[109th CONGRESS House Bills]
[From the U.S. Government Printing Office via GPO Access]
[Considered and Passed House]
[DOCID: f:h4cph.txt]

109th CONGRESS
  2d Session
                                 H. R. 4

To provide economic security for all Americans, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 28, 2006

 Mr. Boehner (for himself, Mr. Thomas, Mr. McKeon, Mr. Kline, and Mr. 
    Camp) introduced the following bill; which was referred to the 
   Committee on Ways and Means, and in addition to the Committee on 
Education and the Workforce, for a period to be subsequently determined 
 by the Speaker, in each case for consideration of such provisions as 
        fall within the jurisdiction of the committee concerned

                             July 28, 2006

    The Committees on Ways and Means and Education and the Workforce 
                   discharged; considered and passed

_______________________________________________________________________

                                 A BILL


 
To provide economic security for all Americans, and for other purposes.

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

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

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

Sec. 1. Short title and table of contents.
 TITLE I--REFORM OF FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT 
                             PENSION PLANS

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

Sec. 101. Minimum funding standards.
Sec. 102. Funding rules for single-employer defined benefit pension 
                            plans.
Sec. 103. Benefit limitations under single-employer plans.
Sec. 104. Special rules for multiple employer plans of certain 
                            cooperatives.
Sec. 105. Temporary relief for certain PBGC settlement plans.
Sec. 106. Special rules for plans of certain government contractors.
Sec. 107. Technical and conforming amendments.
        Subtitle B--Amendments to Internal Revenue Code of 1986

Sec. 111. Minimum funding standards.
Sec. 112. Funding rules for single-employer defined benefit pension 
                            plans.
Sec. 113. Benefit limitations under single-employer plans.
Sec. 114. Technical and conforming amendments.
Sec. 115. Modification of transition rule to pension funding 
                            requirements.
Sec. 116. Restrictions on funding of nonqualified deferred compensation 
                            plans by employers maintaining underfunded 
                            or terminated single-employer plans.
  TITLE II--FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS AND 
                           RELATED PROVISIONS

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

Sec. 201. Funding rules for multiemployer defined benefit plans.
Sec. 202. Additional funding rules for multiemployer plans in 
                            endangered or critical status.
Sec. 203. Measures to forestall insolvency of multiemployer plans.
Sec. 204. Withdrawal liability reforms.
Sec. 205. Prohibition on retaliation against employers exercising their 
                            rights to petition the Federal government.
Sec. 206. Special rule for certain benefits funded under an agreement 
                            approved by the Pension Benefit Guaranty 
                            Corporation.
        Subtitle B--Amendments to Internal Revenue Code of 1986

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

Sec. 221. Sunset of additional funding rules.
                  TITLE III--INTEREST RATE ASSUMPTIONS

Sec. 301. Extension of replacement of 30-year Treasury rates.
Sec. 302. Interest rate assumption for determination of lump sum 
                            distributions.
Sec. 303. Interest rate assumption for applying benefit limitations to 
                            lump sum distributions.
            TITLE IV--PBGC GUARANTEE AND RELATED PROVISIONS

Sec. 401. PBGC premiums.
Sec. 402. Special funding rules for certain plans maintained by 
                            commercial airlines.
Sec. 403. Limitation on PBGC guarantee of shutdown and other benefits.
Sec. 404. Rules relating to bankruptcy of employer.
Sec. 405. PBGC premiums for small plans.
Sec. 406. Authorization for PBGC to pay interest on premium overpayment 
                            refunds.
Sec. 407. Rules for substantial owner benefits in terminated plans.
Sec. 408. Acceleration of PBGC computation of benefits attributable to 
                            recoveries from employers.
Sec. 409. Treatment of certain plans where cessation or change in 
                            membership of a controlled group.
Sec. 410. Missing participants.
Sec. 411. Director of the Pension Benefit Guaranty Corporation.
Sec. 412. Inclusion of information in the PBGC annual report.
                          TITLE V--DISCLOSURE

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

                     Subtitle A--Investment Advice

Sec. 601. Prohibited transaction exemption for provision of investment 
                            advice.
                  Subtitle B--Prohibited Transactions

Sec. 611. Prohibited transaction rules relating to financial 
                            investments.
Sec. 612. Correction period for certain transactions involving 
                            securities and commodities.
                 Subtitle C--Fiduciary and Other Rules

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

Sec. 701. Benefit accrual standards.
Sec. 702. Regulations relating to mergers and acquisitions.
             TITLE VIII--PENSION RELATED REVENUE PROVISIONS

                   Subtitle A--Deduction Limitations

Sec. 801. Increase in deduction limit for single-employer plans.
Sec. 802. Deduction limits for multiemployer plans.
Sec. 803. Updating deduction rules for combination of plans.
         Subtitle B--Certain Pension Provisions Made Permanent

Sec. 811. Pensions and individual retirement arrangement provisions of 
                            Economic Growth and Tax Relief 
                            Reconciliation Act of 2001 made permanent.
Sec. 812. Saver's credit.
Subtitle C--Improvements in Portability, Distribution, and Contribution 
                                 Rules

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

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

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

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

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

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

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

                Subtitle A--Charitable Giving Incentives

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

                        Part 1--General Reforms

Sec. 1211. Reporting on certain acquisitions of interests in insurance 
                            contracts in which certain exempt 
                            organizations hold an interest.
Sec. 1212. Increase in penalty excise taxes relating to public 
                            charities, social welfare organizations, 
                            and private foundations.
Sec. 1213. Reform of charitable contributions of certain easements in 
                            registered historic districts and reduced 
                            deduction for portion of qualified 
                            conservation contribution attributable to 
                            rehabilitation credit.
Sec. 1214. Charitable contributions of taxidermy property.
Sec. 1215. Recapture of tax benefit for charitable contributions of 
                            exempt use property not used for an exempt 
                            use.
Sec. 1216. Limitation of deduction for charitable contributions of 
                            clothing and household items.
Sec. 1217. Modification of recordkeeping requirements for certain 
                            charitable contributions.
Sec. 1218. Contributions of fractional interests in tangible personal 
                            property.
Sec. 1219. Provisions relating to substantial and gross overstatements 
                            of valuations.
Sec. 1220. Additional standards for credit counseling organizations.
Sec. 1221. Expansion of the base of tax on private foundation net 
                            investment income.
Sec. 1222. Definition of convention or association of churches.
Sec. 1223. Notification requirement for entities not currently required 
                            to file.
Sec. 1224. Disclosure to State officials relating to exempt 
                            organizations.
Sec. 1225. Public disclosure of information relating to unrelated 
                            business income tax returns.
Sec. 1226. Study on donor advised funds and supporting organizations.
         Part 2--Improved Accountability of Donor Advised Funds

Sec. 1231. Excise taxes relating to donor advised funds.
Sec. 1232. Excess benefit transactions involving donor advised funds 
                            and sponsoring organizations.
Sec. 1233. Excess business holdings of donor advised funds.
Sec. 1234. Treatment of charitable contribution deductions to donor 
                            advised funds.
Sec. 1235. Returns of, and applications for recognition by, sponsoring 
                            organizations.
      Part 3--Improved Accountability of Supporting Organizations

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

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

Sec. 1401. Short title; table of contents.

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

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

SEC. 101. MINIMUM FUNDING STANDARDS.

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

``SEC. 302. MINIMUM FUNDING STANDARDS.

    ``(a) Requirement To Meet Minimum Funding Standard.--
            ``(1) In general.--A plan to which this part applies shall 
        satisfy the minimum funding standard applicable to the plan for 
        any plan year.
            ``(2) Minimum funding standard.--For purposes of paragraph 
        (1), a plan shall be treated as satisfying the minimum funding 
        standard for a plan year if--
                    ``(A) in the case of a defined benefit plan which 
                is a single-employer plan, the employer makes 
                contributions to or under the plan for the plan year 
                which, in the aggregate, are not less than the minimum 
                required contribution determined under section 303 for 
                the plan for the plan year,
                    ``(B) in the case of a money purchase plan which is 
                a single-employer plan, the employer makes 
                contributions to or under the plan for the plan year 
                which are required under the terms of the plan, and
                    ``(C) in the case of a multiemployer plan, the 
                employers make contributions to or under the plan for 
                any plan year which, in the aggregate, are sufficient 
                to ensure that the plan does not have an accumulated 
                funding deficiency under section 304 as of the end of 
                the plan year.
    ``(b) Liability for Contributions.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        amount of any contribution required by this section (including 
        any required installments under paragraphs (3) and (4) of 
        section 303(j)) shall be paid by the employer responsible for 
        making contributions to or under the plan.
            ``(2) Joint and several liability where employer member of 
        controlled group.--If the employer referred to in paragraph (1) 
        is a member of a controlled group, each member of such group 
        shall be jointly and severally liable for payment of such 
        contributions.
    ``(c) Variance From Minimum Funding Standards.--
            ``(1) Waiver in case of business hardship.--
                    ``(A) In general.--If--
                            ``(i) an employer is (or in the case of a 
                        multiemployer plan, 10 percent or more of the 
                        number of employers contributing to or under 
                        the plan is) unable to satisfy the minimum 
                        funding standard for a plan year without 
                        temporary substantial business hardship 
                        (substantial business hardship in the case of a 
                        multiemployer plan), and
                            ``(ii) application of the standard would be 
                        adverse to the interests of plan participants 
                        in the aggregate,
                the Secretary of the Treasury may, subject to 
                subparagraph (C), waive the requirements of subsection 
                (a) for such year with respect to all or any portion of 
                the minimum funding standard. The Secretary of the 
                Treasury shall not waive the minimum funding standard 
                with respect to a plan for more than 3 of any 15 (5 of 
                any 15 in the case of a multiemployer plan) consecutive 
                plan years.
                    ``(B) Effects of waiver.--If a waiver is granted 
                under subparagraph (A) for any plan year--
                            ``(i) in the case of a single-employer 
                        plan, the minimum required contribution under 
                        section 303 for the plan year shall be reduced 
                        by the amount of the waived funding deficiency 
                        and such amount shall be amortized as required 
                        under section 303(e), and
                            ``(ii) in the case of a multiemployer plan, 
                        the funding standard account shall be credited 
                        under section 304(b)(3)(C) with the amount of 
                        the waived funding deficiency and such amount 
                        shall be amortized as required under section 
                        304(b)(2)(C).
                    ``(C) Waiver of amortized portion not allowed.--The 
                Secretary of the Treasury may not waive under 
                subparagraph (A) any portion of the minimum funding 
                standard under subsection (a) for a plan year which is 
                attributable to any waived funding deficiency for any 
                preceding plan year.
            ``(2) Determination of business hardship.--For purposes of 
        this subsection, the factors taken into account in determining 
        temporary substantial business hardship (substantial business 
        hardship in the case of a multiemployer plan) shall include 
        (but shall not be limited to) whether or not--
                    ``(A) the employer is operating at an economic 
                loss,
                    ``(B) there is substantial unemployment or 
                underemployment in the trade or business and in the 
                industry concerned,
                    ``(C) the sales and profits of the industry 
                concerned are depressed or declining, and
                    ``(D) it is reasonable to expect that the plan will 
                be continued only if the waiver is granted.
            ``(3) Waived funding deficiency.--For purposes of this 
        part, the term `waived funding deficiency' means the portion of 
        the minimum funding standard under subsection (a) (determined 
        without regard to the waiver) for a plan year waived by the 
        Secretary of the Treasury and not satisfied by employer 
        contributions.
            ``(4) Security for waivers for single-employer plans, 
        consultations.--
                    ``(A) Security may be required.--
                            ``(i) In general.--Except as provided in 
                        subparagraph (C), the Secretary of the Treasury 
                        may require an employer maintaining a defined 
                        benefit plan which is a single-employer plan 
                        (within the meaning of section 4001(a)(15)) to 
                        provide security to such plan as a condition 
                        for granting or modifying a waiver under 
                        paragraph (1).
                            ``(ii) Special rules.--Any security 
                        provided under clause (i) may be perfected and 
                        enforced only by the Pension Benefit Guaranty 
                        Corporation, or at the direction of the 
                        Corporation, by a contributing sponsor (within 
                        the meaning of section 4001(a)(13)), or a 
                        member of such sponsor's controlled group 
                        (within the meaning of section 4001(a)(14)).
                    ``(B) Consultation with the pension benefit 
                guaranty corporation.--Except as provided in 
                subparagraph (C), the Secretary of the Treasury shall, 
                before granting or modifying a waiver under this 
                subsection with respect to a plan described in 
                subparagraph (A)(i)--
                            ``(i) provide the Pension Benefit Guaranty 
                        Corporation with--
                                    ``(I) notice of the completed 
                                application for any waiver or 
                                modification, and
                                    ``(II) an opportunity to comment on 
                                such application within 30 days after 
                                receipt of such notice, and
                            ``(ii) consider--
                                    ``(I) any comments of the 
                                Corporation under clause (i)(II), and
                                    ``(II) any views of any employee 
                                organization (within the meaning of 
                                section 3(4)) representing participants 
                                in the plan which are submitted in 
                                writing to the Secretary of the 
                                Treasury in connection with such 
                                application.
                Information provided to the Corporation under this 
                subparagraph shall be considered tax return information 
                and subject to the safeguarding and reporting 
                requirements of section 6103(p) of the Internal Revenue 
                Code of 1986.
                    ``(C) Exception for certain waivers.--
                            ``(i) In general.--The preceding provisions 
                        of this paragraph shall not apply to any plan 
                        with respect to which the sum of--
                                    ``(I) the aggregate unpaid minimum 
                                required contributions for the plan 
                                year and all preceding plan years, and
                                    ``(II) the present value of all 
                                waiver amortization installments 
                                determined for the plan year and 
                                succeeding plan years under section 
                                303(e)(2),
                        is less than $1,000,000.
                            ``(ii) Treatment of waivers for which 
                        applications are pending.--The amount described 
                        in clause (i)(I) shall include any increase in 
                        such amount which would result if all 
                        applications for waivers of the minimum funding 
                        standard under this subsection which are 
                        pending with respect to such plan were denied.
                            ``(iii) Unpaid minimum required 
                        contribution.--For purposes of this 
                        subparagraph--
                                    ``(I) In general.--The term `unpaid 
                                minimum required contribution' means, 
                                with respect to any plan year, any 
                                minimum required contribution under 
                                section 303 for the plan year which is 
                                not paid on or before the due date (as 
                                determined under section 303(j)(1)) for 
                                the plan year.
                                    ``(II) Ordering rule.--For purposes 
                                of subclause (I), any payment to or 
                                under a plan for any plan year shall be 
                                allocated first to unpaid minimum 
                                required contributions for all 
                                preceding plan years on a first-in, 
                                first-out basis and then to the minimum 
                                required contribution under section 303 
                                for the plan year.
            ``(5) Special rules for single-employer plans.--
                    ``(A) Application must be submitted before date 
                2\1/2\ months after close of year.--In the case of a 
                single-employer plan, no waiver may be granted under 
                this subsection with respect to any plan for any plan 
                year unless an application therefor is submitted to the 
                Secretary of the Treasury not later than the 15th day 
                of the 3rd month beginning after the close of such plan 
                year.
                    ``(B) Special rule if employer is member of 
                controlled group.--In the case of a single-employer 
                plan, if an employer is a member of a controlled group, 
                the temporary substantial business hardship 
                requirements of paragraph (1) shall be treated as met 
                only if such requirements are met--
                            ``(i) with respect to such employer, and
                            ``(ii) with respect to the controlled group 
                        of which such employer is a member (determined 
                        by treating all members of such group as a 
                        single employer).
                The Secretary of the Treasury may provide that an 
                analysis of a trade or business or industry of a member 
                need not be conducted if such Secretary determines such 
                analysis is not necessary because the taking into 
                account of such member would not significantly affect 
                the determination under this paragraph.
            ``(6) Advance notice.--
                    ``(A) In general.--The Secretary of the Treasury 
                shall, before granting a waiver under this subsection, 
                require each applicant to provide evidence satisfactory 
                to such Secretary that the applicant has provided 
                notice of the filing of the application for such waiver 
                to each affected party (as defined in section 
                4001(a)(21)). Such notice shall include a description 
                of the extent to which the plan is funded for benefits 
                which are guaranteed under title IV and for benefit 
                liabilities.
                    ``(B) Consideration of relevant information.--The 
                Secretary of the Treasury shall consider any relevant 
                information provided by a person to whom notice was 
                given under subparagraph (A).
            ``(7) Restriction on plan amendments.--
                    ``(A) In general.--No amendment of a plan which 
                increases the liabilities of the plan by reason of any 
                increase in benefits, any change in the accrual of 
                benefits, or any change in the rate at which benefits 
                become nonforfeitable under the plan shall be adopted 
                if a waiver under this subsection or an extension of 
                time under section 304(d) is in effect with respect to 
                the plan, or if a plan amendment described in 
                subsection (d)(2) has been made at any time in the 
                preceding 12 months (24 months in the case of a 
                multiemployer plan). If a plan is amended in violation 
                of the preceding sentence, any such waiver, or 
                extension of time, shall not apply to any plan year 
                ending on or after the date on which such amendment is 
                adopted.
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                to any plan amendment which--
                            ``(i) the Secretary of the Treasury 
                        determines to be reasonable and which provides 
                        for only de minimis increases in the 
                        liabilities of the plan,
                            ``(ii) only repeals an amendment described 
                        in subsection (d)(2), or
                            ``(iii) is required as a condition of 
                        qualification under part I of subchapter D of 
                        chapter 1 of the Internal Revenue Code of 1986.
            ``(8) Cross reference.--For corresponding duties of the 
        Secretary of the Treasury with regard to implementation of the 
        Internal Revenue Code of 1986, see section 412(c) of such Code.
    ``(d) Miscellaneous Rules.--
            ``(1) Change in method or year.--If the funding method, the 
        valuation date, or a plan year for a plan is changed, the 
        change shall take effect only if approved by the Secretary of 
        the Treasury.
            ``(2) Certain retroactive plan amendments.--For purposes of 
        this section, any amendment applying to a plan year which--
                    ``(A) is adopted after the close of such plan year 
                but no later than 2\1/2\ months after the close of the 
                plan year (or, in the case of a multiemployer plan, no 
                later than 2 years after the close of such plan year),
                    ``(B) does not reduce the accrued benefit of any 
                participant determined as of the beginning of the first 
                plan year to which the amendment applies, and
                    ``(C) does not reduce the accrued benefit of any 
                participant determined as of the time of adoption 
                except to the extent required by the circumstances,
        shall, at the election of the plan administrator, be deemed to 
        have been made on the first day of such plan year. No amendment 
        described in this paragraph which reduces the accrued benefits 
        of any participant shall take effect unless the plan 
        administrator files a notice with the Secretary of the Treasury 
        notifying him of such amendment and such Secretary has approved 
        such amendment, or within 90 days after the date on which such 
        notice was filed, failed to disapprove such amendment. No 
        amendment described in this subsection shall be approved by the 
        Secretary of the Treasury unless such Secretary determines that 
        such amendment is necessary because of a temporary substantial 
        business hardship (as determined under subsection (c)(2)) or a 
        substantial business hardship (as so determined) in the case of 
        a multiemployer plan and that a waiver under subsection (c) 
        (or, in the case of a multiemployer plan, any extension of the 
        amortization period under section 304(d)) is unavailable or 
        inadequate.
            ``(3) Controlled group.--For purposes of this section, the 
        term `controlled group' means any group treated as a single 
        employer under subsection (b), (c), (m), or (o) of section 414 
        of the Internal Revenue Code of 1986.''.
    (c) Clerical Amendment.--The table of contents in section 1 of such 
Act is amended by striking the items relating to sections 302 through 
308 and inserting the following new item:

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

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

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

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

    ``(a) Minimum Required Contribution.--For purposes of this section 
and section 302(a)(2)(A), except as provided in subsection (f), the 
term `minimum required contribution' means, with respect to any plan 
year of a single-employer plan--
            ``(1) in any case in which the value of plan assets of the 
        plan (as reduced under subsection (f)(4)(B)) is less than the 
        funding target of the plan for the plan year, the sum of--
                    ``(A) the target normal cost of the plan for the 
                plan year,
                    ``(B) the shortfall amortization charge (if any) 
                for the plan for the plan year determined under 
                subsection (c), and
                    ``(C) the waiver amortization charge (if any) for 
                the plan for the plan year as determined under 
                subsection (e); or
            ``(2) in any case in which the value of plan assets of the 
        plan (as reduced under subsection (f)(4)(B)) equals or exceeds 
        the funding target of the plan for the plan year, the target 
        normal cost of the plan for the plan year reduced (but not 
        below zero) by such excess.
    ``(b) Target Normal Cost.--For purposes of this section, except as 
provided in subsection (i)(2) with respect to plans in at-risk status, 
the term `target normal cost' means, for any plan year, the present 
value of all benefits which are expected to accrue or to be earned 
under the plan during the plan year. For purposes of this subsection, 
if any benefit attributable to services performed in a preceding plan 
year is increased by reason of any increase in compensation during the 
current plan year, the increase in such benefit shall be treated as 
having accrued during the current plan year.
    ``(c) Shortfall Amortization Charge.--
            ``(1) In general.--For purposes of this section, the 
        shortfall amortization charge for a plan for any plan year is 
        the aggregate total (not less than zero) of the shortfall 
        amortization installments for such plan year with respect to 
        the shortfall amortization bases for such plan year and each of 
        the 6 preceding plan years.
            ``(2) Shortfall amortization installment.--For purposes of 
        paragraph (1)--
                    ``(A) Determination.--The shortfall amortization 
                installments are the amounts necessary to amortize the 
                shortfall amortization base of the plan for any plan 
                year in level annual installments over the 7-plan-year 
                period beginning with such plan year.
                    ``(B) Shortfall installment.--The shortfall 
                amortization installment for any plan year in the 7-
                plan-year period under subparagraph (A) with respect to 
                any shortfall amortization base is the annual 
                installment determined under subparagraph (A) for that 
                year for that base.
                    ``(C) Segment rates.--In determining any shortfall 
                amortization installment under this paragraph, the plan 
                sponsor shall use the segment rates determined under 
                subparagraph (C) of subsection (h)(2), applied under 
                rules similar to the rules of subparagraph (B) of 
                subsection (h)(2).
            ``(3) Shortfall amortization base.--For purposes of this 
        section, the shortfall amortization base of a plan for a plan 
        year is--
                    ``(A) the funding shortfall of such plan for such 
                plan year, minus
                    ``(B) the present value (determined using the 
                segment rates determined under subparagraph (C) of 
                subsection (h)(2), applied under rules similar to the 
                rules of subparagraph (B) of subsection (h)(2)) of the 
                aggregate total of the shortfall amortization 
                installments and waiver amortization installments which 
                have been determined for such plan year and any 
                succeeding plan year with respect to the shortfall 
                amortization bases and waiver amortization bases of the 
                plan for any plan year preceding such plan year.
            ``(4) Funding shortfall.--For purposes of this section, the 
        funding shortfall of a plan for any plan year is the excess (if 
        any) of--
                    ``(A) the funding target of the plan for the plan 
                year, over
                    ``(B) the value of plan assets of the plan (as 
                reduced under subsection (f)(4)(B)) for the plan year 
                which are held by the plan on the valuation date.
            ``(5) Exemption from new shortfall amortization base.--
                    ``(A) In general.--In any case in which the value 
                of plan assets of the plan (as reduced under subsection 
                (f)(4)(A)) is equal to or greater than the funding 
                target of the plan for the plan year, the shortfall 
                amortization base of the plan for such plan year shall 
                be zero.
                    ``(B) Transition rule.--
                            ``(i) In general.--Except as provided in 
                        clauses (iii) and (iv), in the case of plan 
                        years beginning after 2007 and before 2011, 
                        only the applicable percentage of the funding 
                        target shall be taken into account under 
                        paragraph (3)(A) in determining the funding 
                        shortfall for the plan year for purposes of 
                        subparagraph (A).
                            ``(ii) Applicable percentage.--For purposes 
                        of subparagraph (A), the applicable percentage 
                        shall be determined in accordance with the 
                        following table:

``In the case of a plan year                             The applicable
   beginning in calendar year:                            percentage is
        2008...................................................     92 
        2009...................................................     94 
        2010...................................................     96.
                            ``(iii) Limitation.--Clause (i) shall not 
                        apply with respect to any plan year after 2008 
                        unless the shortfall amortization base for each 
                        of the preceding years beginning after 2007 was 
                        zero (determined after application of this 
                        subparagraph).
                            ``(iv) Transition relief not available for 
                        new or deficit reduction plans.--Clause (i) 
                        shall not apply to a plan--
                                    ``(I) which was not in effect for a 
                                plan year beginning in 2007, or
                                    ``(II) which was in effect for a 
                                plan year beginning in 2007 and which 
                                was subject to section 302(d) (as in 
                                effect for plan years beginning in 
                                2007), determined after the application 
                                of paragraphs (6) and (9) thereof.
            ``(6) Early deemed amortization upon attainment of funding 
        target.--In any case in which the funding shortfall of a plan 
        for a plan year is zero, for purposes of determining the 
        shortfall amortization charge for such plan year and succeeding 
        plan years, the shortfall amortization bases for all preceding 
        plan years (and all shortfall amortization installments 
        determined with respect to such bases) shall be reduced to 
        zero.
    ``(d) Rules Relating to Funding Target.--For purposes of this 
section--
            ``(1) Funding target.--Except as provided in subsection 
        (i)(1) with respect to plans in at-risk status, the funding 
        target of a plan for a plan year is the present value of all 
        benefits accrued or earned under the plan as of the beginning 
        of the plan year.
            ``(2) Funding target attainment percentage.--The `funding 
        target attainment percentage' of a plan for a plan year is the 
        ratio (expressed as a percentage) which--
                    ``(A) the value of plan assets for the plan year 
                (as reduced under subsection (f)(4)(B)), bears to
                    ``(B) the funding target of the plan for the plan 
                year (determined without regard to subsection (i)(1)).
    ``(e) Waiver Amortization Charge.--
            ``(1) Determination of waiver amortization charge.--The 
        waiver amortization charge (if any) for a plan for any plan 
        year is the aggregate total of the waiver amortization 
        installments for such plan year with respect to the waiver 
        amortization bases for each of the 5 preceding plan years.
            ``(2) Waiver amortization installment.--For purposes of 
        paragraph (1)--
                    ``(A) Determination.--The waiver amortization 
                installments are the amounts necessary to amortize the 
                waiver amortization base of the plan for any plan year 
                in level annual installments over a period of 5 plan 
                years beginning with the succeeding plan year.
                    ``(B) Waiver installment.--The waiver amortization 
                installment for any plan year in the 5-year period 
                under subparagraph (A) with respect to any waiver 
                amortization base is the annual installment determined 
                under subparagraph (A) for that year for that base.
            ``(3) Interest rate.--In determining any waiver 
        amortization installment under this subsection, the plan 
        sponsor shall use the segment rates determined under 
        subparagraph (C) of subsection (h)(2), applied under rules 
        similar to the rules of subparagraph (B) of subsection (h)(2).
            ``(4) Waiver amortization base.--The waiver amortization 
        base of a plan for a plan year is the amount of the waived 
        funding deficiency (if any) for such plan year under section 
        302(c).
            ``(5) Early deemed amortization upon attainment of funding 
        target.--In any case in which the funding shortfall of a plan 
        for a plan year is zero, for purposes of determining the waiver 
        amortization charge for such plan year and succeeding plan 
        years, the waiver amortization bases for all preceding plan 
        years (and all waiver amortization installments determined with 
        respect to such bases) shall be reduced to zero.
    ``(f) Reduction of Minimum Required Contribution by Prefunding 
Balance and Funding Standard Carryover Balance.--
            ``(1) Election to maintain balances.--
                    ``(A) Prefunding balance.--The plan sponsor of a 
                single-employer plan may elect to maintain a prefunding 
                balance.
                    ``(B) Funding standard carryover balance.--
                            ``(i) In general.--In the case of a single-
                        employer plan described in clause (ii), the 
                        plan sponsor may elect to maintain a funding 
                        standard carryover balance, until such balance 
                        is reduced to zero.
                            ``(ii) Plans maintaining funding standard 
                        account in 2007.--A plan is described in this 
                        clause if the plan--
                                    ``(I) was in effect for a plan year 
                                beginning in 2007, and
                                    ``(II) had a positive balance in 
                                the funding standard account under 
                                section 302(b) as in effect for such 
                                plan year and determined as of the end 
                                of such plan year.
            ``(2) Application of balances.--A prefunding balance and a 
        funding standard carryover balance maintained pursuant to this 
        paragraph--
                    ``(A) shall be available for crediting against the 
                minimum required contribution, pursuant to an election 
                under paragraph (3),
                    ``(B) shall be applied as a reduction in the amount 
                treated as the value of plan assets for purposes of 
                this section, to the extent provided in paragraph (4), 
                and
                    ``(C) may be reduced at any time, pursuant to an 
                election under paragraph (5).
            ``(3) Election to apply balances against minimum required 
        contribution.--
                    ``(A) In general.--Except as provided in 
                subparagraphs (B) and (C), in the case of any plan year 
                in which the plan sponsor elects to credit against the 
                minimum required contribution for the current plan year 
                all or a portion of the prefunding balance or the 
                funding standard carryover balance for the current plan 
                year (not in excess of such minimum required 
                contribution), the minimum required contribution for 
                the plan year shall be reduced as of the first day of 
                the plan year by the amount so credited by the plan 
                sponsor. For purposes of the preceding sentence, the 
                minimum required contribution shall be determined after 
                taking into account any waiver under section 302(c).
                    ``(B) Coordination with funding standard carryover 
                balance.--To the extent that any plan has a funding 
                standard carryover balance greater than zero, no amount 
                of the prefunding balance of such plan may be credited 
                under this paragraph in reducing the minimum required 
                contribution.
                    ``(C) Limitation for underfunded plans.--The 
                preceding provisions of this paragraph shall not apply 
                for any plan year if the ratio (expressed as a 
                percentage) which--
                            ``(i) the value of plan assets for the 
                        preceding plan year (as reduced under paragraph 
                        (4)(C)), bears to
                            ``(ii) the funding target of the plan for 
                        the preceding plan year (determined without 
                        regard to subsection (i)(1)),
                is less than 80 percent. In the case of plan years 
                beginning in 2008, the ratio under this subparagraph 
                may be determined using such methods of estimation as 
                the Secretary of the Treasury may prescribe.
            ``(4) Effect of balances on amounts treated as value of 
        plan assets.--In the case of any plan maintaining a prefunding 
        balance or a funding standard carryover balance pursuant to 
        this subsection, the amount treated as the value of plan assets 
        shall be deemed to be such amount, reduced as provided in the 
        following subparagraphs:
                    ``(A) Applicability of shortfall amortization 
                base.--For purposes of subsection (c)(5), the value of 
                plan assets is deemed to be such amount, reduced by the 
                amount of the prefunding balance, but only if an 
                election under paragraph (2) applying any portion of 
                the prefunding balance in reducing the minimum required 
                contribution is in effect for the plan year.
                    ``(B) Determination of excess assets, funding 
                shortfall, and funding target attainment percentage.--
                            ``(i) In general.--For purposes of 
                        subsections (a), (c)(4)(B), and (d)(2)(A), the 
                        value of plan assets is deemed to be such 
                        amount, reduced by the amount of the prefunding 
                        balance and the funding standard carryover 
                        balance.
                            ``(ii) Special rule for certain binding 
                        agreements with pbgc.--For purposes of 
                        subsection (c)(4)(B), the value of plan assets 
                        shall not be deemed to be reduced for a plan 
                        year by the amount of the specified balance if, 
                        with respect to such balance, there is in 
                        effect for a plan year a binding written 
                        agreement with the Pension Benefit Guaranty 
                        Corporation which provides that such balance is 
                        not available to reduce the minimum required 
                        contribution for the plan year. For purposes of 
                        the preceding sentence, the term `specified 
                        balance' means the prefunding balance or the 
                        funding standard carryover balance, as the case 
                        may be.
                    ``(C) Availability of balances in plan year for 
                crediting against minimum required contribution.--For 
                purposes of paragraph (3)(C)(i) of this subsection, the 
                value of plan assets is deemed to be such amount, 
                reduced by the amount of the prefunding balance.
            ``(5) Election to reduce balance prior to determinations of 
        value of plan assets and crediting against minimum required 
        contribution.--
                    ``(A) In general.--The plan sponsor may elect to 
                reduce by any amount the balance of the prefunding 
                balance and the funding standard carryover balance for 
                any plan year (but not below zero). Such reduction 
                shall be effective prior to any determination of the 
                value of plan assets for such plan year under this 
                section and application of the balance in reducing the 
                minimum required contribution for such plan for such 
                plan year pursuant to an election under paragraph (2).
                    ``(B) Coordination between prefunding balance and 
                funding standard carryover balance.--To the extent that 
                any plan has a funding standard carryover balance 
                greater than zero, no election may be made under 
                subparagraph (A) with respect to the prefunding 
                balance.
            ``(6) Prefunding balance.--
                    ``(A) In general.--A prefunding balance maintained 
                by a plan shall consist of a beginning balance of zero, 
                increased and decreased to the extent provided in 
                subparagraphs (B) and (C), and adjusted further as 
                provided in paragraph (8).
                    ``(B) Increases.--
                            ``(i) In general.--As of the first day of 
                        each plan year beginning after 2008, the 
                        prefunding balance of a plan shall be increased 
                        by the amount elected by the plan sponsor for 
                        the plan year. Such amount shall not exceed the 
                        excess (if any) of--
                                    ``(I) the aggregate total of 
                                employer contributions to the plan for 
                                the preceding plan year, over--
                                    ``(II) the minimum required 
                                contribution for such preceding plan 
                                year.
                            ``(ii) Adjustments for interest.--Any 
                        excess contributions under clause (i) shall be 
                        properly adjusted for interest accruing for the 
                        periods between the first day of the current 
                        plan year and the dates on which the excess 
                        contributions were made, determined by using 
                        the effective interest rate for the preceding 
                        plan year and by treating contributions as 
                        being first used to satisfy the minimum 
                        required contribution.
                            ``(iii) Certain contributions necessary to 
                        avoid benefit limitations disregarded.--The 
                        excess described in clause (i) with respect to 
                        any preceding plan year shall be reduced (but 
                        not below zero) by the amount of contributions 
                        an employer would be required to make under 
                        paragraph (1), (2), or (4) of section 206(g) to 
                        avoid a benefit limitation which would 
                        otherwise be imposed under such paragraph for 
                        the preceding plan year. Any contribution which 
                        may be taken into account in satisfying the 
                        requirements of more than 1 of such paragraphs 
                        shall be taken into account only once for 
                        purposes of this clause.
                    ``(C) Decrease.--The prefunding balance of a plan 
                shall be decreased (but not below zero) by--
                            ``(i) as of the first day of each plan year 
                        after 2008, the amount of such balance credited 
                        under paragraph (2) (if any) in reducing the 
                        minimum required contribution of the plan for 
                        the preceding plan year, and
                            ``(ii) as of the time specified in 
                        paragraph (5))(A), any reduction in such 
                        balance elected under paragraph (5).
            ``(7) Funding standard carryover balance.--
                    ``(A) In general.--A funding standard carryover 
                balance maintained by a plan shall consist of a 
                beginning balance determined under subparagraph (B), 
                decreased to the extent provided in subparagraph (C), 
                and adjusted further as provided in paragraph (8).
                    ``(B) Beginning balance.--The beginning balance of 
                the funding standard carryover balance shall be the 
                positive balance described in paragraph (1)(B)(ii)(II).
                    ``(C) Decreases.--The funding standard carryover 
                balance of a plan shall be decreased (but not below 
                zero) by--
                            ``(i) as of the first day of each plan year 
                        after 2008, the amount of such balance credited 
                        under paragraph (2) (if any) in reducing the 
                        minimum required contribution of the plan for 
                        the preceding plan year, and
                            ``(ii) as of the time specified in 
                        paragraph (5))(A), any reduction in such 
                        balance elected under paragraph (5).
            ``(8) Adjustments for investment experience.--In 
        determining the prefunding balance or the funding standard 
        carryover balance of a plan as of the first day of the plan 
        year, the plan sponsor shall, in accordance with regulations 
        prescribed by the Secretary of the Treasury, adjust such 
        balance to reflect the rate of return on plan assets for the 
        preceding plan year. Notwithstanding subsection (g)(3), such 
        rate of return shall be determined on the basis of fair market 
        value and shall properly take into account, in accordance with 
        such regulations, all contributions, distributions, and other 
        plan payments made during such period.
            ``(9) Elections.--Elections under this subsection shall be 
        made at such times, and in such form and manner, as shall be 
        prescribed in regulations of the Secretary of the Treasury.
    ``(g) Valuation of Plan Assets and Liabilities.--
            ``(1) Timing of determinations.--Except as otherwise 
        provided under this subsection, all determinations under this 
        section for a plan year shall be made as of the valuation date 
        of the plan for such plan year.
            ``(2) Valuation date.--For purposes of this section--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the valuation date of a plan for any 
                plan year shall be the first day of the plan year.
                    ``(B) Exception for small plans.--If, on each day 
                during the preceding plan year, a plan had 100 or fewer 
                participants, the plan may designate any day during the 
                plan year as its valuation date for such plan year and 
                succeeding plan years. For purposes of this 
                subparagraph, all defined benefit plans which are 
                single-employer plans and are maintained by the same 
                employer (or any member of such employer's controlled 
                group) shall be treated as 1 plan, but only 
                participants with respect to such employer or member 
                shall be taken into account.
                    ``(C) Application of certain rules in determination 
                of plan size.--For purposes of this paragraph--
                            ``(i) Plans not in existence in preceding 
                        year.--In the case of the first plan year of 
                        any plan, subparagraph (B) shall apply to such 
                        plan by taking into account the number of 
                        participants that the plan is reasonably 
                        expected to have on days during such first plan 
                        year.
                            ``(ii) Predecessors.--Any reference in 
                        subparagraph (B) to an employer shall include a 
                        reference to any predecessor of such employer.
            ``(3) Determination of value of plan assets.--For purposes 
        of this section--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the value of plan assets shall be the 
                fair market value of the assets.
                    ``(B) Averaging allowed.--A plan may determine the 
                value of plan assets on the basis of the averaging of 
                fair market values, but only if such method--
                            ``(i) is permitted under regulations 
                        prescribed by the Secretary of the Treasury,
                            ``(ii) does not provide for averaging of 
                        such values over more than the period beginning 
                        on the last day of the 25th month preceding the 
                        month in which the valuation date occurs and 
                        ending on the valuation date (or a similar 
                        period in the case of a valuation date which is 
                        not the 1st day of a month), and
                            ``(iii) does not result in a determination 
                        of the value of plan assets which, at any time, 
                        is lower than 90 percent or greater than 110 
                        percent of the fair market value of such assets 
                        at such time.
                Any such averaging shall be adjusted for contributions 
                and distributions (as provided by the Secretary of the 
                Treasury).
            ``(4) Accounting for contribution receipts.--For purposes 
        of determining the value of assets under paragraph (3)--
                    ``(A) Prior year contributions.--If--
                            ``(i) an employer makes any contribution to 
                        the plan after the valuation date for the plan 
                        year in which the contribution is made, and
                            ``(ii) the contribution is for a preceding 
                        plan year,
                the contribution shall be taken into account as an 
                asset of the plan as of the valuation date, except that 
                in the case of any plan year beginning after 2008, only 
                the present value (determined as of the valuation date) 
                of such contribution may be taken into account. For 
                purposes of the preceding sentence, present value shall 
                be determined using the effective interest rate for the 
                preceding plan year to which the contribution is 
                properly allocable.
                    ``(B) Special rule for current year contributions 
                made before valuation date.--If any contributions for 
                any plan year are made to or under the plan during the 
                plan year but before the valuation date for the plan 
                year, the assets of the plan as of the valuation date 
                shall not include--
                            ``(i) such contributions, and
                            ``(ii) interest on such contributions for 
                        the period between the date of the 
                        contributions and the valuation date, 
                        determined by using the effective interest rate 
                        for the plan year.
    ``(h) Actuarial Assumptions and Methods.--
            ``(1) In general.--Subject to this subsection, the 
        determination of any present value or other computation under 
        this section shall be made on the basis of actuarial 
        assumptions and methods--
                    ``(A) each of which is reasonable (taking into 
                account the experience of the plan and reasonable 
                expectations), and
                    ``(B) which, in combination, offer the actuary's 
                best estimate of anticipated experience under the plan.
            ``(2) Interest rates.--
                    ``(A) Effective interest rate.--For purposes of 
                this section, the term `effective interest rate' means, 
                with respect to any plan for any plan year, the single 
                rate of interest which, if used to determine the 
                present value of the plan's accrued or earned benefits 
                referred to in subsection (d)(1), would result in an 
                amount equal to the funding target of the plan for such 
                plan year.
                    ``(B) Interest rates for determining funding 
                target.--For purposes of determining the funding target 
                and normal cost of a plan for any plan year, the 
                interest rate used in determining the present value of 
                the benefits of the plan shall be--
                            ``(i) in the case of benefits reasonably 
                        determined to be payable during the 5-year 
                        period beginning on the first day of the plan 
                        year, the first segment rate with respect to 
                        the applicable month,
                            ``(ii) in the case of benefits reasonably 
                        determined to be payable during the 15-year 
                        period beginning at the end of the period 
                        described in clause (i), the second segment 
                        rate with respect to the applicable month, and
                            ``(iii) in the case of benefits reasonably 
                        determined to be payable after the period 
                        described in clause (ii), the third segment 
                        rate with respect to the applicable month.
                    ``(C) Segment rates.--For purposes of this 
                paragraph--
                            ``(i) First segment rate.--The term `first 
                        segment rate' means, with respect to any month, 
                        the single rate of interest which shall be 
                        determined by the Secretary of the Treasury for 
                        such month on the basis of the corporate bond 
                        yield curve for such month, taking into account 
                        only that portion of such yield curve which is 
                        based on bonds maturing during the 5-year 
                        period commencing with such month.
                            ``(ii) Second segment rate.--The term 
                        `second segment rate' means, with respect to 
                        any month, the single rate of interest which 
                        shall be determined by the Secretary of the 
                        Treasury for such month on the basis of the 
                        corporate bond yield curve for such month, 
                        taking into account only that portion of such 
                        yield curve which is based on bonds maturing 
                        during the 15-year period beginning at the end 
                        of the period described in clause (i).
                            ``(iii) Third segment rate.--The term 
                        `third segment rate' means, with respect to any 
                        month, the single rate of interest which shall 
                        be determined by the Secretary of the Treasury 
                        for such month on the basis of the corporate 
                        bond yield curve for such month, taking into 
                        account only that portion of such yield curve 
                        which is based on bonds maturing during periods 
                        beginning after the period described in clause 
                        (ii).
                    ``(D) Corporate bond yield curve.--For purposes of 
                this paragraph--
                            ``(i) In general.--The term `corporate bond 
                        yield curve' means, with respect to any month, 
                        a yield curve which is prescribed by the 
                        Secretary of the Treasury for such month and 
                        which reflects the average, for the 24-month 
                        period ending with the month preceding such 
                        month, of monthly yields on investment grade 
                        corporate bonds with varying maturities and 
                        that are in the top 3 quality levels available.
                            ``(ii) Election to use yield curve.--Solely 
                        for purposes of determining the minimum 
                        required contribution under this section, the 
                        plan sponsor may, in lieu of the segment rates 
                        determined under subparagraph (C), elect to use 
                        interest rates under the corporate bond yield 
                        curve. For purposes of the preceding sentence 
                        such curve shall be determined without regard 
                        to the 24-month averaging described in clause 
                        (i) . Such election, once made, may be revoked 
                        only with the consent of the Secretary of the 
                        Treasury.
                    ``(E) Applicable month.--For purposes of this 
                paragraph, the term `applicable month' means, with 
                respect to any plan for any plan year, the month which 
                includes the valuation date of such plan for such plan 
                year or, at the election of the plan sponsor, any of 
                the 4 months which precede such month. Any election 
                made under this subparagraph shall apply to the plan 
                year for which the election is made and all succeeding 
                plan years, unless the election is revoked with the 
                consent of the Secretary of the Treasury.
                    ``(F) Publication requirements.--The Secretary of 
                the Treasury shall publish for each month the corporate 
                bond yield curve (and the corporate bond yield curve 
                reflecting the modification described in section 
                205(g)(3)(B)(iii)(I)) for such month and each of the 
                rates determined under subparagraph (B) for such month. 
                The Secretary of the Treasury shall also publish a 
                description of the methodology used to determine such 
                yield curve and such rates which is sufficiently 
                detailed to enable plans to make reasonable projections 
                regarding the yield curve and such rates for future 
                months based on the plan's projection of future 
                interest rates.
                    ``(G) Transition rule.--
                            ``(i) In general.--Notwithstanding the 
                        preceding provisions of this paragraph, for 
                        plan years beginning in 2008 or 2009, the 
                        first, second, or third segment rate for a plan 
                        with respect to any month shall be equal to the 
                        sum of--
                                    ``(I) the product of such rate for 
                                such month determined without regard to 
                                this subparagraph, multiplied by the 
                                applicable percentage, and
                                    ``(II) the product of the rate 
                                determined under the rules of section 
                                302(b)(5)(B)(ii)(II) (as in effect for 
                                plan years beginning in 2007), 
                                multiplied by a percentage equal to 100 
                                percent minus the applicable 
                                percentage.
                            ``(ii) Applicable percentage.--For purposes 
                        of clause (i), the applicable percentage is 
                        33\1/3\ percent for plan years beginning in 
                        2008 and 66\2/3\ percent for plan years 
                        beginning in 2009.
                            ``(iii) New plans ineligible.--Clause (i) 
                        shall not apply to any plan if the first plan 
                        year of the plan begins after December 31, 
                        2007.
                            ``(iv) Election.--The plan sponsor may 
                        elect not to have this subparagraph apply. Such 
                        election, once made, may be revoked only with 
                        the consent of the Secretary of the Treasury.
            ``(3) Mortality tables.--
                    ``(A) In general.--Except as provided in 
                subparagraph (C) or (D), the Secretary of the Treasury 
                shall by regulation prescribe mortality tables to be 
                used in determining any present value or making any 
                computation under this section. Such tables shall be 
                based on the actual experience of pension plans and 
                projected trends in such experience. In prescribing 
                such tables, the Secretary of the Treasury shall take 
                into account results of available independent studies 
                of mortality of individuals covered by pension plans.
                    ``(B) Periodic revision.--The Secretary of the 
                Treasury shall (at least every 10 years) make revisions 
                in any table in effect under subparagraph (A) to 
                reflect the actual experience of pension plans and 
                projected trends in such experience.
                    ``(C) Substitute mortality table.--
                            ``(i) In general.--Upon request by the plan 
                        sponsor and approval by the Secretary of the 
                        Treasury, a mortality table which meets the 
                        requirements of clause (iii) shall be used in 
                        determining any present value or making any 
                        computation under this section during the 
                        period of consecutive plan years (not to exceed 
                        10) specified in the request.
                            ``(ii) Early termination of period.--
                        Notwithstanding clause (i), a mortality table 
                        described in clause (i) shall cease to be in 
                        effect as of the earliest of--
                                    ``(I) the date on which there is a 
                                significant change in the participants 
                                in the plan by reason of a plan spinoff 
                                or merger or otherwise, or
                                    ``(II) the date on which the plan 
                                actuary determines that such table does 
                                not meet the requirements of clause 
                                (iii).
                            ``(iii) Requirements.--A mortality table 
                        meets the requirements of this clause if--
                                    ``(I) there is a sufficient number 
                                of plan participants, and the pension 
                                plans have been maintained for a 
                                sufficient period of time, to have 
                                credible information necessary for 
                                purposes of subclause (II), and
                                    ``(II) such table reflects the 
                                actual experience of the pension plans 
                                maintained by the sponsor and projected 
                                trends in general mortality experience.
                            ``(iv) All plans in controlled group must 
                        use separate table.--Except as provided by the 
                        Secretary of the Treasury, a plan sponsor may 
                        not use a mortality table under this 
                        subparagraph for any plan maintained by the 
                        plan sponsor unless--
                                    ``(I) a separate mortality table is 
                                established and used under this 
                                subparagraph for each other plan 
                                maintained by the plan sponsor and if 
                                the plan sponsor is a member of a 
                                controlled group, each member of the 
                                controlled group, and
                                    ``(II) the requirements of clause 
                                (iii) are met separately with respect 
                                to the table so established for each 
                                such plan, determined by only taking 
                                into account the participants of such 
                                plan, the time such plan has been in 
                                existence, and the actual experience of 
                                such plan.
                            ``(v) Deadline for submission and 
                        disposition of application.--
                                    ``(I) Submission.--The plan sponsor 
                                shall submit a mortality table to the 
                                Secretary of the Treasury for approval 
                                under this subparagraph at least 7 
                                months before the 1st day of the period 
                                described in clause (i).
                                    ``(II) Disposition.--Any mortality 
                                table submitted to the Secretary of the 
                                Treasury for approval under this 
                                subparagraph shall be treated as in 
                                effect as of the 1st day of the period 
                                described in clause (i) unless the 
                                Secretary of the Treasury, during the 
                                180-day period beginning on the date of 
                                such submission, disapproves of such 
                                table and provides the reasons that 
                                such table fails to meet the 
                                requirements of clause (iii). The 180-
                                day period shall be extended upon 
                                mutual agreement of the Secretary of 
                                the Treasury and the plan sponsor.
                    ``(D) Separate mortality tables for the disabled.--
                Notwithstanding subparagraph (A)--
                            ``(i) In general.--The Secretary of the 
                        Treasury shall establish mortality tables which 
                        may be used (in lieu of the tables under 
                        subparagraph (A)) under this subsection for 
                        individuals who are entitled to benefits under 
                        the plan on account of disability. The 
                        Secretary of the Treasury shall establish 
                        separate tables for individuals whose 
                        disabilities occur in plan years beginning 
                        before January 1, 1995, and for individuals 
                        whose disabilities occur in plan years 
                        beginning on or after such date.
                            ``(ii) Special rule for disabilities 
                        occurring after 1994.--In the case of 
                        disabilities occurring in plan years beginning 
                        after December 31, 1994, the tables under 
                        clause (i) shall apply only with respect to 
                        individuals described in such subclause who are 
                        disabled within the meaning of title II of the 
                        Social Security Act and the regulations 
                        thereunder.
                            ``(iii) Periodic revision.--The Secretary 
                        of the Treasury shall (at least every 10 years) 
                        make revisions in any table in effect under 
                        clause (i) to reflect the actual experience of 
                        pension plans and projected trends in such 
                        experience.
            ``(4) Probability of benefit payments in the form of lump 
        sums or other optional forms.--For purposes of determining any 
        present value or making any computation under this section, 
        there shall be taken into account--
                    ``(A) the probability that future benefit payments 
                under the plan will be made in the form of optional 
                forms of benefits provided under the plan (including 
                lump sum distributions, determined on the basis of the 
                plan's experience and other related assumptions), and
                    ``(B) any difference in the present value of such 
                future benefit payments resulting from the use of 
                actuarial assumptions, in determining benefit payments 
                in any such optional form of benefits, which are 
                different from those specified in this subsection.
            ``(5) Approval of large changes in actuarial assumptions.--
                    ``(A) In general.--No actuarial assumption used to 
                determine the funding target for a plan to which this 
                paragraph applies may be changed without the approval 
                of the Secretary of the Treasury.
                    ``(B) Plans to which paragraph applies.--This 
                paragraph shall apply to a plan only if--
                            ``(i) the plan is a single-employer plan to 
                        which title IV applies,
                            ``(ii) the aggregate unfunded vested 
                        benefits as of the close of the preceding plan 
                        year (as determined under section 
                        4006(a)(3)(E)(iii)) of such plan and all other 
                        plans maintained by the contributing sponsors 
                        (as defined in section 4001(a)(13)) and members 
                        of such sponsors' controlled groups (as defined 
                        in section 4001(a)(14)) which are covered by 
                        title IV (disregarding plans with no unfunded 
                        vested benefits) exceed $50,000,000, and
                            ``(iii) the change in assumptions 
                        (determined after taking into account any 
                        changes in interest rate and mortality table) 
                        results in a decrease in the funding shortfall 
                        of the plan for the current plan year that 
                        exceeds $50,000,000, or that exceeds $5,000,000 
                        and that is 5 percent or more of the funding 
                        target of the plan before such change.
    ``(i) Special Rules for At-Risk Plans.--
            ``(1) Funding target for plans in at-risk status.--
                    ``(A) In general.--In the case of a plan which is 
                in at-risk status for a plan year, the funding target 
                of the plan for the plan year shall be equal to the sum 
                of--
                            ``(i) the present value of all benefits 
                        accrued or earned under the plan as of the 
                        beginning of the plan year, as determined by 
                        using the additional actuarial assumptions 
                        described in subparagraph (B), and
                            ``(ii) in the case of a plan which also has 
                        been in at-risk status for at least 2 of the 4 
                        preceding plan years, a loading factor 
                        determined under subparagraph (C).
                    ``(B) Additional actuarial assumptions.--The 
                actuarial assumptions described in this subparagraph 
                are as follows:
                            ``(i) All employees who are not otherwise 
                        assumed to retire as of the valuation date but 
                        who will be eligible to elect benefits during 
                        the plan year and the 10 succeeding plan years 
                        shall be assumed to retire at the earliest 
                        retirement date under the plan but not before 
                        the end of the plan year for which the at-risk 
                        funding target and at-risk target normal cost 
                        are being determined.
                            ``(ii) All employees shall be assumed to 
                        elect the retirement benefit available under 
                        the plan at the assumed retirement age 
                        (determined after application of clause (i)) 
                        which would result in the highest present value 
                        of benefits.
                    ``(C) Loading factor.--The loading factor applied 
                with respect to a plan under this paragraph for any 
                plan year is the sum of--
                            ``(i) $700, times the number of 
                        participants in the plan, plus
                            ``(ii) 4 percent of the funding target 
                        (determined without regard to this paragraph) 
                        of the plan for the plan year.
            ``(2) Target normal cost of at-risk plans.--In the case of 
        a plan which is in at-risk status for a plan year, the target 
        normal cost of the plan for such plan year shall be equal to 
        the sum of--
                    ``(A) the present value of all benefits which are 
                expected to accrue or be earned under the plan during 
                the plan year, determined using the additional 
                actuarial assumptions described in paragraph (1)(B), 
                plus
                    ``(B) in the case of a plan which also has been in 
                at-risk status for at least 2 of the 4 preceding plan 
                years, a loading factor equal to 4 percent of the 
                target normal cost (determined without regard to this 
                paragraph) of the plan for the plan year.
            ``(3) Minimum amount.--In no event shall--
                    ``(A) the at-risk funding target be less than the 
                funding target, as determined without regard to this 
                subsection, or
                    ``(B) the at-risk target normal cost be less than 
                the target normal cost, as determined without regard to 
                this subsection.
            ``(4) Determination of at-risk status.--For purposes of 
        this subsection--
                    ``(A) In general.--A plan is in at-risk status for 
                a plan year if--
                            ``(i) the funding target attainment 
                        percentage for the preceding plan year 
                        (determined under this section without regard 
                        to this subsection) is less than 80 percent, 
                        and
                            ``(ii) the funding target attainment 
                        percentage for the preceding plan year 
                        (determined under this section by using the 
                        additional actuarial assumptions described in 
                        paragraph (1)(B) in computing the funding 
                        target) is less than 70 percent.
                    ``(B) Transition rule.--In the case of plan years 
                beginning in 2008, 2009, and 2010, subparagraph (A)(i) 
                shall be applied by substituting the following 
                percentages for `80 percent':
                            ``(i) 65 percent in the case of 2008.
                            ``(ii) 70 percent in the case of 2009.
                            ``(iii) 75 percent in the case of 2010.
                In the case of plan years beginning in 2008, the 
                funding target attainment percentage for the preceding 
                plan year under subparagraph (A)(ii) may be determined 
                using such methods of estimation as the Secretary of 
                the Treasury may provide.
                    ``(C) Special rule for employees offered early 
                retirement in 2006.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A)(ii), the additional actuarial 
                        assumptions described in paragraph (1)(B) shall 
                        not be taken into account with respect to any 
                        employee if--
                                    ``(I) such employee is employed by 
                                a specified automobile manufacturer,
                                    ``(II) such employee is offered a 
                                substantial amount of additional cash 
                                compensation, substantially enhanced 
                                retirement benefits under the plan, or 
                                materially reduced employment duties on 
                                the condition that by a specified date 
                                (not later than December 31, 2010) the 
                                employee retires (as defined under the 
                                terms of the plan),
                                    ``(III) such offer is made during 
                                2006 and pursuant to a bona fide 
                                retirement incentive program and 
                                requires, by the terms of the offer, 
                                that such offer can be accepted not 
                                later than a specified date (not later 
                                than December 31, 2006), and
                                    ``(IV) such employee does not elect 
                                to accept such offer before the 
                                specified date on which the offer 
                                expires.
                            ``(ii) Specified automobile manufacturer.--
                        For purposes of clause (i), the term `specified 
                        automobile manufacturer' means--
                                    ``(I) any manufacturer of 
                                automobiles, and
                                    ``(II) any manufacturer of 
                                automobile parts which supplies such 
                                parts directly to a manufacturer of 
                                automobiles and which, after a 
                                transaction or series of transactions 
                                ending in 1999, ceased to be a member 
                                of a controlled group which included 
                                such manufacturer of automobiles.
            ``(5) Transition between applicable funding targets and 
        between applicable target normal costs.--
                    ``(A) In general.--In any case in which a plan 
                which is in at-risk status for a plan year has been in 
                such status for a consecutive period of fewer than 5 
                plan years, the applicable amount of the funding target 
                and of the target normal cost shall be, in lieu of the 
                amount determined without regard to this paragraph, the 
                sum of--
                            ``(i) the amount determined under this 
                        section without regard to this subsection, plus
                            ``(ii) the transition percentage for such 
                        plan year of the excess of the amount 
                        determined under this subsection (without 
                        regard to this paragraph) over the amount 
                        determined under this section without regard to 
                        this subsection.
                    ``(B) Transition percentage.--For purposes of 
                subparagraph (A), the transition percentage shall be 
                determined in accordance with the following table:

``If the consecutive number of
  years (including the plan year)                        The transition
  the plan is in at-risk status                         percentage is--
        is--
        1......................................................     20 
        2......................................................     40 
        3......................................................     60 
        4......................................................     80.
                    ``(C) Years before effective date.--For purposes of 
                this paragraph, plan years beginning before 2008 shall 
                not be taken into account.
            ``(6) Small plan exception.--If, on each day during the 
        preceding plan year, a plan had 500 or fewer participants, the 
        plan shall not be treated as in at-risk status for the plan 
        year. For purposes of this paragraph, all defined benefit plans 
        (other than multiemployer plans) maintained by the same 
        employer (or any member of such employer's controlled group) 
        shall be treated as 1 plan, but only participants with respect 
        to such employer or member shall be taken into account and the 
        rules of subsection (g)(2)(C) shall apply.
    ``(j) Payment of Minimum Required Contributions.--
            ``(1) In general.--For purposes of this section, the due 
        date for any payment of any minimum required contribution for 
        any plan year shall be 8\1/2\ months after the close of the 
        plan year.
            ``(2) Interest.--Any payment required under paragraph (1) 
        for a plan year that is made on a date other than the valuation 
        date for such plan year shall be adjusted for interest accruing 
        for the period between the valuation date and the payment date, 
        at the effective rate of interest for the plan for such plan 
        year.
            ``(3) Accelerated quarterly contribution schedule for 
        underfunded plans.--
                    ``(A) Failure to timely make required 
                installment.--In any case in which the plan has a 
                funding shortfall for the preceding plan year, the 
                employer maintaining the plan shall make the required 
                installments under this paragraph and if the employer 
                fails to pay the full amount of a required installment 
                for the plan year, then the amount of interest charged 
                under paragraph (2) on the underpayment for the period 
                of underpayment shall be determined by using a rate of 
                interest equal to the rate otherwise used under 
                paragraph (2) plus 5 percentage points.
                    ``(B) Amount of underpayment, period of 
                underpayment.--For purposes of subparagraph (A)--
                            ``(i) Amount.--The amount of the 
                        underpayment shall be the excess of--
                                    ``(I) the required installment, 
                                over
                                    ``(II) the amount (if any) of the 
                                installment contributed to or under the 
                                plan on or before the due date for the 
                                installment.
                            ``(ii) Period of underpayment.--The period 
                        for which any interest is charged under this 
                        paragraph with respect to any portion of the 
                        underpayment shall run from the due date for 
                        the installment to the date on which such 
                        portion is contributed to or under the plan.
                            ``(iii) Order of crediting contributions.--
                        For purposes of clause (i)(II), contributions 
                        shall be credited against unpaid required 
                        installments in the order in which such 
                        installments are required to be paid.
                    ``(C) Number of required installments; due dates.--
                For purposes of this paragraph--
                            ``(i) Payable in 4 installments.--There 
                        shall be 4 required installments for each plan 
                        year.
                            ``(ii) Time for payment of installments.--
                        The due dates for required installments are set 
                        forth in the following table:

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

                    ``(D) Amount of required installment.--For purposes 
                of this paragraph--
                            ``(i) In general.--The amount of any 
                        required installment shall be 25 percent of the 
                        required annual payment.
                            ``(ii) Required annual payment.--For 
                        purposes of clause (i), the term `required 
                        annual payment' means the lesser of--
                                    ``(I) 90 percent of the minimum 
                                required contribution (determined 
                                without regard to this subsection) to 
                                the plan for the plan year under this 
                                section, or
                                    ``(II) 100 percent of the minimum 
                                required contribution (determined 
                                without regard to this subsection or to 
                                any waiver under section 302(c)) to the 
                                plan for the preceding plan year.
                        Subclause (II) shall not apply if the preceding 
                        plan year referred to in such clause was not a 
                        year of 12 months.
                    ``(E) Fiscal years and short years.--
                            ``(i) Fiscal years.--In applying this 
                        paragraph to a plan year beginning on any date 
                        other than January 1, there shall be 
                        substituted for the months specified in this 
                        paragraph, the months which correspond thereto.
                            ``(ii) Short plan year.--This subparagraph 
                        shall be applied to plan years of less than 12 
                        months in accordance with regulations 
                        prescribed by the Secretary of the Treasury.
            ``(4) Liquidity requirement in connection with quarterly 
        contributions.--
                    ``(A) In general.--A plan to which this paragraph 
                applies shall be treated as failing to pay the full 
                amount of any required installment under paragraph (3) 
                to the extent that the value of the liquid assets paid 
                in such installment is less than the liquidity 
                shortfall (whether or not such liquidity shortfall 
                exceeds the amount of such installment required to be 
                paid but for this paragraph).
                    ``(B) Plans to which paragraph applies.--This 
                paragraph shall apply to a plan (other than a plan 
                described in subsection (g)(2)(B)) which--
                            ``(i) is required to pay installments under 
                        paragraph (3) for a plan year, and
                            ``(ii) has a liquidity shortfall for any 
                        quarter during such plan year.
                    ``(C) Period of underpayment.--For purposes of 
                paragraph (3)(A), any portion of an installment that is 
                treated as not paid under subparagraph (A) shall 
                continue to be treated as unpaid until the close of the 
                quarter in which the due date for such installment 
                occurs.
                    ``(D) Limitation on increase.--If the amount of any 
                required installment is increased by reason of 
                subparagraph (A), in no event shall such increase 
                exceed the amount which, when added to prior 
                installments for the plan year, is necessary to 
                increase the funding target attainment percentage of 
                the plan for the plan year (taking into account the 
                expected increase in funding target due to benefits 
                accruing or earned during the plan year) to 100 
                percent.
                    ``(E) Definitions.--For purposes of this 
                paragraph--
                            ``(i) Liquidity shortfall.--The term 
                        `liquidity shortfall' means, with respect to 
                        any required installment, an amount equal to 
                        the excess (as of the last day of the quarter 
                        for which such installment is made) of--
                                    ``(I) the base amount with respect 
                                to such quarter, over
                                    ``(II) the value (as of such last 
                                day) of the plan's liquid assets.
                            ``(ii) Base amount.--
                                    ``(I) In general.--The term `base 
                                amount' means, with respect to any 
                                quarter, an amount equal to 3 times the 
                                sum of the adjusted disbursements from 
                                the plan for the 12 months ending on 
                                the last day of such quarter.
                                    ``(II) Special rule.--If the amount 
                                determined under subclause (I) exceeds 
                                an amount equal to 2 times the sum of 
                                the adjusted disbursements from the 
                                plan for the 36 months ending on the 
                                last day of the quarter and an enrolled 
                                actuary certifies to the satisfaction 
                                of the Secretary of the Treasury that 
                                such excess is the result of 
                                nonrecurring circumstances, the base 
                                amount with respect to such quarter 
                                shall be determined without regard to 
                                amounts related to those nonrecurring 
                                circumstances.
                            ``(iii) Disbursements from the plan.--The 
                        term `disbursements from the plan' means all 
                        disbursements from the trust, including 
                        purchases of annuities, payments of single sums 
                        and other benefits, and administrative 
                        expenses.
                            ``(iv) Adjusted disbursements.--The term 
                        `adjusted disbursements' means disbursements 
                        from the plan reduced by the product of--
                                    ``(I) the plan's funding target 
                                attainment percentage for the plan 
                                year, and
                                    ``(II) the sum of the purchases of 
                                annuities, payments of single sums, and 
                                such other disbursements as the 
                                Secretary of the Treasury shall provide 
                                in regulations.
                            ``(v) Liquid assets.--The term `liquid 
                        assets' means cash, marketable securities, and 
                        such other assets as specified by the Secretary 
                        of the Treasury in regulations.
                            ``(vi) Quarter.--The term `quarter' means, 
                        with respect to any required installment, the 
                        3-month period preceding the month in which the 
                        due date for such installment occurs.
                    ``(F) Regulations.--The Secretary of the Treasury 
                may prescribe such regulations as are necessary to 
                carry out this paragraph.
    ``(k) Imposition of Lien Where Failure To Make Required 
Contributions.--
            ``(1) In general.--In the case of a plan to which this 
        subsection applies (as provided under paragraph (2)), if--
                    ``(A) any person fails to make a contribution 
                payment required by section 302 and this section before 
                the due date for such payment, and
                    ``(B) the unpaid balance of such payment (including 
                interest), when added to the aggregate unpaid balance 
                of all preceding such payments for which payment was 
                not made before the due date (including interest), 
                exceeds $1,000,000,
        then there shall be a lien in favor of the plan in the amount 
        determined under paragraph (3) upon all property and rights to 
        property, whether real or personal, belonging to such person 
        and any other person who is a member of the same controlled 
        group of which such person is a member.
            ``(2) Plans to which subsection applies.--This subsection 
        shall apply to a single-employer plan covered under section 
        4021 for any plan year for which the funding target attainment 
        percentage (as defined in subsection (d)(2)) of such plan is 
        less than 100 percent.
            ``(3) Amount of lien.--For purposes of paragraph (1), the 
        amount of the lien shall be equal to the aggregate unpaid 
        balance of contribution payments required under this section 
        and section 302 for which payment has not been made before the 
        due date.
            ``(4) Notice of failure; lien.--
                    ``(A) Notice of failure.--A person committing a 
                failure described in paragraph (1) shall notify the 
                Pension Benefit Guaranty Corporation of such failure 
                within 10 days of the due date for the required 
                contribution payment.
                    ``(B) Period of lien.--The lien imposed by 
                paragraph (1) shall arise on the due date for the 
                required contribution payment and shall continue until 
                the last day of the first plan year in which the plan 
                ceases to be described in paragraph (1)(B). Such lien 
                shall continue to run without regard to whether such 
                plan continues to be described in paragraph (2) during 
                the period referred to in the preceding sentence.
                    ``(C) Certain rules to apply.--Any amount with 
                respect to which a lien is imposed under paragraph (1) 
                shall be treated as taxes due and owing the United 
                States and rules similar to the rules of subsections 
                (c), (d), and (e) of section 4068 shall apply with 
                respect to a lien imposed by subsection (a) and the 
                amount with respect to such lien.
            ``(5) Enforcement.--Any lien created under paragraph (1) 
        may be perfected and enforced only by the Pension Benefit 
        Guaranty Corporation, or at the direction of the Pension 
        Benefit Guaranty Corporation, by the contributing sponsor (or 
        any member of the controlled group of the contributing 
        sponsor).
            ``(6) Definitions.--For purposes of this subsection--
                    ``(A) Contribution payment.--The term `contribution 
                payment' means, in connection with a plan, a 
                contribution payment required to be made to the plan, 
                including any required installment under paragraphs (3) 
                and (4) of subsection (j).
                    ``(B) Due date; required installment.--The terms 
                `due date' and `required installment' have the meanings 
                given such terms by subsection (j), except that in the 
                case of a payment other than a required installment, 
                the due date shall be the date such payment is required 
                to be made under section 303.
                    ``(C) Controlled group.--The term `controlled 
                group' means any group treated as a single employer 
                under subsections (b), (c), (m), and (o) of section 414 
                of the Internal Revenue Code of 1986.
    ``(l) Qualified Transfers to Health Benefit Accounts.--In the case 
of a qualified transfer (as defined in section 420 of the Internal 
Revenue Code of 1986), any assets so transferred shall not, for 
purposes of this section, be treated as assets in the plan.''.
    (b) Clerical Amendment.--The table of sections in section 1 of such 
Act (as amended by section 101) is amended by inserting after the item 
relating to section 302 the following new item:

``Sec. 303. Minimum funding standards for single-employer defined 
                            benefit pension plans.''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to plan years beginning after 2007.

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

    (a) Funding-Based Limits on Benefits and Benefit Accruals Under 
Single-Employer Plans.--Section 206 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1056) is amended by adding at the end 
the following new subsection:
    ``(g) Funding-Based Limits on Benefits and Benefit Accruals Under 
Single-Employer Plans.--
            ``(1) Funding-based limitation on shutdown benefits and 
        other unpredictable contingent event benefits under single-
        employer plans.--
                    ``(A) In general.--If a participant of a defined 
                benefit plan which is a single-employer plan is 
                entitled to an unpredictable contingent event benefit 
                payable with respect to any event occurring during any 
                plan year, the plan shall provide that such benefit may 
                not be provided if the adjusted funding target 
                attainment percentage for such plan year--
                            ``(i) is less than 60 percent, or
                            ``(ii) would be less than 60 percent taking 
                        into account such occurrence.
                    ``(B) Exemption.--Subparagraph (A) shall cease to 
                apply with respect to any plan year, effective as of 
                the first day of the plan year, upon payment by the 
                plan sponsor of a contribution (in addition to any 
                minimum required contribution under section 303) equal 
                to--
                            ``(i) in the case of subparagraph (A)(i), 
                        the amount of the increase in the funding 
                        target of the plan (under section 303) for the 
                        plan year attributable to the occurrence 
                        referred to in subparagraph (A), and
                            ``(ii) in the case of subparagraph (A)(ii), 
                        the amount sufficient to result in a funding 
                        target attainment percentage of 60 percent.
                    ``(C) Unpredictable contingent event.--For purposes 
                of this paragraph, the term `unpredictable contingent 
                event benefit' means any benefit payable solely by 
                reason of--
                            ``(i) a plant shutdown (or similar event, 
                        as determined by the Secretary of the 
                        Treasury), or
                            ``(ii) an event other than the attainment 
                        of any age, performance of any service, receipt 
                        or derivation of any compensation, or 
                        occurrence of death or disability.
            ``(2) Limitations on plan amendments increasing liability 
        for benefits.--
                    ``(A) In general.--No amendment to a defined 
                benefit plan which is a single-employer plan which has 
                the effect of increasing liabilities of the plan by 
                reason of increases in benefits, establishment of new 
                benefits, changing the rate of benefit accrual, or 
                changing the rate at which benefits become 
                nonforfeitable may take effect during any plan year if 
                the adjusted funding target attainment percentage for 
                such plan year is--
                            ``(i) less than 80 percent, or
                            ``(ii) would be less than 80 percent taking 
                        into account such amendment.
                    ``(B) Exemption.--Subparagraph (A) shall cease to 
                apply with respect to any plan year, effective as of 
                the first day of the plan year (or if later, the 
                effective date of the amendment), upon payment by the 
                plan sponsor of a contribution (in addition to any 
                minimum required contribution under section 303) equal 
                to--
                            ``(i) in the case of subparagraph (A)(i), 
                        the amount of the increase in the funding 
                        target of the plan (under section 303) for the 
                        plan year attributable to the amendment, and
                            ``(ii) in the case of subparagraph (A)(ii), 
                        the amount sufficient to result in an adjusted 
                        funding target attainment percentage of 80 
                        percent.
                    ``(C) Exception for certain benefit increases.--
                Subparagraph (A) shall not apply to any amendment which 
                provides for an increase in benefits under a formula 
                which is not based on a participant's compensation, but 
                only if the rate of such increase is not in excess of 
                the contemporaneous rate of increase in average wages 
                of participants covered by the amendment.
            ``(3) Limitations on accelerated benefit distributions.--
                    ``(A) Funding percentage less than 60 percent.--A 
                defined benefit plan which is a single-employer plan 
                shall provide that, in any case in which the plan's 
                adjusted funding target attainment percentage for a 
                plan year is less than 60 percent, the plan may not pay 
                any prohibited payment after the valuation date for the 
                plan year.
                    ``(B) Bankruptcy.--A defined benefit plan which is 
                a single-employer plan shall provide that, during any 
                period in which the plan sponsor is a debtor in a case 
                under title 11, United States Code, or similar Federal 
                or State law, the plan may not pay any prohibited 
                payment. The preceding sentence shall not apply on or 
                after the date on which the enrolled actuary of the 
                plan certifies that the adjusted funding target 
                attainment percentage of such plan is not less than 100 
                percent.
                    ``(C) Limited payment if percentage at least 60 
                percent but less than 80 percent.--
                            ``(i) In general.--A defined benefit plan 
                        which is a single-employer plan shall provide 
                        that, in any case in which the plan's adjusted 
                        funding target attainment percentage for a plan 
                        year is 60 percent or greater but less than 80 
                        percent, the plan may not pay any prohibited 
                        payment after the valuation date for the plan 
                        year to the extent the amount of the payment 
                        exceeds the lesser of--
                                    ``(I) 50 percent of the amount of 
                                the payment which could be made without 
                                regard to this subsection, or
                                    ``(II) the present value 
                                (determined under guidance prescribed 
                                by the Pension Benefit Guaranty 
                                Corporation, using the interest and 
                                mortality assumptions under section 
                                205(g)) of the maximum guarantee with 
                                respect to the participant under 
                                section 4022.
                            ``(ii) One-time application.--
                                    ``(I) In general.--The plan shall 
                                also provide that only 1 prohibited 
                                payment meeting the requirements of 
                                clause (i) may be made with respect to 
                                any participant during any period of 
                                consecutive plan years to which the 
                                limitations under either subparagraph 
                                (A) or (B) or this subparagraph 
                                applies.
                                    ``(II) Treatment of 
                                beneficiaries.--For purposes of this 
                                clause, a participant and any 
                                beneficiary on his behalf (including an 
                                alternate payee, as defined in section 
                                206(d)(3)(K)) shall be treated as 1 
                                participant. If the accrued benefit of 
                                a participant is allocated to such an 
                                alternate payee and 1 or more other 
                                persons, the amount under clause (i) 
                                shall be allocated among such persons 
                                in the same manner as the accrued 
                                benefit is allocated unless the 
                                qualified domestic relations order (as 
                                defined in section 206(d)(3)(B)(i)) 
                                provides otherwise.
                    ``(D) Exception.--This paragraph shall not apply to 
                any plan for any plan year if the terms of such plan 
                (as in effect for the period beginning on September 1, 
                2005, and ending with such plan year) provide for no 
                benefit accruals with respect to any participant during 
                such period.
                    ``(E) Prohibited payment.--For purpose of this 
                paragraph, the term `prohibited payment' means--
                            ``(i) any payment, in excess of the monthly 
                        amount paid under a single life annuity (plus 
                        any social security supplements described in 
                        the last sentence of section 204(b)(1)(G)), to 
                        a participant or beneficiary whose annuity 
                        starting date (as defined in section 205(h)(2)) 
                        occurs during any period a limitation under 
                        subparagraph (A) or (B) is in effect,
                            ``(ii) any payment for the purchase of an 
                        irrevocable commitment from an insurer to pay 
                        benefits, and
                            ``(iii) any other payment specified by the 
                        Secretary of the Treasury by regulations.
            ``(4) Limitation on benefit accruals for plans with severe 
        funding shortfalls.--
                    ``(A) In general.--A defined benefit plan which is 
                a single-employer plan shall provide that, in any case 
                in which the plan's adjusted funding target attainment 
                percentage for a plan year is less than 60 percent, 
                benefit accruals under the plan shall cease as of the 
                valuation date for the plan year.
                    ``(B) Exemption.--Subparagraph (A) shall cease to 
                apply with respect to any plan year, effective as of 
                the first day of the plan year, upon payment by the 
                plan sponsor of a contribution (in addition to any 
                minimum required contribution under section 303) equal 
                to the amount sufficient to result in an adjusted 
                funding target attainment percentage of 60 percent.
            ``(5) Rules relating to contributions required to avoid 
        benefit limitations.--
                    ``(A) Security may be provided.--
                            ``(i) In general.--For purposes of this 
                        subsection, the adjusted funding target 
                        attainment percentage shall be determined by 
                        treating as an asset of the plan any security 
                        provided by a plan sponsor in a form meeting 
                        the requirements of clause (ii).
                            ``(ii) Form of security.--The security 
                        required under clause (i) shall consist of--
                                    ``(I) a bond issued by a corporate 
                                surety company that is an acceptable 
                                surety for purposes of section 412 of 
                                this Act,
                                    ``(II) cash, or United States 
                                obligations which mature in 3 years or 
                                less, held in escrow by a bank or 
                                similar financial institution, or
                                    ``(III) such other form of security 
                                as is satisfactory to the Secretary of 
                                the Treasury and the parties involved.
                            ``(iii) Enforcement.--Any security provided 
                        under clause (i) may be perfected and enforced 
                        at any time after the earlier of--
                                    ``(I) the date on which the plan 
                                terminates,
                                    ``(II) if there is a failure to 
                                make a payment of the minimum required 
                                contribution for any plan year 
                                beginning after the security is 
                                provided, the due date for the payment 
                                under section 303(j), or
                                    ``(III) if the adjusted funding 
                                target attainment percentage is less 
                                than 60 percent for a consecutive 
                                period of 7 years, the valuation date 
                                for the last year in the period.
                            ``(iv) Release of security.--The security 
                        shall be released (and any amounts thereunder 
                        shall be refunded together with any interest 
                        accrued thereon) at such time as the Secretary 
                        of the Treasury may prescribe in regulations, 
                        including regulations for partial releases of 
                        the security by reason of increases in the 
                        funding target attainment percentage.
                    ``(B) Prefunding balance or funding standard 
                carryover balance may not be used.--No prefunding 
                balance or funding standard carryover balance under 
                section 303(f) may be used under paragraph (1), (2), or 
                (4) to satisfy any payment an employer may make under 
                any such paragraph to avoid or terminate the 
                application of any limitation under such paragraph.
                    ``(C) Deemed reduction of funding balances.--
                            ``(i) In general.--Subject to clause (iii), 
                        in any case in which a benefit limitation under 
                        paragraph (1), (2), (3), or (4) would (but for 
                        this subparagraph and determined without regard 
                        to paragraph (1)(B), (2)(B), or (4)(B)) apply 
                        to such plan for the plan year, the plan 
                        sponsor of such plan shall be treated for 
                        purposes of this Act as having made an election 
                        under section 303(f) to reduce the prefunding 
                        balance or funding standard carryover balance 
                        by such amount as is necessary for such benefit 
                        limitation to not apply to the plan for such 
                        plan year.
                            ``(ii) Exception for insufficient funding 
                        balances.--Clause (i) shall not apply with 
                        respect to a benefit limitation for any plan 
                        year if the application of clause (i) would not 
                        result in the benefit limitation not applying 
                        for such plan year.
                            ``(iii) Restrictions of certain rules to 
                        collectively bargained plans.--With respect to 
                        any benefit limitation under paragraph (1), 
                        (2), or (4), clause (i) shall only apply in the 
                        case of a plan maintained pursuant to 1 or more 
                        collective bargaining agreements between 
                        employee representatives and 1 or more 
                        employers.
            ``(6) New plans.--Paragraphs (1), (2) and (4) shall not 
        apply to a plan for the first 5 plan years of the plan. For 
        purposes of this paragraph, the reference in this paragraph to 
        a plan shall include a reference to any predecessor plan.
            ``(7) Presumed underfunding for purposes of benefit 
        limitations.--
                    ``(A) Presumption of continued underfunding.--In 
                any case in which a benefit limitation under paragraph 
                (1), (2), (3), or (4) has been applied to a plan with 
                respect to the plan year preceding the current plan 
                year, the adjusted funding target attainment percentage 
                of the plan for the current plan year shall be presumed 
                to be equal to the adjusted funding target attainment 
                percentage of the plan for the preceding plan year 
                until the enrolled actuary of the plan certifies the 
                actual adjusted funding target attainment percentage of 
                the plan for the current plan year.
                    ``(B) Presumption of underfunding after 10th 
                month.--In any case in which no certification of the 
                adjusted funding target attainment percentage for the 
                current plan year is made with respect to the plan 
                before the first day of the 10th month of such year, 
                for purposes of paragraphs (1), (2), (3), and (4), such 
                first day shall be deemed, for purposes of such 
                paragraph, to be the valuation date of the plan for the 
                current plan year and the plan's adjusted funding 
                target attainment percentage shall be conclusively 
                presumed to be less than 60 percent as of such first 
                day.
                    ``(C) Presumption of underfunding after 4th month 
                for nearly underfunded plans.--In any case in which--
                            ``(i) a benefit limitation under paragraph 
                        (1), (2), (3), or (4) did not apply to a plan 
                        with respect to the plan year preceding the 
                        current plan year, but the adjusted funding 
                        target attainment percentage of the plan for 
                        such preceding plan year was not more than 10 
                        percentage points greater than the percentage 
                        which would have caused such paragraph to apply 
                        to the plan with respect to such preceding plan 
                        year, and
                            ``(ii) as of the first day of the 4th month 
                        of the current plan year, the enrolled actuary 
                        of the plan has not certified the actual 
                        adjusted funding target attainment percentage 
                        of the plan for the current plan year,
                until the enrolled actuary so certifies, such first day 
                shall be deemed, for purposes of such paragraph, to be 
                the valuation date of the plan for the current plan 
                year and the adjusted funding target attainment 
                percentage of the plan as of such first day shall, for 
                purposes of such paragraph, be presumed to be equal to 
                10 percentage points less than the adjusted funding 
                target attainment percentage of the plan for such 
                preceding plan year.
            ``(8) Treatment of plan as of close of prohibited or 
        cessation period.--For purposes of applying this part--
                    ``(A) Operation of plan after period.--Unless the 
                plan provides otherwise, payments and accruals will 
                resume effective as of the day following the close of 
                the period for which any limitation of payment or 
                accrual of benefits under paragraph (3) or (4) applies.
                    ``(B) Treatment of affected benefits.--Nothing in 
                this paragraph shall be construed as affecting the 
                plan's treatment of benefits which would have been paid 
                or accrued but for this subsection.
            ``(9) Terms relating to funding target attainment 
        percentage.--For purposes of this subsection--
                    ``(A) In general.--The term `funding target 
                attainment percentage' has the same meaning given such 
                term by section 303(d)(2).
                    ``(B) Adjusted funding target attainment 
                percentage.--The term `adjusted funding target 
                attainment percentage' means the funding target 
                attainment percentage which is determined under 
                subparagraph (A) by increasing each of the amounts 
                under subparagraphs (A) and (B) of section 303(d)(2) by 
                the aggregate amount of purchases of annuities for 
                employees other than highly compensated employees (as 
                defined in section 414(q) of the Internal Revenue Code 
                of 1986) which were made by the plan during the 
                preceding 2 plan years.
                    ``(C) Application to plans which are fully funded 
                without regard to reductions for funding balances.--
                            ``(i) In general.--In the case of a plan 
                        for any plan year, if the funding target 
                        attainment percentage is 100 percent or more 
                        (determined without regard to this subparagraph 
                        and without regard to the reduction in the 
                        value of assets under section 303(f)(4)), the 
                        funding target attainment percentage for 
                        purposes of subparagraphs (A) and (B) shall be 
                        determined without regard to such reduction.
                            ``(ii) Transition rule.--Clause (i) shall 
                        be applied to plan years beginning after 2007 
                        and before 2011 by substituting for `100 
                        percent' the applicable percentage determined 
                        in accordance with the following table:

``In the case of a plan year                             The applicable
   beginning in calendar year:                            percentage is
        2008...................................................     92 
        2009...................................................     94 
        2010...................................................     96.
                            ``(iii) Limitation.--Clause (ii) shall not 
                        apply with respect to any plan year after 2008 
                        unless the funding target attainment percentage 
                        (determined without regard to this 
                        subparagraph) of the plan for each preceding 
                        plan year after 2007 was not less than the 
                        applicable percentage with respect to such 
                        preceding plan year determined under clause 
                        (ii).
            ``(10) Special rule for 2008.--For purposes of this 
        subsection, in the case of plan years beginning in 2008, the 
        funding target attainment percentage for the preceding plan 
        year may be determined using such methods of estimation as the 
        Secretary of the Treasury may provide.''.
    (b) Notice Requirement.--
            (1) In general.--Section 101 of such Act (29 U.S.C. 1021) 
        is amended--
                    (A) by redesignating subsection (j) as subsection 
                (k); and
                    (B) by inserting after subsection (i) the following 
                new subsection:
    ``(j) Notice of Funding-Based Limitation on Certain Forms of 
Distribution.--The plan administrator of a single-employer plan shall 
provide a written notice to plan participants and beneficiaries within 
30 days--
            ``(1) after the plan has become subject to a restriction 
        described in paragraph (1) or (3) of section 206(g)),
            ``(2) in the case of a plan to which section 206(g)(4) 
        applies, after the valuation date for the plan year described 
        in section 206(g)(4)(B) for which the plan's adjusted funding 
        target attainment percentage for the plan year is less than 60 
        percent (or, if earlier, the date such percentage is deemed to 
        be less than 60 percent under section 206(g)(7)), and
            ``(3) at such other time as may be determined by the 
        Secretary of the Treasury.
The notice required to be provided under this subsection shall be in 
writing, except that such notice may be in electronic or other form to 
the extent that such form is reasonably accessible to the recipient.''.
            (2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C. 
        1132(c)(4)) is amended by striking ``section 302(b)(7)(F)(iv)'' 
        and inserting ``section 101(j) or 302(b)(7)(F)(iv)''.
    (c) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply to plan years beginning after December 31, 2007.
            (2) Collective bargaining exception.--In the case of a plan 
        maintained pursuant to 1 or more collective bargaining 
        agreements between employee representatives and 1 or more 
        employers ratified before January 1, 2008, the amendments made 
        by this section shall not apply to plan years beginning before 
        the earlier of--
                    (A) the later of--
                            (i) the date on which the last collective 
                        bargaining agreement relating to the plan 
                        terminates (determined without regard to any 
                        extension thereof agreed to after the date of 
                        the enactment of this Act), or
                            (ii) the first day of the first plan year 
                        to which the amendments made by this subsection 
                        would (but for this subparagraph) apply, or
                    (B) January 1, 2010.
        For purposes of subparagraph (A)(i), any plan amendment made 
        pursuant to a collective bargaining agreement relating to the 
        plan which amends the plan solely to conform to any requirement 
        added by this section shall not be treated as a termination of 
        such collective bargaining agreement.

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

    (a) General Rule.--Except as provided in this section, if a plan in 
existence on July 26, 2005, was an eligible cooperative plan for its 
plan year which includes such date, the amendments made by this 
subtitle and subtitle B shall not apply to plan years beginning before 
the earlier of--
            (1) the first plan year for which the plan ceases to be an 
        eligible cooperative plan, or
            (2) January 1, 2017.
    (b) Interest Rate.--In applying section 302(b)(5)(B) of the 
Employee Retirement Income Security Act of 1974 and section 
412(b)(5)(B) of the Internal Revenue Code of 1986 (as in effect before 
the amendments made by this subtitle and subtitle B) to an eligible 
cooperative plan for plan years beginning after December 31, 2007, and 
before the first plan year to which such amendments apply, the third 
segment rate determined under section 303(h)(2)(C)(iii) of such Act and 
section 430(h)(2)(C)(iii) of such Code (as added by such amendments) 
shall be used in lieu of the interest rate otherwise used.
    (c) Eligible Cooperative Plan Defined.--For purposes of this 
section, a plan shall be treated as an eligible cooperative plan for a 
plan year if the plan is maintained by more than 1 employer and at 
least 85 percent of the employers are--
            (1) rural cooperatives (as defined in section 401(k)(7)(B) 
        of such Code without regard to clause (iv) thereof), or
            (2) organizations which are--
                    (A) cooperative organizations described in section 
                1381(a) of such Code which are more than 50-percent 
                owned by agricultural producers or by cooperatives 
                owned by agricultural producers, or
                    (B) more than 50-percent owned, or controlled by, 
                one or more cooperative organizations described in 
                subparagraph (A).
A plan shall also be treated as an eligible cooperative plan for any 
plan year for which it is described in section 210(a) of the Employee 
Retirement Income Security Act of 1974 and is maintained by a rural 
telephone cooperative association described in section 3(40)(B)(v) of 
such Act.

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

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

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

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

SEC. 107. TECHNICAL AND CONFORMING AMENDMENTS.

    (a) Miscellaneous Amendments to Title I.--Subtitle B of title I of 
such Act (29 U.S.C. 1021 et seq.) is amended--
            (1) in section 101(d)(3), by striking ``section 302(e)'' 
        and inserting ``section 303(j)'';
            (2) in section 103(d)(8)(B), by striking ``the requirements 
        of section 302(c)(3)'' and inserting ``the applicable 
        requirements of sections 303(h) and 304(c)(3)'';
            (3) in section 103(d), by striking paragraph (11) and 
        inserting the following:
            ``(11) If the current value of the assets of the plan is 
        less than 70 percent of--
                    ``(A) in the case of a single-employer plan, the 
                funding target (as defined in section 303(d)(1)) of the 
                plan, or
                    ``(B) in the case of a multiemployer plan, the 
                current liability (as defined in section 304(c)(6)(D)) 
                under the plan,
        the percentage which such value is of the amount described in 
        subparagraph (A) or (B).'';
            (4) in section 203(a)(3)(C), by striking ``section 
        302(c)(8)'' and inserting ``section 302(d)(2)'';
            (5) in section 204(g)(1), by striking ``section 302(c)(8)'' 
        and inserting ``section 302(d)(2)'';
            (6) in section 204(i)(2)(B), by striking ``section 
        302(c)(8)'' and inserting ``section 302(d)(2)'';
            (7) in section 204(i)(3), by striking ``funded current 
        liability percentage (within the meaning of section 302(d)(8) 
        of this Act)'' and inserting ``funding target attainment 
        percentage (as defined in section 303(d)(2))'';
            (8) in section 204(i)(4), by striking ``section 
        302(c)(11)(A), without regard to section 302(c)(11)(B)'' and 
        inserting ``section 302(b)(1), without regard to section 
        302(b)(2)'';
            (9) in section 206(e)(1), by striking ``section 302(d)'' 
        and inserting ``section 303(j)(4)'', and by striking ``section 
        302(e)(5)'' and inserting ``section 303(j)(4)(E)(i)'';
            (10) in section 206(e)(3), by striking ``section 302(e) by 
        reason of paragraph (5)(A) thereof'' and inserting ``section 
        303(j)(3) by reason of section 303(j)(4)(A)''; and
            (11) in sections 101(e)(3), 403(c)(1), and 408(b)(13), by 
        striking ``American Jobs Creation Act of 2004'' and inserting 
        ``Pension Protection Act of 2006''.
    (b) Miscellaneous Amendments to Title IV.--Title IV of such Act is 
amended--
            (1) in section 4001(a)(13) (29 U.S.C. 1301(a)(13)), by 
        striking ``302(c)(11)(A)'' and inserting ``302(b)(1)'', by 
        striking ``412(c)(11)(A)'' and inserting ``412(b)(1)'', by 
        striking ``302(c)(11)(B)'' and inserting ``302(b)(2)'', and by 
        striking ``412(c)(11)(B)'' and inserting ``412(b)(2)'';
            (2) in section 4003(e)(1) (29 U.S.C. 1303(e)(1)), by 
        striking ``302(f)(1)(A) and (B)'' and inserting ``303(k)(1)(A) 
        and (B)'', and by striking ``412(n)(1)(A) and (B)'' and 
        inserting ``430(k)(1)(A) and (B)'';
            (3) in section 4010(b)(2) (29 U.S.C. 1310(b)(2)), by 
        striking ``302(f)(1)(A) and (B)'' and inserting ``303(k)(1)(A) 
        and (B)'', and by striking ``412(n)(1)(A) and (B)'' and 
        inserting ``430(k)(1)(A) and (B)'';
            (4) in section 4062(c) (29 U.S.C. 1362(c)), by striking 
        paragraphs (1), (2), and (3) and inserting the following:
            ``(1) the sum of the shortfall amortization charge (within 
        the meaning of section 303(c)(1) of this Act and 430(d)(1) of 
        the Internal Revenue Code of 1986) with respect to the plan (if 
        any) for the plan year in which the termination date occurs, 
        plus the aggregate total of shortfall amortization installments 
        (if any) determined for succeeding plan years under section 
        303(c)(2) of this Act and section 430(d)(2) of such Code 
        (which, for purposes of this subparagraph, shall include any 
        increase in such sum which would result if all applications for 
        waivers of the minimum funding standard under section 302(c) of 
        this Act and section 412(c) of such Code which are pending with 
        respect to such plan were denied and if no additional 
        contributions (other than those already made by the termination 
        date) were made for the plan year in which the termination date 
        occurs or for any previous plan year), and
            ``(2) the sum of the waiver amortization charge (within the 
        meaning of section 303(e)(1) of this Act and 430(e)(1) of the 
        Internal Revenue Code of 1986) with respect to the plan (if 
        any) for the plan year in which the termination date occurs, 
        plus the aggregate total of waiver amortization installments 
        (if any) determined for succeeding plan years under section 
        303(e)(2) of this Act and section 430(e)(2) of such Code,'';
            (5) in section 4071 (29 U.S.C. 1371), by striking 
        ``302(f)(4)'' and inserting ``303(k)(4)'';
            (6) in section 4243(a)(1)(B) (29 U.S.C. 1423(a)(1)(B)), by 
        striking ``302(a)'' and inserting ``304(a)'', and, in clause 
        (i), by striking ``302(a)'' and inserting ``304(a)'';
            (7) in section 4243(f)(1) (29 U.S.C. 1423(f)(1)), by 
        striking ``303(a)'' and inserting ``302(c)'';
            (8) in section 4243(f)(2) (29 U.S.C. 1423(f)(2)), by 
        striking ``303(c)'' and inserting ``302(c)(3)''; and
            (9) in section 4243(g) (29 U.S.C. 1423(g)), by striking 
        ``302(c)(3)'' and inserting ``304(c)(3)''.
    (c) Amendments to Reorganization Plan No. 4 of 1978.--Section 
106(b)(ii) of Reorganization Plan No. 4 of 1978 (ratified and affirmed 
as law by Public Law 98-532 (98 Stat. 2705)) is amended by striking 
``302(c)(8)'' and inserting ``302(d)(2)'', by striking ``304(a) and 
(b)(2)(A)'' and inserting ``304(d)(1), (d)(2), and (e)(2)(A)'', and by 
striking ``412(c)(8), (e), and (f)(2)(A)'' and inserting ``412(c)(2) 
and 431(d)(1), (d)(2), and (e)(2)(A)''.
    (d) Repeal of Expired Authority for Temporary Variances.--Section 
207 of such Act (29 U.S.C. 1057) is repealed.
    (e) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after 2007.

        Subtitle B--Amendments to Internal Revenue Code of 1986

SEC. 111. MINIMUM FUNDING STANDARDS.

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

``SEC. 412. MINIMUM FUNDING STANDARDS.

    ``(a) Requirement To Meet Minimum Funding Standard.--
            ``(1) In general.--A plan to which this section applies 
        shall satisfy the minimum funding standard applicable to the 
        plan for any plan year.
            ``(2) Minimum funding standard.--For purposes of paragraph 
        (1), a plan shall be treated as satisfying the minimum funding 
        standard for a plan year if--
                    ``(A) in the case of a defined benefit plan which 
                is not a multiemployer plan, the employer makes 
                contributions to or under the plan for the plan year 
                which, in the aggregate, are not less than the minimum 
                required contribution determined under section 430 for 
                the plan for the plan year,
                    ``(B) in the case of a money purchase plan which is 
                not a multiemployer plan, the employer makes 
                contributions to or under the plan for the plan year 
                which are required under the terms of the plan, and
                    ``(C) in the case of a multiemployer plan, the 
                employers make contributions to or under the plan for 
                any plan year which, in the aggregate, are sufficient 
                to ensure that the plan does not have an accumulated 
                funding deficiency under section 431 as of the end of 
                the plan year.
    ``(b) Liability for Contributions.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        amount of any contribution required by this section (including 
        any required installments under paragraphs (3) and (4) of 
        section 430(j)) shall be paid by the employer responsible for 
        making contributions to or under the plan.
            ``(2) Joint and several liability where employer member of 
        controlled group.--If the employer referred to in paragraph (1) 
        is a member of a controlled group, each member of such group 
        shall be jointly and severally liable for payment of such 
        contributions.
    ``(c) Variance From Minimum Funding Standards.--
            ``(1) Waiver in case of business hardship.--
                    ``(A) In general.--If--
                            ``(i) an employer is (or in the case of a 
                        multiemployer plan, 10 percent or more of the 
                        number of employers contributing to or under 
                        the plan is) unable to satisfy the minimum 
                        funding standard for a plan year without 
                        temporary substantial business hardship 
                        (substantial business hardship in the case of a 
                        multiemployer plan), and
                            ``(ii) application of the standard would be 
                        adverse to the interests of plan participants 
                        in the aggregate,
                the Secretary may, subject to subparagraph (C), waive 
                the requirements of subsection (a) for such year with 
                respect to all or any portion of the minimum funding 
                standard. The Secretary shall not waive the minimum 
                funding standard with respect to a plan for more than 3 
                of any 15 (5 of any 15 in the case of a multiemployer 
                plan) consecutive plan years
                    ``(B) Effects of waiver.--If a waiver is granted 
                under subparagraph (A) for any plan year--
                            ``(i) in the case of a defined benefit plan 
                        which is not a multiemployer plan, the minimum 
                        required contribution under section 430 for the 
                        plan year shall be reduced by the amount of the 
                        waived funding deficiency and such amount shall 
                        be amortized as required under section 430(e), 
                        and
                            ``(ii) in the case of a multiemployer plan, 
                        the funding standard account shall be credited 
                        under section 431(b)(3)(C) with the amount of 
                        the waived funding deficiency and such amount 
                        shall be amortized as required under section 
                        431(b)(2)(C).
                    ``(C) Waiver of amortized portion not allowed.--The 
                Secretary may not waive under subparagraph (A) any 
                portion of the minimum funding standard under 
                subsection (a) for a plan year which is attributable to 
                any waived funding deficiency for any preceding plan 
                year.
            ``(2) Determination of business hardship.--For purposes of 
        this subsection, the factors taken into account in determining 
        temporary substantial business hardship (substantial business 
        hardship in the case of a multiemployer plan) shall include 
        (but shall not be limited to) whether or not--
                    ``(A) the employer is operating at an economic 
                loss,
                    ``(B) there is substantial unemployment or 
                underemployment in the trade or business and in the 
                industry concerned,
                    ``(C) the sales and profits of the industry 
                concerned are depressed or declining, and
                    ``(D) it is reasonable to expect that the plan will 
                be continued only if the waiver is granted.
            ``(3) Waived funding deficiency.--For purposes of this 
        section and part III of this subchapter, the term `waived 
        funding deficiency' means the portion of the minimum funding 
        standard under subsection (a) (determined without regard to the 
        waiver) for a plan year waived by the Secretary and not 
        satisfied by employer contributions.
            ``(4) Security for waivers for single-employer plans, 
        consultations.--
                    ``(A) Security may be required.--
                            ``(i) In general.--Except as provided in 
                        subparagraph (C), the Secretary may require an 
                        employer maintaining a defined benefit plan 
                        which is a single-employer plan (within the 
                        meaning of section 4001(a)(15) of the Employee 
                        Retirement Income Security Act of 1974) to 
                        provide security to such plan as a condition 
                        for granting or modifying a waiver under 
                        paragraph (1).
                            ``(ii) Special rules.--Any security 
                        provided under clause (i) may be perfected and 
                        enforced only by the Pension Benefit Guaranty 
                        Corporation, or at the direction of the 
                        Corporation, by a contributing sponsor (within 
                        the meaning of section 4001(a)(13) of the 
                        Employee Retirement Income Security Act of 
                        1974), or a member of such sponsor's controlled 
                        group (within the meaning of section 
                        4001(a)(14) of such Act).
                    ``(B) Consultation with the pension benefit 
                guaranty corporation.--Except as provided in 
                subparagraph (C), the Secretary shall, before granting 
                or modifying a waiver under this subsection with 
                respect to a plan described in subparagraph (A)(i)--
                            ``(i) provide the Pension Benefit Guaranty 
                        Corporation with--
                                    ``(I) notice of the completed 
                                application for any waiver or 
                                modification, and
                                    ``(II) an opportunity to comment on 
                                such application within 30 days after 
                                receipt of such notice, and
                            ``(ii) consider--
                                    ``(I) any comments of the 
                                Corporation under clause (i)(II), and
                                    ``(II) any views of any employee 
                                organization (within the meaning of 
                                section 3(4) of the Employee Retirement 
                                Income Security Act of 1974) 
                                representing participants in the plan 
                                which are submitted in writing to the 
                                Secretary in connection with such 
                                application.
                Information provided to the Corporation under this 
                subparagraph shall be considered tax return information 
                and subject to the safeguarding and reporting 
                requirements of section 6103(p).
                    ``(C) Exception for certain waivers.--
                            ``(i) In general.--The preceding provisions 
                        of this paragraph shall not apply to any plan 
                        with respect to which the sum of--
                                    ``(I) the aggregate unpaid minimum 
                                required contributions (within the 
                                meaning of section 4971(c)(4)) for the 
                                plan year and all preceding plan years, 
                                and
                                    ``(II) the present value of all 
                                waiver amortization installments 
                                determined for the plan year and 
                                succeeding plan years under section 
                                430(e)(2),
                        is less than $1,000,000.
                            ``(ii) Treatment of waivers for which 
                        applications are pending.--The amount described 
                        in clause (i)(I) shall include any increase in 
                        such amount which would result if all 
                        applications for waivers of the minimum funding 
                        standard under this subsection which are 
                        pending with respect to such plan were denied.
            ``(5) Special rules for single-employer plans.--
                    ``(A) Application must be submitted before date 
                2\1/2\ months after close of year.--In the case of a 
                defined benefit plan which is not a multiemployer plan, 
                no waiver may be granted under this subsection with 
                respect to any plan for any plan year unless an 
                application therefor is submitted to the Secretary not 
                later than the 15th day of the 3rd month beginning 
                after the close of such plan year.
                    ``(B) Special rule if employer is member of 
                controlled group.--In the case of a defined benefit 
                plan which is not a multiemployer plan, if an employer 
                is a member of a controlled group, the temporary 
                substantial business hardship requirements of paragraph 
                (1) shall be treated as met only if such requirements 
                are met--
                            ``(i) with respect to such employer, and
                            ``(ii) with respect to the controlled group 
                        of which such employer is a member (determined 
                        by treating all members of such group as a 
                        single employer).
                The Secretary may provide that an analysis of a trade 
                or business or industry of a member need not be 
                conducted if the Secretary determines such analysis is 
                not necessary because the taking into account of such 
                member would not significantly affect the determination 
                under this paragraph.
            ``(6) Advance notice.--
                    ``(A) In general.--The Secretary shall, before 
                granting a waiver under this subsection, require each 
                applicant to provide evidence satisfactory to the 
                Secretary that the applicant has provided notice of the 
                filing of the application for such waiver to each 
                affected party (as defined in section 4001(a)(21) of 
                the Employee Retirement Income Security Act of 1974). 
                Such notice shall include a description of the extent 
                to which the plan is funded for benefits which are 
                guaranteed under title IV of the Employee Retirement 
                Income Security Act of 1974 and for benefit 
                liabilities.
                    ``(B) Consideration of relevant information.--The 
                Secretary shall consider any relevant information 
                provided by a person to whom notice was given under 
                subparagraph (A).
            ``(7) Restriction on plan amendments.--
                    ``(A) In general.--No amendment of a plan which 
                increases the liabilities of the plan by reason of any 
                increase in benefits, any change in the accrual of 
                benefits, or any change in the rate at which benefits 
                become nonforfeitable under the plan shall be adopted 
                if a waiver under this subsection or an extension of 
                time under section 431(d) is in effect with respect to 
                the plan, or if a plan amendment described in 
                subsection (d)(2) has been made at any time in the 
                preceding 12 months (24 months in the case of a 
                multiemployer plan). If a plan is amended in violation 
                of the preceding sentence, any such waiver, or 
                extension of time, shall not apply to any plan year 
                ending on or after the date on which such amendment is 
                adopted.
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                to any plan amendment which--
                            ``(i) the Secretary determines to be 
                        reasonable and which provides for only de 
                        minimis increases in the liabilities of the 
                        plan,
                            ``(ii) only repeals an amendment described 
                        in subsection (d)(2), or
                            ``(iii) is required as a condition of 
                        qualification under part I of subchapter D, of 
                        chapter 1.
    ``(d) Miscellaneous Rules.--
            ``(1) Change in method or year.--If the funding method, the 
        valuation date, or a plan year for a plan is changed, the 
        change shall take effect only if approved by the Secretary.
            ``(2) Certain retroactive plan amendments.--For purposes of 
        this section, any amendment applying to a plan year which--
                    ``(A) is adopted after the close of such plan year 
                but no later than 2\1/2\ months after the close of the 
                plan year (or, in the case of a multiemployer plan, no 
                later than 2 years after the close of such plan year),
                    ``(B) does not reduce the accrued benefit of any 
                participant determined as of the beginning of the first 
                plan year to which the amendment applies, and
                    ``(C) does not reduce the accrued benefit of any 
                participant determined as of the time of adoption 
                except to the extent required by the circumstances,
        shall, at the election of the plan administrator, be deemed to 
        have been made on the first day of such plan year. No amendment 
        described in this paragraph which reduces the accrued benefits 
        of any participant shall take effect unless the plan 
        administrator files a notice with the Secretary notifying him 
        of such amendment and the Secretary has approved such 
        amendment, or within 90 days after the date on which such 
        notice was filed, failed to disapprove such amendment. No 
        amendment described in this subsection shall be approved by the 
        Secretary unless the Secretary determines that such amendment 
        is necessary because of a temporary substantial business 
        hardship (as determined under subsection (c)(2)) or a 
        substantial business hardship (as so determined) in the case of 
        a multiemployer plan and that a waiver under subsection (c) 
        (or, in the case of a multiemployer plan, any extension of the 
        amortization period under section 431(d)) is unavailable or 
        inadequate.
            ``(3) Controlled group.--For purposes of this section, the 
        term `controlled group' means any group treated as a single 
        employer under subsection (b), (c), (m), or (o) of section 414.
    ``(e) Plans to Which Section Applies.--
            ``(1) In general.--Except as provided in paragraphs (2) and 
        (4), this section applies to a plan if, for any plan year 
        beginning on or after the effective date of this section for 
        such plan under the Employee Retirement Income Security Act of 
        1974--
                    ``(A) such plan included a trust which qualified 
                (or was determined by the Secretary to have qualified) 
                under section 401(a), or
                    ``(B) such plan satisfied (or was determined by the 
                Secretary to have satisfied) the requirements of 
                section 403(a).
            ``(2) Exceptions.--This section shall not apply to--
                    ``(A) any profit-sharing or stock bonus plan,
                    ``(B) any insurance contract plan described in 
                paragraph (3),
                    ``(C) any governmental plan (within the meaning of 
                section 414(d)),
                    ``(D) any church plan (within the meaning of 
                section 414(e)) with respect to which the election 
                provided by section 410(d) has not been made,
                    ``(E) any plan which has not, at any time after 
                September 2, 1974, provided for employer contributions, 
                or
                    ``(F) any plan established and maintained by a 
                society, order, or association described in section 
                501(c)(8) or (9), if no part of the contributions to or 
                under such plan are made by employers of participants 
                in such plan.
        No plan described in subparagraph (C), (D), or (F) shall be 
        treated as a qualified plan for purposes of section 401(a) 
        unless such plan meets the requirements of section 401(a)(7) as 
        in effect on September 1, 1974.
            ``(3) Certain insurance contract plans.--A plan is 
        described in this paragraph if--
                    ``(A) the plan is funded exclusively by the 
                purchase of individual insurance contracts,
                    ``(B) such contracts provide for level annual 
                premium payments to be paid extending not later than 
                the retirement age for each individual participating in 
                the plan, and commencing with the date the individual 
                became a participant in the plan (or, in the case of an 
                increase in benefits, commencing at the time such 
                increase becomes effective),
                    ``(C) benefits provided by the plan are equal to 
                the benefits provided under each contract at normal 
                retirement age under the plan and are guaranteed by an 
                insurance carrier (licensed under the laws of a State 
                to do business with the plan) to the extent premiums 
                have been paid,
                    ``(D) premiums payable for the plan year, and all 
                prior plan years, under such contracts have been paid 
                before lapse or there is reinstatement of the policy,
                    ``(E) no rights under such contracts have been 
                subject to a security interest at any time during the 
                plan year, and
                    ``(F) no policy loans are outstanding at any time 
                during the plan year.
        A plan funded exclusively by the purchase of group insurance 
        contracts which is determined under regulations prescribed by 
        the Secretary to have the same characteristics as contracts 
        described in the preceding sentence shall be treated as a plan 
        described in this paragraph.
            ``(4) Certain terminated multiemployer plans.--This section 
        applies with respect to a terminated multiemployer plan to 
        which section 4021 of the Employee Retirement Income Security 
        Act of 1974 applies until the last day of the plan year in 
        which the plan terminates (within the meaning of section 
        4041A(a)(2) of such Act).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2007.

