable contingent event benefit.--The term 
     `unpredictable contingent event benefit' means any benefit 
     contingent on an event other than--
       ``(i) age, service, compensation, death, or disability, or
       ``(ii) an event which is reasonably and reliably 
     predictable (as determined by the Secretary).
       ``(3) Interest rate and mortality assumptions used.--
       ``(A) Interest rate.--The rate of interest used to 
     determine current liability under this section shall be the 
     third segment rate determined under section 430(h)(2)(C).
       ``(B) Mortality tables.--
       ``(i) Secretarial authority.--The Secretary may by 
     regulation prescribe mortality tables to be used in 
     determining current liability under this subsection. Such 
     tables shall be based upon the actual experience of pension 
     plans and projected trends in such experience. In prescribing 
     such tables, the Secretary shall take into account results of 
     available independent studies of mortality of individuals 
     covered by pension plans.
       ``(ii) Periodic review.--The Secretary shall periodically 
     (at least every 5 years) review any tables in effect under 
     this subsection and shall, to the extent the Secretary 
     determines necessary, by regulation update the tables to 
     reflect the actual experience of pension plans and projected 
     trends in such experience.
       ``(C) Separate mortality tables for the disabled.--
     Notwithstanding subparagraph (B)--
       ``(i) In general.--In the case of plan years beginning 
     after December 31, 1995, the Secretary shall establish 
     mortality tables which may be used (in lieu of the tables 
     under subparagraph (B)) to determine current liability under 
     this subsection for individuals who are entitled to benefits 
     under the plan on account of disability. The Secretary shall 
     establish separate tables for individuals whose disabilities 
     occur in plan years beginning before January 1, 1995, and for 
     individuals whose disabilities occur in plan years beginning 
     on or after such date.
       ``(ii) Special rule for disabilities occurring after 
     1994.--In the case of disabilities occurring in plan years 
     beginning after December 31, 1994, the tables under clause 
     (i) shall apply only with respect to individuals described in 
     such subclause who are disabled within the meaning of title 
     II of the Social Security Act and the regulations thereunder.
       ``(4) Certain service disregarded.--
       ``(A) In general.--In the case of a participant to whom 
     this paragraph applies, only the applicable percentage of the 
     years of service before such individual became a participant 
     shall be taken into account in computing the current 
     liability of the plan.
       ``(B) Applicable percentage.--For purposes of this 
     subparagraph, the applicable percentage shall be determined 
     as follows:


 
                                             The applicable  percentage
   ``If the years of  participation are:                 is:
 
1.........................................  20
2.........................................  40
3.........................................  60
4.........................................  80
5 or more.................................  100.
 

