    [United States Statutes at Large, Volume 128, 113th Congress, 2nd Session]
    [From the U.S. Government Publishing Office, www.gpo.gov]

    Public Law 113-97
    113th Congress

    An Act

    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. <>

    Be it enacted by the Senate and House of Representatives of the
    United States of America in Congress assembled, <>
    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. Effective date.

    TITLE I--AMENDMENTS TO EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
    AND OTHER PROVISIONS

    Sec. 101. Definition of cooperative and small employer charity pension
    plans.
    Sec. 102. Funding rules applicable to cooperative and small employer
    charity pension plans.
    Sec. 103. Elections.
    Sec. 104. Transparency.
    Sec. 105. Sponsor education and assistance.

    TITLE II--AMENDMENTS TO INTERNAL REVENUE CODE OF 1986

    Sec. 201. Definition of cooperative and small employer charity pension
    plans.
    Sec. 202. Funding rules applicable to cooperative and small employer
    charity pension plans.
    Sec. 203. Election not to be treated as a CSEC plan.

    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. EFFECTIVE DATE.

    Unless <>  otherwise specified in this Act,
    the provisions of this Act shall apply to years beginning after December
    31, 2013.

    [[Page 1102]]

    TITLE I--AMENDMENTS TO EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
    AND OTHER PROVISIONS

    SEC. 101. DEFINITION OF COOPERATIVE AND SMALL EMPLOYER CHARITY
    PENSION PLANS.

    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 June 25, 2010, 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).''.
    SEC. 102. FUNDING RULES APPLICABLE TO COOPERATIVE AND SMALL
    EMPLOYER CHARITY PENSION PLANS.

    (a) In General.--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,

    [[Page 1103]]

    ``(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) separately, with respect to each plan
    year, the net increase (if any) in unfunded past
    service liability under the plan arising from plan
    amendments adopted in such year, over a period of
    15 plan years,
    ``(iv) separately, with respect to each plan
    year, the net experience loss (if any) under the
    plan, over a period of 5 plan years, and
    ``(v) separately, with respect to each plan
    year, the net loss (if any) resulting from changes
    in actuarial assumptions used under the plan, over
    a period of 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, and

    [[Page 1104]]

    ``(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.
    ``(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.

    ``(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

    [[Page 1105]]

    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), 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) 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. 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.
    ``(C) 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 of the Treasury.
    ``(ii) Plans to which subparagraph applies.--
    This subparagraph shall apply to a plan only if--
    ``(I) the plan is a CSEC plan,

    [[Page 1106]]

    ``(II) the aggregate unfunded vested
    benefits as of the close of the
    preceding plan year (as determined under
    section 4006(a)(3)(E)(iii)) of such plan
    and all other plans maintained by the
    contributing sponsors (as defined in
    section 4001(a)(13)) and members of such
    sponsors' controlled groups (as defined
    in section 4001(a)(14)) which are
    covered by title IV (disregarding plans
    with no unfunded vested benefits) exceed
    $50,000,000, and
    ``(III) the change in assumptions
    (determined after taking into account
    any changes in interest rate and
    mortality table) results in a decrease
    in the funding shortfall of the plan for
    the current plan year that exceeds
    $50,000,000, or that exceeds $5,000,000
    and that is 5 percent or more of the
    current liability of the plan before
    such change.
    ``(6) Full funding.--If, as of the close of a plan year, a
    plan would (without regard to this paragraph) have an
    accumulated funding deficiency (determined without regard to the
    alternative minimum funding standard account permitted under
    subsection (e)) in excess of the full funding limitation--
    ``(A) the funding standard account shall be credited
    with the amount of such excess, and
    ``(B) all amounts described in paragraphs (2)(B),
    (C), and (D) and (3)(B) of subsection (b) which are
    required to be amortized shall be considered fully
    amortized for purposes of such paragraphs.
    ``(7) Full-funding limitation.--For purposes of paragraph
    (6), the term `full-funding limitation' means the excess (if
    any) of--
    ``(A) the accrued liability (including normal cost)
    under the plan (determined under the entry age normal
    funding method if such accrued liability cannot be
    directly calculated under the funding method used for
    the plan), over
    ``(B) the lesser of--
    ``(i) the fair market value of the plan's
    assets, or
    ``(ii) the value of such assets determined
    under paragraph (2).
    ``(C) Minimum amount.--
    ``(i) In general.--In no event shall the full-
    funding limitation determined under subparagraph
    (A) be less than the excess (if any) of--
    ``(I) 90 percent of the current
    liability (determined without regard to
    paragraph (4) of subsection (h)) of the
    plan (including the expected increase in
    such current liability due to benefits
    accruing during the plan year), over
    ``(II) the value of the plan's
    assets determined under paragraph (2).
    ``(ii) Assets.--For purposes of clause (i),
    assets shall not be reduced by any credit balance
    in the funding standard account.
    ``(8) Annual valuation.--
    ``(A) <>  In general.--For
    purposes of this section, a determination of experience
    gains and losses and a valuation of the plan's liability
    shall be made not less frequently