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

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

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

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

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

``In the case of a plan year                             The applicable
   beginning in calendar year:                            percentage is
        2008...................................................     92 
        2009...................................................     94 
        2010...................................................     96.
                            ``(iii) Limitation.--Clause (i) shall not 
                        apply with respect to any plan year after 2008 
                        unless the shortfall amortization base for each 
                        of the preceding years beginning after 2007 was 
                        zero (determined after application of this 
                        subparagraph).
                            ``(iv) Transition relief not available for 
                        new or deficit reduction plans.--Clause (i) 
                        shall not apply to a plan--
                                    ``(I) which was not in effect for a 
                                plan year beginning in 2007, or
                                    ``(II) which was in effect for a 
                                plan year beginning in 2007 and which 
                                was subject to section 412(l) (as in 
                                effect for plan years beginning in 
                                2007), determined after the application 
                                of paragraphs (6) and (9) thereof.
            ``(6) Early deemed amortization upon attainment of funding 
        target.--In any case in which the funding shortfall of a plan 
        for a plan year is zero, for purposes of determining the 
        shortfall amortization charge for such plan year and succeeding 
        plan years, the shortfall amortization bases for all preceding 
        plan years (and all shortfall amortization installments 
        determined with respect to such bases) shall be reduced to 
        zero.
    ``(d) Rules Relating to Funding Target.--For purposes of this 
section--
            ``(1) Funding target.--Except as provided in subsection 
        (i)(1) with respect to plans in at-risk status, the funding 
        target of a plan for a plan year is the present value of all 
        benefits accrued or earned under the plan as of the beginning 
        of the plan year.
            ``(2) Funding target attainment percentage.--The `funding 
        target attainment percentage' of a plan for a plan year is the 
        ratio (expressed as a percentage) which--
                    ``(A) the value of plan assets for the plan year 
                (as reduced under subsection (f)(4)(B)), bears to
                    ``(B) the funding target of the plan for the plan 
                year (determined without regard to subsection (i)(1)).
    ``(e) Waiver Amortization Charge.--
            ``(1) Determination of waiver amortization charge.--The 
        waiver amortization charge (if any) for a plan for any plan 
        year is the aggregate total of the waiver amortization 
        installments for such plan year with respect to the waiver 
        amortization bases for each of the 5 preceding plan years.
            ``(2) Waiver amortization installment.--For purposes of 
        paragraph (1)--
                    ``(A) Determination.--The waiver amortization 
                installments are the amounts necessary to amortize the 
                waiver amortization base of the plan for any plan year 
                in level annual installments over a period of 5 plan 
                years beginning with the succeeding plan year.
                    ``(B) Waiver installment.--The waiver amortization 
                installment for any plan year in the 5-year period 
                under subparagraph (A) with respect to any waiver 
                amortization base is the annual installment determined 
                under subparagraph (A) for that year for that base.
            ``(3) Interest rate.--In determining any waiver 
        amortization installment under this subsection, the plan 
        sponsor shall use the segment rates determined under 
        subparagraph (C) of subsection (h)(2), applied under rules 
        similar to the rules of subparagraph (B) of subsection (h)(2).
            ``(4) Waiver amortization base.--The waiver amortization 
        base of a plan for a plan year is the amount of the waived 
        funding deficiency (if any) for such plan year under section 
        412(c).
            ``(5) Early deemed amortization upon attainment of funding 
        target.--In any case in which the funding shortfall of a plan 
        for a plan year is zero, for purposes of determining the waiver 
        amortization charge for such plan year and succeeding plan 
        years, the waiver amortization bases for all preceding plan 
        years (and all waiver amortization installments determined with 
        respect to such bases) shall be reduced to zero.
    ``(f) Reduction of Minimum Required Contribution by Prefunding 
Balance and Funding Standard Carryover Balance.--
            ``(1) Election to maintain balances.--
                    ``(A) Prefunding balance.--The plan sponsor of a 
                defined benefit plan which is not a multiemployer plan 
                may elect to maintain a prefunding balance.
                    ``(B) Funding standard carryover balance.--
                            ``(i) In general.--In the case of a defined 
                        benefit plan (other than a multiemployer plan) 
                        described in clause (ii), the plan sponsor may 
                        elect to maintain a funding standard carryover 
                        balance, until such balance is reduced to zero.
                            ``(ii) Plans maintaining funding standard 
                        account in 2007.--A plan is described in this 
                        clause if the plan--
                                    ``(I) was in effect for a plan year 
                                beginning in 2007, and
                                    ``(II) had a positive balance in 
                                the funding standard account under 
                                section 412(b) as in effect for such 
                                plan year and determined as of the end 
                                of such plan year.
            ``(2) Application of balances.--A prefunding balance and a 
        funding standard carryover balance maintained pursuant to this 
        paragraph--
                    ``(A) shall be available for crediting against the 
                minimum required contribution, pursuant to an election 
                under paragraph (3),
                    ``(B) shall be applied as a reduction in the amount 
                treated as the value of plan assets for purposes of 
                this section, to the extent provided in paragraph (4), 
                and
                    ``(C) may be reduced at any time, pursuant to an 
                election under paragraph (5).
            ``(3) Election to apply balances against minimum required 
        contribution.--
                    ``(A) In general.--Except as provided in 
                subparagraphs (B) and (C), in the case of any plan year 
                in which the plan sponsor elects to credit against the 
                minimum required contribution for the current plan year 
                all or a portion of the prefunding balance or the 
                funding standard carryover balance for the current plan 
                year (not in excess of such minimum required 
                contribution), the minimum required contribution for 
                the plan year shall be reduced as of the first day of 
                the plan year by the amount so credited by the plan 
                sponsor as of the first day of the plan year. For 
                purposes of the preceding sentence, the minimum 
                required contribution shall be determined after taking 
                into account any waiver under section 412(c).
                    ``(B) Coordination with funding standard carryover 
                balance.--To the extent that any plan has a funding 
                standard carryover balance greater than zero, no amount 
                of the prefunding balance of such plan may be credited 
                under this paragraph in reducing the minimum required 
                contribution.
                    ``(C) Limitation for underfunded plans.--The 
                preceding provisions of this paragraph shall not apply 
                for any plan year if the ratio (expressed as a 
                percentage) which--
                            ``(i) the value of plan assets for the 
                        preceding plan year (as reduced under paragraph 
                        (4)(C)), bears to
                            ``(ii) the funding target of the plan for 
                        the preceding plan year (determined without 
                        regard to subsection (i)(1)),
                is less than 80 percent. In the case of plan years 
                beginning in 2008, the ratio under this subparagraph 
                may be determined using such methods of estimation as 
                the Secretary may prescribe.
            ``(4) Effect of balances on amounts treated as value of 
        plan assets.--In the case of any plan maintaining a prefunding 
        balance or a funding standard carryover balance pursuant to 
        this subsection, the amount treated as the value of plan assets 
        shall be deemed to be such amount, reduced as provided in the 
        following subparagraphs:
                    ``(A) Applicability of shortfall amortization 
                base.--For purposes of subsection (c)(5), the value of 
                plan assets is deemed to be such amount, reduced by the 
                amount of the prefunding balance, but only if an 
                election under paragraph (2) applying any portion of 
                the prefunding balance in reducing the minimum required 
                contribution is in effect for the plan year.
                    ``(B) Determination of excess assets, funding 
                shortfall, and funding target attainment percentage.--
                            ``(i) In general.--For purposes of 
                        subsections (a), (c)(4)(B), and (d)(2)(A), the 
                        value of plan assets is deemed to be such 
                        amount, reduced by the amount of the prefunding 
                        balance and the funding standard carryover 
                        balance.
                            ``(ii) Special rule for certain binding 
                        agreements with pbgc.--For purposes of 
                        subsection (c)(4)(B), the value of plan assets 
                        shall not be deemed to be reduced for a plan 
                        year by the amount of the specified balance if, 
                        with respect to such balance, there is in 
                        effect for a plan year a binding written 
                        agreement with the Pension Benefit Guaranty 
                        Corporation which provides that such balance is 
                        not available to reduce the minimum required 
                        contribution for the plan year. For purposes of 
                        the preceding sentence, the term `specified 
                        balance' means the prefunding balance or the 
                        funding standard carryover balance, as the case 
                        may be.
                    ``(C) Availability of balances in plan year for 
                crediting against minimum required contribution.--For 
                purposes of paragraph (3)(C)(i) of this subsection, the 
                value of plan assets is deemed to be such amount, 
                reduced by the amount of the prefunding balance.
            ``(5) Election to reduce balance prior to determinations of 
        value of plan assets and crediting against minimum required 
        contribution.--
                    ``(A) In general.--The plan sponsor may elect to 
                reduce by any amount the balance of the prefunding 
                balance and the funding standard carryover balance for 
                any plan year (but not below zero). Such reduction 
                shall be effective prior to any determination of the 
                value of plan assets for such plan year under this 
                section and application of the balance in reducing the 
                minimum required contribution for such plan for such 
                plan year pursuant to an election under paragraph (2).
                    ``(B) Coordination between prefunding balance and 
                funding standard carryover balance.--To the extent that 
                any plan has a funding standard carryover balance 
                greater than zero, no election may be made under 
                subparagraph (A) with respect to the prefunding 
                balance.
            ``(6) Prefunding balance.--
                    ``(A) In general.--A prefunding balance maintained 
                by a plan shall consist of a beginning balance of zero, 
                increased and decreased to the extent provided in 
                subparagraphs (B) and (C), and adjusted further as 
                provided in paragraph (8).
                    ``(B) Increases.--
                            ``(i) In general.--As of the first day of 
                        each plan year beginning after 2008, the 
                        prefunding balance of a plan shall be increased 
                        by the amount elected by the plan sponsor for 
                        the plan year. Such amount shall not exceed the 
                        excess (if any) of--
                                    ``(I) the aggregate total of 
                                employer contributions to the plan for 
                                the preceding plan year, over--
                                    ``(II) the minimum required 
                                contribution for such preceding plan 
                                year.
                            ``(ii) Adjustments for interest.--Any 
                        excess contributions under clause (i) shall be 
                        properly adjusted for interest accruing for the 
                        periods between the first day of the current 
                        plan year and the dates on which the excess 
                        contributions were made, determined by using 
                        the effective interest rate for the preceding 
                        plan year and by treating contributions as 
                        being first used to satisfy the minimum 
                        required contribution.
                            ``(iii) Certain contributions necessary to 
                        avoid benefit limitations disregarded.--The 
                        excess described in clause (i) with respect to 
                        any preceding plan year shall be reduced (but 
                        not below zero) by the amount of contributions 
                        an employer would be required to make under 
                        paragraph (1), (2), or (4) of section 206(g) to 
                        avoid a benefit limitation which would 
                        otherwise be imposed under such paragraph for 
                        the preceding plan year. Any contribution which 
                        may be taken into account in satisfying the 
                        requirements of more than 1 of such paragraphs 
                        shall be taken into account only once for 
                        purposes of this clause.
                    ``(C) Decreases.--The prefunding balance of a plan 
                shall be decreased (but not below zero) by the sum of--
                            ``(i) as of the first day of each plan year 
                        after 2008, the amount of such balance credited 
                        under paragraph (2) (if any) in reducing the 
                        minimum required contribution of the plan for 
                        the preceding plan year, and
                            ``(ii) as of the time specified in 
                        paragraph (5))(A), any reduction in such 
                        balance elected under paragraph (5).
            ``(7) Funding standard carryover balance.--
                    ``(A) In general.--A funding standard carryover 
                balance maintained by a plan shall consist of a 
                beginning balance determined under subparagraph (B), 
                decreased to the extent provided in subparagraph (C), 
                and adjusted further as provided in paragraph (8).
                    ``(B) Beginning balance.--The beginning balance of 
                the funding standard carryover balance shall be the 
                positive balance described in paragraph (1)(B)(ii)(II).
                    ``(C) Decreases.--The funding standard carryover 
                balance of a plan shall be decreased (but not below 
                zero) by--
                            ``(i) as of the first day of each plan year 
                        after 2008, the amount of such balance credited 
                        under paragraph (2) (if any) in reducing the 
                        minimum required contribution of the plan for 
                        the preceding plan year, and
                            ``(ii) as of the time specified in 
                        paragraph (5))(A), any reduction in such 
                        balance elected under paragraph (5).
            ``(8) Adjustments for investment experience.--In 
        determining the prefunding balance or the funding standard 
        carryover balance of a plan as of the first day of the plan 
        year, the plan sponsor shall, in accordance with regulations 
        prescribed by the Secretary of the Treasury, adjust such 
        balance to reflect the rate of return on plan assets for the 
        preceding plan year. Notwithstanding subsection (g)(3), such 
        rate of return shall be determined on the basis of fair market 
        value and shall properly take into account, in accordance with 
        such regulations, all contributions, distributions, and other 
        plan payments made during such period.
            ``(9) Elections.--Elections under this subsection shall be 
        made at such times, and in such form and manner, as shall be 
        prescribed in regulations of the Secretary.
    ``(g) Valuation of Plan Assets and Liabilities.--
            ``(1) Timing of determinations.--Except as otherwise 
        provided under this subsection, all determinations under this 
        section for a plan year shall be made as of the valuation date 
        of the plan for such plan year.
            ``(2) Valuation date.--For purposes of this section--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the valuation date of a plan for any 
                plan year shall be the first day of the plan year.
                    ``(B) Exception for small plans.--If, on each day 
                during the preceding plan year, a plan had 100 or fewer 
                participants, the plan may designate any day during the 
                plan year as its valuation date for such plan year and 
                succeeding plan years. For purposes of this 
                subparagraph, all defined benefit plans (other than 
                multiemployer plans) maintained by the same employer 
                (or any member of such employer's controlled group) 
                shall be treated as 1 plan, but only participants with 
                respect to such employer or member shall be taken into 
                account.
                    ``(C) Application of certain rules in determination 
                of plan size.--For purposes of this paragraph--
                            ``(i) Plans not in existence in preceding 
                        year.--In the case of the first plan year of 
                        any plan, subparagraph (B) shall apply to such 
                        plan by taking into account the number of 
                        participants that the plan is reasonably 
                        expected to have on days during such first plan 
                        year.
                            ``(ii) Predecessors.--Any reference in 
                        subparagraph (B) to an employer shall include a 
                        reference to any predecessor of such employer.
            ``(3) Determination of value of plan assets.--For purposes 
        of this section--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the value of plan assets shall be the 
                fair market value of the assets.
                    ``(B) Averaging allowed.--A plan may determine the 
                value of plan assets on the basis of the averaging of 
                fair market values, but only if such method--
                            ``(i) is permitted under regulations 
                        prescribed by the Secretary,
                            ``(ii) does not provide for averaging of 
                        such values over more than the period beginning 
                        on the last day of the 25th month preceding the 
                        month in which the valuation date occurs and 
                        ending on the valuation date (or a similar 
                        period in the case of a valuation date which is 
                        not the 1st day of a month), and
                            ``(iii) does not result in a determination 
                        of the value of plan assets which, at any time, 
                        is lower than 90 percent or greater than 110 
                        percent of the fair market value of such assets 
                        at such time.
                Any such averaging shall be adjusted for contributions 
                and distributions (as provided by the Secretary).
            ``(4) Accounting for contribution receipts.--For purposes 
        of determining the value of assets under paragraph (3)--
                    ``(A) Prior year contributions.--If--
                            ``(i) an employer makes any contribution to 
                        the plan after the valuation date for the plan 
                        year in which the contribution is made, and
                            ``(ii) the contribution is for a preceding 
                        plan year,
                the contribution shall be taken into account as an 
                asset of the plan as of the valuation date, except that 
                in the case of any plan year beginning after 2008, only 
                the present value (determined as of the valuation date) 
                of such contribution may be taken into account. For 
                purposes of the preceding sentence, present value shall 
                be determined using the effective interest rate for the 
                preceding plan year to which the contribution is 
                properly allocable.
                    ``(B) Special rule for current year contributions 
                made before valuation date.--If any contributions for 
                any plan year are made to or under the plan during the 
                plan year but before the valuation date for the plan 
                year, the assets of the plan as of the valuation date 
                shall not include--
                            ``(i) such contributions, and
                            ``(ii) interest on such contributions for 
                        the period between the date of the 
                        contributions and the valuation date, 
                        determined by using the effective interest rate 
                        for the plan year.
    ``(h) Actuarial Assumptions and Methods.--
            ``(1) In general.--Subject to this subsection, the 
        determination of any present value or other computation under 
        this section shall be made on the basis of actuarial 
        assumptions and methods--
                    ``(A) each of which is reasonable (taking into 
                account the experience of the plan and reasonable 
                expectations), and
                    ``(B) which, in combination, offer the actuary's 
                best estimate of anticipated experience under the plan.
            ``(2) Interest rates.--
                    ``(A) Effective interest rate.--For purposes of 
                this section, the term `effective interest rate' means, 
                with respect to any plan for any plan year, the single 
                rate of interest which, if used to determine the 
                present value of the plan's accrued or earned benefits 
                referred to in subsection (d)(1), would result in an 
                amount equal to the funding target of the plan for such 
                plan year.
                    ``(B) Interest rates for determining funding 
                target.--For purposes of determining the funding target 
                of a plan for any plan year, the interest rate used in 
                determining the present value of the liabilities of the 
                plan shall be--
                            ``(i) in the case of benefits reasonably 
                        determined to be payable during the 5-year 
                        period beginning on the first day of the plan 
                        year, the first segment rate with respect to 
                        the applicable month,
                            ``(ii) in the case of benefits reasonably 
                        determined to be payable during the 15-year 
                        period beginning at the end of the period 
                        described in clause (i), the second segment 
                        rate with respect to the applicable month, and
                            ``(iii) in the case of benefits reasonably 
                        determined to be payable after the period 
                        described in clause (ii), the third segment 
                        rate with respect to the applicable month.
                    ``(C) Segment rates.--For purposes of this 
                paragraph--
                            ``(i) First segment rate.--The term `first 
                        segment rate' means, with respect to any month, 
                        the single rate of interest which shall be 
                        determined by the Secretary for such month on 
                        the basis of the corporate bond yield curve for 
                        such month, taking into account only that 
                        portion of such yield curve which is based on 
                        bonds maturing during the 5-year period 
                        commencing with such month.
                            ``(ii) Second segment rate.--The term 
                        `second segment rate' means, with respect to 
                        any month, the single rate of interest which 
                        shall be determined by the Secretary for such 
                        month on the basis of the corporate bond yield 
                        curve for such month, taking into account only 
                        that portion of such yield curve which is based 
                        on bonds maturing during the 15-year period 
                        beginning at the end of the period described in 
                        clause (i).
                            ``(iii) Third segment rate.--The term 
                        `third segment rate' means, with respect to any 
                        month, the single rate of interest which shall 
                        be determined by the Secretary for such month 
                        on the basis of the corporate bond yield curve 
                        for such month, taking into account only that 
                        portion of such yield curve which is based on 
                        bonds maturing during periods beginning after 
                        the period described in clause (ii).
                    ``(D) Corporate bond yield curve.--For purposes of 
                this paragraph--
                            ``(i) In general.--The term `corporate bond 
                        yield curve' means, with respect to any month, 
                        a yield curve which is prescribed by the 
                        Secretary for such month and which reflects the 
                        average, for the 24-month period ending with 
                        the month preceding such month, of monthly 
                        yields on investment grade corporate bonds with 
                        varying maturities and that are in the top 3 
                        quality levels available.
                            ``(ii) Election to use yield curve.--Solely 
                        for purposes of determining the minimum 
                        required contribution under this section, the 
                        plan sponsor may, in lieu of the segment rates 
                        determined under subparagraph (C), elect to use 
                        interest rates under the corporate bond yield 
                        curve. For purposes of the preceding sentence 
                        such curve shall be determined without regard 
                        to the 24-month averaging described in clause 
                        (i) . Such election, once made, may be revoked 
                        only with the consent of the Secretary.
                    ``(E) Applicable month.--For purposes of this 
                paragraph, the term `applicable month' means, with 
                respect to any plan for any plan year, the month which 
                includes the valuation date of such plan for such plan 
                year or, at the election of the plan sponsor, any of 
                the 4 months which precede such month. Any election 
                made under this subparagraph shall apply to the plan 
                year for which the election is made and all succeeding 
                plan years, unless the election is revoked with the 
                consent of the Secretary.
                    ``(F) Publication requirements.--The Secretary 
                shall publish for each month the corporate bond yield 
                curve (and the corporate bond yield curve reflecting 
                the modification described in section 417(e)(3)(D)(i) 
                for such month and each of the rates determined under 
                subparagraph (B) for such month. The Secretary shall 
                also publish a description of the methodology used to 
                determine such yield curve and such rates which is 
                sufficiently detailed to enable plans to make 
                reasonable projections regarding the yield curve and 
                such rates for future months based on the plan's 
                projection of future interest rates.
                    ``(G) Transition rule.--
                            ``(i) In general.--Notwithstanding the 
                        preceding provisions of this paragraph, for 
                        plan years beginning in 2008 or 2009, the 
                        first, second, or third segment rate for a plan 
                        with respect to any month shall be equal to the 
                        sum of--
                                    ``(I) the product of such rate for 
                                such month determined without regard to 
                                this subparagraph, multiplied by the 
                                applicable percentage, and
                                    ``(II) the product of the rate 
                                determined under the rules of section 
                                412(b)(5)(B)(ii)(II) (as in effect for 
                                plan years beginning in 2007), 
                                multiplied by a percentage equal to 100 
                                percent minus the applicable 
                                percentage.
                            ``(ii) Applicable percentage.--For purposes 
                        of clause (i), the applicable percentage is 
                        33\1/3\ percent for plan years beginning in 
                        2008 and 66\2/3\ percent for plan years 
                        beginning in 2009.
                            ``(iii) New plans ineligible.--Clause (i) 
                        shall not apply to any plan if the first plan 
                        year of the plan begins after December 31, 
                        2007.
                            ``(iv) Election.--The plan sponsor may 
                        elect not to have this subparagraph apply. Such 
                        election, once made, may be revoked only with 
                        the consent of the Secretary.
            ``(3) Mortality tables.--
                    ``(A) In general.--Except as provided in 
                subparagraph (C) or (D), the Secretary shall by 
                regulation prescribe mortality tables to be used in 
                determining any present value or making any computation 
                under this section. Such tables shall be based on the 
                actual experience of pension plans and projected trends 
                in such experience. In prescribing such tables, the 
                Secretary shall take into account results of available 
                independent studies of mortality of individuals covered 
                by pension plans.
                    ``(B) Periodic revision.--The Secretary shall (at 
                least every 10 years) make revisions in any table in 
                effect under subparagraph (A) to reflect the actual 
                experience of pension plans and projected trends in 
                such experience.
                    ``(C) Substitute mortality table.--
                            ``(i) In general.--Upon request by the plan 
                        sponsor and approval by the Secretary, a 
                        mortality table which meets the requirements of 
                        clause (iii) shall be used in determining any 
                        present value or making any computation under 
                        this section during the period of consecutive 
                        plan years (not to exceed 10) specified in the 
                        request.
                            ``(ii) Early termination of period.--
                        Notwithstanding clause (i), a mortality table 
                        described in clause (i) shall cease to be in 
                        effect as of the earliest of--
                                    ``(I) the date on which there is a 
                                significant change in the participants 
                                in the plan by reason of a plan spinoff 
                                or merger or otherwise, or
                                    ``(II) the date on which the plan 
                                actuary determines that such table does 
                                not meet the requirements of clause 
                                (iii).
                            ``(iii) Requirements.--A mortality table 
                        meets the requirements of this clause if--
                                    ``(I) there is a sufficient number 
                                of plan participants, and the pension 
                                plans have been maintained for a 
                                sufficient period of time, to have 
                                credible information necessary for 
                                purposes of subclause (II), and
                                    ``(II) such table reflects the 
                                actual experience of the pension plans 
                                maintained by the sponsor and projected 
                                trends in general mortality experience.
                            ``(iv) All plans in controlled group must 
                        use separate table.--Except as provided by the 
                        Secretary, a plan sponsor may not use a 
                        mortality table under this subparagraph for any 
                        plan maintained by the plan sponsor unless--
                                    ``(I) a separate mortality table is 
                                established and used under this 
                                subparagraph for each other plan 
                                maintained by the plan sponsor and if 
                                the plan sponsor is a member of a 
                                controlled group, each member of the 
                                controlled group, and
                                    ``(II) the requirements of clause 
                                (iii) are met separately with respect 
                                to the table so established for each 
                                such plan, determined by only taking 
                                into account the participants of such 
                                plan, the time such plan has been in 
                                existence, and the actual experience of 
                                such plan.
                            ``(v) Deadline for submission and 
                        disposition of application.--
                                    ``(I) Submission.--The plan sponsor 
                                shall submit a mortality table to the 
                                Secretary for approval under this 
                                subparagraph at least 7 months before 
                                the 1st day of the period described in 
                                clause (i).
                                    ``(II) Disposition.--Any mortality 
                                table submitted to the Secretary for 
                                approval under this subparagraph shall 
                                be treated as in effect as of the 1st 
                                day of the period described in clause 
                                (i) unless the Secretary, during the 
                                180-day period beginning on the date of 
                                such submission, disapproves of such 
                                table and provides the reasons that 
                                such table fails to meet the 
                                requirements of clause (iii). The 180-
                                day period shall be extended upon 
                                mutual agreement of the Secretary and 
                                the plan sponsor.
                    ``(D) Separate mortality tables for the disabled.--
                Notwithstanding subparagraph (A)--
                            ``(i) In general.--The Secretary shall 
                        establish mortality tables which may be used 
                        (in lieu of the tables under subparagraph (A)) 
                        under this subsection for individuals who are 
                        entitled to benefits under the plan on account 
                        of disability. The Secretary shall establish 
                        separate tables for individuals whose 
                        disabilities occur in plan years beginning 
                        before January 1, 1995, and for individuals 
                        whose disabilities occur in plan years 
                        beginning on or after such date.
                            ``(ii) Special rule for disabilities 
                        occurring after 1994.--In the case of 
                        disabilities occurring in plan years beginning 
                        after December 31, 1994, the tables under 
                        clause (i) shall apply only with respect to 
                        individuals described in such subclause who are 
                        disabled within the meaning of title II of the 
                        Social Security Act and the regulations 
                        thereunder.
                            ``(iii) Periodic revision.--The Secretary 
                        shall (at least every 10 years) make revisions 
                        in any table in effect under clause (i) to 
                        reflect the actual experience of pension plans 
                        and projected trends in such experience.
            ``(4) Probability of benefit payments in the form of lump 
        sums or other optional forms.--For purposes of determining any 
        present value or making any computation under this section, 
        there shall be taken into account--
                    ``(A) the probability that future benefit payments 
                under the plan will be made in the form of optional 
                forms of benefits provided under the plan (including 
                lump sum distributions, determined on the basis of the 
                plan's experience and other related assumptions), and
                    ``(B) any difference in the present value of such 
                future benefit payments resulting from the use of 
                actuarial assumptions, in determining benefit payments 
                in any such optional form of benefits, which are 
                different from those specified in this subsection.
            ``(5) Approval of large changes in actuarial assumptions.--
                    ``(A) In general.--No actuarial assumption used to 
                determine the funding target for a plan to which this 
                paragraph applies may be changed without the approval 
                of the Secretary.
                    ``(B) Plans to which paragraph applies.--This 
                paragraph shall apply to a plan only if--
                            ``(i) the plan is a defined benefit plan 
                        (other than a multiemployer plan) to which 
                        title IV of the Employee Retirement Income 
                        Security Act of 1974 applies,
                            ``(ii) the aggregate unfunded vested 
                        benefits as of the close of the preceding plan 
                        year (as determined under section 
                        4006(a)(3)(E)(iii) of the Employee Retirement 
                        Income Security Act of 1974) of such plan and 
                        all other plans maintained by the contributing 
                        sponsors (as defined in section 4001(a)(13) of 
                        such Act) and members of such sponsors' 
                        controlled groups (as defined in section 
                        4001(a)(14) of such Act) which are covered by 
                        title IV (disregarding plans with no unfunded 
                        vested benefits) exceed $50,000,000, and
                            ``(iii) the change in assumptions 
                        (determined after taking into account any 
                        changes in interest rate and mortality table) 
                        results in a decrease in the funding shortfall 
                        of the plan for the current plan year that 
                        exceeds $50,000,000, or that exceeds $5,000,000 
                        and that is 5 percent or more of the funding 
                        target of the plan before such change.
    ``(i) Special Rules for At-Risk Plans.--
            ``(1) Funding target for plans in at-risk status.--
                    ``(A) In general.--In the case of a plan which is 
                in at-risk status for a plan year, the funding target 
                of the plan for the plan year shall be equal to the sum 
                of--
                            ``(i) the present value of all benefits 
                        accrued or earned under the plan as of the 
                        beginning of the plan year, as determined by 
                        using the additional actuarial assumptions 
                        described in subparagraph (B), and
                            ``(ii) in the case of a plan which also has 
                        been in at-risk status for at least 2 of the 4 
                        preceding plan years, a loading factor 
                        determined under subparagraph (C).
                    ``(B) Additional actuarial assumptions.--The 
                actuarial assumptions described in this subparagraph 
                are as follows:
                            ``(i) All employees who are not otherwise 
                        assumed to retire as of the valuation date but 
                        who will be eligible to elect benefits during 
                        the plan year and the 10 succeeding plan years 
                        shall be assumed to retire at the earliest 
                        retirement date under the plan but not before 
                        the end of the plan year for which the at-risk 
                        funding target and at-risk target normal cost 
                        are being determined.
                            ``(ii) All employees shall be assumed to 
                        elect the retirement benefit available under 
                        the plan at the assumed retirement age 
                        (determined after application of clause (i)) 
                        which would result in the highest present value 
                        of benefits.
                    ``(C) Loading factor.--The loading factor applied 
                with respect to a plan under this paragraph for any 
                plan year is the sum of--
                            ``(i) $700, times the number of 
                        participants in the plan, plus
                            ``(ii) 4 percent of the funding target 
                        (determined without regard to this paragraph) 
                        of the plan for the plan year.
            ``(2) Target normal cost of at-risk plans.--In the case of 
        a plan which is in at-risk status for a plan year, the target 
        normal cost of the plan for such plan year shall be equal to 
        the sum of--
                    ``(A) the present value of all benefits which are 
                expected to accrue or be earned under the plan during 
                the plan year, determined using the additional 
                actuarial assumptions described in paragraph (1)(B), 
                plus
                    ``(B) in the case of a plan which also has been in 
                at-risk status for at least 2 of the 4 preceding plan 
                years, a loading factor equal to 4 percent of the 
                target normal cost (determined without regard to this 
                paragraph) of the plan for the plan year.
            ``(3) Minimum amount.--In no event shall--
                    ``(A) the at-risk funding target be less than the 
                funding target, as determined without regard to this 
                subsection, or
                    ``(B) the at-risk target normal cost be less than 
                the target normal cost, as determined without regard to 
                this subsection.
            ``(4) Determination of at-risk status.--For purposes of 
        this subsection--
                    ``(A) In general.--A plan is in at-risk status for 
                a plan year if--
                            ``(i) the funding target attainment 
                        percentage for the preceding plan year 
                        (determined under this section without regard 
                        to this subsection) is less than 80 percent, 
                        and
                            ``(ii) the funding target attainment 
                        percentage for the preceding plan year 
                        (determined under this section by using the 
                        additional actuarial assumptions described in 
                        paragraph (1)(B) in computing the funding 
                        target) is less than 70 percent.
                    ``(B) Transition rule.--In the case of plan years 
                beginning in 2008, 2009, and 2010, subparagraph (A)(i) 
                shall be applied by substituting the following 
                percentages for `80 percent':
                            ``(i) 65 percent in the case of 2008.
                            ``(ii) 70 percent in the case of 2009.
                            ``(iii) 75 percent in the case of 2010.
                In the case of plan years beginning in 2008, the 
                funding target attainment percentage for the preceding 
                plan year under subparagraph (A)(ii) may be determined 
                using such methods of estimation as the Secretary may 
                provide.
                    ``(C) Special rule for employees offered early 
                retirement in 2006.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A)(ii), the additional actuarial 
                        assumptions described in paragraph (1)(B) shall 
                        not be taken into account with respect to any 
                        employee if--
                                    ``(I) such employee is employed by 
                                a specified automobile manufacturer,
                                    ``(II) such employee is offered a 
                                substantial amount of additional cash 
                                compensation, substantially enhanced 
                                retirement benefits under the plan, or 
                                materially reduced employment duties on 
                                the condition that by a specified date 
                                (not later than December 31, 2010) the 
                                employee retires (as defined under the 
                                terms of the plan),
                                    ``(III) such offer is made during 
                                2006 and pursuant to a bona fide 
                                retirement incentive program and 
                                requires, by the terms of the offer, 
                                that such offer can be accepted not 
                                later than a specified date (not later 
                                than December 31, 2006), and
                                    ``(IV) such employee does not elect 
                                to accept such offer before the 
                                specified date on which the offer 
                                expires.
                            ``(ii) Specified automobile manufacturer.--
                        For purposes of clause (i), the term `specified 
                        automobile manufacturer' means--
                                    ``(I) any manufacturer of 
                                automobiles, and
                                    ``(II) any manufacturer of 
                                automobile parts which supplies such 
                                parts directly to a manufacturer of 
                                automobiles and which, after a 
                                transaction or series of transactions 
                                ending in 1999, ceased to be a member 
                                of a controlled group which included 
                                such manufacturer of automobiles.
            ``(5) Transition between applicable funding targets and 
        between applicable target normal costs.--
                    ``(A) In general.--In any case in which a plan 
                which is in at-risk status for a plan year has been in 
                such status for a consecutive period of fewer than 5 
                plan years, the applicable amount of the funding target 
                and of the target normal cost shall be, in lieu of the 
                amount determined without regard to this paragraph, the 
                sum of--
                            ``(i) the amount determined under this 
                        section without regard to this subsection, plus
                            ``(ii) the transition percentage for such 
                        plan year of the excess of the amount 
                        determined under this subsection (without 
                        regard to this paragraph) over the amount 
                        determined under this section without regard to 
                        this subsection.
                    ``(B) Transition percentage.--For purposes of 
                subparagraph (A), the transition percentage shall be 
                determined in accordance with the following table:

``If the consecutive number of
  years (including the plan year)                        The transition
  the plan is in at-risk status                         percentage is--
        is--
        1......................................................     20 
        2......................................................     40 
        3......................................................     60 
        4......................................................     80.
                    ``(C) Years before effective date.--For purposes of 
                this paragraph, plan years beginning before 2008 shall 
                not be taken into account.
            ``(6) Small plan exception.--If, on each day during the 
        preceding plan year, a plan had 500 or fewer participants, the 
        plan shall not be treated as in at-risk status for the plan 
        year. For purposes of this paragraph, all defined benefit plans 
        (other than multiemployer plans) maintained by the same 
        employer (or any member of such employer's controlled group) 
        shall be treated as 1 plan, but only participants with respect 
        to such employer or member shall be taken into account and the 
        rules of subsection (g)(2)(C) shall apply.
    ``(j) Payment of Minimum Required Contributions.--
            ``(1) In general.--For purposes of this section, the due 
        date for any payment of any minimum required contribution for 
        any plan year shall be 8\1/2\ months after the close of the 
        plan year.
            ``(2) Interest.--Any payment required under paragraph (1) 
        for a plan year that is made on a date other than the valuation 
        date for such plan year shall be adjusted for interest accruing 
        for the period between the valuation date and the payment date, 
        at the effective rate of interest for the plan for such plan 
        year.
            ``(3) Accelerated quarterly contribution schedule for 
        underfunded plans.--
                    ``(A) Failure to timely make required 
                installment.--In any case in which the plan has a 
                funding shortfall for the preceding plan year, the 
                employer maintaining the plan shall make the required 
                installments under this paragraph and if the employer 
                fails to pay the full amount of a required installment 
                for the plan year, then the amount of interest charged 
                under paragraph (2) on the underpayment for the period 
                of underpayment shall be determined by using a rate of 
                interest equal to the rate otherwise used under 
                paragraph (2) plus 5 percentage points.
                    ``(B) Amount of underpayment, period of 
                underpayment.--For purposes of subparagraph (A)--
                            ``(i) Amount.--The amount of the 
                        underpayment shall be the excess of--
                                    ``(I) the required installment, 
                                over
                                    ``(II) the amount (if any) of the 
                                installment contributed to or under the 
                                plan on or before the due date for the 
                                installment.
                            ``(ii) Period of underpayment.--The period 
                        for which any interest is charged under this 
                        paragraph with respect to any portion of the 
                        underpayment shall run from the due date for 
                        the installment to the date on which such 
                        portion is contributed to or under the plan.
                            ``(iii) Order of crediting contributions.--
                        For purposes of clause (i)(II), contributions 
                        shall be credited against unpaid required 
                        installments in the order in which such 
                        installments are required to be paid.
                    ``(C) Number of required installments; due dates.--
                For purposes of this paragraph--
                            ``(i) Payable in 4 installments.--There 
                        shall be 4 required installments for each plan 
                        year.
                            ``(ii) Time for payment of installments.--
                        The due dates for required installments are set 
                        forth in the following table:

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

                    ``(D) Amount of required installment.--For purposes 
                of this paragraph--
                            ``(i) In general.--The amount of any 
                        required installment shall be 25 percent of the 
                        required annual payment.
                            ``(ii) Required annual payment.--For 
                        purposes of clause (i), the term `required 
                        annual payment' means the lesser of--
                                    ``(I) 90 percent of the minimum 
                                required contribution (determined 
                                without regard to this subsection) to 
                                the plan for the plan year under this 
                                section, or
                                    ``(II) 100 percent of the minimum 
                                required contribution (determined 
                                without regard to this subsection or to 
                                any waiver under section 302(c)) to the 
                                plan for the preceding plan year.
                        Subclause (II) shall not apply if the preceding 
                        plan year referred to in such clause was not a 
                        year of 12 months.
                    ``(E) Fiscal years and short years.--
                            ``(i) Fiscal years.--In applying this 
                        paragraph to a plan year beginning on any date 
                        other than January 1, there shall be 
                        substituted for the months specified in this 
                        paragraph, the months which correspond thereto.
                            ``(ii) Short plan year.--This subparagraph 
                        shall be applied to plan years of less than 12 
                        months in accordance with regulations 
                        prescribed by the Secretary.
            ``(4) Liquidity requirement in connection with quarterly 
        contributions.--
                    ``(A) In general.--A plan to which this paragraph 
                applies shall be treated as failing to pay the full 
                amount of any required installment under paragraph (3) 
                to the extent that the value of the liquid assets paid 
                in such installment is less than the liquidity 
                shortfall (whether or not such liquidity shortfall 
                exceeds the amount of such installment required to be 
                paid but for this paragraph).
                    ``(B) Plans to which paragraph applies.--This 
                paragraph shall apply to a plan (other than a plan 
                described in subsection (g)(2)(B)) which--
                            ``(i) is required to pay installments under 
                        paragraph (3) for a plan year, and
                            ``(ii) has a liquidity shortfall for any 
                        quarter during such plan year.
                    ``(C) Period of underpayment.--For purposes of 
                paragraph (3)(A), any portion of an installment that is 
                treated as not paid under subparagraph (A) shall 
                continue to be treated as unpaid until the close of the 
                quarter in which the due date for such installment 
                occurs.
                    ``(D) Limitation on increase.--If the amount of any 
                required installment is increased by reason of 
                subparagraph (A), in no event shall such increase 
                exceed the amount which, when added to prior 
                installments for the plan year, is necessary to 
                increase the funding target attainment percentage of 
                the plan for the plan year (taking into account the 
                expected increase in funding target due to benefits 
                accruing or earned during the plan year) to 100 
                percent.
                    ``(E) Definitions.--For purposes of this 
                paragraph--
                            ``(i) Liquidity shortfall.--The term 
                        `liquidity shortfall' means, with respect to 
                        any required installment, an amount equal to 
                        the excess (as of the last day of the quarter 
                        for which such installment is made) of--
                                    ``(I) the base amount with respect 
                                to such quarter, over
                                    ``(II) the value (as of such last 
                                day) of the plan's liquid assets.
                            ``(ii) Base amount.--
                                    ``(I) In general.--The term `base 
                                amount' means, with respect to any 
                                quarter, an amount equal to 3 times the 
                                sum of the adjusted disbursements from 
                                the plan for the 12 months ending on 
                                the last day of such quarter.
                                    ``(II) Special rule.--If the amount 
                                determined under subclause (I) exceeds 
                                an amount equal to 2 times the sum of 
                                the adjusted disbursements from the 
                                plan for the 36 months ending on the 
                                last day of the quarter and an enrolled 
                                actuary certifies to the satisfaction 
                                of the Secretary that such excess is 
                                the result of nonrecurring 
                                circumstances, the base amount with 
                                respect to such quarter shall be 
                                determined without regard to amounts 
                                related to those nonrecurring 
                                circumstances.
                            ``(iii) Disbursements from the plan.--The 
                        term `disbursements from the plan' means all 
                        disbursements from the trust, including 
                        purchases of annuities, payments of single sums 
                        and other benefits, and administrative 
                        expenses.
                            ``(iv) Adjusted disbursements.--The term 
                        `adjusted disbursements' means disbursements 
                        from the plan reduced by the product of--
                                    ``(I) the plan's funding target 
                                attainment percentage for the plan 
                                year, and
                                    ``(II) the sum of the purchases of 
                                annuities, payments of single sums, and 
                                such other disbursements as the 
                                Secretary shall provide in regulations.
                            ``(v) Liquid assets.--The term `liquid 
                        assets' means cash, marketable securities, and 
                        such other assets as specified by the Secretary 
                        in regulations.
                            ``(vi) Quarter.--The term `quarter' means, 
                        with respect to any required installment, the 
                        3-month period preceding the month in which the 
                        due date for such installment occurs.
                    ``(F) Regulations.--The Secretary may prescribe 
                such regulations as are necessary to carry out this 
                paragraph.
    ``(k) Imposition of Lien Where Failure To Make Required 
Contributions.--
            ``(1) In general.--In the case of a plan to which this 
        subsection applies, if--
                    ``(A) any person fails to make a contribution 
                payment required by section 412 and this section before 
                the due date for such payment, and
                    ``(B) the unpaid balance of such payment (including 
                interest), when added to the aggregate unpaid balance 
                of all preceding such payments for which payment was 
                not made before the due date (including interest), 
                exceeds $1,000,000,
        then there shall be a lien in favor of the plan in the amount 
        determined under paragraph (3) upon all property and rights to 
        property, whether real or personal, belonging to such person 
        and any other person who is a member of the same controlled 
        group of which such person is a member.
            ``(2) Plans to which subsection applies.--This subsection 
        shall apply to a defined benefit plan (other than a 
        multiemployer plan) covered under section 4021 of the Employee 
        Retirement Income Security Act of 1974 for any plan year for 
        which the funding target attainment percentage (as defined in 
        subsection (d)(2)) of such plan is less than 100 percent.
            ``(3) Amount of lien.--For purposes of paragraph (1), the 
        amount of the lien shall be equal to the aggregate unpaid 
        balance of contribution payments required under this section 
        and section 412 for which payment has not been made before the 
        due date.
            ``(4) Notice of failure; lien.--
                    ``(A) Notice of failure.--A person committing a 
                failure described in paragraph (1) shall notify the 
                Pension Benefit Guaranty Corporation of such failure 
                within 10 days of the due date for the required 
                contribution payment.
                    ``(B) Period of lien.--The lien imposed by 
                paragraph (1) shall arise on the due date for the 
                required contribution payment and shall continue until 
                the last day of the first plan year in which the plan 
                ceases to be described in paragraph (1)(B). Such lien 
                shall continue to run without regard to whether such 
                plan continues to be described in paragraph (2) during 
                the period referred to in the preceding sentence.
                    ``(C) Certain rules to apply.--Any amount with 
                respect to which a lien is imposed under paragraph (1) 
                shall be treated as taxes due and owing the United 
                States and rules similar to the rules of subsections 
                (c), (d), and (e) of section 4068 of the Employee 
                Retirement Income Security Act of 1974 shall apply with 
                respect to a lien imposed by subsection (a) and the 
                amount with respect to such lien.
            ``(5) Enforcement.--Any lien created under paragraph (1) 
        may be perfected and enforced only by the Pension Benefit 
        Guaranty Corporation, or at the direction of the Pension 
        Benefit Guaranty Corporation, by the contributing sponsor (or 
        any member of the controlled group of the contributing 
        sponsor).
            ``(6) Definitions.--For purposes of this subsection--
                    ``(A) Contribution payment.--The term `contribution 
                payment' means, in connection with a plan, a 
                contribution payment required to be made to the plan, 
                including any required installment under paragraphs (3) 
                and (4) of subsection (j).
                    ``(B) Due date; required installment.--The terms 
                `due date' and `required installment' have the meanings 
                given such terms by subsection (j), except that in the 
                case of a payment other than a required installment, 
                the due date shall be the date such payment is required 
                to be made under section 430.
                    ``(C) Controlled group.--The term `controlled 
                group' means any group treated as a single employer 
                under subsections (b), (c), (m), and (o) of section 
                414.
    ``(l) Qualified Transfers to Health Benefit Accounts.--In the case 
of a qualified transfer (as defined in section 420), any assets so 
transferred shall not, for purposes of this section, be treated as 
assets in the plan.''.
    (b) Effective Date.--The amendments made by this section shall 
apply with respect to plan years beginning after December 31, 2007.

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

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

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

       ``subpart a. minimum funding standards for pension plans.
     ``subpart b. benefit limitations under single-employer plans.