       ``(C) Participants to whom paragraph applies.--This 
     subparagraph shall apply to any participant who, at the time 
     of becoming a participant--
       ``(i) has not accrued any other benefit under any defined 
     benefit plan (whether or not terminated) maintained by the 
     employer or a member of the same controlled group of which 
     the employer is a member,
       ``(ii) who first becomes a participant under the plan in a 
     plan year beginning after December 31, 1987, and
       ``(iii) has years of service greater than the minimum years 
     of service necessary for eligibility to participate in the 
     plan.
       ``(D) Election.--An employer may elect not to have this 
     subparagraph apply. Such an election, once made, may be 
     revoked only with the consent of the Secretary.
       ``(i) Funded Current Liability Percentage.--For purposes of 
     this section, the term `funded current liability percentage' 
     means, with respect to any plan year, the percentage which--
       ``(1) the value of the plan's assets determined under 
     subsection (c)(2), is of
       ``(2) the current liability under the plan.
       ``(j) Transition.--The Secretary may prescribe such rules 
     as are necessary or appropriate with respect to the 
     transition of a CSEC plan from the application of section 430 
     to the application of this section.''.
       (2) Separate rules for csec plans.--
       (A) In general.--Paragraph (2) of section 412(a) of the 
     Internal Revenue Code of 1986 is amended by striking ``and'' 
     at the end of subparagraph (B), by striking the period at the 
     end of subparagraph (C) and inserting ``, and'', and by 
     inserting at the end thereof the following new subparagraph:
       ``(D) in the case of a CSEC plan, the employers make 
     contributions to or under the plan for any plan year which, 
     in the aggregate, are sufficient to ensure that the plan does 
     not have an accumulated funding deficiency under section 433 
     as of the end of the plan year.''.
       (B) Conforming amendments.--Section 412 of the Internal 
     Revenue Code of 1986 is amended--
       (i) by striking ``multiemployer plan'' in paragraph (A) of 
     subsection (a)(2), in clause (i) of subsection (c)(1)(B), the 
     first place it appears in clause (i) of subsection (c)(1)(A), 
     and the last place it appears in paragraph (2) of subsection 
     (d), and inserting ``multiemployer plan or a CSEC plan'',
       (ii) by striking ``430(j)'' in paragraph (1) of subsection 
     (b) and inserting ``430(j) or under 433(f)'',
       (iii)(I) by striking ``and'' at the end of clause (i) of 
     subsection (c)(1)(B),
       (II) by striking the period at the end of clause (ii) of 
     subsection (c)(1)(B) and inserting ``, and'', and
       (III) by inserting the following new clause after clause 
     (ii) of subsection (c)(1)(B):
       ``(iii) in the case of a CSEC plan, the funding standard 
     account shall be credited under section 433(b)(3)(C) with the 
     amount of the waived funding deficiency and such amount shall 
     be amortized as required under section 433(b)(2)(C).'',
       (iv) by striking ``under paragraph (1)'' in clause (i) of 
     subsection (c)(4)(A) and inserting ``under paragraph (1) or 
     for granting an extension under section 433(d)'',
       (v) by striking ``waiver under this subsection'' in 
     subparagraph (B) of subsection (c)(4) and inserting ``waiver 
     under this subsection or an extension under 433(d)'',
       (vi) by striking ``waiver or modification'' in subclause 
     (I) of subsection (c)(4)(B)(i) and inserting ``waiver, 
     modification, or extension'',
       (vii) by striking ``waivers'' in the heading of subsection 
     (c)(4)(C) and of clause (ii) of subsection (c)(4)(C) and 
     inserting ``waivers or extensions'',
       (viii) by striking ``section 431(d)'' in subparagraph (A) 
     of subsection (c)(7) and in paragraph (2) of subsection (d) 
     and inserting ``section 431(d) or section 433(d)'',
       (ix) by striking ``and'' at the end of subclause (I) of 
     subsection (c)(4)(C)(i) and inserting ``or the accumulated 
     funding deficiency under section 433, whichever is 
     applicable,'',

[[Page 2094]]

       (x) by striking ``430(e)(2),'' in subclause (II) of 
     subsection (c)(4)(C)(i) and inserting ``430(e)(2) or 
     433(b)(2)(C), whichever is applicable, and'',
       (xi) by adding immediately after subclause (II) of 
     subsection (c)(4)(C)(i) the following new subclause:

       ``(III) the total amounts not paid by reason of an 
     extension in effect under section 433(d),'', and

       (xii) by striking ``for waivers of'' in clause (ii) of 
     subsection (c)(4)(C) and inserting ``for waivers or 
     extensions with respect to''.
       (3) Benefit restrictions.--
       (A) In general.--Paragraph (29) of section 401(a) of the 
     Internal Revenue Code of 1986 is amended by striking 
     ``multiemployer plan'' and inserting ``multiemployer plan or 
     a CSEC plan''.
       (B) Conforming change.--Subsection (a) of section 436 of 
     the Internal Revenue Code of 1986 is amended by striking 
     ``single-employer plan'' and inserting ``single-employer plan 
     (other than a CSEC plan)''.
       (C) Effective date.--Any restriction under sections 
     401(a)(29) and 436 of the Internal Revenue Code of 1986 that 
     is in effect with respect to a CSEC plan as of the last day 
     of the last plan year beginning before January 1, 2014, shall 
     cease to apply as of the first day of the following plan 
     year.
       (4) Benefit increases.--Subparagraph (C) of section 
     401(a)(33) of the Internal Revenue Code of 1986 is amended by 
     striking ``multiemployer plans'' and inserting 
     ``multiemployer plans or CSEC plans''.

     SEC. 5. TRANSPARENCY.