    [[Page 1107]]

    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 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
    the Treasury 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

    [[Page 1108]]

    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) Interest.--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--

    [[Page 1109]]

    ``(A) Payable in 4 installments.--There shall be 4
    required installments for each plan year.
    ``(B) Time for payment of installments.--

    ``In the case of the following required
    installments:                                           The due date is:

    1st..........................................  April 15
    2nd..........................................  July 15
    3rd..........................................  October 15
    4th..........................................  January 15 of the following year.

    ``(4) Amount of required installment.--For purposes of this
    subsection--
    ``(A) In general.--The amount of any required
    installment shall be 25 percent of the required annual
    payment.
    ``(B) Required annual payment.--For purposes of
    subparagraph (A), the term `required annual payment'
    means the lesser of--
    ``(i) 90 percent of the amount required to be
    contributed to or under the plan by the employer
    for the plan year under section 302 (without
    regard to any waiver under subsection (c)
    thereof), or
    ``(ii) 100 percent of the amount so required
    for the preceding plan year.
    Clause (ii) shall not apply if the preceding plan year
    was not a year of 12 months.
    ``(5) Liquidity requirement.--
    ``(A) <>  In general.--A plan
    to which this paragraph applies shall be treated as
    failing to pay the full amount of any required
    installment to the extent that the value of the liquid
    assets paid in such installment is less than the
    liquidity shortfall (whether or not such liquidity
    shortfall exceeds the amount of such installment
    required to be paid but for this paragraph).
    ``(B) Plans to which paragraph applies.--This
    paragraph shall apply to a CSEC plan other than a plan
    described in section 302(d)(6)(A) (as in effect on the
    day before the enactment of the Pension Protection Act
    of 2006) which--
    ``(i) is required to pay installments under
    this subsection for a plan year, and
    ``(ii) has a liquidity shortfall for any
    quarter during such plan year.
    ``(C) Period of underpayment.--For purposes of
    paragraph (1), any portion of an installment that is
    treated as not paid under subparagraph (A) shall
    continue to be treated as unpaid until the close of the
    quarter in which the due date for such installment
    occurs.
    ``(D) Limitation on increase.--If the amount of any
    required installment is increased by reason of
    subparagraph (A), in no event shall such increase exceed
    the amount which, when added to prior installments for
    the plan year, is necessary to increase the funded
    current liability percentage (taking into account the
    expected

    [[Page 1110]]

    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.

    [[Page 1111]]

    ``(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.

    [[Page 1112]]

    ``(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)--

    [[Page 1113]]

    ``(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:

    ``If the years of participation  are:    The applicable percentage 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.

    [[Page 1114]]

    ``(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) Funding Restoration Status.--Notwithstanding any other
    provisions of this section--
    ``(1) Normal cost payment.--
    ``(A) <>  In general.--In the
    case of a CSEC plan that is in funding restoration
    status for a plan year, for purposes of section 302, the
    term `accumulated funding deficiency' means, for such
    plan year, the greater of--
    ``(i) the amount described in subsection (a),
    or
    ``(ii) the excess of the normal cost of the
    plan for the plan year over the amount actually
    contributed to or under the plan for the plan
    year.
    ``(B) Normal cost.--In the case of a CSEC plan that
    uses a spread gain funding method, for purposes of this
    subsection, the term `normal cost' means normal cost as
    determined under the entry age normal funding method.
    ``(2) Plan amendments.--In the case of a CSEC plan that is
    in funding restoration status for a plan year, no amendment to
    such plan may take effect during such plan year if such
    amendment has the effect of increasing liabilities of the plan
    by means of increases in benefits, establishment of new
    benefits, changing the rate of benefit accrual, or changing the
    rate at which benefits become nonforfeitable. This paragraph
    shall not apply to any plan amendment that is required to comply
    with any applicable <> law. This
    paragraph shall cease to apply with respect to any plan year,
    effective as of the first day of the plan year (or if later, the
    effective date of the amendment) upon payment by the plan
    sponsor of a contribution to the plan (in addition to any
    contribution required under this section without regard to this
    paragraph) in an amount equal to the increase in the funding
    liability of the plan attributable to the plan amendment.
    ``(3) <>  Funding
    restoration plan.--The sponsor of a CSEC plan shall establish a
    written funding restoration plan within 180 days of the receipt
    by the plan sponsor of a certification from the plan actuary
    that the plan is in funding restoration status for a plan year.
    Such funding restoration plan shall consist of actions that are
    calculated, based on reasonably anticipated experience and
    reasonable actuarial assumptions, to increase the plan's funded
    percentage to 100 percent over a period that is not longer than
    the greater of 7 years or the shortest amount of time
    practicable. Such funding restoration plan shall take into
    account contributions required under this section (without
    regard to this paragraph). If a plan remains in funding
    restoration status for 2 or more years, such funding restoration
    plan shall be updated each year after the 1st such year within
    180 days of receipt by the plan sponsor of a certification from
    the plan actuary that the plan remains in funding restoration
    status for the plan year.
    ``(4) <>  Annual certification by plan
    actuary.--Not later than the 90th day of each plan year of a
    CSEC plan, the plan actuary shall certify to the plan sponsor
    whether or not