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

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

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

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

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

    ``(a) General Rule.--For purposes of section 401(a)(29), a defined 
benefit plan which is a single-employer plan shall be treated as 
meeting the requirements of this section if the plan meets the 
requirements of subsections (b), (c), (d), and (e).
    ``(b) Funding-Based Limitation on Shutdown Benefits and Other 
Unpredictable Contingent Event Benefits Under Single-Employer Plans.--
            ``(1) In general.--If a participant of a defined benefit 
        plan which is a single-employer plan is entitled to an 
        unpredictable contingent event benefit payable with respect to 
        any event occurring during any plan year, the plan shall 
        provide that such benefit may not be provided if the adjusted 
        funding target attainment percentage for such plan year--
                    ``(A) is less than 60 percent, or
                    ``(B) would be less than 60 percent taking into 
                account such occurrence.
            ``(2) Exemption.--Paragraph (1) shall cease to apply with 
        respect to any plan year, effective as of the first day of the 
        plan year, upon payment by the plan sponsor of a contribution 
        (in addition to any minimum required contribution under section 
        303) equal to--
                    ``(A) in the case of paragraph (1)(A), the amount 
                of the increase in the funding target of the plan 
                (under section 430) for the plan year attributable to 
                the occurrence referred to in paragraph (1), and
                    ``(B) in the case of paragraph (1)(B), the amount 
                sufficient to result in a funding target attainment 
                percentage of 60 percent.
            ``(3) Unpredictable contingent event.--For purposes of this 
        subsection, the term `unpredictable contingent event benefit' 
        means any benefit payable solely by reason of--
                    ``(A) a plant shutdown (or similar event, as 
                determined by the Secretary), or
                    ``(B) any event other than the attainment of any 
                age, performance of any service, receipt or derivation 
                of any compensation, or occurrence of death or 
                disability.
    ``(c) Limitations on Plan Amendments Increasing Liability for 
Benefits.--
            ``(1) In general.--No amendment to a defined benefit plan 
        which is a single-employer plan which has the effect of 
        increasing liabilities of the plan by reason of increases in 
        benefits, establishment of new benefits, changing the rate of 
        benefit accrual, or changing the rate at which benefits become 
        nonforfeitable may take effect during any plan year if the 
        adjusted funding target attainment percentage for such plan 
        year is--
                    ``(A) less than 80 percent, or
                    ``(B) would be less than 80 percent taking into 
                account such amendment.
            ``(2) Exemption.--Paragraph (1) shall cease to apply with 
        respect to any plan year, effective as of the first day of the 
        plan year (or if later, the effective date of the amendment), 
        upon payment by the plan sponsor of a contribution (in addition 
        to any minimum required contribution under section 430) equal 
        to--
                    ``(A) in the case of paragraph (1)(A), the amount 
                of the increase in the funding target of the plan 
                (under section 430) for the plan year attributable to 
                the amendment, and
                    ``(B) in the case of paragraph (1)(B), the amount 
                sufficient to result in an adjusted funding target 
                attainment percentage of 80 percent.
            ``(3) Exception for certain benefit increases.--Paragraph 
        (1) shall not apply to any amendment which provides for an 
        increase in benefits under a formula which is not based on a 
        participant's compensation, but only if the rate of such 
        increase is not in excess of the contemporaneous rate of 
        increase in average wages of participants covered by the 
        amendment.
    ``(d) Limitations on Accelerated Benefit Distributions.--
            ``(1) Funding percentage less than 60 percent.--A defined 
        benefit plan which is a single-employer plan shall provide 
        that, in any case in which the plan's adjusted funding target 
        attainment percentage for a plan year is less than 60 percent, 
        the plan may not pay any prohibited payment after the valuation 
        date for the plan year.
            ``(2) Bankruptcy.--A defined benefit plan which is a 
        single-employer plan shall provide that, during any period in 
        which the plan sponsor is a debtor in a case under title 11, 
        United States Code, or similar Federal or State law, the plan 
        may not pay any prohibited payment. The preceding sentence 
        shall not apply on or after the date on which the enrolled 
        actuary of the plan certifies that the adjusted funding target 
        attainment percentage of such plan is not less than 100 
        percent.
            ``(3) Limited payment if percentage at least 60 percent but 
        less than 80 percent.--
                    ``(A) In general.--A defined benefit plan which is 
                a single-employer plan shall provide that, in any case 
                in which the plan's adjusted funding target attainment 
                percentage for a plan year is 60 percent or greater but 
                less than 80 percent, the plan may not pay any 
                prohibited payment after the valuation date for the 
                plan year to the extent the amount of the payment 
                exceeds the lesser of--
                            ``(i) 50 percent of the amount of the 
                        payment which could be made without regard to 
                        this section, or
                            ``(ii) the present value (determined under 
                        guidance prescribed by the Pension Benefit 
                        Guaranty Corporation, using the interest and 
                        mortality assumptions under section 417(e)) of 
                        the maximum guarantee with respect to the 
                        participant under section 4022 of the Employee 
                        Retirement Income Security Act of 1974.
                    ``(B) One-time application.--
                            ``(i) In general.--The plan shall also 
                        provide that only 1 prohibited payment meeting 
                        the requirements of subparagraph (A) may be 
                        made with respect to any participant during any 
                        period of consecutive plan years to which the 
                        limitations under either paragraph (1) or (2) 
                        or this paragraph applies.
                            ``(ii) Treatment of beneficiaries.--For 
                        purposes of this subparagraph, a participant 
                        and any beneficiary on his behalf (including an 
                        alternate payee, as defined in section 
                        414(p)(8)) shall be treated as 1 participant. 
                        If the accrued benefit of a participant is 
                        allocated to such an alternate payee and 1 or 
                        more other persons, the amount under 
                        subparagraph (A) shall be allocated among such 
                        persons in the same manner as the accrued 
                        benefit is allocated unless the qualified 
                        domestic relations order (as defined in section 
                        414(p)(1)(A)) provides otherwise.
            ``(4) Exception.--This subsection shall not apply to any 
        plan for any plan year if the terms of such plan (as in effect 
        for the period beginning on September 1, 2005, and ending with 
        such plan year) provide for no benefit accruals with respect to 
        any participant during such period.
            ``(5) Prohibited payment.--For purpose of this subsection, 
        the term `prohibited payment' means--
                    ``(A) any payment, in excess of the monthly amount 
                paid under a single life annuity (plus any social 
                security supplements described in the last sentence of 
                section 411(a)(9)), to a participant or beneficiary 
                whose annuity starting date (as defined in section 
                417(f)(2)) occurs during any period a limitation under 
                paragraph (1) or (2) is in effect,
                    ``(B) any payment for the purchase of an 
                irrevocable commitment from an insurer to pay benefits, 
                and
                    ``(C) any other payment specified by the Secretary 
                by regulations.
    ``(e) Limitation on Benefit Accruals for Plans With Severe Funding 
Shortfalls.--
            ``(1) In general.--A defined benefit plan which is a 
        single-employer plan shall provide that, in any case in which 
        the plan's adjusted funding target attainment percentage for a 
        plan year is less than 60 percent, benefit accruals under the 
        plan shall cease as of the valuation date for the plan year.
            ``(2) Exemption.--Paragraph (1) shall cease to apply with 
        respect to any plan year, effective as of the first day of the 
        plan year, upon payment by the plan sponsor of a contribution 
        (in addition to any minimum required contribution under section 
        430) equal to the amount sufficient to result in an adjusted 
        funding target attainment percentage of 60 percent.
    ``(f) Rules Relating to Contributions Required To Avoid Benefit 
Limitations.--
            ``(1) Security may be provided.--
                    ``(A) In general.--For purposes of this section, 
                the adjusted funding target attainment percentage shall 
                be determined by treating as an asset of the plan any 
                security provided by a plan sponsor in a form meeting 
                the requirements of subparagraph (B).
                    ``(B) Form of security.--The security required 
                under subparagraph (A) shall consist of--
                            ``(i) a bond issued by a corporate surety 
                        company that is an acceptable surety for 
                        purposes of section 412 of the Employee 
                        Retirement Income Security Act of 1974,
                            ``(ii) cash, or United States obligations 
                        which mature in 3 years or less, held in escrow 
                        by a bank or similar financial institution, or
                            ``(iii) such other form of security as is 
                        satisfactory to the Secretary and the parties 
                        involved.
                    ``(C) Enforcement.--Any security provided under 
                subparagraph (A) may be perfected and enforced at any 
                time after the earlier of--
                            ``(i) the date on which the plan 
                        terminates,
                            ``(ii) if there is a failure to make a 
                        payment of the minimum required contribution 
                        for any plan year beginning after the security 
                        is provided, the due date for the payment under 
                        section 430(j), or
                            ``(iii) if the adjusted funding target 
                        attainment percentage is less than 60 percent 
                        for a consecutive period of 7 years, the 
                        valuation date for the last year in the period.
                    ``(D) Release of security.--The security shall be 
                released (and any amounts thereunder shall be refunded 
                together with any interest accrued thereon) at such 
                time as the Secretary may prescribe in regulations, 
                including regulations for partial releases of the 
                security by reason of increases in the funding target 
                attainment percentage.
            ``(2) Prefunding balance or funding standard carryover 
        balance may not be used.--No prefunding balance under section 
        430(f) or funding standard carryover balance may be used under 
        subsection (b), (c), or (e) to satisfy any payment an employer 
        may make under any such subsection to avoid or terminate the 
        application of any limitation under such subsection.
            ``(3) Deemed reduction of funding balances.--
                    ``(A) In general.--Subject to subparagraph (C), in 
                any case in which a benefit limitation under subsection 
                (b), (c), (d), or (e) would (but for this subparagraph 
                and determined without regard to subsection (b)(2), 
                (c)(2), or (e)(2)) apply to such plan for the plan 
                year, the plan sponsor of such plan shall be treated 
                for purposes of this title as having made an election 
                under section 430(f) to reduce the prefunding balance 
                or funding standard carryover balance by such amount as 
                is necessary for such benefit limitation to not apply 
                to the plan for such plan year.
                    ``(B) Exception for insufficient funding 
                balances.--Subparagraph (A) shall not apply with 
                respect to a benefit limitation for any plan year if 
                the application of subparagraph (A) would not result in 
                the benefit limitation not applying for such plan year.
                    ``(C) Restrictions of certain rules to collectively 
                bargained plans.--With respect to any benefit 
                limitation under subsection (b), (c), or (e), 
                subparagraph (A) shall only apply in the case of a plan 
                maintained pursuant to 1 or more collective bargaining 
                agreements between employee representatives and 1 or 
                more employers.
    ``(g) New Plans.--Subsections (b), (c), and (e) shall not apply to 
a plan for the first 5 plan years of the plan. For purposes of this 
subsection, the reference in this subsection to a plan shall include a 
reference to any predecessor plan.
    ``(h) Presumed Underfunding for Purposes of Benefit Limitations.--
            ``(1) Presumption of continued underfunding.--In any case 
        in which a benefit limitation under subsection (b), (c), (d), 
        or (e) has been applied to a plan with respect to the plan year 
        preceding the current plan year, the adjusted funding target 
        attainment percentage of the plan for the current plan year 
        shall be presumed to be equal to the adjusted funding target 
        attainment percentage of the plan for the preceding plan year 
        until the enrolled actuary of the plan certifies the actual 
        adjusted funding target attainment percentage of the plan for 
        the current plan year.
            ``(2) Presumption of underfunding after 10th month.--In any 
        case in which no certification of the adjusted funding target 
        attainment percentage for the current plan year is made with 
        respect to the plan before the first day of the 10th month of 
        such year, for purposes of subsections (b), (c), (d), and (e), 
        such first day shall be deemed, for purposes of such 
        subsection, to be the valuation date of the plan for the 
        current plan year and the plan's adjusted funding target 
        attainment percentage shall be conclusively presumed to be less 
        than 60 percent as of such first day.
            ``(3) Presumption of underfunding after 4th month for 
        nearly underfunded plans.--In any case in which--
                    ``(A) a benefit limitation under subsection (b), 
                (c), (d), or (e) did not apply to a plan with respect 
                to the plan year preceding the current plan year, but 
                the adjusted funding target attainment percentage of 
                the plan for such preceding plan year was not more than 
                10 percentage points greater than the percentage which 
                would have caused such subsection to apply to the plan 
                with respect to such preceding plan year, and
                    ``(B) as of the first day of the 4th month of the 
                current plan year, the enrolled actuary of the plan has 
                not certified the actual adjusted funding target 
                attainment percentage of the plan for the current plan 
                year,
        until the enrolled actuary so certifies, such first day shall 
        be deemed, for purposes of such subsection, to be the valuation 
        date of the plan for the current plan year and the adjusted 
        funding target attainment percentage of the plan as of such 
        first day shall, for purposes of such subsection, be presumed 
        to be equal to 10 percentage points less than the adjusted 
        funding target attainment percentage of the plan for such 
        preceding plan year.
    ``(i) Treatment of Plan as of Close of Prohibited or Cessation 
Period.--For purposes of applying this title--
            ``(1) Operation of plan after period.--Unless the plan 
        provides otherwise, payments and accruals will resume effective 
        as of the day following the close of the period for which any 
        limitation of payment or accrual of benefits under subsection 
        (d) or (e) applies.
            ``(2) Treatment of affected benefits.--Nothing in this 
        subsection shall be construed as affecting the plan's treatment 
        of benefits which would have been paid or accrued but for this 
        section.
    ``(j) Terms Relating to Funding Target Attainment Percentage.--For 
purposes of this section--
            ``(1) In general.--The term `funding target attainment 
        percentage' has the same meaning given such term by section 
        430(d)(2).
            ``(2) Adjusted funding target attainment percentage.--The 
        term `adjusted funding target attainment percentage' means the 
        funding target attainment percentage which is determined under 
        paragraph (1) by increasing each of the amounts under 
        subparagraphs (A) and (B) of section 430(d)(2) by the aggregate 
        amount of purchases of annuities for employees other than 
        highly compensated employees (as defined in section 414(q)) 
        which were made by the plan during the preceding 2 plan years.
            ``(3) Application to plans which are fully funded without 
        regard to reductions for funding balances.--
                    ``(A) In general.--In the case of a plan for any 
                plan year, if the funding target attainment percentage 
                is 100 percent or more (determined without regard to 
                this paragraph and without regard to the reduction in 
                the value of assets under section 430(f)(4)(A)), the 
                funding target attainment percentage for purposes of 
                paragraph (1) shall be determined without regard to 
                such reduction.
                    ``(B) Transition rule.--Subparagraph (A) shall be 
                applied to plan years beginning after 2007 and before 
                2011 by substituting for `100 percent' the applicable 
                percentage determined in accordance with the following 
                table:

``In the case of a plan year                             The applicable
   beginning in calendar year:                            percentage is
        2008...................................................     92 
        2009...................................................     94 
        2010...................................................     96.
                    ``(C) Limitation.--Subparagraph (B) shall not apply 
                with respect to any plan year after 2008 unless the 
                funding target attainment percentage (determined 
                without regard to this paragraph) of the plan for each 
                preceding plan year after 2007 was not less than the 
                applicable percentage with respect to such preceding 
                plan year determined under subparagraph (B).
    ``(k) Special Rule for 2008.--For purposes of this section, in the 
case of plan years beginning in 2008, the funding target attainment 
percentage for the preceding plan year may be determined using such 
methods of estimation as the Secretary may provide.''.
            (2) Clerical amendment.--The table of parts for subchapter 
        D of chapter 1 of the Internal Revenue Code of 1986 is amended 
        by adding at the end the following new item:

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

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

SEC. 114. TECHNICAL AND CONFORMING AMENDMENTS.

    (a) Amendments Related to Qualification Requirements.--
            (1) Section 401(a)(29) of the Internal Revenue Code of 1986 
        is amended to read as follows:
            ``(29) Benefit limitations on plans in at-risk status.--In 
        the case of a defined benefit plan (other than a multiemployer 
        plan) to which the requirements of section 412 apply, the trust 
        of which the plan is a part shall not constitute a qualified 
        trust under this subsection unless the plan meets the 
        requirements of section 436.''.
            (2) Section 401(a)(32) of such Code is amended--
                    (A) in subparagraph (A), by striking ``412(m)(5)'' 
                each place it appears and inserting ``section 
                430(j)(4)'', and
                    (B) in subparagraph (C), by striking ``section 
                412(m)'' and inserting ``section 430(j)''.
            (3) Section 401(a)(33) of such Code is amended--
                    (A) in subparagraph (B)(i), by striking ``funded 
                current liability percentage (within the meaning of 
                section 412(l)(8))'' and inserting ``funding target 
                attainment percentage (as defined in section 
                430(d)(2))'',
                    (B) in subparagraph (B)(iii), by striking 
                ``subsection 412(c)(8)'' and inserting ``section 
                412(c)(2)'', and
                    (C) in subparagraph (D), by striking ``section 
                412(c)(11) (without regard to subparagraph (B) 
                thereof)'' and inserting ``section 412(b)(2) (without 
                regard to subparagraph (B) thereof)''.
    (b) Vesting Rules.--Section 411 of such Code is amended--
            (1) by striking ``section 412(c)(8)'' in subsection 
        (a)(3)(C) and inserting ``section 412(c)(2)'',
            (2) in subsection (b)(1)(F)--
                    (A) by striking ``paragraphs (2) and (3) of section 
                412(i)'' in clause (ii) and inserting ``subparagraphs 
                (B) and (C) of section 412(e)(3)'', and
                    (B) by striking ``paragraphs (4), (5), and (6) of 
                section 412(i)'' and inserting ``subparagraphs (D), 
                (E), and (F) of section 412(e)(3)'', and
            (3) by striking ``section 412(c)(8)'' in subsection 
        (d)(6)(A) and inserting ``section 412(e)(2)''.
    (c) Mergers and Consolidations of Plans.--Subclause (I) of section 
414(l)(2)(B)(i) of such Code is amended to read as follows:
                                    ``(I) the amount determined under 
                                section 431(c)(6)(A)(i) in the case of 
                                a multiemployer plan (and the sum of 
                                the funding shortfall and target normal 
                                cost determined under section 430 in 
                                the case of any other plan), over''.
    (d) Transfer of Excess Pension Assets to Retiree Health Accounts.--
            (1) Section 420(e)(2) of such Code is amended to read as 
        follows:
            ``(2) Excess pension assets.--The term `excess pension 
        assets' means the excess (if any) of--
                    ``(A) the lesser of--
                            ``(i) the fair market value of the plan's 
                        assets (reduced by the prefunding balance and 
                        funding standard carryover balance determined 
                        under section 430(f)), or
                            ``(ii) the value of plan assets as 
                        determined under section 430(g)(3) after 
                        reduction under section 430(f), over
                    ``(B) 125 percent of the sum of the funding 
                shortfall and the target normal cost determined under 
                section 430 for such plan year.''.
            (2) Section 420(e)(4) of such Code is amended to read as 
        follows:
            ``(4) Coordination with section 430.--In the case of a 
        qualified transfer, any assets so transferred shall not, for 
        purposes of this section and section 430, be treated as assets 
        in the plan.''.
    (e) Excise Taxes.--
            (1) In general.--Subsections (a) and (b) of section 4971 of 
        such Code are amended to read as follows:
    ``(a) Initial Tax.--If at any time during any taxable year an 
employer maintains a plan to which section 412 applies, there is hereby 
imposed for the taxable year a tax equal to--
            ``(1) in the case of a single-employer plan, 10 percent of 
        the aggregate unpaid minimum required contributions for all 
        plan years remaining unpaid as of the end of any plan year 
        ending with or within the taxable year, and
            ``(2) in the case of a multiemployer plan, 5 percent of the 
        accumulated funding deficiency determined under section 431 as 
        of the end of any plan year ending with or within the taxable 
        year.
    ``(b) Additional Tax.--If--
            ``(1) a tax is imposed under subsection (a)(1) on any 
        unpaid required minimum contribution and such amount remains 
        unpaid as of the close of the taxable period, or
            ``(2) a tax is imposed under subsection (a)(2) on any 
        accumulated funding deficiency and the accumulated funding 
        deficiency is not corrected within the taxable period,
there is hereby imposed a tax equal to 100 percent of the unpaid 
minimum required contribution or accumulated funding deficiency, 
whichever is applicable, to the extent not so paid or corrected.''.
            (2) Section 4971(c) of such Code is amended--
                    (A) by striking ``the last two sentences of section 
                412(a)'' in paragraph (1) and inserting ``section 
                431'', and
                    (B) by adding at the end the following new 
                paragraph:
            ``(4) Unpaid minimum required contribution.--
                    ``(A) In general.--The term `unpaid minimum 
                required contribution' means, with respect to any plan 
                year, any minimum required contribution under section 
                430 for the plan year which is not paid on or before 
                the due date (as determined under section 430(j)(1)) 
                for the plan year.
                    ``(B) Ordering rule.--Any payment to or under a 
                plan for any plan year shall be allocated first to 
                unpaid minimum required contributions for all preceding 
                plan years on a first-in, first-out basis and then to 
                the minimum required contribution under section 430 for 
                the plan year.''.
            (3) Section 4971(e)(1) of such Code is amended by striking 
        ``section 412(b)(3)(A)'' and inserting ``section 
        412(a)(1)(A)''.
            (4) Section 4971(f)(1) of such Code is amended--
                    (A) by striking ``section 412(m)(5)'' and inserting 
                ``section 430(j)(4)'', and
                    (B) by striking ``section 412(m)'' and inserting 
                ``section 430(j)''.
            (5) Section 4972(c)(7) of such Code is amended by striking 
        ``except to the extent that such contributions exceed the full-
        funding limitation (as defined in section 412(c)(7), determined 
        without regard to subparagraph (A)(i)(I) thereof)'' and 
        inserting ``except, in the case of a multiemployer plan, to the 
        extent that such contributions exceed the full-funding 
        limitation (as defined in section 431(c)(6))''.
    (f) Reporting Requirements.--Section 6059(b) of such Code is 
amended--
            (1) by striking ``the accumulated funding deficiency (as 
        defined in section 412(a))'' in paragraph (2) and inserting 
        ``the minimum required contribution determined under section 
        430, or the accumulated funding deficiency determined under 
        section 431,'', and
            (2) by striking paragraph (3)(B) and inserting:
                    ``(B) the requirements for reasonable actuarial 
                assumptions under section 430(h)(1) or 431(c)(3), 
                whichever are applicable, have been complied with.''.

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

    (a) In General.--In the case of a plan that--
            (1) was not required to pay a variable rate premium for the 
        plan year beginning in 1996,
            (2) has not, in any plan year beginning after 1995, merged 
        with another plan (other than a plan sponsored by an employer 
        that was in 1996 within the controlled group of the plan 
        sponsor); and
            (3) is sponsored by a company that is engaged primarily in 
        the interurban or interstate passenger bus service,
the rules described in subsection (b) shall apply for any plan year 
beginning after December 31, 2007.
    (b) Modified Rules.--The rules described in this subsection are as 
follows:
            (1) For purposes of section 430(j)(3) of the Internal 
        Revenue Code of 1986 and section 303(j)(3) of the Employee 
        Retirement Income Security Act of 1974, the plan shall be 
        treated as not having a funding shortfall for any plan year.
            (2) For purposes of--
                    (A) determining unfunded vested benefits under 
                section 4006(a)(3)(E)(iii) of such Act, and
                    (B) determining any present value or making any 
                computation under section 412 of such Code or section 
                302 of such Act,
        the mortality table shall be the mortality table used by the 
        plan.
            (3) Section 430(c)(5)(B) of such Code and section 
        303(c)(5)(B) of such Act (relating to phase-in of funding 
        target for exemption from new shortfall amortization base) 
        shall each be applied by substituting ``2012'' for ``2011'' 
        therein and by substituting for the table therein the 
        following:


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

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

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

    (a) Amendments of Internal Revenue Code.--Subsection (b) of section 
409A of the Internal Revenue Code of 1986 (providing rules relating to 
funding) is amended by redesignating paragraphs (3) and (4) as 
paragraphs (4) and (5), respectively, and by inserting after paragraph 
(2) the following new paragraph:
            ``(3) Treatment of employer's defined benefit plan during 
        restricted period.--
                    ``(A) In general.--If-
                            ``(i) during any restricted period with 
                        respect to a single-employer defined benefit 
                        plan, assets are set aside or reserved 
                        (directly or indirectly) in a trust (or other 
                        arrangement as determined by the Secretary) or 
                        transferred to such a trust or other 
                        arrangement for purposes of paying deferred 
                        compensation of an applicable covered employee 
                        under a nonqualified deferred compensation plan 
                        of the plan sponsor or member of a controlled 
                        group which includes the plan sponsor, or
                            ``(ii) a nonqualified deferred compensation 
                        plan of the plan sponsor or member of a 
                        controlled group which includes the plan 
                        sponsor provides that assets will become 
                        restricted to the provision of benefits under 
                        the plan in connection with such restricted 
                        period (or other similar financial measure 
                        determined by the Secretary) with respect to 
                        the defined benefit plan, or assets are so 
                        restricted,
                such assets shall, for purposes of section 83, be 
                treated as property transferred in connection with the 
                performance of services whether or not such assets are 
                available to satisfy claims of general creditors. 
                Clause (i) shall not apply with respect to any assets 
                which are so set aside before the restricted period 
                with respect to the defined benefit plan.
                    ``(B) Restricted period.--For purposes of this 
                section, the term `restricted period' means, with 
                respect to any plan described in subparagraph (A)--
                            ``(i) any period during which the plan is 
                        in at-risk status (as defined in section 
                        430(i));
                            ``(ii) any period the plan sponsor is a 
                        debtor in a case under title 11, United States 
                        Code, or similar Federal or State law, and
                            ``(iii) the 12-month period beginning on 
                        the date which is 6 months before the 
                        termination date of the plan if, as of the 
                        termination date, the plan is not sufficient 
                        for benefit liabilities (within the meaning of 
                        section 4041 of the Employee Retirement Income 
                        Security Act of 1974).
                    ``(C) Special rule for payment of taxes on deferred 
                compensation included in income.--If an employer 
                provides directly or indirectly for the payment of any 
                Federal, State, or local income taxes with respect to 
                any compensation required to be included in gross 
                income by reason of this paragraph--
                            ``(i) interest shall be imposed under 
                        subsection (a)(1)(B)(i)(I) on the amount of 
                        such payment in the same manner as if such 
                        payment was part of the deferred compensation 
                        to which it relates,
                            ``(ii) such payment shall be taken into 
                        account in determining the amount of the 
                        additional tax under subsection 
                        (a)(1)(B)(i)(II) in the same manner as if such 
                        payment was part of the deferred compensation 
                        to which it relates, and
                            ``(iii) no deduction shall be allowed under 
                        this title with respect to such payment.
                    ``(D) Other definitions.--For purposes of this 
                section--
                            ``(i) Applicable covered employee.--The 
                        term `applicable covered employee' means any--
                                    ``(I) covered employee of a plan 
                                sponsor,
                                    ``(II) covered employee of a member 
                                of a controlled group which includes 
                                the plan sponsor, and
                                    ``(III) former employee who was a 
                                covered employee at the time of 
                                termination of employment with the plan 
                                sponsor or a member of a controlled 
                                group which includes the plan sponsor.
                            ``(ii) Covered employee.--The term `covered 
                        employee' means an individual described in 
                        section 162(m)(3) or an individual subject to 
                        the requirements of section 16(a) of the 
                        Securities Exchange Act of 1934.''.
    (b) Conforming Amendments.--Paragraphs (4) and (5) of section 
409A(b) of such Code, as redesignated by subsection (a) of this 
subsection, are each amended by striking ``paragraph (1) or (2)'' each 
place it appears and inserting ``paragraph (1), (2), or (3)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to transfers or other reservation of assets after the date of the 
enactment of this Act.

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

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

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

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

          ``minimum funding standards for multiemployer plans

    ``Sec. 304.  (a) In General.--For purposes of section 302, the 
accumulated funding deficiency of a multiemployer plan for any plan 
year is--
            ``(1) except as provided in paragraph (2), the amount, 
        determined as of the end of the plan year, equal to the excess 
        (if any) of the total charges to the funding standard account 
        of the plan for all plan years (beginning with the first plan 
        year for which this part applies to the plan) over the total 
        credits to such account for such years, and
            ``(2) if the multiemployer plan is in reorganization for 
        any plan year, the accumulated funding deficiency of the plan 
        determined under section 4243.
    ``(b) Funding Standard Account.--
            ``(1) Account required.--Each multiemployer plan to which 
        this part applies shall establish and maintain a funding 
        standard account. Such account shall be credited and charged 
        solely as provided in this section.
            ``(2) Charges to account.--For a plan year, the funding 
        standard account shall be charged with the sum of--
                    ``(A) the normal cost of the plan for the plan 
                year,
                    ``(B) the amounts necessary to amortize in equal 
                annual installments (until fully amortized)--
                            ``(i) in the case of a plan which comes 
                        into existence on or after January 1, 2008, the 
                        unfunded past service liability under the plan 
                        on the first day of the first plan year to 
                        which this section applies, over a period of 15 
                        plan years,
                            ``(ii) separately, with respect to each 
                        plan year, the net increase (if any) in 
                        unfunded past service liability under the plan 
                        arising from plan amendments adopted in such 
                        year, over a period of 15 plan years,
                            ``(iii) separately, with respect to each 
                        plan year, the net experience loss (if any) 
                        under the plan, over a period of 15 plan years, 
                        and
                            ``(iv) separately, with respect to each 
                        plan year, the net loss (if any) resulting from 
                        changes in actuarial assumptions used under the 
                        plan, over a period of 15 plan years,
                    ``(C) the amount necessary to amortize each waived 
                funding deficiency (within the meaning of section 
                302(c)(3)) for each prior plan year in equal annual 
                installments (until fully amortized) over a period of 
                15 plan years,
                    ``(D) the amount necessary to amortize in equal 
                annual installments (until fully amortized) over a 
                period of 5 plan years any amount credited to the 
                funding standard account under section 302(b)(3)(D) (as 
                in effect on the day before the date of the enactment 
                of the Pension Protection Act of 2006), and
                    ``(E) the amount necessary to amortize in equal 
                annual installments (until fully amortized) over a 
                period of 20 years the contributions which would be 
                required to be made under the plan but for the 
                provisions of section 302(c)(7)(A)(i)(I) (as in effect 
                on the day before the date of the enactment of the 
                Pension Protection Act of 2006).
            ``(3) Credits to account.--For a plan year, the funding 
        standard account shall be credited with the sum of--
                    ``(A) the amount considered contributed by the 
                employer to or under the plan for the plan year,
                    ``(B) the amount necessary to amortize in equal 
                annual installments (until fully amortized)--
                            ``(i) separately, with respect to each plan 
                        year, the net decrease (if any) in unfunded 
                        past service liability under the plan arising 
                        from plan amendments adopted in such year, over 
                        a period of 15 plan years,
                            ``(ii) separately, with respect to each 
                        plan year, the net experience gain (if any) 
                        under the plan, over a period of 15 plan years, 
                        and
                            ``(iii) separately, with respect to each 
                        plan year, the net gain (if any) resulting from 
                        changes in actuarial assumptions used under the 
                        plan, over a period of 15 plan years,
                    ``(C) the amount of the waived funding deficiency 
                (within the meaning of section 302(c)(3)) for the plan 
                year, and
                    ``(D) in the case of a plan year for which the 
                accumulated funding deficiency is determined under the 
                funding standard account if such plan year follows a 
                plan year for which such deficiency was determined 
                under the alternative minimum funding standard under 
                section 305 (as in effect on the day before the date of 
                the enactment of the Pension Protection Act of 2006), 
                the excess (if any) of any debit balance in the funding 
                standard account (determined without regard to this 
                subparagraph) over any debit balance in the alternative 
                minimum funding standard account.
            ``(4) Special rule for amounts first amortized in plan 
        years before 2008.--In the case of any amount amortized under 
        section 302(b) (as in effect on the day before the date of the 
        enactment of the Pension Protection Act of 2006) over any 
        period beginning with a plan year beginning before 2008, in 
        lieu of the amortization described in paragraphs (2)(B) and 
        (3)(B), such amount shall continue to be amortized under such 
        section as so in effect.
            ``(5) Combining and offsetting amounts to be amortized.--
        Under regulations prescribed by the Secretary of the Treasury, 
        amounts required to be amortized under paragraph (2) or 
        paragraph (3), as the case may be--
                    ``(A) may be combined into one amount under such 
                paragraph to be amortized over a period determined on 
                the basis of the remaining amortization period for all 
                items entering into such combined amount, and
                    ``(B) may be offset against amounts required to be 
                amortized under the other such paragraph, with the 
                resulting amount to be amortized over a period 
                determined on the basis of the remaining amortization 
                periods for all items entering into whichever of the 
                two amounts being offset is the greater.
            ``(6) Interest.--The funding standard account (and items 
        therein) shall be charged or credited (as determined under 
        regulations prescribed by the Secretary of the Treasury) with 
        interest at the appropriate rate consistent with the rate or 
        rates of interest used under the plan to determine costs.
            ``(7) Special rules relating to charges and credits to 
        funding standard account.--For purposes of this part--
                    ``(A) Withdrawal liability.--Any amount received by 
                a multiemployer plan in payment of all or part of an 
                employer's withdrawal liability under part 1 of 
                subtitle E of title IV shall be considered an amount 
                contributed by the employer to or under the plan. The 
                Secretary of the Treasury may prescribe by regulation 
                additional charges and credits to a multiemployer 
                plan's funding standard account to the extent necessary 
                to prevent withdrawal liability payments from being 
                unduly reflected as advance funding for plan 
                liabilities.
                    ``(B) Adjustments when a multiemployer plan leaves 
                reorganization.--If a multiemployer plan is not in 
                reorganization in the plan year but was in 
                reorganization in the immediately preceding plan year, 
                any balance in the funding standard account at the 
                close of such immediately preceding plan year--
                            ``(i) shall be eliminated by an offsetting 
                        credit or charge (as the case may be), but
                            ``(ii) shall be taken into account in 
                        subsequent plan years by being amortized in 
                        equal annual installments (until fully 
                        amortized) over 30 plan years.
                The preceding sentence shall not apply to the extent of 
                any accumulated funding deficiency under section 
                4243(a) as of the end of the last plan year that the 
                plan was in reorganization.
                    ``(C) Plan payments to supplemental program or 
                withdrawal liability payment fund.--Any amount paid by 
                a plan during a plan year to the Pension Benefit 
                Guaranty Corporation pursuant to section 4222 of this 
                Act or to a fund exempt under section 501(c)(22) of the 
                Internal Revenue Code of 1986 pursuant to section 4223 
                of this Act shall reduce the amount of contributions 
                considered received by the plan for the plan year.
                    ``(D) Interim withdrawal liability payments.--Any 
                amount paid by an employer pending a final 
                determination of the employer's withdrawal liability 
                under part 1 of subtitle E of title IV and subsequently 
                refunded to the employer by the plan shall be charged 
                to the funding standard account in accordance with 
                regulations prescribed by the Secretary of the 
                Treasury.
                    ``(E) Election for deferral of charge for portion 
                of net experience loss.--If an election is in effect 
                under section 302(b)(7)(F) (as in effect on the day 
                before the date of the enactment of the Pension 
                Protection Act of 2006) for any plan year, the funding 
                standard account shall be charged in the plan year to 
                which the portion of the net experience loss deferred 
                by such election was deferred with the amount so 
                deferred (and paragraph (2)(B)(iii) shall not apply to 
                the amount so charged).
                    ``(F) Financial assistance.--Any amount of any 
                financial assistance from the Pension Benefit Guaranty 
                Corporation to any plan, and any repayment of such 
                amount, shall be taken into account under this section 
                and section 302 in such manner as is determined by the 
                Secretary of the Treasury.
                    ``(G) Short-term benefits.--To the extent that any 
                plan amendment increases the unfunded past service 
                liability under the plan by reason of an increase in 
                benefits which are not payable as a life annuity but 
                are payable under the terms of the plan for a period 
                that does not exceed 14 years from the effective date 
                of the amendment, paragraph (2)(B)(ii) shall be applied 
                separately with respect to such increase in unfunded 
                past service liability by substituting the number of 
                years of the period during which such benefits are 
                payable for `15'.
    ``(c) Additional Rules.--
            ``(1) Determinations to be made under funding method.--For 
        purposes of this part, normal costs, accrued liability, past 
        service liabilities, and experience gains and losses shall be 
        determined under the funding method used to determine costs 
        under the plan.
            ``(2) Valuation of assets.--
                    ``(A) In general.--For purposes of this part, the 
                value of the plan's assets shall be determined on the 
                basis of any reasonable actuarial method of valuation 
                which takes into account fair market value and which is 
                permitted under regulations prescribed by the Secretary 
                of the Treasury.
                    ``(B) Election with respect to bonds.--The value of 
                a bond or other evidence of indebtedness which is not 
                in default as to principal or interest may, at the 
                election of the plan administrator, be determined on an 
                amortized basis running from initial cost at purchase 
                to par value at maturity or earliest call date. Any 
                election under this subparagraph shall be made at such 
                time and in such manner as the Secretary of the 
                Treasury shall by regulations provide, shall apply to 
                all such evidences of indebtedness, and may be revoked 
                only with the consent of such Secretary.
            ``(3) Actuarial assumptions must be reasonable.--For 
        purposes of this section, all costs, liabilities, rates of 
        interest, and other factors under the plan shall be determined 
        on the basis of actuarial assumptions and methods--
                    ``(A) each of which is reasonable (taking into 
                account the experience of the plan and reasonable 
                expectations), and
                    ``(B) which, in combination, offer the actuary's 
                best estimate of anticipated experience under the plan.
            ``(4) Treatment of certain changes as experience gain or 
        loss.--For purposes of this section, if--
                    ``(A) a change in benefits under the Social 
                Security Act or in other retirement benefits created 
                under Federal or State law, or
                    ``(B) a change in the definition of the term 
                `wages' under section 3121 of the Internal Revenue Code 
                of 1986, or a change in the amount of such wages taken 
                into account under regulations prescribed for purposes 
                of section 401(a)(5) of such Code,
        results in an increase or decrease in accrued liability under a 
        plan, such increase or decrease shall be treated as an 
        experience loss or gain.
            ``(5) Full funding.--If, as of the close of a plan year, a 
        plan would (without regard to this paragraph) have an 
        accumulated funding deficiency in excess of the full funding 
        limitation--
                    ``(A) the funding standard account shall be 
                credited with the amount of such excess, and
                    ``(B) all amounts described in subparagraphs (B), 
                (C), and (D) of subsection (b) (2) and subparagraph (B) 
                of subsection (b)(3) which are required to be amortized 
                shall be considered fully amortized for purposes of 
                such subparagraphs.
            ``(6) Full-funding limitation.--
                    ``(A) In general.--For purposes of paragraph (5), 
                the term `full-funding limitation' means the excess (if 
                any) of--
                            ``(i) the accrued liability (including 
                        normal cost) under the plan (determined under 
                        the entry age normal funding method if such 
                        accrued liability cannot be directly calculated 
                        under the funding method used for the plan), 
                        over
                            ``(ii) the lesser of--
                                    ``(I) the fair market value of the 
                                plan's assets, or
                                    ``(II) the value of such assets 
                                determined under paragraph (2).
                    ``(B) Minimum amount.--
                            ``(i) In general.--In no event shall the 
                        full-funding limitation determined under 
                        subparagraph (A) be less than the excess (if 
                        any) of--
                                    ``(I) 90 percent of the current 
                                liability of the plan (including the 
                                expected increase in current liability 
                                due to benefits accruing during the 
                                plan year), over
                                    ``(II) the value of the plan's 
                                assets determined under paragraph (2).
                            ``(ii) Assets.--For purposes of clause (i), 
                        assets shall not be reduced by any credit 
                        balance in the funding standard account.
                    ``(C) Full funding limitation.--For purposes of 
                this paragraph, unless otherwise provided by the plan, 
                the accrued liability under a multiemployer plan shall 
                not include benefits which are not nonforfeitable under 
                the plan after the termination of the plan (taking into 
                consideration section 411(d)(3) of the Internal Revenue 
                Code of 1986).
                    ``(D) Current liability.--For purposes of this 
                paragraph--
                            ``(i) In general.--The term `current 
                        liability' means all liabilities to employees 
                        and their beneficiaries under the plan.
                            ``(ii) Treatment of unpredictable 
                        contingent event benefits.--For purposes of 
                        clause (i), any benefit contingent on an event 
                        other than--
                                    ``(I) age, service, compensation, 
                                death, or disability, or
                                    ``(II) an event which is reasonably 
                                and reliably predictable (as determined 
                                by the Secretary of the Treasury),
                        shall not be taken into account until the event 
                        on which the benefit is contingent occurs.
                            ``(iii) Interest rate used.--The rate of 
                        interest used to determine current liability 
                        under this paragraph shall be the rate of 
                        interest determined under subparagraph (E).
                            ``(iv) Mortality tables.--
                                    ``(I) Commissioners' standard 
                                table.--In the case of plan years 
                                beginning before the first plan year to 
                                which the first tables prescribed under 
                                subclause (II) apply, the mortality 
                                table used in determining current 
                                liability under this paragraph shall be 
                                the table prescribed by the Secretary 
                                of the Treasury which is based on the 
                                prevailing commissioners' standard 
                                table (described in section 
                                807(d)(5)(A) of the Internal Revenue 
                                Code of 1986) used to determine 
                                reserves for group annuity contracts 
                                issued on January 1, 1993.
                                    ``(II) Secretarial authority.--The 
                                Secretary of the Treasury may by 
                                regulation prescribe for plan years 
                                beginning after December 31, 1999, 
                                mortality tables to be used in 
                                determining current liability under 
                                this subsection. Such tables shall be 
                                based upon the actual experience of 
                                pension plans and projected trends in 
                                such experience. In prescribing such 
                                tables, such Secretary shall take into 
                                account results of available 
                                independent studies of mortality of 
                                individuals covered by pension plans.
                            ``(v) Separate mortality tables for the 
                        disabled.--Notwithstanding clause (iv)--
                                    ``(I) In general.--The Secretary of 
                                the Treasury shall establish mortality 
                                tables which may be used (in lieu of 
                                the tables under clause (iv)) to 
                                determine current liability under this 
                                subsection for individuals who are 
                                entitled to benefits under the plan on 
                                account of disability. Such Secretary 
                                shall establish separate tables for 
                                individuals whose disabilities occur in 
                                plan years beginning before January 1, 
                                1995, and for individuals whose 
                                disabilities occur in plan years 
                                beginning on or after such date.
                                    ``(II) Special rule for 
                                disabilities occurring after 1994.--In 
                                the case of disabilities occurring in 
                                plan years beginning after December 31, 
                                1994, the tables under subclause (I) 
                                shall apply only with respect to 
                                individuals described in such subclause 
                                who are disabled within the meaning of 
                                title II of the Social Security Act and 
                                the regulations thereunder.
                            ``(vi) Periodic review.--The Secretary of 
                        the Treasury shall periodically (at least every 
                        5 years) review any tables in effect under this 
                        subparagraph and shall, to the extent such 
                        Secretary determines necessary, by regulation 
                        update the tables to reflect the actual 
                        experience of pension plans and projected 
                        trends in such experience.
                    ``(E) Required change of interest rate.--For 
                purposes of determining a plan's current liability for 
                purposes of this paragraph--
                            ``(i) In general.--If any rate of interest 
                        used under the plan under subsection (b)(6) to 
                        determine cost is not within the permissible 
                        range, the plan shall establish a new rate of 
                        interest within the permissible range.
                            ``(ii) Permissible range.--For purposes of 
                        this subparagraph--
                                    ``(I) In general.--Except as 
                                provided in subclause (II), the term 
                                `permissible range' means a rate of 
                                interest which is not more than 5 
                                percent above, and not more than 10 
                                percent below, the weighted average of 
                                the rates of interest on 30-year 
                                Treasury securities during the 4-year 
                                period ending on the last day before 
                                the beginning of the plan year.
                                    ``(II) Secretarial authority.--If 
                                the Secretary of the Treasury finds 
                                that the lowest rate of interest 
                                permissible under subclause (I) is 
                                unreasonably high, such Secretary may 
                                prescribe a lower rate of interest, 
                                except that such rate may not be less 
                                than 80 percent of the average rate 
                                determined under such subclause.
                            ``(iii) Assumptions.--Notwithstanding 
                        paragraph (3)(A), the interest rate used under 
                        the plan shall be--
                                    ``(I) determined without taking 
                                into account the experience of the plan 
                                and reasonable expectations, but
                                    ``(II) consistent with the 
                                assumptions which reflect the purchase 
                                rates which would be used by insurance 
                                companies to satisfy the liabilities 
                                under the plan.
            ``(7) Annual valuation.--
                    ``(A) In general.--For purposes of this section, a 
                determination of experience gains and losses and a 
                valuation of the plan's liability shall be made not 
                less frequently than once every year, except that such 
                determination shall be made more frequently to the 
                extent required in particular cases under regulations 
                prescribed by the Secretary of the Treasury.
                    ``(B) Valuation date.--
                            ``(i) Current year.--Except as provided in 
                        clause (ii), the valuation referred to in 
                        subparagraph (A) shall be made as of a date 
                        within the plan year to which the valuation 
                        refers or within one month prior to the 
                        beginning of such year.
                            ``(ii) Use of prior year valuation.--The 
                        valuation referred to in subparagraph (A) may 
                        be made as of a date within the plan year prior 
                        to the year to which the valuation refers if, 
                        as of such date, the value of the assets of the 
                        plan are not less than 100 percent of the 
                        plan's current liability (as defined in 
                        paragraph (6)(D) without regard to clause (iv) 
                        thereof).
                            ``(iii) Adjustments.--Information under 
                        clause (ii) shall, in accordance with 
                        regulations, be actuarially adjusted to reflect 
                        significant differences in participants.
                            ``(iv) Limitation.--A change in funding 
                        method to use a prior year valuation, as 
                        provided in clause (ii), may not be made unless 
                        as of the valuation date within the prior plan 
                        year, the value of the assets of the plan are 
                        not less than 125 percent of the plan's current 
                        liability (as defined in paragraph (6)(D) 
                        without regard to clause (iv) thereof).
            ``(8) Time when certain contributions deemed made.--For 
        purposes of this section, any contributions for a plan year 
        made by an employer after the last day of such plan year, but 
        not later than two and one-half months after such day, shall be 
        deemed to have been made on such last day. For purposes of this 
        subparagraph, such two and one-half month period may be 
        extended for not more than six months under regulations 
        prescribed by the Secretary of the Treasury.
    ``(d) Extension of Amortization Periods for Multiemployer Plans.--
            ``(1) Automatic extension upon application by certain 
        plans.--
                    ``(A) In general.--If the plan sponsor of a 
                multiemployer plan--
                            ``(i) submits to the Secretary of the 
                        Treasury an application for an extension of the 
                        period of years required to amortize any 
                        unfunded liability described in any clause of 
                        subsection (b)(2)(B) or described in subsection 
                        (b)(4), and
                            ``(ii) includes with the application a 
                        certification by the plan's actuary described 
                        in subparagraph (B),
                the Secretary of the Treasury shall extend the 
                amortization period for the period of time (not in 
                excess of 5 years) specified in the application. Such 
                extension shall be in addition to any extension under 
                paragraph (2).
                    ``(B) Criteria.--A certification with respect to a 
                multiemployer plan is described in this subparagraph if 
                the plan's actuary certifies that, based on reasonable 
                assumptions--
                            ``(i) absent the extension under 
                        subparagraph (A), the plan would have an 
                        accumulated funding deficiency in the current 
                        plan year or any of the 9 succeeding plan 
                        years,
                            ``(ii) the plan sponsor has adopted a plan 
                        to improve the plan's funding status,
                            ``(iii) the plan is projected to have 
                        sufficient assets to timely pay expected 
                        benefits and anticipated expenditures over the 
                        amortization period as extended, and
                            ``(iv) the notice required under paragraph 
                        (3)(A) has been provided.
                    ``(C) Termination.--The preceding provisions of 
                this paragraph shall not apply with respect to any 
                application submitted after December 31, 2014.
            ``(2) Alternative extension.--
                    ``(A) In general.--If the plan sponsor of a 
                multiemployer plan submits to the Secretary of the 
                Treasury an application for an extension of the period 
                of years required to amortize any unfunded liability 
                described in any clause of subsection (b)(2)(B) or 
                described in subsection (b)(4), the Secretary of the 
                Treasury may extend the amortization period for a 
                period of time (not in excess of 10 years reduced by 
                the number of years of any extension under paragraph 
                (1) with respect to such unfunded liability) if the 
                Secretary of the Treasury makes the determination 
                described in subparagraph (B). Such extension shall be 
                in addition to any extension under paragraph (1).
                    ``(B) Determination.--The Secretary of the Treasury 
                may grant an extension under subparagraph (A) if such 
                Secretary determines that--
                            ``(i) such extension would carry out the 
                        purposes of this Act and would provide adequate 
                        protection for participants under the plan and 
                        their beneficiaries, and
                            ``(ii) the failure to permit such extension 
                        would--
                                    ``(I) result in a substantial risk 
                                to the voluntary continuation of the 
                                plan, or a substantial curtailment of 
                                pension benefit levels or employee 
                                compensation, and
                                    ``(II) be adverse to the interests 
                                of plan participants in the aggregate.
                    ``(C) Action by secretary of the treasury.--The 
                Secretary of the Treasury shall act upon any 
                application for an extension under this paragraph 
                within 180 days of the submission of such application. 
                If such Secretary rejects the application for an 
                extension under this paragraph, such Secretary shall 
                provide notice to the plan detailing the specific 
                reasons for the rejection, including references to the 
                criteria set forth above.
            ``(3) Advance notice.--
                    ``(A) In general.--The Secretary of the Treasury 
                shall, before granting an extension under this 
                subsection, require each applicant to provide evidence 
                satisfactory to such Secretary that the applicant has 
                provided notice of the filing of the application for 
                such extension to each affected party (as defined in 
                section 4001(a)(21)) with respect to the affected plan. 
                Such notice shall include a description of the extent 
                to which the plan is funded for benefits which are 
                guaranteed under title IV and for benefit liabilities.
                    ``(B) Consideration of relevant information.--The 
                Secretary of the Treasury shall consider any relevant 
                information provided by a person to whom notice was 
                given under paragraph (1).''.
    (b) Shortfall Funding Method.--
            (1) In general.--A multiemployer plan meeting the criteria 
        of paragraph (2) may adopt, use, or cease using, the shortfall 
        funding method and such adoption, use, or cessation of use of 
        such method, shall be deemed approved by the Secretary of the 
        Treasury under section 302(d)(1) of the Employee Retirement 
        Income Security Act of 1974 and section 412(d)(1) of the 
        Internal Revenue Code of 1986.
            (2) Criteria.--A multiemployer pension plan meets the 
        criteria of this clause if--
                    (A) the plan has not used the shortfall funding 
                method during the 5-year period ending on the day 
                before the date the plan is to use the method under 
                paragraph (1); and
                    (B) the plan is not operating under an amortization 
                period extension under section 304(d) of such Act and 
                did not operate under such an extension during such 5-
                year period.
            (3) Shortfall funding method defined.--For purposes of this 
        subsection, the term ``shortfall funding method'' means the 
        shortfall funding method described in Treasury Regulations 
        section 1.412(c)(1)-2 (26 C.F.R. 1.412(c)(1)-2).
            (4) Benefit restrictions to apply.--The benefit 
        restrictions under section 302(c)(7) of such Act and section 
        412(c)(7) of such Code shall apply during any period a 
        multiemployer plan is on the shortfall funding method pursuant 
        to this subsection.
            (5) Use of shortfall method not to preclude other 
        options.--Nothing in this subsection shall be construed to 
        affect a multiemployer plan's ability to adopt the shortfall 
        funding method with the Secretary's permission under otherwise 
        applicable regulations or to affect a multiemployer plan's 
        right to change funding methods, with or without the 
        Secretary's consent, as provided in applicable rules and 
        regulations.
    (c) Conforming Amendments.--
            (1) Section 301 of the Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1081) is amended by striking subsection 
        (d).
            (2) The table of contents in section 1 of such Act (as 
        amended by this Act) is amended by inserting after the item 
        relating to section 303 the following new item:

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

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

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

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

    ``Sec. 305.  (a) General Rule.--For purposes of this part, in the 
case of a multiemployer plan in effect on July 16, 2006--
            ``(1) if the plan is in endangered status--
                    ``(A) the plan sponsor shall adopt and implement a 
                funding improvement plan in accordance with the 
                requirements of subsection (c), and
                    ``(B) the requirements of subsection (d) shall 
                apply during the funding plan adoption period and the 
                funding improvement period, and
            ``(2) if the plan is in critical status--
                    ``(A) the plan sponsor shall adopt and implement a 
                rehabilitation plan in accordance with the requirements 
                of subsection (e), and
                    ``(B) the requirements of subsection (f) shall 
                apply during the rehabilitation plan adoption period 
                and the rehabilitation period.
    ``(b) Determination of Endangered and Critical Status.--For 
purposes of this section--
            ``(1) Endangered status.--A multiemployer plan is in 
        endangered status for a plan year if, as determined by the plan 
        actuary under paragraph (3), the plan is not in critical status 
        for the plan year and, as of the beginning of the plan year, 
        either--
                    ``(A) the plan's funded percentage for such plan 
                year is less than 80 percent, or
                    ``(B) the plan has an accumulated funding 
                deficiency for such plan year, or is projected to have 
                such an accumulated funding deficiency for any of the 6 
                succeeding plan years, taking into account any 
                extension of amortization periods under section 304(d).
        For purposes of this section, a plan shall be treated as in 
        seriously endangered status for a plan year if the plan is 
        described in both subparagraphs (A) and (B).
            ``(2) Critical status.--A multiemployer plan is in critical 
        status for a plan year if, as determined by the plan actuary 
        under paragraph (3), the plan is described in 1 or more of the 
        following subparagraphs as of the beginning of the plan year:
                    ``(A) A plan is described in this subparagraph if--
                            ``(i) the funded percentage of the plan is 
                        less than 65 percent, and
                            ``(ii) the sum of--
                                    ``(I) the fair market value of plan 
                                assets, plus
                                    ``(II) the present value of the 
                                reasonably anticipated employer 
                                contributions for the current plan year 
                                and each of the 6 succeeding plan 
                                years, assuming that the terms of all 
                                collective bargaining agreements 
                                pursuant to which the plan is 
                                maintained for the current plan year 
                                continue in effect for succeeding plan 
                                years,
                        is less than the present value of all 
                        nonforfeitable benefits projected to be payable 
                        under the plan during the current plan year and 
                        each of the 6 succeeding plan years (plus 
                        administrative expenses for such plan years).
                    ``(B) A plan is described in this subparagraph if--
                            ``(i) the plan has an accumulated funding 
                        deficiency for the current plan year, not 
                        taking into account any extension of 
                        amortization periods under section 304(d), or
                            ``(ii) the plan is projected to have an 
                        accumulated funding deficiency for any of the 3 
                        succeeding plan years (4 succeeding plan years 
                        if the funded percentage of the plan is 65 
                        percent or less), not taking into account any 
                        extension of amortization periods under section 
                        304(d).
                    ``(C) A plan is described in this subparagraph if--
                            ``(i)(I) the plan's normal cost for the 
                        current plan year, plus interest (determined at 
                        the rate used for determining costs under the 
                        plan) for the current plan year on the amount 
                        of unfunded benefit liabilities under the plan 
                        as of the last date of the preceding plan year, 
                        exceeds
                            ``(II) the present value of the reasonably 
                        anticipated employer and employee contributions 
                        for the current plan year,
                            ``(ii) the present value, as of the 
                        beginning of the current plan year, of 
                        nonforfeitable benefits of inactive 
                        participants is greater than the present value 
                        of nonforfeitable benefits of active 
                        participants, and
                            ``(iii) the plan has an accumulated funding 
                        deficiency for the current plan year, or is 
                        projected to have such a deficiency for any of 
                        the 4 succeeding plan years, not taking into 
                        account any extension of amortization periods 
                        under section 304(d).
                    ``(D) A plan is described in this subparagraph if 
                the sum of--
                            ``(i) the fair market value of plan assets, 
                        plus
                            ``(ii) the present value of the reasonably 
                        anticipated employer contributions for the 
                        current plan year and each of the 4 succeeding 
                        plan years, assuming that the terms of all 
                        collective bargaining agreements pursuant to 
                        which the plan is maintained for the current 
                        plan year continue in effect for succeeding 
                        plan years,
                is less than the present value of all benefits 
                projected to be payable under the plan during the 
                current plan year and each of the 4 succeeding plan 
                years (plus administrative expenses for such plan 
                years).
            ``(3) Annual certification by plan actuary.--
                    ``(A) In general.--Not later than the 90th day of 
                each plan year of a multiemployer plan, the plan 
                actuary shall certify to the Secretary of the Treasury 
                and to the plan sponsor--
                            ``(i) whether or not the plan is in 
                        endangered status for such plan year and 
                        whether or not the plan is or will be in 
                        critical status for such plan year, and
                            ``(ii) in the case of a plan which is in a 
                        funding improvement or rehabilitation period, 
                        whether or not the plan is making the scheduled 
                        progress in meeting the requirements of its 
                        funding improvement or rehabilitation plan.
                    ``(B) Actuarial projections of assets and 
                liabilities.--
                            ``(i) In general.--In making the 
                        determinations and projections under this 
                        subsection, the plan actuary shall make 
                        projections required for the current and 
                        succeeding plan years of the current value of 
                        the assets of the plan and the present value of 
                        all liabilities to participants and 
                        beneficiaries under the plan for the current 
                        plan year as of the beginning of such year. The 
                        actuary's projections shall be based on 
                        reasonable actuarial estimates, assumptions, 
                        and methods that, except as provided in clause 
                        (iii), offer the actuary's best estimate of 
                        anticipated experience under the plan. The 
                        projected present value of liabilities as of 
                        the beginning of such year shall be determined 
                        based on the most recent of either--
                                    ``(I) the actuarial statement 
                                required under section 103(d) with 
                                respect to the most recently filed 
                                annual report, or
                                    ``(II) the actuarial valuation for 
                                the preceding plan year.
                            ``(ii) Determinations of future 
                        contributions.--Any actuarial projection of 
                        plan assets shall assume--
                                    ``(I) reasonably anticipated 
                                employer contributions for the current 
                                and succeeding plan years, assuming 
                                that the terms of the one or more 
                                collective bargaining agreements 
                                pursuant to which the plan is 
                                maintained for the current plan year 
                                continue in effect for succeeding plan 
                                years, or
                                    ``(II) that employer contributions 
                                for the most recent plan year will 
                                continue indefinitely, but only if the 
                                plan actuary determines there have been 
                                no significant demographic changes that 
                                would make such assumption 
                                unreasonable.
                            ``(iii) Projected industry activity.--Any 
                        projection of activity in the industry or 
                        industries covered by the plan, including 
                        future covered employment and contribution 
                        levels, shall be based on information provided 
                        by the plan sponsor, which shall act reasonably 
                        and in good faith.
                    ``(C) Penalty for failure to secure timely 
                actuarial certification.--Any failure of the plan's 
                actuary to certify the plan's status under this 
                subsection by the date specified in subparagraph (A) 
                shall be treated for purposes of section 502(c)(2) as a 
                failure or refusal by the plan administrator to file 
                the annual report required to be filed with the 
                Secretary under section 101(b)(4).
                    ``(D) Notice.--
                            ``(i) In general.--In any case in which it 
                        is certified under subparagraph (A) that a 
                        multiemployer plan is or will be in endangered 
                        or critical status for a plan year, the plan 
                        sponsor shall, not later than 30 days after the 
                        date of the certification, provide notification 
                        of the endangered or critical status to the 
                        participants and beneficiaries, the bargaining 
                        parties, the Pension Benefit Guaranty 
                        Corporation, and the Secretary.
                            ``(ii) Plans in critical status.--If it is 
                        certified under subparagraph (A) that a 
                        multiemployer plan is or will be in critical 
                        status, the plan sponsor shall include in the 
                        notice under clause (i) an explanation of the 
                        possibility that--
                                    ``(I) adjustable benefits (as 
                                defined in subsection (e)(8)) may be 
                                reduced, and
                                    ``(II) such reductions may apply to 
                                participants and beneficiaries whose 
                                benefit commencement date is on or 
                                after the date such notice is provided 
                                for the first plan year in which the 
                                plan is in critical status.
                            ``(iii) Model notice.--The Secretary shall 
                        prescribe a model notice that a multiemployer 
                        plan may use to satisfy the requirements under 
                        clause (ii).
    ``(c) Funding Improvement Plan Must Be Adopted for Multiemployer 
Plans in Endangered Status.--
            ``(1) In general.--In any case in which a multiemployer 
        plan is in endangered status for a plan year, the plan sponsor, 
        in accordance with this subsection--
                    ``(A) shall adopt a funding improvement plan not 
                later than 240 days following the required date for the 
                actuarial certification of endangered status under 
                subsection (b)(3)(A), and
                    ``(B) within 30 days after the adoption of the 
                funding improvement plan--
                            ``(i) shall provide to the bargaining 
                        parties 1 or more schedules showing revised 
                        benefit structures, revised contribution 
                        structures, or both, which, if adopted, may 
                        reasonably be expected to enable the 
                        multiemployer plan to meet the applicable 
                        benchmarks in accordance with the funding 
                        improvement plan, including--
                                    ``(I) one proposal for reductions 
                                in the amount of future benefit 
                                accruals necessary to achieve the 
                                applicable benchmarks, assuming no 
                                amendments increasing contributions 
                                under the plan (other than amendments 
                                increasing contributions necessary to 
                                achieve the applicable benchmarks after 
                                amendments have reduced future benefit 
                                accruals to the maximum extent 
                                permitted by law), and
                                    ``(II) one proposal for increases 
                                in contributions under the plan 
                                necessary to achieve the applicable 
                                benchmarks, assuming no amendments 
                                reducing future benefit accruals under 
                                the plan, and
                            ``(ii) may, if the plan sponsor deems 
                        appropriate, prepare and provide the bargaining 
                        parties with additional information relating to 
                        contribution rates or benefit reductions, 
                        alternative schedules, or other information 
                        relevant to achieving the applicable benchmarks 
                        in accordance with the funding improvement 
                        plan.
                For purposes of this section, the term `applicable 
                benchmarks' means the requirements applicable to the 
                multiemployer plan under paragraph (3) (as modified by 
                paragraph (5)).
            ``(2) Exception for years after process begins.--Paragraph 
        (1) shall not apply to a plan year if such year is in a funding 
        plan adoption period or funding improvement period by reason of 
        the plan being in endangered status for a preceding plan year. 
        For purposes of this section, such preceding plan year shall be 
        the initial determination year with respect to the funding 
        improvement plan to which it relates.
            ``(3) Funding improvement plan.--For purposes of this 
        section--
                    ``(A) In general.--A funding improvement plan is a 
                plan which consists of the actions, including options 
                or a range of options to be proposed to the bargaining 
                parties, formulated to provide, based on reasonably 
                anticipated experience and reasonable actuarial 
                assumptions, for the attainment by the plan during the 
                funding improvement period of the following 
                requirements:
                            ``(i) Increase in plan's funding 
                        percentage.--The plan's funded percentage as of 
                        the close of the funding improvement period 
                        equals or exceeds a percentage equal to the sum 
                        of--
                                    ``(I) such percentage as of the 
                                beginning of such period, plus
                                    ``(II) 33 percent of the difference 
                                between 100 percent and the percentage 
                                under subclause (I).
                            ``(ii) Avoidance of accumulated funding 
                        deficiencies.--No accumulated funding 
                        deficiency for any plan year during the funding 
                        improvement period (taking into account any 
                        extension of amortization periods under section 
                        304(d)).
                    ``(B) Seriously endangered plans.--In the case of a 
                plan in seriously endangered status, except as provided 
                in paragraph (5), subparagraph (A)(i)(II) shall be 
                applied by substituting `20 percent' for `33 percent'.
            ``(4) Funding improvement period.--For purposes of this 
        section--
                    ``(A) In general.--The funding improvement period 
                for any funding improvement plan adopted pursuant to 
                this subsection is the 10-year period beginning on the 
                first day of the first plan year of the multiemployer 
                plan beginning after the earlier of--
                            ``(i) the second anniversary of the date of 
                        the adoption of the funding improvement plan, 
                        or
                            ``(ii) the expiration of the collective 
                        bargaining agreements in effect on the due date 
                        for the actuarial certification of endangered 
                        status for the initial determination year under 
                        subsection (b)(3)(A) and covering, as of such 
                        due date, at least 75 percent of the active 
                        participants in such multiemployer plan.
                    ``(B) Seriously endangered plans.--In the case of a 
                plan in seriously endangered status, except as provided 
                in paragraph (5), subparagraph (A) shall be applied by 
                substituting `15-year period' for `10-year period'.
                    ``(C) Coordination with changes in status.--
                            ``(i) Plans no longer in endangered 
                        status.--If the plan's actuary certifies under 
                        subsection (b)(3)(A) for a plan year in any 
                        funding plan adoption period or funding 
                        improvement period that the plan is no longer 
                        in endangered status and is not in critical 
                        status, the funding plan adoption period or 
                        funding improvement period, whichever is 
                        applicable, shall end as of the close of the 
                        preceding plan year.
                            ``(ii) Plans in critical status.--If the 
                        plan's actuary certifies under subsection 
                        (b)(3)(A) for a plan year in any funding plan 
                        adoption period or funding improvement period 
                        that the plan is in critical status, the 
                        funding plan adoption period or funding 
                        improvement period, whichever is applicable, 
                        shall end as of the close of the plan year 
                        preceding the first plan year in the 
                        rehabilitation period with respect to such 
                        status.
                    ``(D) Plans in endangered status at end of 
                period.--If the plan's actuary certifies under 
                subsection (b)(3)(A) for the first plan year following 
                the close of the period described in subparagraph (A) 
                that the plan is in endangered status, the provisions 
                of this subsection and subsection (d) shall be applied 
                as if such first plan year were an initial 
                determination year, except that the plan may not be 
                amended in a manner inconsistent with the funding 
                improvement plan in effect for the preceding plan year 
                until a new funding improvement plan is adopted.
            ``(5) Special rules for seriously endangered plans more 
        than 70 percent funded.--
                    ``(A) In general.--If the funded percentage of a 
                plan in seriously endangered status was more than 70 
                percent as of the beginning of the initial 
                determination year--
                            ``(i) paragraphs (3)(B) and (4)(B) shall 
                        apply only if the plan's actuary certifies, 
                        within 30 days after the certification under 
                        subsection (b)(3)(A) for the initial 
                        determination year, that, based on the terms of 
                        the plan and the collective bargaining 
                        agreements in effect at the time of such 
                        certification, the plan is not projected to 
                        meet the requirements of paragraph (3)(A) 
                        (without regard to paragraphs (3)(B) and 
                        (4)(B)), and
                            ``(ii) if there is a certification under 
                        clause (i), the plan may, in formulating its 
                        funding improvement plan, only take into 
                        account the rules of paragraph (3)(B) and 
                        (4)(B) for plan years in the funding 
                        improvement period beginning on or before the 
                        date on which the last of the collective 
                        bargaining agreements described in paragraph 
                        (4)(A)(ii) expires.
                    ``(B) Special rule after expiration of 
                agreements.--Notwithstanding subparagraph (A)(ii), if, 
                for any plan year ending after the date described in 
                subparagraph (A)(ii), the plan actuary certifies (at 
                the time of the annual certification under subsection 
                (b)(3)(A) for such plan year) that, based on the terms 
                of the plan and collective bargaining agreements in 
                effect at the time of that annual certification, the 
                plan is not projected to be able to meet the 
                requirements of paragraph (3)(A) (without regard to 
                paragraphs (3)(B) and (4)(B)), paragraphs (3)(B) and 
                (4)(B) shall continue to apply for such year.
            ``(6) Updates to funding improvement plan and schedules.--
                    ``(A) Funding improvement plan.--The plan sponsor 
                shall annually update the funding improvement plan and 
                shall file the update with the plan's annual report 
                under section 104.
                    ``(B) Schedules.--The plan sponsor shall annually 
                update any schedule of contribution rates provided 
                under this subsection to reflect the experience of the 
                plan.
                    ``(C) Duration of schedule.--A schedule of 
                contribution rates provided by the plan sponsor and 
                relied upon by bargaining parties in negotiating a 
                collective bargaining agreement shall remain in effect 
                for the duration of that collective bargaining 
                agreement.
            ``(7) Imposition of default schedule where failure to adopt 
        funding improvement plan.--
                    ``(A) In general.--If--
                            ``(i) a collective bargaining agreement 
                        providing for contributions under a 
                        multiemployer plan that was in effect at the 
                        time the plan entered endangered status 
                        expires, and
                            ``(ii) after receiving one or more 
                        schedules from the plan sponsor under paragraph 
                        (1)(B), the bargaining parties with respect to 
                        such agreement fail to agree on changes to 
                        contribution or benefit schedules necessary to 
                        meet the applicable benchmarks in accordance 
                        with the funding improvement plan,
                the plan sponsor shall implement the schedule described 
                in paragraph (1)(B)(i)(I) beginning on the date 
                specified in subparagraph (B).
                    ``(B) Date of implementation.--The date specified 
                in this subparagraph is the earlier of the date--
                            ``(i) on which the Secretary certifies that 
                        the parties are at an impasse, or
                            ``(ii) which is 180 days after the date on 
                        which the collective bargaining agreement 
                        described in subparagraph (A) expires.
            ``(8) Funding plan adoption period.--For purposes of this 
        section, the term `funding plan adoption period' means the 
        period beginning on the date of the certification under 
        subsection (b)(3)(A) for the initial determination year and 
        ending on the day before the first day of the funding 
        improvement period.
    ``(d) Rules for Operation of Plan During Adoption and Improvement 
Periods.--
            ``(1) Special rules for plan adoption period.--During the 
        funding plan adoption period--
                    ``(A) the plan sponsor may not accept a collective 
                bargaining agreement or participation agreement with 
                respect to the multiemployer plan that provides for--
                            ``(i) a reduction in the level of 
                        contributions for any participants,
                            ``(ii) a suspension of contributions with 
                        respect to any period of service, or
                            ``(iii) any new direct or indirect 
                        exclusion of younger or newly hired employees 
                        from plan participation,
                    ``(B) no amendment of the plan which increases the 
                liabilities of the plan by reason of any increase in 
                benefits, any change in the accrual of benefits, or any 
                change in the rate at which benefits become 
                nonforfeitable under the plan may be adopted unless the 
                amendment is required as a condition of qualification 
                under part I of subchapter D of chapter 1 of the 
                Internal Revenue Code of 1986 or to comply with other 
                applicable law, and
                    ``(C) in the case of a plan in seriously endangered 
                status, the plan sponsor shall take all reasonable 
                actions which are consistent with the terms of the plan 
                and applicable law and which are expected, based on 
                reasonable assumptions, to achieve--
                            ``(i) an increase in the plan's funded 
                        percentage, and
                            ``(ii) postponement of an accumulated 
                        funding deficiency for at least 1 additional 
                        plan year.
        Actions under subparagraph (C) include applications for 
        extensions of amortization periods under section 304(d), use of 
        the shortfall funding method in making funding standard account 
        computations, amendments to the plan's benefit structure, 
        reductions in future benefit accruals, and other reasonable 
        actions consistent with the terms of the plan and applicable 
        law.
            ``(2) Compliance with funding improvement plan.--
                    ``(A) In general.--A plan may not be amended after 
                the date of the adoption of a funding improvement plan 
                so as to be inconsistent with the funding improvement 
                plan.
                    ``(B) No reduction in contributions.--A plan 
                sponsor may not during any funding improvement period 
                accept a collective bargaining agreement or 
                participation agreement with respect to the 
                multiemployer plan that provides for--
                            ``(i) a reduction in the level of 
                        contributions for any participants,
                            ``(ii) a suspension of contributions with 
                        respect to any period of service, or
                            ``(iii) any new direct or indirect 
                        exclusion of younger or newly hired employees 
                        from plan participation.
                    ``(C) Special rules for benefit increases.--A plan 
                may not be amended after the date of the adoption of a 
                funding improvement plan so as to increase benefits, 
                including future benefit accruals, unless the plan 
                actuary certifies that the benefit increase is 
                consistent with the funding improvement plan and is 
                paid for out of contributions not required by the 
                funding improvement plan to meet the applicable 
                benchmark in accordance with the schedule contemplated 
                in the funding improvement plan.
    ``(e) Rehabilitation Plan Must Be Adopted for Multiemployer Plans 
in Critical Status.--
            ``(1) In general.--In any case in which a multiemployer 
        plan is in critical status for a plan year, the plan sponsor, 
        in accordance with this subsection--
                    ``(A) shall adopt a rehabilitation plan not later 
                than 240 days following the required date for the 
                actuarial certification of critical status under 
                subsection (b)(3)(A), and
                    ``(B) within 30 days after the adoption of the 
                rehabilitation plan--
                            ``(i) shall provide to the bargaining 
                        parties 1 or more schedules showing revised 
                        benefit structures, revised contribution 
                        structures, or both, which, if adopted, may 
                        reasonably be expected to enable the 
                        multiemployer plan to emerge from critical 
                        status in accordance with the rehabilitation 
                        plan, and
                            ``(ii) may, if the plan sponsor deems 
                        appropriate, prepare and provide the bargaining 
                        parties with additional information relating to 
                        contribution rates or benefit reductions, 
                        alternative schedules, or other information 
                        relevant to emerging from critical status in 
                        accordance with the rehabilitation plan.
        The schedule or schedules described in subparagraph (B)(i) 
        shall reflect reductions in future benefit accruals and 
        adjustable benefits, and increases in contributions, that the 
        plan sponsor determines are reasonably necessary to emerge from 
        critical status. One schedule shall be designated as the 
        default schedule and such schedule shall assume that there are 
        no increases in contributions under the plan other than the 
        increases necessary to emerge from critical status after future 
        benefit accruals and other benefits (other than benefits the 
        reduction or elimination of which are not permitted under 
        section 204(g)) have been reduced to the maximum extent 
        permitted by law.
            ``(2) Exception for years after process begins.--Paragraph 
        (1) shall not apply to a plan year if such year is in a 
        rehabilitation plan adoption period or rehabilitation period by 
        reason of the plan being in critical status for a preceding 
        plan year. For purposes of this section, such preceding plan 
        year shall be the initial critical year with respect to the 
        rehabilitation plan to which it relates.
            ``(3) Rehabilitation plan.--For purposes of this section--
                    ``(A) In general.--A rehabilitation plan is a plan 
                which consists of--
                            ``(i) actions, including options or a range 
                        of options to be proposed to the bargaining 
                        parties, formulated, based on reasonably 
                        anticipated experience and reasonable actuarial 
                        assumptions, to enable the plan to cease to be 
                        in critical status by the end of the 
                        rehabilitation period and may include 
                        reductions in plan expenditures (including plan 
                        mergers and consolidations), reductions in 
                        future benefit accruals or increases in 
                        contributions, if agreed to by the bargaining 
                        parties, or any combination of such actions, or
                            ``(ii) if the plan sponsor determines that, 
                        based on reasonable actuarial assumptions and 
                        upon exhaustion of all reasonable measures, the 
                        plan can not reasonably be expected to emerge 
                        from critical status by the end of the 
                        rehabilitation period, reasonable measures to 
                        emerge from critical status at a later time or 
                        to forestall possible insolvency (within the 
                        meaning of section 4245).
                A rehabilitation plan must provide annual standards for 
                meeting the requirements of such rehabilitation plan. 
                Such plan shall also include the schedules required to 
                be provided under paragraph (1)(B)(i) and if clause 
                (ii) applies, shall set forth the alternatives 
                considered, explain why the plan is not reasonably 
                expected to emerge from critical status by the end of 
                the rehabilitation period, and specify when, if ever, 
                the plan is expected to emerge from critical status in 
                accordance with the rehabilitation plan.
                    ``(B) Updates to rehabilitation plan and 
                schedules.--
                            ``(i) Rehabilitation plan.--The plan 
                        sponsor shall annually update the 
                        rehabilitation plan and shall file the update 
                        with the plan's annual report under section 
                        104.
                            ``(ii) Schedules.--The plan sponsor shall 
                        annually update any schedule of contribution 
                        rates provided under this subsection to reflect 
                        the experience of the plan.
                            ``(iii) Duration of schedule.--A schedule 
                        of contribution rates provided by the plan 
                        sponsor and relied upon by bargaining parties 
                        in negotiating a collective bargaining 
                        agreement shall remain in effect for the 
                        duration of that collective bargaining 
                        agreement.
                    ``(C) Imposition of default schedule where failure 
                to adopt rehabilitation plan.--
                            ``(i) In general.--If--
                                    ``(I) a collective bargaining 
                                agreement providing for contributions 
                                under a multiemployer plan that was in 
                                effect at the time the plan entered 
                                critical status expires, and
                                    ``(II) after receiving one or more 
                                schedules from the plan sponsor under 
                                paragraph (1)(B), the bargaining 
                                parties with respect to such agreement 
                                fail to adopt a contribution or benefit 
                                schedules with terms consistent with 
                                the rehabilitation plan and the 
                                schedule from the plan sponsor under 
                                paragraph (1)(B)(i),
                        the plan sponsor shall implement the default 
                        schedule described in the last sentence of 
                        paragraph (1) beginning on the date specified 
                        in clause (ii).
                            ``(ii) Date of implementation.--The date 
                        specified in this clause is the earlier of the 
                        date--
                                    ``(I) on which the Secretary 
                                certifies that the parties are at an 
                                impasse, or
                                    ``(II) which is 180 days after the 
                                date on which the collective bargaining 
                                agreement described in clause (i) 
                                expires.
            ``(4) Rehabilitation period.--For purposes of this 
        section--
                    ``(A) In general.--The rehabilitation period for a 
                plan in critical status is the 10-year period beginning 
                on the first day of the first plan year of the 
                multiemployer plan following the earlier of--
                            ``(i) the second anniversary of the date of 
                        the adoption of the rehabilitation plan, or
                            ``(ii) the expiration of the collective 
                        bargaining agreements in effect on the date of 
                        the due date for the actuarial certification of 
                        critical status for the initial critical year 
                        under subsection (a)(1) and covering, as of 
                        such date at least 75 percent of the active 
                        participants in such multiemployer plan.
                If a plan emerges from critical status as provided 
                under subparagraph (B) before the end of such 10-year 
                period, the rehabilitation period shall end with the 
                plan year preceding the plan year for which the 
                determination under subparagraph (B) is made.
                    ``(B) Emergence.--A plan in critical status shall 
                remain in such status until a plan year for which the 
                plan actuary certifies, in accordance with subsection 
                (b)(3)(A), that the plan is not projected to have an 
                accumulated funding deficiency for the plan year or any 
                of the 9 succeeding plan years, without regard to the 
                use of the shortfall method and taking into account any 
                extension of amortization periods under section 304(d).
            ``(5) Rehabilitation plan adoption period.--For purposes of 
        this section, the term `rehabilitation plan adoption period' 
        means the period beginning on the date of the certification 
        under subsection (b)(3)(A) for the initial critical year and 
        ending on the day before the first day of the rehabilitation 
        period.
            ``(6) Limitation on reduction in rates of future 
        accruals.--Any reduction in the rate of future accruals under 
        the default schedule described in paragraph (1)(B)(i) shall not 
        reduce the rate of future accruals below--
                    ``(A) a monthly benefit (payable as a single life 
                annuity commencing at the participant's normal 
                retirement age) equal to 1 percent of the contributions 
                required to be made with respect to a participant, or 
                the equivalent standard accrual rate for a participant 
                or group of participants under the collective 
                bargaining agreements in effect as of the first day of 
                the initial critical year, or
                    ``(B) if lower, the accrual rate under the plan on 
                such first day.
        The equivalent standard accrual rate shall be determined by the 
        plan sponsor based on the standard or average contribution base 
        units which the plan sponsor determines to be representative 
        for active participants and such other factors as the plan 
        sponsor determines to be relevant. Nothing in this paragraph 
        shall be construed as limiting the ability of the plan sponsor 
        to prepare and provide the bargaining parties with alternative 
        schedules to the default schedule that established lower or 
        higher accrual and contribution rates than the rates otherwise 
        described in this paragraph.
            ``(7) Automatic employer surcharge.--
                    ``(A) Imposition of surcharge.--Each employer 
                otherwise obligated to make contributions for the 
                initial critical year shall be obligated to pay to the 
                plan for such year a surcharge equal to 5 percent of 
                the contributions otherwise required under the 
                applicable collective bargaining agreement (or other 
                agreement pursuant to which the employer contributes). 
                For each succeeding plan year in which the plan is in 
                critical status for a consecutive period of years 
                beginning with the initial critical year, the surcharge 
                shall be 10 percent of the contributions otherwise so 
                required.
                    ``(B) Enforcement of surcharge.--The surcharges 
                under subparagraph (A) shall be due and payable on the 
                same schedule as the contributions on which the 
                surcharges are based. Any failure to make a surcharge 
                payment shall be treated as a delinquent contribution 
                under section 515 and shall be enforceable as such.
                    ``(C) Surcharge to terminate upon collective 
                bargaining agreement renegotiation.--The surcharge 
                under this paragraph shall cease to be effective with 
                respect to employees covered by a collective bargaining 
                agreement (or other agreement pursuant to which the 
                employer contributes), beginning on the effective date 
                of a collective bargaining agreement (or other such 
                agreement) that includes terms consistent with a 
                schedule presented by the plan sponsor under paragraph 
                (1)(B)(i), as modified under subparagraph (B) of 
                paragraph (3).
                    ``(D) Surcharge not to apply until employer 
                receives notice.--The surcharge under this paragraph 
                shall not apply to an employer until 30 days after the 
                employer has been notified by the plan sponsor that the 
                plan is in critical status and that the surcharge is in 
                effect.
                    ``(E) Surcharge not to generate increased benefit 
                accruals.--Notwithstanding any provision of a plan to 
                the contrary, the amount of any surcharge under this 
                paragraph shall not be the basis for any benefit 
                accrual under the plan.
            ``(8) Benefit adjustments.--
                    ``(A) Adjustable benefits.--
                            ``(i) In general.--Notwithstanding section 
                        204(g), the plan sponsor shall, subject to the 
                        notice requirements in subparagraph (C), make 
                        any reductions to adjustable benefits which the 
                        plan sponsor deems appropriate, based upon the 
                        outcome of collective bargaining over the 
                        schedule or schedules provided under paragraph 
                        (1)(B)(i).
                            ``(ii) Exception for retirees.--Except in 
                        the case of adjustable benefits described in 
                        clause (iv)(III), the plan sponsor of a plan in 
                        critical status shall not reduce adjustable 
                        benefits of any participant or beneficiary 
                        whose benefit commencement date is before the 
                        date on which the plan provides notice to the 
                        participant or beneficiary under subsection 
                        (b)(3)(D) for the initial critical year.
                            ``(iii) Plan sponsor flexibility.--The plan 
                        sponsor shall include in the schedules provided 
                        to the bargaining parties an allowance for 
                        funding the benefits of participants with 
                        respect to whom contributions are not currently 
                        required to be made, and shall reduce their 
                        benefits to the extent permitted under this 
                        title and considered appropriate by the plan 
                        sponsor based on the plan's then current 
                        overall funding status.
                            ``(iv) Adjustable benefit defined.--For 
                        purposes of this paragraph, the term 
                        `adjustable benefit' means--
                                    ``(I) benefits, rights, and 
                                features under the plan, including 
                                post-retirement death benefits, 60-
                                month guarantees, disability benefits 
                                not yet in pay status, and similar 
                                benefits,
                                    ``(II) any early retirement benefit 
                                or retirement-type subsidy (within the 
                                meaning of section 204(g)(2)(A)) and 
                                any benefit payment option (other than 
                                the qualified joint-and survivor 
                                annuity), and
                                    ``(III) benefit increases that 
                                would not be eligible for a guarantee 
                                under section 4022A on the first day of 
                                initial critical year because the 
                                increases were adopted (or, if later, 
                                took effect) less than 60 months before 
                                such first day.
                    ``(B) Normal retirement benefits protected.--Except 
                as provided in subparagraph (A)(iv)(III), nothing in 
                this paragraph shall be construed to permit a plan to 
                reduce the level of a participant's accrued benefit 
                payable at normal retirement age.
                    ``(C) Notice requirements.--
                            ``(i) In general.--No reduction may be made 
                        to adjustable benefits under subparagraph (A) 
                        unless notice of such reduction has been given 
                        at least 30 days before the general effective 
                        date of such reduction for all participants and 
                        beneficiaries to--
                                    ``(I) plan participants and 
                                beneficiaries,
                                    ``(II) each employer who has an 
                                obligation to contribute (within the 
                                meaning of section 4212(a)) under the 
                                plan, and
                                    ``(III) each employee organization 
                                which, for purposes of collective 
                                bargaining, represents plan 
                                participants employed by such an 
                                employer.
                            ``(ii) Content of notice.--The notice under 
                        clause (i) shall contain--
                                    ``(I) sufficient information to 
                                enable participants and beneficiaries 
                                to understand the effect of any 
                                reduction on their benefits, including 
                                an estimate (on an annual or monthly 
                                basis) of any affected adjustable 
                                benefit that a participant or 
                                beneficiary would otherwise have been 
                                eligible for as of the general 
                                effective date described in clause (i), 
                                and
                                    ``(II) information as to the rights 
                                and remedies of plan participants and 
                                beneficiaries as well as how to contact 
                                the Department of Labor for further 
                                information and assistance where 
                                appropriate.
                            ``(iii) Form and manner.--Any notice under 
                        clause (i)--
                                    ``(I) shall be provided in a form 
                                and manner prescribed in regulations of 
                                the Secretary,
                                    ``(II) shall be written in a manner 
                                so as to be understood by the average 
                                plan participant, and
                                    ``(III) may be provided in written, 
                                electronic, or other appropriate form 
                                to the extent such form is reasonably 
                                accessible to persons to whom the 
                                notice is required to be provided.
                        The Secretary shall in the regulations 
                        prescribed under subclause (I) establish a 
                        model notice that a plan sponsor may use to 
                        meet the requirements of this subparagraph.
            ``(9) Adjustments disregarded in withdrawal liability 
        determination.--
                    ``(A) Benefit reductions.--Any benefit reductions 
                under this subsection shall be disregarded in 
                determining a plan's unfunded vested benefits for 
                purposes of determining an employer's withdrawal 
                liability under section 4201.
                    ``(B) Surcharges.--Any surcharges under paragraph 
                (7) shall be disregarded in determining an employer's 
                withdrawal liability under section 4211, except for 
                purposes of determining the unfunded vested benefits 
                attributable to an employer under section 4211(c)(4) or 
                a comparable method approved under section 4211(c)(5).
                    ``(C) Simplified calculations.--The Pension Benefit 
                Guaranty Corporation shall prescribe simplified methods 
                for the application of this paragraph in determining 
                withdrawal liability.
    ``(f) Rules for Operation of Plan During Adoption and 
Rehabilitation Period.--
            ``(1) Compliance with rehabilitation plan.--
                    ``(A) In general.--A plan may not be amended after 
                the date of the adoption of a rehabilitation plan under 
                subsection (e) so as to be inconsistent with the 
                rehabilitation plan.
                    ``(B) Special rules for benefit increases.--A plan 
                may not be amended after the date of the adoption of a 
                rehabilitation plan under subsection (e) so as to 
                increase benefits, including future benefit accruals, 
                unless the plan actuary certifies that such increase is 
                paid for out of additional contributions not 
                contemplated by the rehabilitation plan, and, after 
                taking into account the benefit increase, the 
                multiemployer plan still is reasonably expected to 
                emerge from critical status by the end of the 
                rehabilitation period on the schedule contemplated in 
                the rehabilitation plan.
            ``(2) Restriction on lump sums and similar benefits.--
                    ``(A) In general.--Effective on the date the notice 
                of certification of the plan's critical status for the 
                initial critical year under subsection (b)(3)(D) is 
                sent, and notwithstanding section 204(g), the plan 
                shall not pay--
                            ``(i) any payment, in excess of the monthly 
                        amount paid under a single life annuity (plus 
                        any social security supplements described in 
                        the last sentence of section 204(b)(1)(G)),
                            ``(ii) any payment for the purchase of an 
                        irrevocable commitment from an insurer to pay 
                        benefits, and
                            ``(iii) any other payment specified by the 
                        Secretary of the Treasury by regulations.
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                to a benefit which under section 203(e) may be 
                immediately distributed without the consent of the 
                participant or to any makeup payment in the case of a 
                retroactive annuity starting date or any similar 
                payment of benefits owed with respect to a prior 
                period.
            ``(3) Adjustments disregarded in withdrawal liability 
        determination.--Any benefit reductions under this subsection 
        shall be disregarded in determining a plan's unfunded vested 
        benefits for purposes of determining an employer's withdrawal 
        liability under section 4201.
            ``(4) Special rules for plan adoption period.--During the 
        rehabilitation plan adoption period--
                    ``(A) the plan sponsor may not accept a collective 
                bargaining agreement or participation agreement with 
                respect to the multiemployer plan that provides for--
                            ``(i) a reduction in the level of 
                        contributions for any participants,
                            ``(ii) a suspension of contributions with 
                        respect to any period of service, or
                            ``(iii) any new direct or indirect 
                        exclusion of younger or newly hired employees 
                        from plan participation, and
                    ``(B) no amendment of the plan which increases the 
                liabilities of the plan by reason of any increase in 
                benefits, any change in the accrual of benefits, or any 
                change in the rate at which benefits become 
                nonforfeitable under the plan may be adopted unless the 
                amendment is required as a condition of qualification 
                under part I of subchapter D of chapter 1 of the 
                Internal Revenue Code of 1986 or to comply with other 
                applicable law.
    ``(g) Expedited Resolution of Plan Sponsor Decisions.--If, within 
60 days of the due date for adoption of a funding improvement plan or a 
rehabilitation plan under subsection (e), the plan sponsor of a plan in 
endangered status or a plan in critical status has not agreed on a 
funding improvement plan or rehabilitation plan, then any member of the 
board or group that constitutes the plan sponsor may require that the 
plan sponsor enter into an expedited dispute resolution procedure for 
the development and adoption of a funding improvement plan or 
rehabilitation plan.
    ``(h) Nonbargained Participation.--
            ``(1) Both bargained and nonbargained employee-
        participants.--In the case of an employer that contributes to a 
        multiemployer plan with respect to both employees who are 
        covered by one or more collective bargaining agreements and 
        employees who are not so covered, if the plan is in endangered 
        status or in critical status, benefits of and contributions for 
        the nonbargained employees, including surcharges on those 
        contributions, shall be determined as if those nonbargained 
        employees were covered under the first to expire of the 
        employer's collective bargaining agreements in effect when the 
        plan entered endangered or critical status.
            ``(2) Nonbargained employees only.--In the case of an 
        employer that contributes to a multiemployer plan only with 
        respect to employees who are not covered by a collective 
        bargaining agreement, this section shall be applied as if the 
        employer were the bargaining party, and its participation 
        agreement with the plan were a collective bargaining agreement 
        with a term ending on the first day of the plan year beginning 
        after the employer is provided the schedule or schedules 
        described in subsections (c) and (e).
    ``(i) Definitions; Actuarial Method.--For purposes of this 
section--
            ``(1) Bargaining party.--The term `bargaining party' 
        means--
                    ``(A)(i) except as provided in clause (ii), an 
                employer who has an obligation to contribute under the 
                plan; or
                    ``(ii) in the case of a plan described under 
                section 404(c) of the Internal Revenue Code of 1986, or 
                a continuation of such a plan, the association of 
                employers that is the employer settlor of the plan; and
                    ``(B) an employee organization which, for purposes 
                of collective bargaining, represents plan participants 
                employed by an employer who has an obligation to 
                contribute under the plan.
            ``(2) Funded percentage.--The term `funded percentage' 
        means the percentage equal to a fraction--
                    ``(A) the numerator of which is the value of the 
                plan's assets, as determined under section 304(c)(2), 
                and
                    ``(B) the denominator of which is the accrued 
                liability of the plan, determined using actuarial 
                assumptions described in section 304(c)(3).
            ``(3) Accumulated funding deficiency.--The term 
        `accumulated funding deficiency' has the meaning given such 
        term in section 304(a).
            ``(4) Active participant.--The term `active participant' 
        means, in connection with a multiemployer plan, a participant 
        who is in covered service under the plan.
            ``(5) Inactive participant.--The term `inactive 
        participant' means, in connection with a multiemployer plan, a 
        participant, or the beneficiary or alternate payee of a 
        participant, who--
                    ``(A) is not in covered service under the plan, and
                    ``(B) is in pay status under the plan or has a 
                nonforfeitable right to benefits under the plan.
            ``(6) Pay status.--A person is in pay status under a 
        multiemployer plan if--
                    ``(A) at any time during the current plan year, 
                such person is a participant or beneficiary under the 
                plan and is paid an early, late, normal, or disability 
                retirement benefit under the plan (or a death benefit 
                under the plan related to a retirement benefit), or
                    ``(B) to the extent provided in regulations of the 
                Secretary of the Treasury, such person is entitled to 
                such a benefit under the plan.
            ``(7) Obligation to contribute.--The term `obligation to 
        contribute' has the meaning given such term under section 
        4212(a).
            ``(8) Actuarial method.--Notwithstanding any other 
        provision of this section, the actuary's determinations with 
        respect to a plan's normal cost, actuarial accrued liability, 
        and improvements in a plan's funded percentage under this 
        section shall be based upon the unit credit funding method 
        (whether or not that method is used for the plan's actuarial 
        valuation).
            ``(9) Plan sponsor.--In the case of a plan described under 
        section 404(c) of the Internal Revenue Code of 1986, or a 
        continuation of such a plan, the term `plan sponsor' means the 
        bargaining parties described under paragraph (1).
            ``(10) Benefit commencement date.--The term `benefit 
        commencement date' means the annuity starting date (or in the 
        case of a retroactive annuity starting date, the date on which 
        benefit payments begin).''.
    (b) Enforcement.--Section 502 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1132) is amended--
            (1) in subsection (a)(6) by striking ``(6), or (7)'' and 
        inserting ``(6), (7), or (8)'';
            (2) by redesignating subsection (c)(8) as subsection 
        (c)(9); and
            (3) by inserting after subsection (c)(7) the following new 
        paragraph:
            ``(8) The Secretary may assess against any plan sponsor of 
        a multiemployer plan a civil penalty of not more than $1,100 
        per day--
                    ``(A) for each violation by such sponsor of the 
                requirement under section 305 to adopt by the deadline 
                established in that section a funding improvement plan 
                or rehabilitation plan with respect to a multiemployer 
                which is in endangered or critical status, or
                    ``(B) in the case of a plan in endangered status 
                which is not in seriously endangered status, for 
                failure by the plan to meet the applicable benchmarks 
                under section 305 by the end of the funding improvement 
                period with respect to the plan.''.
    (c) Cause of Action To Compel Adoption or Implementation of Funding 
Improvement or Rehabilitation Plan.--Section 502(a) of the Employee 
Retirement Income Security Act of 1974 is amended by striking ``or'' at 
the end of paragraph (8), by striking the period at the end of 
paragraph (9) and inserting ``; or'' and by adding at the end the 
following:
            ``(10) in the case of a multiemployer plan that has been 
        certified by the actuary to be in endangered or critical status 
        under section 305, if the plan sponsor--
                    ``(A) has not adopted a funding improvement or 
                rehabilitation plan under that section by the deadline 
                established in such section, or
                    ``(B) fails to update or comply with the terms of 
                the funding improvement or rehabilitation plan in 
                accordance with the requirements of such section,
        by an employer that has an obligation to contribute with 
        respect to the multiemployer plan or an employee organization 
        that represents active participants in the multiemployer plan, 
        for an order compelling the plan sponsor to adopt a funding 
        improvement or rehabilitation plan or to update or comply with 
        the terms of the funding improvement or rehabilitation plan in 
        accordance with the requirements of such section and the 
        funding improvement or rehabilitation plan.''.
    (d) No Additional Contributions Required.--Section 302(b) of the 
Employee Retirement Income Security Act of 1974, as amended by this 
Act, is amended by adding at the end the following new paragraph:
            ``(3) Multiemployer plans in critical status.--Paragraph 
        (1) shall not apply in the case of a multiemployer plan for any 
        plan year in which the plan is in critical status pursuant to 
        section 305. This paragraph shall only apply if the plan adopts 
        a rehabilitation plan in accordance with section 305(e) and 
        complies with the terms of such rehabilitation plan (and any 
        updates or modifications of the plan).''.
    (e) Conforming Amendment.--The table of contents in section 1 of 
such Act (as amended by the preceding provisions of this Act) is 
amended by inserting after the item relating to section 304 the 
following new item:

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

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

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

SEC. 204. WITHDRAWAL LIABILITY REFORMS.

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


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

        ''.    (2) Plans using attributable method.--Section 
        4225(a)(1)(B) of such Act (29 U.S.C. 1405(a)(1)(B)) is amended 
        to read as follows:
                    ``(B) in the case of a plan using the attributable 
                method of allocating withdrawal liability, the unfunded 
                vested benefits attributable to employees of the 
                employer.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to sales occurring on or after January 1, 2007.
    (b) Withdrawal Liability Continues if Work Contracted Out.--
            (1) In general.--Clause (i) of section 4205(b)(2)(A) of 
        such Act (29 U.S.C. 1385(b)(2)(A)) is amended by inserting ``or 
        to an entity or entities owned or controlled by the employer'' 
        after ``to another location''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply with respect to work transferred on or after the 
        date of the enactment of this Act.
    (c) Application of Rules to Plans Primarily Covering Employees in 
the Building and Construction Industry.--
            (1) In general.--Section 4210(b) of such Act (29 U.S.C. 
        1390(b)) is amended--
                    (A) by striking paragraph (1); and
                    (B) by redesignating paragraphs (2) through (4) as 
                paragraphs (1) through (3), respectively.
            (2) Fresh start option.--Section 4211(c)(5) of such Act (29 
        U.S.C. 1391(c)(5)) is amended by adding at the end the 
        following new subparagraph:
                    ``(E) Fresh start option.--Notwithstanding 
                paragraph (1), a plan may be amended to provide that 
                the withdrawal liability method described in subsection 
                (b) shall be applied by substituting the plan year 
                which is specified in the amendment and for which the 
                plan has no unfunded vested benefits for the plan year 
                ending before September 26, 1980.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply with respect to plan withdrawals occurring on or 
        after January 1, 2007.
    (d) Procedures Applicable to Disputes Involving Pension Plan 
Withdrawal Liability.--
            (1) In general.--Section 4221 of Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1401) is amended by adding at 
        the end the following:
    ``(g) Procedures Applicable to Certain Disputes.--
            ``(1) In general.--If--
                    ``(A) a plan sponsor of a plan determines that--
                            ``(i) a complete or partial withdrawal of 
                        an employer has occurred, or
                            ``(ii) an employer is liable for withdrawal 
                        liability payments with respect to such 
                        complete or partial withdrawal, and
                    ``(B) such determination is based in whole or in 
                part on a finding by the plan sponsor under section 
                4212(c) that a principal purpose of any transaction 
                which occurred after December 31, 1998, and at least 5 
                years (2 years in the case of a small employer) before 
                the date of the complete or partial withdrawal was to 
                evade or avoid withdrawal liability under this 
                subtitle,
        then the person against which the withdrawal liability is 
        assessed based solely on the application of section 4212(c) may 
        elect to use the special rule under paragraph (2) in applying 
        subsection (d) of this section and section 4219(c) to such 
        person.
            ``(2) Special rule.--Notwithstanding subsection (d) and 
        section 4219(c), if an electing person contests the plan 
        sponsor's determination with respect to withdrawal liability 
        payments under paragraph (1) through an arbitration proceeding 
        pursuant to subsection (a), through an action brought in a 
        court of competent jurisdiction for review of such an 
        arbitration decision, or as otherwise permitted by law, the 
        electing person shall not be obligated to make the withdrawal 
        liability payments until a final decision in the arbitration 
        proceeding, or in court, upholds the plan sponsor's 
        determination, but only if the electing person--
                    ``(A) provides notice to the plan sponsor of its 
                election to apply the special rule in this paragraph 
                within 90 days after the plan sponsor notifies the 
                electing person of its liability by reason of the 
                application of section 4212(c); and
                    ``(B) if a final decision in the arbitration 
                proceeding, or in court, of the withdrawal liability 
                dispute has not been rendered within 12 months from the 
                date of such notice, the electing person provides to 
                the plan, effective as of the first day following the 
                12-month period, a bond issued by a corporate surety 
                company that is an acceptable surety for purposes of 
                section 412 of this Act, or an amount held in escrow by 
                a bank or similar financial institution satisfactory to 
                the plan, in an amount equal to the sum of the 
                withdrawal liability payments that would otherwise be 
                due under subsection (d) and section 4219(c) for the 
                12-month period beginning with the first anniversary of 
                such notice. Such bond or escrow shall remain in effect 
                until there is a final decision in the arbitration 
                proceeding, or in court, of the withdrawal liability 
                dispute, at which time such bond or escrow shall be 
                paid to the plan if such final decision upholds the 
                plan sponsor's determination.
            ``(3) Definition of small employer.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `small employer' means 
                any employer which, for the calendar year in which the 
                transaction referred to in paragraph (1)(B) occurred 
                and for each of the 3 preceding years, on average--
                            ``(i) employs not more than 500 employees, 
                        and
                            ``(ii) is required to make contributions to 
                        the plan for not more than 250 employees.
                    ``(B) Controlled group.--Any group treated as a 
                single employer under subsection (b)(1) of section 
                4001, without regard to any transaction that was a 
                basis for the plan's finding under section 4212, shall 
                be treated as a single employer for purposes of this 
                subparagraph.
            ``(4) Additional security pending resolution of dispute.--
        If a withdrawal liability dispute to which this subsection 
        applies is not concluded by 12 months after the electing person 
        posts the bond or escrow described in paragraph (2), the 
        electing person shall, at the start of each succeeding 12-month 
        period, provide an additional bond or amount held in escrow 
        equal to the sum of the withdrawal liability payments that 
        would otherwise be payable to the plan during that period.
            ``(5) The liability of the party furnishing a bond or 
        escrow under this subsection shall be reduced, upon the payment 
        of the bond or escrow to the plan, by the amount thereof.''
            (2) Effective date.--The amendments made by this subsection 
        shall apply to any person that receives a notification under 
        section 4219(b)(1) of the Employee Retirement Income Security 
        Act of 1974 on or after the date of enactment of this Act with 
        respect to a transaction that occurred after December 31, 1998.

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

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

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

    In the case of a multiemployer plan that is a party to an agreement 
that was approved by the Pension Benefit Guaranty Corporation prior to 
June 30, 2005, and that--
            (1) increases benefits, and
            (2) provides for special withdrawal liability rules under 
        section 4203(f) of the Employee Retirement Income Security Act 
        of 1974 (29 U.S.C. 1383),
the amendments made by sections 201, 202, 211, and 212 of this Act 
shall not apply to the benefit increases under any plan amendment 
adopted prior to June 30, 2005, that are funded pursuant to such 
agreement if the plan is funded in compliance with such agreement (and 
any amendments thereto).

        Subtitle B--Amendments to Internal Revenue Code of 1986

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

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

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

    ``(a) In General.--For purposes of section 412, the accumulated 
funding deficiency of a multiemployer plan for any plan year is--
            ``(1) except as provided in paragraph (2), the amount, 
        determined as of the end of the plan year, equal to the excess 
        (if any) of the total charges to the funding standard account 
        of the plan for all plan years (beginning with the first plan 
        year for which this part applies to the plan) over the total 
        credits to such account for such years, and
            ``(2) if the multiemployer plan is in reorganization for 
        any plan year, the accumulated funding deficiency of the plan 
        determined under section 4243 of the Employee Retirement Income 
        Security Act of 1974.
    ``(b) Funding Standard Account.--
            ``(1) Account required.--Each multiemployer plan to which 
        this part applies shall establish and maintain a funding 
        standard account. Such account shall be credited and charged 
        solely as provided in this section.
            ``(2) Charges to account.--For a plan year, the funding 
        standard account shall be charged with the sum of--
                    ``(A) the normal cost of the plan for the plan 
                year,
                    ``(B) the amounts necessary to amortize in equal 
                annual installments (until fully amortized)--
                            ``(i) in the case of a plan which comes 
                        into existence on or after January 1, 2008, the 
                        unfunded past service liability under the plan 
                        on the first day of the first plan year to 
                        which this section applies, over a period of 15 
                        plan years,
                            ``(ii) separately, with respect to each 
                        plan year, the net increase (if any) in 
                        unfunded past service liability under the plan 
                        arising from plan amendments adopted in such 
                        year, over a period of 15 plan years,
                            ``(iii) separately, with respect to each 
                        plan year, the net experience loss (if any) 
                        under the plan, over a period of 15 plan years, 
                        and
                            ``(iv) separately, with respect to each 
                        plan year, the net loss (if any) resulting from 
                        changes in actuarial assumptions used under the 
                        plan, over a period of 15 plan years,
                    ``(C) the amount necessary to amortize each waived 
                funding deficiency (within the meaning of section 
                412(c)(3)) for each prior plan year in equal annual 
                installments (until fully amortized) over a period of 
                15 plan years,
                    ``(D) the amount necessary to amortize in equal 
                annual installments (until fully amortized) over a 
                period of 5 plan years any amount credited to the 
                funding standard account under section 412(b)(3)(D) (as 
                in effect on the day before the date of the enactment 
                of the Pension Protection Act of 2006), and
                    ``(E) the amount necessary to amortize in equal 
                annual installments (until fully amortized) over a 
                period of 20 years the contributions which would be 
                required to be made under the plan but for the 
                provisions of section 412(c)(7)(A)(i)(I) (as in effect 
                on the day before the date of the enactment of the 
                Pension Protection Act of 2006).
            ``(3) Credits to account.--For a plan year, the funding 
        standard account shall be credited with the sum of--
                    ``(A) the amount considered contributed by the 
                employer to or under the plan for the plan year,
                    ``(B) the amount necessary to amortize in equal 
                annual installments (until fully amortized)--
                            ``(i) separately, with respect to each plan 
                        year, the net decrease (if any) in unfunded 
                        past service liability under the plan arising 
                        from plan amendments adopted in such year, over 
                        a period of 15 plan years,
                            ``(ii) separately, with respect to each 
                        plan year, the net experience gain (if any) 
                        under the plan, over a period of 15 plan years, 
                        and
                            ``(iii) separately, with respect to each 
                        plan year, the net gain (if any) resulting from 
                        changes in actuarial assumptions used under the 
                        plan, over a period of 15 plan years,
                    ``(C) the amount of the waived funding deficiency 
                (within the meaning of section 412(c)(3)) for the plan 
                year, and
                    ``(D) in the case of a plan year for which the 
                accumulated funding deficiency is determined under the 
                funding standard account if such plan year follows a 
                plan year for which such deficiency was determined 
                under the alternative minimum funding standard under 
                section 412(g) (as in effect on the day before the date 
                of the enactment of the Pension Protection Act of 
                2006), the excess (if any) of any debit balance in the 
                funding standard account (determined without regard to 
                this subparagraph) over any debit balance in the 
                alternative minimum funding standard account.
            ``(4) Special rule for amounts first amortized in plan 
        years before 2008.--In the case of any amount amortized under 
        section 412(b) (as in effect on the day before the date of the 
        enactment of the Pension Protection Act of 2006) over any 
        period beginning with a plan year beginning before 2008 in lieu 
        of the amortization described in paragraphs (2)(B) and (3)(B), 
        such amount shall continue to be amortized under such section 
        as so in effect.
            ``(5) Combining and offsetting amounts to be amortized.--
        Under regulations prescribed by the Secretary, amounts required 
        to be amortized under paragraph (2) or paragraph (3), as the 
        case may be--
                    ``(A) may be combined into one amount under such 
                paragraph to be amortized over a period determined on 
                the basis of the remaining amortization period for all 
                items entering into such combined amount, and
                    ``(B) may be offset against amounts required to be 
                amortized under the other such paragraph, with the 
                resulting amount to be amortized over a period 
                determined on the basis of the remaining amortization 
                periods for all items entering into whichever of the 
                two amounts being offset is the greater.
            ``(6) Interest.--The funding standard account (and items 
        therein) shall be charged or credited (as determined under 
        regulations prescribed by the Secretary of the Treasury) with 
        interest at the appropriate rate consistent with the rate or 
        rates of interest used under the plan to determine costs.
            ``(7) Special rules relating to charges and credits to 
        funding standard account.--For purposes of this part--
                    ``(A) Withdrawal liability.--Any amount received by 
                a multiemployer plan in payment of all or part of an 
                employer's withdrawal liability under part 1 of 
                subtitle E of title IV of the Employee Retirement 
                Income Security Act of 1974 shall be considered an 
                amount contributed by the employer to or under the 
                plan. The Secretary may prescribe by regulation 
                additional charges and credits to a multiemployer 
                plan's funding standard account to the extent necessary 
                to prevent withdrawal liability payments from being 
                unduly reflected as advance funding for plan 
                liabilities.
                    ``(B) Adjustments when a multiemployer plan leaves 
                reorganization.--If a multiemployer plan is not in 
                reorganization in the plan year but was in 
                reorganization in the immediately preceding plan year, 
                any balance in the funding standard account at the 
                close of such immediately preceding plan year--
                            ``(i) shall be eliminated by an offsetting 
                        credit or charge (as the case may be), but
                            ``(ii) shall be taken into account in 
                        subsequent plan years by being amortized in 
                        equal annual installments (until fully 
                        amortized) over 30 plan years.
                The preceding sentence shall not apply to the extent of 
                any accumulated funding deficiency under section 
                4243(a) of such Act as of the end of the last plan year 
                that the plan was in reorganization.
                    ``(C) Plan payments to supplemental program or 
                withdrawal liability payment fund.--Any amount paid by 
                a plan during a plan year to the Pension Benefit 
                Guaranty Corporation pursuant to section 4222 of such 
                Act or to a fund exempt under section 501(c)(22) 
                pursuant to section 4223 of such Act shall reduce the 
                amount of contributions considered received by the plan 
                for the plan year.
                    ``(D) Interim withdrawal liability payments.--Any 
                amount paid by an employer pending a final 
                determination of the employer's withdrawal liability 
                under part 1 of subtitle E of title IV of such Act and 
                subsequently refunded to the employer by the plan shall 
                be charged to the funding standard account in 
                accordance with regulations prescribed by the 
                Secretary.
                    ``(E) Election for deferral of charge for portion 
                of net experience loss.--If an election is in effect 
                under section 412(b)(7)(F) (as in effect on the day 
                before the date of the enactment of the Pension 
                Protection Act of 2006) for any plan year, the funding 
                standard account shall be charged in the plan year to 
                which the portion of the net experience loss deferred 
                by such election was deferred with the amount so 
                deferred (and paragraph (2)(B)(iii) shall not apply to 
                the amount so charged).
                    ``(F) Financial assistance.--Any amount of any 
                financial assistance from the Pension Benefit Guaranty 
                Corporation to any plan, and any repayment of such 
                amount, shall be taken into account under this section 
                and section 412 in such manner as is determined by the 
                Secretary.
                    ``(G) Short-term benefits.--To the extent that any 
                plan amendment increases the unfunded past service 
                liability under the plan by reason of an increase in 
                benefits which are not payable as a life annuity but 
                are payable under the terms of the plan for a period 
                that does not exceed 14 years from the effective date 
                of the amendment, paragraph (2)(B)(ii) shall be applied 
                separately with respect to such increase in unfunded 
                past service liability by substituting the number of 
                years of the period during which such benefits are 
                payable for `15'.
    ``(c) Additional Rules.--
            ``(1) Determinations to be made under funding method.--For 
        purposes of this part, normal costs, accrued liability, past 
        service liabilities, and experience gains and losses shall be 
        determined under the funding method used to determine costs 
        under the plan.
            ``(2) Valuation of assets.--
                    ``(A) In general.--For purposes of this part, the 
                value of the plan's assets shall be determined on the 
                basis of any reasonable actuarial method of valuation 
                which takes into account fair market value and which is 
                permitted under regulations prescribed by the 
                Secretary.
                    ``(B) Election with respect to bonds.--The value of 
                a bond or other evidence of indebtedness which is not 
                in default as to principal or interest may, at the 
                election of the plan administrator, be determined on an 
                amortized basis running from initial cost at purchase 
                to par value at maturity or earliest call date. Any 
                election under this subparagraph shall be made at such 
                time and in such manner as the Secretary shall by 
                regulations provide, shall apply to all such evidences 
                of indebtedness, and may be revoked only with the 
                consent of the Secretary.
            ``(3) Actuarial assumptions must be reasonable.--For 
        purposes of this section, all costs, liabilities, rates of 
        interest, and other factors under the plan shall be determined 
        on the basis of actuarial assumptions and methods--
                    ``(A) each of which is reasonable (taking into 
                account the experience of the plan and reasonable 
                expectations), and
                    ``(B) which, in combination, offer the actuary's 
                best estimate of anticipated experience under the plan.
            ``(4) Treatment of certain changes as experience gain or 
        loss.--For purposes of this section, if--
                    ``(A) a change in benefits under the Social 
                Security Act or in other retirement benefits created 
                under Federal or State law, or
                    ``(B) a change in the definition of the term 
                `wages' under section 3121, or a change in the amount 
                of such wages taken into account under regulations 
                prescribed for purposes of section 401(a)(5),
        results in an increase or decrease in accrued liability under a 
        plan, such increase or decrease shall be treated as an 
        experience loss or gain.
            ``(5) Full funding.--If, as of the close of a plan year, a 
        plan would (without regard to this paragraph) have an 
        accumulated funding deficiency in excess of the full funding 
        limitation--
                    ``(A) the funding standard account shall be 
                credited with the amount of such excess, and
                    ``(B) all amounts described in subparagraphs (B), 
                (C), and (D) of subsection (b) (2) and subparagraph (B) 
                of subsection (b)(3) which are required to be amortized 
                shall be considered fully amortized for purposes of 
                such subparagraphs.
            ``(6) Full-funding limitation.--
                    ``(A) In general.--For purposes of paragraph (5), 
                the term `full-funding limitation' means the excess (if 
                any) of--
                            ``(i) the accrued liability (including 
                        normal cost) under the plan (determined under 
                        the entry age normal funding method if such 
                        accrued liability cannot be directly calculated 
                        under the funding method used for the plan), 
                        over
                            ``(ii) the lesser of--
                                    ``(I) the fair market value of the 
                                plan's assets, or
                                    ``(II) the value of such assets 
                                determined under paragraph (2).
                    ``(B) Minimum amount.--
                            ``(i) In general.--In no event shall the 
                        full-funding limitation determined under 
                        subparagraph (A) be less than the excess (if 
                        any) of--
                                    ``(I) 90 percent of the current 
                                liability of the plan (including the 
                                expected increase in current liability 
                                due to benefits accruing during the 
                                plan year), over
                                    ``(II) the value of the plan's 
                                assets determined under paragraph (2).
                            ``(ii) Assets.--For purposes of clause (i), 
                        assets shall not be reduced by any credit 
                        balance in the funding standard account.
                    ``(C) Full funding limitation.--For purposes of 
                this paragraph, unless otherwise provided by the plan, 
                the accrued liability under a multiemployer plan shall 
                not include benefits which are not nonforfeitable under 
                the plan after the termination of the plan (taking into 
                consideration section 411(d)(3)).
                    ``(D) Current liability.--For purposes of this 
                paragraph--
                            ``(i) In general.--The term `current 
                        liability' means all liabilities to employees 
                        and their beneficiaries under the plan.
                            ``(ii) Treatment of unpredictable 
                        contingent event benefits.--For purposes of 
                        clause (i), any benefit contingent on an event 
                        other than--
                                    ``(I) age, service, compensation, 
                                death, or disability, or
                                    ``(II) an event which is reasonably 
                                and reliably predictable (as determined 
                                by the Secretary),
                        shall not be taken into account until the event 
                        on which the benefit is contingent occurs.
                            ``(iii) Interest rate used.--The rate of 
                        interest used to determine current liability 
                        under this paragraph shall be the rate of 
                        interest determined under subparagraph (E).
                            ``(iv) Mortality tables.--
                                    ``(I) Commissioners' standard 
                                table.--In the case of plan years 
                                beginning before the first plan year to 
                                which the first tables prescribed under 
                                subclause (II) apply, the mortality 
                                table used in determining current 
                                liability under this paragraph shall be 
                                the table prescribed by the Secretary 
                                which is based on the prevailing 
                                commissioners' standard table 
                                (described in section 807(d)(5)(A)) 
                                used to determine reserves for group 
                                annuity contracts issued on January 1, 
                                1993.
                                    ``(II) Secretarial authority.--The 
                                Secretary may by regulation prescribe 
                                for plan years beginning after December 
                                31, 1999, mortality tables to be used 
                                in determining current liability under 
                                this subsection. Such tables shall be 
                                based upon the actual experience of 
                                pension plans and projected trends in 
                                such experience. In prescribing such 
                                tables, the Secretary shall take into 
                                account results of available 
                                independent studies of mortality of 
                                individuals covered by pension plans.
                            ``(v) Separate mortality tables for the 
                        disabled.--Notwithstanding clause (iv)--
                                    ``(I) In general.--The Secretary 
                                shall establish mortality tables which 
                                may be used (in lieu of the tables 
                                under clause (iv)) to determine current 
                                liability under this subsection for 
                                individuals who are entitled to 
                                benefits under the plan on account of 
                                disability. The Secretary shall 
                                establish separate tables for 
                                individuals whose disabilities occur in 
                                plan years beginning before January 1, 
                                1995, and for individuals whose 
                                disabilities occur in plan years 
                                beginning on or after such date.
                                    ``(II) Special rule for 
                                disabilities occurring after 1994.--In 
                                the case of disabilities occurring in 
                                plan years beginning after December 31, 
                                1994, the tables under subclause (I) 
                                shall apply only with respect to 
                                individuals described in such subclause 
                                who are disabled within the meaning of 
                                title II of the Social Security Act and 
                                the regulations thereunder.
                            ``(vi) Periodic review.--The Secretary 
                        shall periodically (at least every 5 years) 
                        review any tables in effect under this 
                        subparagraph and shall, to the extent such 
                        Secretary determines necessary, by regulation 
                        update the tables to reflect the actual 
                        experience of pension plans and projected 
                        trends in such experience.
                    ``(E) Required change of interest rate.--For 
                purposes of determining a plan's current liability for 
                purposes of this paragraph--
                            ``(i) In general.--If any rate of interest 
                        used under the plan under subsection (b)(6) to 
                        determine cost is not within the permissible 
                        range, the plan shall establish a new rate of 
                        interest within the permissible range.
                            ``(ii) Permissible range.--For purposes of 
                        this subparagraph--
                                    ``(I) In general.--Except as 
                                provided in subclause (II), the term 
                                `permissible range' means a rate of 
                                interest which is not more than 5 
                                percent above, and not more than 10 
                                percent below, the weighted average of 
                                the rates of interest on 30-year 
                                Treasury securities during the 4-year 
                                period ending on the last day before 
                                the beginning of the plan year.
                                    ``(II) Secretarial authority.--If 
                                the Secretary finds that the lowest 
                                rate of interest permissible under 
                                subclause (I) is unreasonably high, the 
                                Secretary may prescribe a lower rate of 
                                interest, except that such rate may not 
                                be less than 80 percent of the average 
                                rate determined under such subclause.
                            ``(iii) Assumptions.--Notwithstanding 
                        paragraph (3)(A), the interest rate used under 
                        the plan shall be--
                                    ``(I) determined without taking 
                                into account the experience of the plan 
                                and reasonable expectations, but
                                    ``(II) consistent with the 
                                assumptions which reflect the purchase 
                                rates which would be used by insurance 
                                companies to satisfy the liabilities 
                                under the plan.
            ``(7) Annual valuation.--
                    ``(A) In general.--For purposes of this section, a 
                determination of experience gains and losses and a 
                valuation of the plan's liability shall be made not 
                less frequently than once every year, except that such 
                determination shall be made more frequently to the 
                extent required in particular cases under regulations 
                prescribed by the Secretary.
                    ``(B) Valuation date.--
                            ``(i) Current year.--Except as provided in 
                        clause (ii), the valuation referred to in 
                        subparagraph (A) shall be made as of a date 
                        within the plan year to which the valuation 
                        refers or within one month prior to the 
                        beginning of such year.
                            ``(ii) Use of prior year valuation.--The 
                        valuation referred to in subparagraph (A) may 
                        be made as of a date within the plan year prior 
                        to the year to which the valuation refers if, 
                        as of such date, the value of the assets of the 
                        plan are not less than 100 percent of the 
                        plan's current liability (as defined in 
                        paragraph (6)(D) without regard to clause (iv) 
                        thereof).
                            ``(iii) Adjustments.--Information under 
                        clause (ii) shall, in accordance with 
                        regulations, be actuarially adjusted to reflect 
                        significant differences in participants.
                            ``(iv) Limitation.--A change in funding 
                        method to use a prior year valuation, as 
                        provided in clause (ii), may not be made unless 
                        as of the valuation date within the prior plan 
                        year, the value of the assets of the plan are 
                        not less than 125 percent of the plan's current 
                        liability (as defined in paragraph (6)(D) 
                        without regard to clause (iv) thereof).
            ``(8) Time when certain contributions deemed made.--For 
        purposes of this section, any contributions for a plan year 
        made by an employer after the last day of such plan year, but 
        not later than two and one-half months after such day, shall be 
        deemed to have been made on such last day. For purposes of this 
        subparagraph, such two and one-half month period may be 
        extended for not more than six months under regulations 
        prescribed by the Secretary.
    ``(d) Extension of Amortization Periods for Multiemployer Plans.--
            ``(1) Automatic extension upon application by certain 
        plans.--
                    ``(A) In general.--If the plan sponsor of a 
                multiemployer plan--
                            ``(i) submits to the Secretary an 
                        application for an extension of the period of 
                        years required to amortize any unfunded 
                        liability described in any clause of subsection 
                        (b)(2)(B) or described in subsection (b)(4), 
                        and
                            ``(ii) includes with the application a 
                        certification by the plan's actuary described 
                        in subparagraph (B),
                the Secretary shall extend the amortization period for 
                the period of time (not in excess of 5 years) specified 
                in the application. Such extension shall be in addition 
                to any extension under paragraph (2).
                    ``(B) Criteria.--A certification with respect to a 
                multiemployer plan is described in this subparagraph if 
                the plan's actuary certifies that, based on reasonable 
                assumptions--
                            ``(i) absent the extension under 
                        subparagraph (A), the plan would have an 
                        accumulated funding deficiency in the current 
                        plan year or any of the 9 succeeding plan 
                        years,
                            ``(ii) the plan sponsor has adopted a plan 
                        to improve the plan's funding status,
                            ``(iii) the plan is projected to have 
                        sufficient assets to timely pay expected 
                        benefits and anticipated expenditures over the 
                        amortization period as extended, and
                            ``(iv) the notice required under paragraph 
                        (3)(A) has been provided.
                    ``(C) Termination.--The preceding provisions of 
                this paragraph shall not apply with respect to any 
                application submitted after December 31, 2014.
            ``(2) Alternative extension.--
                    ``(A) In general.--If the plan sponsor of a 
                multiemployer plan submits to the Secretary an 
                application for an extension of the period of years 
                required to amortize any unfunded liability described 
                in any clause of subsection (b)(2)(B) or described in 
                subsection (b)(4), the Secretary may extend the 
                amortization period for a period of time (not in excess 
                of 10 years reduced by the number of years of any 
                extension under paragraph (1) with respect to such 
                unfunded liability) if the Secretary makes the 
                determination described in subparagraph (B). Such 
                extension shall be in addition to any extension under 
                paragraph (1).
                    ``(B) Determination.--The Secretary may grant an 
                extension under subparagraph (A) if the Secretary 
                determines that--
                            ``(i) such extension would carry out the 
                        purposes of this Act and would provide adequate 
                        protection for participants under the plan and 
                        their beneficiaries, and
                            ``(ii) the failure to permit such extension 
                        would--
                                    ``(I) result in a substantial risk 
                                to the voluntary continuation of the 
                                plan, or a substantial curtailment of 
                                pension benefit levels or employee 
                                compensation, and
                                    ``(II) be adverse to the interests 
                                of plan participants in the aggregate.
                    ``(C) Action by secretary.--The Secretary shall act 
                upon any application for an extension under this 
                paragraph within 180 days of the submission of such 
                application. If the Secretary rejects the application 
                for an extension under this paragraph, the Secretary 
                shall provide notice to the plan detailing the specific 
                reasons for the rejection, including references to the 
                criteria set forth above.
            ``(3) Advance notice.--
                    ``(A) In general.--The Secretary shall, before 
                granting an extension under this subsection, require 
                each applicant to provide evidence satisfactory to such 
                Secretary that the applicant has provided notice of the 
                filing of the application for such extension to each 
                affected party (as defined in section 4001(a)(21) of 
                the Employee Retirement Income Security Act of 1974) 
                with respect to the affected plan. Such notice shall 
                include a description of the extent to which the plan 
                is funded for benefits which are guaranteed under title 
                IV of such Act and for benefit liabilities.
                    ``(B) Consideration of relevant information.--The 
                Secretary shall consider any relevant information 
                provided by a person to whom notice was given under 
                paragraph (1).''.
    (b) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to plan years beginning after 2007.
            (2) Special rule for certain amortization extensions.--If 
        the Secretary of the Treasury grants an extension under section 
        304 of the Employee Retirement Income Security Act of 1974 and 
        section 412(e) of the Internal Revenue Code of 1986 with 
        respect to any application filed with the Secretary of the 
        Treasury on or before June 30, 2005, the extension (and any 
        modification thereof) shall be applied and administered under 
        the rules of such sections as in effect before the enactment of 
        this Act, including the use of the rate of interest determined 
        under section 6621(b) of such Code.