       (a) Notice to Participants.--
       (1) In general.--Paragraph (2) of section 101(f) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1021(f)) is amended by adding at the end the following new 
     subparagraph:
       ``(E) Effect of csec plan rules on plan funding.--
       ``(i) In general.--In the case of a CSEC plan, each notice 
     under paragraph (1) shall include--

       ``(I) a statement that different rules apply to CSEC plans 
     than apply to single-employer plans, and
       ``(II) for the first 2 plan years beginning after December 
     31, 2013, a statement that, as a result of changes in the law 
     made by the Cooperative and Small Employer Charity Pension 
     Flexibility Act, the contributions to the plan may have 
     changed.

       ``(ii) Applicable plan year.--For purposes of this 
     subparagraph, the term `applicable plan year' means any plan 
     year beginning after December 31, 2013, for which--

       ``(I) the plan has a funding shortfall (as defined in 
     section 303(c)(4)) greater than $1,000,000, and
       ``(II) the plan had 50 or more participants on any day 
     during the preceding plan year.

     For purposes of any determination under subclause (II), the 
     aggregation rule under the last sentence of section 
     303(g)(2)(B) shall apply.
       ``(iii) Special rule for plan years beginning before 
     2014.--In the case of a preceding plan year referred to in 
     clause (i)(III) which begins before January 1, 2014, the 
     information described in such clause shall be provided only 
     without regard to the different rules applicable to CSEC 
     plans.''.
       (2) Model notice.--The Secretary of Labor may modify the 
     model notice required to be published under section 501(c) of 
     the Pension Protection Act of 2006 to include the information 
     described in section 101(f)(2)(E) of the Employee Retirement 
     Income Security Act of 1974, as added by this subsection.
       (b) Notice of Failure To Meet Minimum Funding Standards.--
       (1) Pending waivers.--Paragraph (2) of section 101(d) of 
     the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1021(d)) is amended by striking ``303'' and inserting 
     ``303 or 306''.
       (2) Definitions.--Paragraph (3) of section 101(d) of the 
     Employee Retirement Income Security Act of 1974 (21 U.S.C. 
     1021(d)) is amended by striking ``303(j)'' and inserting 
     ``303(j) or 306(f), whichever is applicable''.
       (c) Additional Reporting Requirements.--Section 103 of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1023) is amended by adding at the end the following new 
     subsection:
       ``(g) Additional Information With Respect to CSEC Plans.--
     With respect to any CSEC plan, an annual report under this 
     section for a plan year shall include a list of participating 
     employers and a good faith estimate of the percentage of 
     total contributions made by such participating employers 
     during the plan year.''.

     SEC. 6. ELECTIONS.