    [[Page 1115]]

    the plan is in funding restoration status for the plan year,
    based on the plan's funded percentage as of the beginning of the
    plan year. For this purpose, the actuary may conclusively rely
    on an estimate of--
    ``(A) the plan's funding liability, based on the
    funding liability of the plan for the preceding plan
    year and on reasonable actuarial estimates, assumptions,
    and methods, and
    ``(B) the amount of any contributions reasonably
    anticipated to be made for the preceding plan year.
    Contributions described in subparagraph (B) shall be taken into
    account in determining the plan's funded percentage as of the
    beginning of the plan year.
    ``(5) Definitions.--For purposes of this subsection--
    ``(A) Funding restoration status.--A CSEC plan shall
    be treated as in funding restoration status for a plan
    year if the plan's funded percentage as of the beginning
    of such plan year is less than 80 percent.
    ``(B) Funded percentage.--The term `funded
    percentage' means the ratio (expressed as a percentage)
    which--
    ``(i) the value of plan assets (as determined
    under subsection (c)(2)), bears to
    ``(ii) the plan's funding liability.
    ``(C) Funding liability.--The term `funding
    liability' for a plan year means the present value of
    all benefits accrued or earned under the plan as of the
    beginning of the plan year, based on the assumptions
    used by the plan pursuant to this section, including the
    interest rate described in subsection (b)(5)(A) (without
    regard to subsection (b)(5)(B)).
    ``(D) Spread gain funding method.--The term `spread
    gain funding method' has the meaning given such term
    under rules and forms issued by the Secretary of the
    Treasury.''.

    (b) Separate Rules for CSEC Plans.--
    (1) 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.''.
    (2) Conforming amendments.--Section 302 of the Employee
    Retirement Income Security Act of 1974 (29 U.S.C. 1082) is
    amended--
    (A) 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'',
    (B) by striking ``303(j)'' in paragraph (1) of
    subsection (b) and inserting ``303(j) or under section
    306(f)'',
    (C)(i) by striking ``and'' at the end of clause (i)
    of subsection (c)(1)(B),

    [[Page 1116]]

    (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).'',
    (D) 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)'',
    (E) 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)'',
    (F) by striking ``waiver or modification'' in
    subclause (I) of subsection (c)(4)(B)(i) and inserting
    ``waiver, modification, or extension'',
    (G) 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'',
    (H) 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)'',
    (I) 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,'',
    (J) 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'',
    (K) 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),'',
    (L) by striking ``for waivers of'' in clause (ii) of
    subsection (c)(4)(C) and inserting ``for waivers or
    extensions with respect to'', and
    (M) 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.--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)).''.
    (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)''.

    [[Page 1117]]

    (6) Section 502.--Subsection (c) of section 502 of the
    Employee Retirement Income Security Act of <> 1974 is amended--
    (A) by redesignating the last paragraph as paragraph
    (11), and
    (B) by adding at the end the following new
    paragraph:
    ``(12) The Secretary may assess a civil penalty against any
    sponsor of a CSEC plan of up to $100 a day from the date of the
    plan sponsor's failure to comply with the requirements of
    section 306(j)(3) to establish or update a funding restoration
    plan.''.
    (7) 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''.
    (8) 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''.
    (9) 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)''.
    SEC. 103. ELECTIONS.

    (a) Election Not To Be Treated as a CSEC Plan.--Subsection (f) of
    section 210 of the Employee Retirement Income Security Act of 1974, as
    added by section 101, 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.''.

    (b) Election To Cease To Be Treated as an Eligible Charity Plan.--
    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--

    [[Page 1118]]

    (1) by striking ``For purposes of'' and inserting ``(1) In
    general.--For purposes of'', and
    (2) by 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

    [[Page 1119]]

    have applied to the plan for the first plan beginning
    after December 31, 2009, if--
    ``(i) the plan had never been an eligible
    charity plan,
    ``(ii) <>  the plan
    sponsor had made the election described in section
    303(c)(2)(D)(i) of the Employee Retirement Income
    Security Act of 1974 and in section
    430(c)(2)(D)(i) of the Internal Revenue Code of
    1986 to have section 303(c)(2)(D)(i) of such Act
    and section 430(c)(2)(D)(iii) of such Code apply
    with respect to the shortfall amortization base
    for the first plan year beginning after December
    31, 2009, and
    ``(iii) no event had occurred under paragraph
    (6) or (7) of section 303(c) of such Act or
    paragraph (6) or (7) of section 430(c) of such
    Code that, as of the first day of the first plan
    year beginning after December 31, 2013, would have
    modified the shortfall amortization base or the
    shortfall amortization installments with respect
    to the first plan year beginning after December
    31, 2009.
    ``(F) <>  For purposes of this
    paragraph, the 12-year amortization base is an amount,
    determined for the first plan year beginning after
    December 31, 2013, equal to the unamortized principal
    amount of the shortfall amortization base (as defined in
    section 303(c)(3) of the Employee Retirement Income
    Security Act of 1974 and section 430(c)(3) of the
    Internal Revenue Code of 1986) that would have applied
    to the plan for the first plan beginning after December
    31, 2010, if--
    ``(i) the plan had never been an eligible
    charity plan,
    ``(ii) the plan sponsor had made the election
    described in section 303(c)(2)(D)(i) of the
    Employee Retirement Income Security Act of 1974
    and in section 430(c)(2)(D)(i) of the Internal
    Revenue Code of 1986 to have section
    303(c)(2)(D)(i) of such Act and section
    430(c)(2)(D)(iii) of such Code apply with respect
    to the shortfall amortization base for the first
    plan year beginning after December 31, 2010, and
    ``(iii) no event had occurred under paragraph
    (6) or (7) of section 303(c) of such Act or
    paragraph (6) or (7) of section 430(c) of such
    Code that, as of the first day of the first plan
    year beginning after December 31, 2013, would have
    modified the shortfall amortization base or the
    shortfall amortization installments with respect
    to the first plan year beginning after December
    31, 2010.
    ``(G) For purposes of this paragraph, the 7-year
    shortfall amortization base is an amount, determined for
    the first plan year beginning after December 31, 2013,
    equal to--
    ``(i) the shortfall amortization base for the
    first plan year beginning after December 31, 2013,
    without regard to this paragraph, minus
    ``(ii) the sum of the 11-year shortfall
    amortization base and the 12-year shortfall
    amortization base.

    [[Page 1120]]

    ``(4) <>  Retroactive election.--Not later
    than December 31, 2014, a plan sponsor may make a one-time,
    irrevocable, retroactive election to not be treated as an
    eligible charity plan. Such <>  election
    shall be effective for plan years beginning after December 31,
    2007, and shall be made by providing reasonable notice to the
    Secretary of the Treasury.''.

    (c) <>  Deemed Election.--For purposes of
    the Internal Revenue Code of 1986, sections 4(b)(2) and 4021(b)(3) of
    the Employee Retirement Income Security Act of 1974, and all other
    purposes, 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. 104. 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.--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,
    ``(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, and
    ``(iii) in the case of a CSEC plan that is in
    funding restoration status for the plan year, a
    statement that the plan is in funding restoration
    status for such plan year.
    A copy of the statement required under clause (iii)
    shall be provided to the Secretary, the Secretary of the
    Treasury, and the Director of the Pension Benefit
    Guaranty Corporation.''.
    (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

    [[Page 1121]]

    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 Multiple Employer
    Plans.--With respect to any multiple employer 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. 105. <>  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)).

    TITLE II--AMENDMENTS TO INTERNAL REVENUE CODE OF 1986

    SEC. 201. DEFINITION OF COOPERATIVE AND SMALL EMPLOYER CHARITY
    PENSION PLANS.

    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 June 25, 2010, 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).''.

    [[Page 1122]]

    SEC. 202. FUNDING RULES APPLICABLE TO COOPERATIVE AND SMALL
    EMPLOYER CHARITY PENSION PLANS.

    (a) In General.--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) separately, with respect to each plan
    year, the net increase (if any) in unfunded past
    service liability under the plan arising from plan
    amendments adopted in such year, over a period of
    15 plan years,
    ``(iv) separately, with respect to each plan
    year, the net experience loss (if any) under the
    plan, over a period of 5 plan years, and
    ``(v) separately, with respect to each plan
    year, the net loss (if any) resulting from changes
    in actuarial assumptions used under the plan, over
    a period of 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

    [[Page 1123]]

    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, and
    ``(D) in the case of a plan year for which the
    accumulated funding deficiency is determined under the
    funding standard account if such plan year follows a
    plan year for which such deficiency was determined under
    the alternative minimum funding standard, the excess (if
    any) of any debit balance in the funding standard
    account (determined without regard to this subparagraph)
    over any debit balance in the alternative minimum
    funding standard account.
    ``(4) 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) <>  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) 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--

    [[Page 1124]]

    ``(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.