       (a) Election Not To Be Treated as a CSEC Plan.--
       (1) Amendment to erisa.--Subsection (f) of section 210 of 
     the Employee Retirement Income Security Act of 1974, as added 
     by section 3, is amended by adding at the end the following 
     new paragraph:
       ``(3) Election.--
       ``(A) In general.--If a plan falls within the definition of 
     a CSEC plan under this subsection (without regard to this 
     paragraph), such plan shall be a CSEC plan unless the plan 
     sponsor elects not later than the close of the first plan 
     year of the plan beginning after December 31, 2013, not to be 
     treated as a CSEC plan. An election under the preceding 
     sentence shall take effect for such plan year and, once made, 
     may be revoked only with the consent of the Secretary of the 
     Treasury.
       ``(B) Special rule.--If a plan described in subparagraph 
     (A) is treated as a CSEC plan, section 104 of the Pension 
     Protection Act of 2006, as amended by the Preservation of 
     Access to Care for Medicare Beneficiaries and Pension Relief 
     Act of 2010, shall cease to apply to such plan as of the 
     first date as of which such plan is treated as a CSEC 
     plan.''.
       (2) Amendment to the code.--Section 414(y) of the Internal 
     Revenue Code of 1986, as added by section 3, is amended by 
     adding at the end the following new paragraph:
       ``(3) Election.--
       ``(A) In general.--If a plan falls within the definition of 
     a CSEC plan under this subsection (without regard to this 
     paragraph), such plan shall be a CSEC plan unless the plan 
     sponsor elects not later than the close of the first plan 
     year of the plan beginning after December 31, 2013, not to be 
     treated as a CSEC plan. An election under the preceding 
     sentence shall take effect for such plan year and, once made, 
     may be revoked only with the consent of the Secretary.
       ``(B) Special rule.--If a plan described in subparagraph 
     (A) is treated as a CSEC plan, section 104 of the Pension 
     Protection Act of 2006, as amended by the Preservation of 
     Access to Care for Medicare Beneficiaries and Pension Relief 
     Act of 2010, shall cease to apply to such plan as of the 
     first date as of which such plan is treated as a CSEC 
     plan.''.
       (b) Election To Cease To Be Treated as an Eligible Charity 
     Plan.--
       (1) In general.--Subsection (d) of section 104 of the 
     Pension Protection Act of 2006, as added by section 202 of 
     the Preservation of Access to Care for Medicare Beneficiaries 
     and Pension Relief Act of 2010, is amended by--
       (A) striking ``For purposes of'' and inserting ``(1) In 
     general.--For purposes of'', and
       (B) adding at the end the following:
       ``(2) Election not to be an eligible charity plan.--A plan 
     sponsor may elect for a plan to cease to be treated as an 
     eligible charity plan for plan years beginning after December 
     31, 2013. Such election shall be made at such time and in 
     such form and manner as shall be prescribed by the Secretary 
     of the Treasury. Any such election may be revoked only with 
     the consent of the Secretary of the Treasury.
       ``(3) Election to use funding options available to other 
     plan sponsors.--
       ``(A) A plan sponsor that makes the election described in 
     paragraph (2) may elect for a plan to apply the rules 
     described in subparagraphs (B), (C), and (D) for plan years 
     beginning after December 31, 2013. Such election shall be 
     made at such time and in such form and manner as shall be 
     prescribed by the Secretary of the Treasury. Any such 
     election may be revoked only with the consent of the 
     Secretary of the Treasury.
       ``(B) Under the rules described in this subparagraph, for 
     the first plan year beginning after December 31, 2013, a plan 
     has--
       ``(i) an 11-year shortfall amortization base,
       ``(ii) a 12-year shortfall amortization base, and
       ``(iii) a 7-year shortfall amortization base.
       ``(C) Under the rules described in this subparagraph, 
     section 303(c)(2)(A) and (B) of the Employee Retirement 
     Income Security Act of 1974, and section 430(c)(2)(A) and (B) 
     of the Internal Revenue Code of 1986 shall be applied by--
       ``(i) in the case of an 11-year shortfall amortization 
     base, substituting `11-plan-year period' for `7-plan-year 
     period' wherever such phrase appears, and
       ``(ii) in the case of a 12-year shortfall amortization 
     base, substituting `12-plan-year period' for `7-plan-year 
     period' wherever such phrase appears.
       ``(D) Under the rules described in this subparagraph, 
     section 303(c)(7) of the Employee Retirement Income Security 
     Act of 1974, and section 430(c)(7) of the Internal Revenue 
     Code of 1986 shall apply to a plan for which an election has 
     been made under subparagraph (A). Such provisions shall apply 
     in the following manner:
       ``(i) The first plan year beginning after December 31, 
     2013, shall be treated as an election year, and no other plan 
     years shall be so treated.
       ``(ii) All references in section 303(c)(7) of such Act and 
     section 430(c)(7) of such Code to `February 28, 2010' or 
     `March 1, 2010' shall be treated as references to `February 
     28, 2013' or `March 1, 2013', respectively.
       ``(E) For purposes of this paragraph, the 11-year 
     amortization base is an amount, determined for the first plan 
     year beginning after December 31, 2013, equal to the 
     unamortized principal amount of the shortfall amortization 
     base (as defined in section 303(c)(3) of the Employee 
     Retirement Income Security Act of 1974 and section 430(c)(3) 
     of the Internal Revenue Code of 1986) that would have applied 
     to the plan for the first plan beginning after December 31, 
     2009, if--
       ``(i) the plan had never been an eligible charity plan,
       ``(ii) the plan sponsor had made the election described in 
     section 303(c)(2)(D)(i) of the Employee Retirement Income 
     Security Act of 1974 and in section 430(c)(2)(D)(i) of the 
     Internal Revenue Code of 1986 to have section 303(c)(2)(D)(i) 
     of such Act and section 430(c)(2)(D)(iii) of such Code apply 
     with respect to the shortfall amortization base for the first 
     plan year beginning after December 31, 2009, and
       ``(iii) no event had occurred under paragraph (6) or (7) of 
     section 303(c) of such Act or paragraph (6) or (7) of section 
     430(c) of such Code that, as of the first day of the first 
     plan year beginning after December 31, 2013, would have 
     modified the shortfall amortization base or the

[[Page 2095]]

     shortfall amortization installments with respect to the first 
     plan year beginning after December 31, 2009.
       ``(F) For purposes of this paragraph, the 12-year 
     amortization base is an amount, determined for the first plan 
     year beginning after December 31, 2013, equal to the 
     unamortized principal amount of the shortfall amortization 
     base (as defined in section 303(c)(3) of the Employee 
     Retirement Income Security Act of 1974 and section 430(c)(3) 
     of the Internal Revenue Code of 1986) that would have applied 
     to the plan for the first plan beginning after December 31, 
     2010, if--
       ``(i) the plan had never been an eligible charity plan,
       ``(ii) the plan sponsor had made the election described in 
     section 303(c)(2)(D)(i) of the Employee Retirement Income 
     Security Act of 1974 and in section 430(c)(2)(D)(i) of the 
     Internal Revenue Code of 1986 to have section 303(c)(2)(D)(i) 
     of such Act and section 430(c)(2)(D)(iii) of such Code apply 
     with respect to the shortfall amortization base for the first 
     plan year beginning after December 31, 2010, and
       ``(iii) no event had occurred under paragraph (6) or (7) of 
     section 303(c) of such Act or paragraph (6) or (7) of section 
     430(c) of such Code that, as of the first day of the first 
     plan year beginning after December 31, 2013, would have 
     modified the shortfall amortization base or the shortfall 
     amortization installments with respect to the first plan year 
     beginning after December 31, 2010.
       ``(G) For purposes of this paragraph, the 7-year shortfall 
     amortization base is an amount, determined for the first plan 
     year beginning after December 31, 2013, equal to--
       ``(i) the shortfall amortization base for the first plan 
     year beginning after December 31, 2013, without regard to 
     this paragraph, minus
       ``(ii) the sum of the 11-year shortfall amortization base 
     and the 12-year shortfall amortization base.''.
       (c) Deemed Election.--For purposes of sections 4(b)(2) and 
     4021(b)(3) of the Employee Retirement Income Security Act of 
     1974, a plan shall be deemed to have made an irrevocable 
     election under section 410(d) of the Internal Revenue Code of 
     1986 if--
       (1) the plan was established before January 1, 2014;
       (2) the plan falls within the definition of a CSEC plan;
       (3) the plan sponsor does not make an election under 
     section 210(f)(3)(A) of the Employee Retirement Income 
     Security Act of 1974 and section 414(y)(3)(A) of the Internal 
     Revenue Code of 1986, as added by this Act; and
       (4) the plan, plan sponsor, administrator, or fiduciary 
     remits one or more premium payments for the plan to the 
     Pension Benefit Guaranty Corporation for a plan year 
     beginning after December 31, 2013.
       (d) Effective Date.--The amendments made by this section 
     shall apply as of the date of enactment of this Act.

     SEC. 7. SPONSOR EDUCATION AND ASSISTANCE.

       (a) Definition.--In this section, the term ``CSEC plan'' 
     has the meaning given that term in subsection (f)(1) of 
     section 210 of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1060(f)(1)) (as added by this Act).
       (b) Education.--The Participant and Plan Sponsor Advocate 
     established under section 4004 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1304) shall make 
     itself available to assist CSEC plan sponsors and 
     participants as part of the duties it performs under the 
     general supervision of the Board of Directors under section 
     4004(b) of such Act (29 U.S.C. 1304(b)).

     SEC. 8. EFFECTIVE DATE.

       Unless otherwise specified in this Act, the provisions of 
     this Act shall apply to years beginning after December 31, 
     2013.
  The amendment (No. 2701) was agreed to.
  (The amendment is printed in today's Record under ``Text of 
Amendments.'')
  The committee-reported substitute, as amended, was agreed to.
  The bill was ordered to be engrossed for a third reading, was read 
the third time, and passed.

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