    ``(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), 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.

    [[Page 1125]]

    ``(B) 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. 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.
    ``(C) 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

    [[Page 1126]]

    ``(ii) the value of such assets determined
    under paragraph (2).
    ``(C) Minimum amount.--
    ``(i) In general.--In no event shall the full-
    funding limitation determined under subparagraph
    (A) be less than the excess (if any) of--
    ``(I) 90 percent of the current
    liability (determined without regard to
    paragraph (4) of subsection (h)) of the
    plan (including the expected increase in
    such current liability due to benefits
    accruing during the plan year), over
    ``(II) the value of the plan's
    assets determined under paragraph (2).
    ``(ii) Assets.--For purposes of clause (i),
    assets shall not be reduced by any credit balance
    in the funding standard account.
    ``(8) Annual valuation.--
    ``(A) <>  In
    general.--For purposes of this section, a determination
    of experience gains and losses and a valuation of the
    plan's liability shall be made not less frequently than
    once every year, except that such determination shall be
    made more frequently to the extent required in
    particular cases under regulations prescribed by the
    Secretary.
    ``(B) Valuation date.--
    ``(i) Current year.--Except as provided in
    clause (ii), the valuation referred to in
    subparagraph (A) shall be made as of a date within
    the plan year to which the valuation refers or
    within one month prior to the beginning of such
    year.
    ``(ii) Use of prior year valuation.--The
    valuation referred to in subparagraph (A) may be
    made as of a date within the plan year prior to
    the year to which the valuation refers if, as of
    such date, the value of the assets of the plan are
    not less than 100 percent of the plan's current
    liability.
    ``(iii) Adjustments.--Information under clause
    (ii) shall, in accordance with regulations, be
    actuarially adjusted to reflect significant
    differences in participants.
    ``(iv) Limitation.--A change in funding method
    to use a prior year valuation, as provided in
    clause (ii), may not be made unless as of the
    valuation date within the prior plan year, the
    value of the assets of the plan are not less than
    125 percent of the plan's current liability.
    ``(9) Time when certain contributions deemed made.--For
    purposes of this section, any contributions for a plan year made
    by an employer during the period--
    ``(A) beginning on the day after the last day of
    such plan year, and
    ``(B) ending on the day which is 8\1/2\ months after
    the close of the plan year,
    shall be deemed to have been made on such last day.
    ``(10) Anticipation of benefit increases effective in the
    future.--In determining projected benefits, the funding method
    of a collectively bargained CSEC plan described in section
    413(a) shall anticipate benefit increases scheduled to

    [[Page 1127]]

    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 the 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 the 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) Interest.--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)--

    [[Page 1128]]

    ``(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

    [[Page 1129]]

    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

    [[Page 1130]]

    ``(II) the sum of the purchases of
    annuities, payments of single sums, and
    such other disbursements as the
    Secretary shall provide in regulations.
    ``(v) Liquid assets.--The term `liquid assets'
    means cash, marketable securities and such other
    assets as specified by the Secretary in
    regulations.
    ``(vi) Quarter.--The term `quarter' means,
    with respect to any required installment, the 3-
    month period preceding the month in which the due
    date for such installment occurs.
    ``(F) Regulations.--The Secretary may prescribe such
    regulations as are necessary to carry out this
    paragraph.
    ``(6) Fiscal years and short years.--
    ``(A) <>  Fiscal years.--In
    applying this subsection to a plan year beginning on any
    date other than January 1, there shall be substituted
    for the months specified in this subsection, the months
    which correspond thereto.
    ``(B) <>  Short plan year.--This
    subsection shall be applied to plan years of less than
    12 months in accordance with regulations prescribed by
    the Secretary.

    ``(g) Imposition of Lien Where Failure To Make Required
    Contributions.--
    ``(1) <>  In general.--In the case of
    a plan to which this section applies, if--
    ``(A) any person fails to make a required
    installment under subsection (f) or any other payment
    required under this section before the due date for such
    installment or other payment, and
    ``(B) the unpaid balance of such installment or
    other payment (including interest), when added to the
    aggregate unpaid balance of all preceding such
    installments or other payments for which payment was not
    made before the due date (including interest), exceeds
    $1,000,000,
    then there shall be a lien in favor of the plan in the amount
    determined under paragraph (3) upon all property and rights to
    property, whether real or personal, belonging to such person and
    any other person who is a member of the same controlled group of
    which such person is a member.
    ``(2) Plans to which subsection applies.--This subsection
    shall apply to a CSEC plan for any plan year for which the
    funded current liability percentage of such plan is less than
    100 percent. This subsection shall not apply to any plan to
    which section 4021 of the Employee Retirement Income Security
    Act of 1974 does not apply (as such section is in effect on the
    date of the enactment of the Retirement Protection Act of 1994).
    ``(3) Amount of lien.--For purposes of paragraph (1), the
    amount of the lien shall be equal to the aggregate unpaid
    balance of required installments and other payments required
    under this section (including interest)--
    ``(A) for plan years beginning after 1987, and
    ``(B) for which payment has not been made before the
    due date.
    ``(4) Notice of failure; lien.--
    ``(A) <>  Notice of failure.--A
    person committing a failure described in paragraph (1)
    shall notify the Pension

    [[Page 1131]]

    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

    [[Page 1132]]

    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:

    ``If the years of participation  are:    The applicable percentage 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--

    [[Page 1133]]

    ``(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) Funding Restoration Status.--Notwithstanding any other
    provisions of this section--
    ``(1) <>  Normal cost payment.--
    ``(A) In general.--In the case of a CSEC plan that
    is in funding restoration status for a plan year, for
    purposes of section 412, the term `accumulated funding
    deficiency' means, for such plan year, the greater of--
    ``(i) the amount described in subsection (a),
    or
    ``(ii) the excess of the normal cost of the
    plan for the plan year over the amount actually
    contributed to or under the plan for the plan
    year.
    ``(B) Normal cost.--In the case of a CSEC plan that
    uses a spread gain funding method, for purposes of this
    subsection, the term `normal cost' means normal cost as
    determined under the entry age normal funding method.
    ``(2) Plan amendments.--In the case of a CSEC plan that is
    in funding restoration status for a plan year, no amendment to
    such plan may take effect during such plan year if such
    amendment has the effect of increasing liabilities of the plan
    by means of increases in benefits, establishment of new
    benefits, changing the rate of benefit accrual, or changing the
    rate at which benefits become nonforfeitable. This paragraph
    shall not apply to any plan amendment that is required to comply
    with any applicable <> law. This
    paragraph shall cease to apply with respect to any plan year,
    effective as of the first day of the plan year (or if later, the
    effective date of the amendment) upon payment by the plan
    sponsor of a contribution to the plan (in addition to any
    contribution required under this section without regard to this
    paragraph) in an amount equal to the increase in the funding
    liability of the plan attributable to the plan amendment.
    ``(3) <>  Funding restoration plan.--The
    sponsor of a CSEC plan shall establish a written funding
    restoration plan within 180 days of the receipt by the plan
    sponsor of a certification from the plan actuary that the plan
    is in funding restoration status for a plan year. Such funding
    restoration plan shall consist of actions that are calculated,
    based on reasonably anticipated experience and reasonable
    actuarial assumptions,

    [[Page 1134]]

    to increase the plan's funded percentage to 100 percent over a
    period that is not longer than the greater of 7 years or the
    shortest amount of time practicable. Such funding restoration
    plan shall take into account contributions required under this
    section (without regard to this
    paragraph). <>  If a plan
    remains in funding restoration status for 2 or more years, such
    funding restoration plan shall be updated each year after the
    1st such year within 180 days of receipt by the plan sponsor of
    a certification from the plan actuary that the plan remains in
    funding restoration status for the plan year.
    ``(4) <>  Annual certification by plan
    actuary.--Not later than the 90th day of each plan year of a
    CSEC plan, the plan actuary shall certify to the plan sponsor
    whether or not the plan is in funding restoration status for the
    plan year, based on the plan's funded percentage as of the
    beginning of the plan year. For this purpose, the actuary may
    conclusively rely on an estimate of--
    ``(A) the plan's funding liability, based on the
    funding liability of the plan for the preceding plan
    year and on reasonable actuarial estimates, assumptions,
    and methods, and
    ``(B) the amount of any contributions reasonably
    anticipated to be made for the preceding plan year.
    Contributions described in subparagraph (B) shall be taken into
    account in determining the plan's funded percentage as of the
    beginning of the plan year.
    ``(5) Definitions.--For purposes of this subsection--
    ``(A) Funding restoration status.--A CSEC plan shall
    be treated as in funding restoration status for a plan
    year if the plan's funded percentage as of the beginning
    of such plan year is less than 80 percent.
    ``(B) Funded percentage.--The term `funded
    percentage' means the ratio (expressed as a percentage)
    which--
    ``(i) the value of plan assets (as determined
    under subsection (c)(2)), bears to
    ``(ii) the plan's funding liability.
    ``(C) Funding liability.--The term `funding
    liability' for a plan year means the present value of
    all benefits accrued or earned under the plan as of the
    beginning of the plan year, based on the assumptions
    used by the plan pursuant to this section, including the
    interest rate described in subsection (b)(5)(A) (without
    regard to subsection (b)(5)(B)).
    ``(D) Spread gain funding method.--The term `spread
    gain funding method' has the meaning given such term
    under rules and forms issued by the Secretary.
    ``(E) Plan sponsor.--The term `plan sponsor' means,
    with respect to a CSEC plan, the association, committee,
    joint board of trustees, or other similar group of
    representatives of the parties who establish or maintain
    the plan.''.

    (b) CSEC Plans.--Section 413 of the Internal Revenue Code of
    1986 <>  is amended by adding at the end the
    following new subsection:

    ``(d) CSEC Plans.--Notwithstanding any other provision of this
    section, in the case of a CSEC plan--

    [[Page 1135]]

    ``(1) Funding.--The requirements of section 412 shall be
    determined as if all participants in the plan were employed by a
    single employer.
    ``(2) Application of provisions.--Paragraphs (1), (2), (3),
    and (5) of subsection (c) shall apply.
    ``(3) Deduction limitations.--Each applicable limitation
    provided by section 404(a) shall be determined as if all
    participants in the plan were employed by a single employer. The
    amounts contributed to or under the plan by each employer who
    maintains the plan (for the portion of the taxable year included
    within a plan year) shall be considered not to exceed such
    applicable limitation if the anticipated employer contributions
    for such plan year of all employers (determined in a reasonable
    manner not inconsistent with regulations prescribed by the
    Secretary) do not exceed such limitation.
    If <>  such anticipated
    contributions exceed such limitation, the portion of each such
    employer's contributions which is not deductible under section
    404 shall be determined in accordance with regulations
    prescribed by the Secretary.
    ``(4) Allocations.--Allocations of amounts under paragraph
    (3) and subsection (c)(5) among the employers maintaining the
    plan shall not be inconsistent with the regulations prescribed
    for this purpose by the Secretary.''.

    (c) Separate Rules for CSEC Plans.--
    (1) 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.''.
    (2) Conforming amendments.--Section 412 of such Code is
    amended--
    (A) 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'',
    (B) by striking ``430(j)'' in paragraph (1) of
    subsection (b) and inserting ``430(j) or under section
    433(f)'',
    (C)(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).'',
    (D) 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)'',

    [[Page 1136]]

    (E) 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)'',
    (F) by striking ``waiver or modification'' in
    subclause (I) of subsection (c)(4)(B)(i) and inserting
    ``waiver, modification, or extension'',
    (G) 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'',
    (H) 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)'',
    (I) 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,'',
    (J) 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'',
    (K) 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
    (L) 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
    such Code <>  is amended by striking
    ``multiemployer plan'' and inserting ``multiemployer
    plan or a CSEC plan''.
    (B) Conforming change.--Subsection (a) of section
    436 of such Code <>  is amended by
    striking ``single-employer plan'' and inserting
    ``single-employer plan (other than a CSEC plan)''.
    (4) Benefit increases.--Subparagraph (C) of section
    401(a)(33) of such Code is amended by striking ``multiemployer
    plans'' and inserting ``multiemployer plans or CSEC plans''.
    (5) Liquidity shortfalls.--
    (A) In general.--Subparagraph (A) of section
    401(a)(32) of such Code is amended by striking
    ``430(j)(4)'' each place it appears and inserting
    ``430(j)(4) or 433(f)(5)''.
    (B) Period of shortfall.--Subparagraph (C) of
    section 401(a)(32) of such Code is amended by striking
    ``430(j)(3) by reason of section 430(j)(4)(A) thereof''
    and inserting ``430(j)(3) or 433(f) by reason of section
    430(j)(4)(A) or 433(f)(5), respectively''.
    (6) Deduction limits.--Subsection (o) of section 404 of such
    Code <>  is amended by adding at the end the
    following new paragraph:
    ``(8) <>  CSEC plans.--Solely for
    purposes of this subsection, a CSEC plan shall be treated as
    though section 430 applied to such plan and the minimum required
    contribution for any plan year shall be the amount described in
    section 412(a)(2)(D).''.

    [[Page 1137]]

    (7) Section 420.--Paragraph (5) of section 420(e) of such
    Code <>  is amended by striking ``section
    430'' each place it appears and inserting ``sections 430 and
    433''.
    (8) Coordination with section 4971.--
    (A) Subsection (a) of section 4971 of such
    Code <>  is amended by striking
    ``and'' at the end of paragraph (1), by striking the
    period at the end of paragraph (2) and inserting ``,
    and'', and by adding at the end thereof the following
    new paragraph:
    ``(3) in the case of a CSEC plan, 10 percent of the CSEC
    accumulated funding deficiency as of the end of the plan year
    ending with or within the taxable year.''.
    (B) Subsection (b) of section 4971 of such Code is
    amended--
    (i) by striking ``or'' at the end of paragraph
    (1), by adding ``or'' at the end of paragraph (2),
    and by inserting immediately after paragraph (2)
    the following new paragraph:
    ``(3) a tax is imposed under subsection (a)(3) on any CSEC
    accumulated funding deficiency and the CSEC accumulated funding
    deficiency is not corrected within the taxable period,'', and
    (ii) by striking ``minimum required
    contributions or accumulated funding deficiency''
    and inserting ``minimum required contribution,
    accumulated funding deficiency, or CSEC
    accumulated funding deficiency''.
    (C) Subsection (c) of section 4971 of such Code is
    amended--
    (i) by striking ``accumulated funding
    deficiency'' each place it appears in paragraph
    (2) and inserting ``accumulated funding deficiency
    or CSEC accumulated funding deficiency'',
    (ii) by striking ``accumulated funding
    deficiency or unpaid minimum required
    contribution'' each place it appears in paragraph
    (3) and inserting ``accumulated funding
    deficiency, CSEC accumulated funding deficiency,
    or unpaid minimum required contribution'', and
    (iii) by adding at the end the following new
    paragraph:
    ``(5) <>  CSEC accumulated funding
    deficiency.--The term `CSEC accumulated funding deficiency'
    means the accumulated funding deficiency determined under
    section 433.''.
    (D) Paragraph (1) of section 4971(d) of such Code is
    amended by striking ``accumulated funding deficiency or
    unpaid minimum required contribution'' and inserting
    ``accumulated funding deficiency, CSEC accumulated
    funding deficiency, or unpaid minimum required
    contribution''.
    (E) Subsection (f) of section 4971 of such Code is
    amended--
    (i) by striking ``430(j)(4)'' in paragraph (1)
    and inserting ``430(j)(4) or 433(f)'',
    (ii) by striking ``430(j)'' in paragraph
    (1)(B) and inserting ``430(j) or 433(f), whichever
    is applicable'', and
    (iii) by striking ``412(m)(5)'' in paragraph
    (3)(A) and inserting ``430(j) or 433(f), whichever
    is applicable''.

    [[Page 1138]]

    (9) Excise tax on failure to adopt funding restoration
    plan.--Section 4971 of such Code <>  is
    amended by redesignating subsection (h) as subsection (i), and
    by inserting after subsection (g) the following new subsection:

    ``(h) Failure of a CSEC Plan Sponsor To Adopt Funding Restoration
    Plan.--
    ``(1) <>  In general.--In the case of a CSEC
    plan that is in funding restoration status (within the meaning
    of section 433(j)(5)(A)), there is hereby imposed a tax on the
    failure of such plan to adopt a funding restoration plan within
    the time prescribed under section 433(j)(3).
    ``(2) <>  Amount of tax.--The amount of
    the tax imposed under paragraph (1) with respect to any plan
    sponsor for any taxable year shall be the amount equal to $100
    multiplied by the number of days during the taxable year which
    are included in the period beginning on the day following the
    close of the 180-day period described in section 433(j)(3) and
    ending on the day on which the funding restoration plan is
    adopted.
    ``(3) Waiver by secretary.--In the case of a failure
    described in paragraph (1) which the Secretary determines is due
    to reasonable cause and not to willful neglect, the Secretary
    may waive a portion or all of the tax imposed by such paragraph.
    ``(4) Liability for tax.--The tax imposed by paragraph (1)
    shall be paid by the plan sponsor (within the meaning of section
    433(j)(5)(E)).''.
    (10) Reporting.--
    (A) In general.--Paragraph (2) of section 6059(b) of
    such Code <>  is amended by striking
    ``430,'' and inserting ``430, the accumulated funding
    deficiency under section 433,''.
    (B) Assumptions.--Subparagraph (B) of section
    6059(b)(3) of such Code is amended by striking
    ``430(h)(1) or 431(c)(3)'' and inserting ``430(h)(1),
    431(c)(3), or 433(c)(3)''.
    SEC. 203. ELECTION NOT TO BE TREATED AS A CSEC PLAN.

    (a) In General.--Section 414(y) of the Internal Revenue Code of
    1986, <>  as added by section 201, 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.''.

    [[Page 1139]]

    (b) <>  Effective Date.--The amendment made
    by this section shall apply as of the date of enactment of this Act.

    Approved April 7, 2014.

    LEGISLATIVE HISTORY--H.R. 4275 (S. 1302):
    ---------------------------------------------------------------------------

    CONGRESSIONAL RECORD, Vol. 160 (2014):
    Mar. 24, considered and passed House.
    Mar. 25, considered and passed Senate.