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

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

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

    ``(a) General Rule.--For purposes of this part, in the case of a 
multiemployer plan in effect on July 16, 2006 --
            ``(1) if the plan is in endangered status--
                    ``(A) the plan sponsor shall adopt and implement a 
                funding improvement plan in accordance with the 
                requirements of subsection (c), and
                    ``(B) the requirements of subsection (d) shall 
                apply during the funding plan adoption period and the 
                funding improvement period, and
            ``(2) if the plan is in critical status--
                    ``(A) the plan sponsor shall adopt and implement a 
                rehabilitation plan in accordance with the requirements 
                of subsection (e), and
                    ``(B) the requirements of subsection (f) shall 
                apply during the rehabilitation plan adoption period 
                and the rehabilitation period.
    ``(b) Determination of Endangered and Critical Status.--For 
purposes of this section--
            ``(1) Endangered status.--A multiemployer plan is in 
        endangered status for a plan year if, as determined by the plan 
        actuary under paragraph (3), the plan is not in critical status 
        for the plan year and, as of the beginning of the plan year, 
        either--
                    ``(A) the plan's funded percentage for such plan 
                year is less than 80 percent, or
                    ``(B) the plan has an accumulated funding 
                deficiency for such plan year, or is projected to have 
                such an accumulated funding deficiency for any of the 6 
                succeeding plan years, taking into account any 
                extension of amortization periods under section 431(d).
        For purposes of this section, a plan shall be treated as in 
        seriously endangered status for a plan year if the plan is 
        described in both subparagraphs (A) and (B).
            ``(2) Critical status.--A multiemployer plan is in critical 
        status for a plan year if, as determined by the plan actuary 
        under paragraph (3), the plan is described in 1 or more of the 
        following subparagraphs as of the beginning of the plan year:
                    ``(A) A plan is described in this subparagraph if--
                            ``(i) the funded percentage of the plan is 
                        less than 65 percent, and
                            ``(ii) the sum of--
                                    ``(I) the fair market value of plan 
                                assets, plus
                                    ``(II) the present value of the 
                                reasonably anticipated employer 
                                contributions for the current plan year 
                                and each of the 6 succeeding plan 
                                years, assuming that the terms of all 
                                collective bargaining agreements 
                                pursuant to which the plan is 
                                maintained for the current plan year 
                                continue in effect for succeeding plan 
                                years,
                        is less than the present value of all 
                        nonforfeitable benefits projected to be payable 
                        under the plan during the current plan year and 
                        each of the 6 succeeding plan years (plus 
                        administrative expenses for such plan years).
                    ``(B) A plan is described in this subparagraph if--
                            ``(i) the plan has an accumulated funding 
                        deficiency for the current plan year, not 
                        taking into account any extension of 
                        amortization periods under section 431(d), or
                            ``(ii) the plan is projected to have an 
                        accumulated funding deficiency for any of the 3 
                        succeeding plan years (4 succeeding plan years 
                        if the funded percentage of the plan is 65 
                        percent or less), not taking into account any 
                        extension of amortization periods under section 
                        431(d).
                    ``(C) A plan is described in this subparagraph if--
                            ``(i)(I) the plan's normal cost for the 
                        current plan year, plus interest (determined at 
                        the rate used for determining costs under the 
                        plan) for the current plan year on the amount 
                        of unfunded benefit liabilities under the plan 
                        as of the last date of the preceding plan year, 
                        exceeds
                            ``(II) the present value of the reasonably 
                        anticipated employer and employee contributions 
                        for the current plan year,
                            ``(ii) the present value, as of the 
                        beginning of the current plan year, of 
                        nonforfeitable benefits of inactive 
                        participants is greater than the present value 
                        of nonforfeitable benefits of active 
                        participants, and
                            ``(iii) the plan has an accumulated funding 
                        deficiency for the current plan year, or is 
                        projected to have such a deficiency for any of 
                        the 4 succeeding plan years, not taking into 
                        account any extension of amortization periods 
                        under section 431(d).
                    ``(D) A plan is described in this subparagraph if 
                the sum of--
                            ``(i) the fair market value of plan assets, 
                        plus
                            ``(ii) the present value of the reasonably 
                        anticipated employer contributions for the 
                        current plan year and each of the 4 succeeding 
                        plan years, assuming that the terms of all 
                        collective bargaining agreements pursuant to 
                        which the plan is maintained for the current 
                        plan year continue in effect for succeeding 
                        plan years,
                is less than the present value of all benefits 
                projected to be payable under the plan during the 
                current plan year and each of the 4 succeeding plan 
                years (plus administrative expenses for such plan 
                years).
            ``(3) Annual certification by plan actuary.--
                    ``(A) In general.--Not later than the 90th day of 
                each plan year of a multiemployer plan, the plan 
                actuary shall certify to the Secretary and to the plan 
                sponsor--
                            ``(i) whether or not the plan is in 
                        endangered status for such plan year and 
                        whether or not the plan is or will be in 
                        critical status for such plan year, and
                            ``(ii) in the case of a plan which is in a 
                        funding improvement or rehabilitation period, 
                        whether or not the plan is making the scheduled 
                        progress in meeting the requirements of its 
                        funding improvement or rehabilitation plan.
                    ``(B) Actuarial projections of assets and 
                liabilities.--
                            ``(i) In general.--In making the 
                        determinations and projections under this 
                        subsection, the plan actuary shall make 
                        projections required for the current and 
                        succeeding plan years of the current value of 
                        the assets of the plan and the present value of 
                        all liabilities to participants and 
                        beneficiaries under the plan for the current 
                        plan year as of the beginning of such year. The 
                        actuary's projections shall be based on 
                        reasonable actuarial estimates, assumptions, 
                        and methods that, except as provided in clause 
                        (iii), offer the actuary's best estimate of 
                        anticipated experience under the plan. The 
                        projected present value of liabilities as of 
                        the beginning of such year shall be determined 
                        based on the most recent of either--
                                    ``(I) the actuarial statement 
                                required under section 103(d) of the 
                                Employee Retirement Income Security Act 
                                of 1974 with respect to the most 
                                recently filed annual report, or
                                    ``(II) the actuarial valuation for 
                                the preceding plan year.
                            ``(ii) Determinations of future 
                        contributions.--Any actuarial projection of 
                        plan assets shall assume--
                                    ``(I) reasonably anticipated 
                                employer contributions for the current 
                                and succeeding plan years, assuming 
                                that the terms of the one or more 
                                collective bargaining agreements 
                                pursuant to which the plan is 
                                maintained for the current plan year 
                                continue in effect for succeeding plan 
                                years, or
                                    ``(II) that employer contributions 
                                for the most recent plan year will 
                                continue indefinitely, but only if the 
                                plan actuary determines there have been 
                                no significant demographic changes that 
                                would make such assumption 
                                unreasonable.
                            ``(iii) Projected industry activity.--Any 
                        projection of activity in the industry or 
                        industries covered by the plan, including 
                        future covered employment and contribution 
                        levels, shall be based on information provided 
                        by the plan sponsor, which shall act reasonably 
                        and in good faith.
                    ``(C) Penalty for failure to secure timely 
                actuarial certification.--Any failure of the plan's 
                actuary to certify the plan's status under this 
                subsection by the date specified in subparagraph (A) 
                shall be treated for purposes of section 502(c)(2) of 
                the Employee Retirement Income Security Act of 1974 as 
                a failure or refusal by the plan administrator to file 
                the annual report required to be filed with the 
                Secretary under section 101(b)(4) of such Act.
                    ``(D) Notice.--
                            ``(i) In general.--In any case in which it 
                        is certified under subparagraph (A) that a 
                        multiemployer plan is or will be in endangered 
                        or critical status for a plan year, the plan 
                        sponsor shall, not later than 30 days after the 
                        date of the certification, provide notification 
                        of the endangered or critical status to the 
                        participants and beneficiaries, the bargaining 
                        parties, the Pension Benefit Guaranty 
                        Corporation, and the Secretary of Labor.
                            ``(ii) Plans in critical status.--If it is 
                        certified under subparagraph (A) that a 
                        multiemployer plan is or will be in critical 
                        status, the plan sponsor shall include in the 
                        notice under clause (i) an explanation of the 
                        possibility that--
                                    ``(I) adjustable benefits (as 
                                defined in subsection (e)(8)) may be 
                                reduced, and
                                    ``(II) such reductions may apply to 
                                participants and beneficiaries whose 
                                benefit commencement date is on or 
                                after the date such notice is provided 
                                for the first plan year in which the 
                                plan is in critical status.
                            ``(iii) Model notice.--The Secretary of 
                        Labor shall prescribe a model notice that a 
                        multiemployer plan may use to satisfy the 
                        requirements under clause (ii).
    ``(c) Funding Improvement Plan Must Be Adopted for Multiemployer 
Plans in Endangered Status.--
            ``(1) In general.--In any case in which a multiemployer 
        plan is in endangered status for a plan year, the plan sponsor, 
        in accordance with this subsection--
                    ``(A) shall adopt a funding improvement plan not 
                later than 240 days following the required date for the 
                actuarial certification of endangered status under 
                subsection (b)(3)(A), and
                    ``(B) within 30 days after the adoption of the 
                funding improvement plan--
                            ``(i) shall provide to the bargaining 
                        parties 1 or more schedules showing revised 
                        benefit structures, revised contribution 
                        structures, or both, which, if adopted, may 
                        reasonably be expected to enable the 
                        multiemployer plan to meet the applicable 
                        benchmarks in accordance with the funding 
                        improvement plan, including--
                                    ``(I) one proposal for reductions 
                                in the amount of future benefit 
                                accruals necessary to achieve the 
                                applicable benchmarks, assuming no 
                                amendments increasing contributions 
                                under the plan (other than amendments 
                                increasing contributions necessary to 
                                achieve the applicable benchmarks after 
                                amendments have reduced future benefit 
                                accruals to the maximum extent 
                                permitted by law), and
                                    ``(II) one proposal for increases 
                                in contributions under the plan 
                                necessary to achieve the applicable 
                                benchmarks, assuming no amendments 
                                reducing future benefit accruals under 
                                the plan, and
                            ``(ii) may, if the plan sponsor deems 
                        appropriate, prepare and provide the bargaining 
                        parties with additional information relating to 
                        contribution rates or benefit reductions, 
                        alternative schedules, or other information 
                        relevant to achieving the applicable benchmarks 
                        in accordance with the funding improvement 
                        plan.
                For purposes of this section, the term `applicable 
                benchmarks' means the requirements applicable to the 
                multiemployer plan under paragraph (3) (as modified by 
                paragraph (5)).
            ``(2) Exception for years after process begins.--Paragraph 
        (1) shall not apply to a plan year if such year is in a funding 
        plan adoption period or funding improvement period by reason of 
        the plan being in endangered status for a preceding plan year. 
        For purposes of this section, such preceding plan year shall be 
        the initial determination year with respect to the funding 
        improvement plan to which it relates.
            ``(3) Funding improvement plan.--For purposes of this 
        section--
                    ``(A) In general.--A funding improvement plan is a 
                plan which consists of the actions, including options 
                or a range of options to be proposed to the bargaining 
                parties, formulated to provide, based on reasonably 
                anticipated experience and reasonable actuarial 
                assumptions, for the attainment by the plan during the 
                funding improvement period of the following 
                requirements:
                            ``(i) Increase in plan's funding 
                        percentage.--The plan's funded percentage as of 
                        the close of the funding improvement period 
                        equals or exceeds a percentage equal to the sum 
                        of--
                                    ``(I) such percentage as of the 
                                beginning of such period, plus
                                    ``(II) 33 percent of the difference 
                                between 100 percent and the percentage 
                                under subclause (I).
                            ``(ii) Avoidance of accumulated funding 
                        deficiencies.--No accumulated funding 
                        deficiency for any plan year during the funding 
                        improvement period (taking into account any 
                        extension of amortization periods under section 
                        304(d)).
                    ``(B) Seriously endangered plans.--In the case of a 
                plan in seriously endangered status, except as provided 
                in paragraph (5), subparagraph (A)(i)(II) shall be 
                applied by substituting `20 percent' for `33 percent'.
            ``(4) Funding improvement period.--For purposes of this 
        section--
                    ``(A) In general.--The funding improvement period 
                for any funding improvement plan adopted pursuant to 
                this subsection is the 10-year period beginning on the 
                first day of the first plan year of the multiemployer 
                plan beginning after the earlier of--
                            ``(i) the second anniversary of the date of 
                        the adoption of the funding improvement plan, 
                        or
                            ``(ii) the expiration of the collective 
                        bargaining agreements in effect on the due date 
                        for the actuarial certification of endangered 
                        status for the initial determination year under 
                        subsection (b)(3)(A) and covering, as of such 
                        due date, at least 75 percent of the active 
                        participants in such multiemployer plan.
                    ``(B) Seriously endangered plans.--In the case of a 
                plan in seriously endangered status, except as provided 
                in paragraph (5), subparagraph (A) shall be applied by 
                substituting `15-year period' for `10-year period'.
                    ``(C) Coordination with changes in status.--
                            ``(i) Plans no longer in endangered 
                        status.--If the plan's actuary certifies under 
                        subsection (b)(3)(A) for a plan year in any 
                        funding plan adoption period or funding 
                        improvement period that the plan is no longer 
                        in endangered status and is not in critical 
                        status, the funding plan adoption period or 
                        funding improvement period, whichever is 
                        applicable, shall end as of the close of the 
                        preceding plan year.
                            ``(ii) Plans in critical status.--If the 
                        plan's actuary certifies under subsection 
                        (b)(3)(A) for a plan year in any funding plan 
                        adoption period or funding improvement period 
                        that the plan is in critical status, the 
                        funding plan adoption period or funding 
                        improvement period, whichever is applicable, 
                        shall end as of the close of the plan year 
                        preceding the first plan year in the 
                        rehabilitation period with respect to such 
                        status.
                    ``(D) Plans in endangered status at end of 
                period.--If the plan's actuary certifies under 
                subsection (b)(3)(A) for the first plan year following 
                the close of the period described in subparagraph (A) 
                that the plan is in endangered status, the provisions 
                of this subsection and subsection (d) shall be applied 
                as if such first plan year were an initial 
                determination year, except that the plan may not be 
                amended in a manner inconsistent with the funding 
                improvement plan in effect for the preceding plan year 
                until a new funding improvement plan is adopted.
            ``(5) Special rules for seriously endangered plans more 
        than 70 percent funded.--
                    ``(A) In general.--If the funded percentage of a 
                plan in seriously endangered status was more than 70 
                percent as of the beginning of the initial 
                determination year--
                            ``(i) paragraphs (3)(B) and (4)(B) shall 
                        apply only if the plan's actuary certifies, 
                        within 30 days after the certification under 
                        subsection (b)(3)(A) for the initial 
                        determination year, that, based on the terms of 
                        the plan and the collective bargaining 
                        agreements in effect at the time of such 
                        certification, the plan is not projected to 
                        meet the requirements of paragraph (3)(A) 
                        (without regard to paragraphs (3)(B) and 
                        (4)(B)), and
                            ``(ii) if there is a certification under 
                        clause (i), the plan may, in formulating its 
                        funding improvement plan, only take into 
                        account the rules of paragraph (3)(B) and 
                        (4)(B) for plan years in the funding 
                        improvement period beginning on or before the 
                        date on which the last of the collective 
                        bargaining agreements described in paragraph 
                        (4)(A)(ii) expires.
                    ``(B) Special rule after expiration of 
                agreements.--Notwithstanding subparagraph (A)(ii), if, 
                for any plan year ending after the date described in 
                subparagraph (A)(ii), the plan actuary certifies (at 
                the time of the annual certification under subsection 
                (b)(3)(A) for such plan year) that, based on the terms 
                of the plan and collective bargaining agreements in 
                effect at the time of that annual certification, the 
                plan is not projected to be able to meet the 
                requirements of paragraph (3)(A) (without regard to 
                paragraphs (3)(B) and (4)(B)), paragraphs (3)(B) and 
                (4)(B) shall continue to apply for such year.
            ``(6) Updates to funding improvement plans and schedules.--
                    ``(A) Funding improvement plan.--The plan sponsor 
                shall annually update the funding improvement plan and 
                shall file the update with the plan's annual report 
                under section 104 of the Employee Retirement Income 
                Security Act of 1974.
                    ``(B) Schedules.--The plan sponsor shall annually 
                update any schedule of contribution rates provided 
                under this subsection to reflect the experience of the 
                plan.
                    ``(C) Duration of schedule.--A schedule of 
                contribution rates provided by the plan sponsor and 
                relied upon by bargaining parties in negotiating a 
                collective bargaining agreement shall remain in effect 
                for the duration of that collective bargaining 
                agreement.
            ``(7) Imposition of default schedule where failure to adopt 
        funding improvement plan.--
                    ``(A) In general.--If--
                            ``(i) a collective bargaining agreement 
                        providing for contributions under a 
                        multiemployer plan that was in effect at the 
                        time the plan entered endangered status 
                        expires, and
                            ``(ii) after receiving one or more 
                        schedules from the plan sponsor under paragraph 
                        (1)(B), the bargaining parties with respect to 
                        such agreement fail to agree on changes to 
                        contribution or benefit schedules necessary to 
                        meet the applicable benchmarks in accordance 
                        with the funding improvement plan,
                the plan sponsor shall implement the schedule described 
                in paragraph (1)(B)(i)(I) beginning on the date 
                specified in subparagraph (B).
                    ``(B) Date of implementation.--The date specified 
                in this subparagraph is the earlier of the date--
                            ``(i) on which the Secretary of Labor 
                        certifies that the parties are at an impasse, 
                        or
                            ``(ii) which is 180 days after the date on 
                        which the collective bargaining agreement 
                        described in subparagraph (A) expires.
            ``(8) Funding plan adoption period.--For purposes of this 
        section, the term `funding plan adoption period' means the 
        period beginning on the date of the certification under 
        subsection (b)(3)(A) for the initial determination year and 
        ending on the day before the first day of the funding 
        improvement period.
    ``(d) Rules for Operation of Plan During Adoption and Improvement 
Periods.--
            ``(1) Special rules for plan adoption period.--During the 
        funding plan adoption period--
                    ``(A) the plan sponsor may not accept a collective 
                bargaining agreement or participation agreement with 
                respect to the multiemployer plan that provides for--
                            ``(i) a reduction in the level of 
                        contributions for any participants,
                            ``(ii) a suspension of contributions with 
                        respect to any period of service, or
                            ``(iii) any new direct or indirect 
                        exclusion of younger or newly hired employees 
                        from plan participation,
                    ``(B) no amendment of the plan which increases the 
                liabilities of the plan by reason of any increase in 
                benefits, any change in the accrual of benefits, or any 
                change in the rate at which benefits become 
                nonforfeitable under the plan may be adopted unless the 
                amendment is required as a condition of qualification 
                under part I of subchapter D of chapter 1 or to comply 
                with other applicable law, and
                    ``(C) in the case of a plan in seriously endangered 
                status, the plan sponsor shall take all reasonable 
                actions which are consistent with the terms of the plan 
                and applicable law and which are expected, based on 
                reasonable assumptions, to achieve--
                            ``(i) an increase in the plan's funded 
                        percentage, and
                            ``(ii) postponement of an accumulated 
                        funding deficiency for at least 1 additional 
                        plan year.
        Actions under subparagraph (C) include applications for 
        extensions of amortization periods under section 431(d), use of 
        the shortfall funding method in making funding standard account 
        computations, amendments to the plan's benefit structure, 
        reductions in future benefit accruals, and other reasonable 
        actions consistent with the terms of the plan and applicable 
        law.
            ``(2) Compliance with funding improvement plan.--
                    ``(A) In general.--A plan may not be amended after 
                the date of the adoption of a funding improvement plan 
                so as to be inconsistent with the funding improvement 
                plan.
                    ``(B) No reduction in contributions.--A plan 
                sponsor may not during any funding improvement period 
                accept a collective bargaining agreement or 
                participation agreement with respect to the 
                multiemployer plan that provides for--
                            ``(i) a reduction in the level of 
                        contributions for any participants,
                            ``(ii) a suspension of contributions with 
                        respect to any period of service, or
                            ``(iii) any new direct or indirect 
                        exclusion of younger or newly hired employees 
                        from plan participation.
                    ``(C) Special rules for benefit increases.--A plan 
                may not be amended after the date of the adoption of a 
                funding improvement plan so as to increase benefits, 
                including future benefit accruals, unless the plan 
                actuary certifies that the benefit increase is 
                consistent with the funding improvement plan and is 
                paid for out of contributions not required by the 
                funding improvement plan to meet the applicable 
                benchmark in accordance with the schedule contemplated 
                in the funding improvement plan.
    ``(e) Rehabilitation Plan Must Be Adopted for Multiemployer Plans 
in Critical Status.--
            ``(1) In general.--In any case in which a multiemployer 
        plan is in critical status for a plan year, the plan sponsor, 
        in accordance with this subsection--
                    ``(A) shall adopt a rehabilitation plan not later 
                than 240 days following the required date for the 
                actuarial certification of critical status under 
                subsection (b)(3)(A), and
                    ``(B) within 30 days after the adoption of the 
                rehabilitation plan--
                            ``(i) shall provide to the bargaining 
                        parties 1 or more schedules showing revised 
                        benefit structures, revised contribution 
                        structures, or both, which, if adopted, may 
                        reasonably be expected to enable the 
                        multiemployer plan to emerge from critical 
                        status in accordance with the rehabilitation 
                        plan, and
                            ``(ii) may, if the plan sponsor deems 
                        appropriate, prepare and provide the bargaining 
                        parties with additional information relating to 
                        contribution rates or benefit reductions, 
                        alternative schedules, or other information 
                        relevant to emerging from critical status in 
                        accordance with the rehabilitation plan.
        The schedule or schedules described in subparagraph (B)(i) 
        shall reflect reductions in future benefit accruals and 
        adjustable benefits, and increases in contributions, that the 
        plan sponsor determines are reasonably necessary to emerge from 
        critical status. One schedule shall be designated as the 
        default schedule and such schedule shall assume that there are 
        no increases in contributions under the plan other than the 
        increases necessary to emerge from critical status after future 
        benefit accruals and other benefits (other than benefits the 
        reduction or elimination of which are not permitted under 
        section 411(d)(6)) have been reduced to the maximum extent 
        permitted by law.
            ``(2) Exception for years after process begins.--Paragraph 
        (1) shall not apply to a plan year if such year is in a 
        rehabilitation plan adoption period or rehabilitation period by 
        reason of the plan being in critical status for a preceding 
        plan year. For purposes of this section, such preceding plan 
        year shall be the initial critical year with respect to the 
        rehabilitation plan to which it relates.
            ``(3) Rehabilitation plan.--For purposes of this section--
                    ``(A) In general.--A rehabilitation plan is a plan 
                which consists of--
                            ``(i) actions, including options or a range 
                        of options to be proposed to the bargaining 
                        parties, formulated, based on reasonably 
                        anticipated experience and reasonable actuarial 
                        assumptions, to enable the plan to cease to be 
                        in critical status by the end of the 
                        rehabilitation period and may include 
                        reductions in plan expenditures (including plan 
                        mergers and consolidations), reductions in 
                        future benefit accruals or increases in 
                        contributions, if agreed to by the bargaining 
                        parties, or any combination of such actions, or
                            ``(ii) if the plan sponsor determines that, 
                        based on reasonable actuarial assumptions and 
                        upon exhaustion of all reasonable measures, the 
                        plan can not reasonably be expected to emerge 
                        from critical status by the end of the 
                        rehabilitation period, reasonable measures to 
                        emerge from critical status at a later time or 
                        to forestall possible insolvency (within the 
                        meaning of section 4245 of the Employee 
                        Retirement Income Security Act of 1974).
                A rehabilitation plan must provide annual standards for 
                meeting the requirements of such rehabilitation plan. 
                Such plan shall also include the schedules required to 
                be provided under paragraph (1)(B)(i) and if clause 
                (ii) applies, shall set forth the alternatives 
                considered, explain why the plan is not reasonably 
                expected to emerge from critical status by the end of 
                the rehabilitation period, and specify when, if ever, 
                the plan is expected to emerge from critical status in 
                accordance with the rehabilitation plan.
                    ``(B) Updates to rehabilitation plan and 
                schedules.--
                            ``(i) Rehabilitation plan.--The plan 
                        sponsor shall annually update the 
                        rehabilitation plan and shall file the update 
                        with the plan's annual report under section 104 
                        of the Employee Retirement Income Security Act 
                        of 1974.
                            ``(ii) Schedules.--The plan sponsor shall 
                        annually update any schedule of contribution 
                        rates provided under this subsection to reflect 
                        the experience of the plan.
                            ``(iii) Duration of schedule.--A schedule 
                        of contribution rates provided by the plan 
                        sponsor and relied upon by bargaining parties 
                        in negotiating a collective bargaining 
                        agreement shall remain in effect for the 
                        duration of that collective bargaining 
                        agreement.
                    ``(C) Imposition of default schedule where failure 
                to adopt rehabilitation plan.--
                            ``(i) In general.--If--
                                    ``(I) a collective bargaining 
                                agreement providing for contributions 
                                under a multiemployer plan that was in 
                                effect at the time the plan entered 
                                critical status expires, and
                                    ``(II) after receiving one or more 
                                schedules from the plan sponsor under 
                                paragraph (1)(B), the bargaining 
                                parties with respect to such agreement 
                                fail to adopt a contribution or benefit 
                                schedules with terms consistent with 
                                the rehabilitation plan and the 
                                schedule from the plan sponsor under 
                                paragraph (1)(B)(i),
                        the plan sponsor shall implement the default 
                        schedule described in the last sentence of 
                        paragraph (1) beginning on the date specified 
                        in clause (ii).
                            ``(ii) Date of implementation.--The date 
                        specified in this clause is the earlier of the 
                        date--
                                    ``(I) on which the Secretary of 
                                Labor certifies that the parties are at 
                                an impasse, or
                                    ``(II) which is 180 days after the 
                                date on which the collective bargaining 
                                agreement described in clause (i) 
                                expires.
            ``(4) Rehabilitation period.--For purposes of this 
        section--
                    ``(A) In general.--The rehabilitation period for a 
                plan in critical status is the 10-year period beginning 
                on the first day of the first plan year of the 
                multiemployer plan following the earlier of--
                            ``(i) the second anniversary of the date of 
                        the adoption of the rehabilitation plan, or
                            ``(ii) the expiration of the collective 
                        bargaining agreements in effect on the date of 
                        the due date for the actuarial certification of 
                        critical status for the initial critical year 
                        under subsection (a)(1) and covering, as of 
                        such date at least 75 percent of the active 
                        participants in such multiemployer plan.
                If a plan emerges from critical status as provided 
                under subparagraph (B) before the end of such 10-year 
                period, the rehabilitation period shall end with the 
                plan year preceding the plan year for which the 
                determination under subparagraph (B) is made.
                    ``(B) Emergence.--A plan in critical status shall 
                remain in such status until a plan year for which the 
                plan actuary certifies, in accordance with subsection 
                (b)(3)(A), that the plan is not projected to have an 
                accumulated funding deficiency for the plan year or any 
                of the 9 succeeding plan years, without regard to the 
                use of the shortfall method and taking into account any 
                extension of amortization periods under section 431(d).
            ``(5) Rehabilitation plan adoption period.--For purposes of 
        this section, the term `rehabilitation plan adoption period' 
        means the period beginning on the date of the certification 
        under subsection (b)(3)(A) for the initial critical year and 
        ending on the day before the first day of the rehabilitation 
        period.
            ``(6) Limitation on reduction in rates of future 
        accruals.--Any reduction in the rate of future accruals under 
        the default schedule described in paragraph (1)(B)(i) shall not 
        reduce the rate of future accruals below--
                    ``(A) a monthly benefit (payable as a single life 
                annuity commencing at the participant's normal 
                retirement age) equal to 1 percent of the contributions 
                required to be made with respect to a participant, or 
                the equivalent standard accrual rate for a participant 
                or group of participants under the collective 
                bargaining agreements in effect as of the first day of 
                the initial critical year, or
                    ``(B) if lower, the accrual rate under the plan on 
                such first day.
        The equivalent standard accrual rate shall be determined by the 
        plan sponsor based on the standard or average contribution base 
        units which the plan sponsor determines to be representative 
        for active participants and such other factors as the plan 
        sponsor determines to be relevant. Nothing in this paragraph 
        shall be construed as limiting the ability of the plan sponsor 
        to prepare and provide the bargaining parties with alternative 
        schedules to the default schedule that established lower or 
        higher accrual and contribution rates than the rates otherwise 
        described in this paragraph.
            ``(7) Automatic employer surcharge.--
                    ``(A) Imposition of surcharge.--Each employer 
                otherwise obligated to make a contribution for the 
                initial critical year shall be obligated to pay to the 
                plan for such year a surcharge equal to 5 percent of 
                the contribution otherwise required under the 
                applicable collective bargaining agreement (or other 
                agreement pursuant to which the employer contributes). 
                For each succeeding plan year in which the plan is in 
                critical status for a consecutive period of years 
                beginning with the initial critical year, the surcharge 
                shall be 10 percent of the contribution otherwise so 
                required.
                    ``(B) Enforcement of surcharge.--The surcharges 
                under subparagraph (A) shall be due and payable on the 
                same schedule as the contributions on which the 
                surcharges are based. Any failure to make a surcharge 
                payment shall be treated as a delinquent contribution 
                under section 515 of the Employee Retirement Income 
                Security Act of 1974 and shall be enforceable as such.
                    ``(C) Surcharge to terminate upon collective 
                bargaining agreement renegotiation.--The surcharge 
                under this paragraph shall cease to be effective with 
                respect to employees covered by a collective bargaining 
                agreement (or other agreement pursuant to which the 
                employer contributes), beginning on the effective date 
                of a collective bargaining agreement (or other such 
                agreement) that includes terms consistent with a 
                schedule presented by the plan sponsor under paragraph 
                (1)(B)(i), as modified under subparagraph (B) of 
                paragraph (3).
                    ``(D) Surcharge not to apply until employer 
                receives notice.--The surcharge under this paragraph 
                shall not apply to an employer until 30 days after the 
                employer has been notified by the plan sponsor that the 
                plan is in critical status and that the surcharge is in 
                effect.
                    ``(E) Surcharge not to generate increased benefit 
                accruals.--Notwithstanding any provision of a plan to 
                the contrary, the amount of any surcharge under this 
                paragraph shall not be the basis for any benefit 
                accrual under the plan.
            ``(8) Benefit adjustments.--
                    ``(A) Adjustable benefits.--
                            ``(i) In general.--Notwithstanding section 
                        204(g), the plan sponsor shall, subject to the 
                        notice requirement under subparagraph (C), make 
                        any reductions to adjustable benefits which the 
                        plan sponsor deems appropriate, based upon the 
                        outcome of collective bargaining over the 
                        schedule or schedules provided under paragraph 
                        (1)(B)(i).
                            ``(ii) Exception for retirees.--Except in 
                        the case of adjustable benefits described in 
                        clause (iv)(III), the plan sponsor of a plan in 
                        critical status shall not reduce adjustable 
                        benefits of any participant or beneficiary 
                        whose benefit commencement date is before the 
                        date on which the plan provides notice to the 
                        participant or beneficiary under subsection 
                        (b)(3)(D) for the initial critical year .
                            ``(iii) Plan sponsor flexibility.--The plan 
                        sponsor shall include in the schedules provided 
                        to the bargaining parties an allowance for 
                        funding the benefits of participants with 
                        respect to whom contributions are not currently 
                        required to be made, and shall reduce their 
                        benefits to the extent permitted under this 
                        title and considered appropriate by the plan 
                        sponsor based on the plan's then current 
                        overall funding status.
                            ``(iv) Adjustable benefit defined.--For 
                        purposes of this paragraph, the term 
                        `adjustable benefit' means--
                                    ``(I) benefits, rights, and 
                                features under the plan, including 
                                post-retirement death benefits, 60-
                                month guarantees, disability benefits 
                                not yet in pay status, and similar 
                                benefits,
                                    ``(II) any early retirement benefit 
                                or retirement-type subsidy (within the 
                                meaning of section 411(d)(6)(B)(i)) and 
                                any benefit payment option (other than 
                                the qualified joint-and survivor 
                                annuity), and
                                    ``(III) benefit increases that 
                                would not be eligible for a guarantee 
                                under section 4022A of the Employee 
                                Retirement Income Security Act of 1974 
                                on the first day of initial critical 
                                year because the increases were adopted 
                                (or, if later, took effect) less than 
                                60 months before such first day.
                    ``(B) Normal retirement benefits protected.--Except 
                as provided in subparagraph (A)(iv)(III), nothing in 
                this paragraph shall be construed to permit a plan to 
                reduce the level of a participant's accrued benefit 
                payable at normal retirement age.
                    ``(C) Notice requirements.--
                            ``(i) In general.--No reduction may be made 
                        to adjustable benefits under subparagraph (A) 
                        unless notice of such reduction has been given 
                        at least 30 days before the general effective 
                        date of such reduction for all participants and 
                        beneficiaries to--
                                    ``(I) plan participants and 
                                beneficiaries,
                                    ``(II) each employer who has an 
                                obligation to contribute (within the 
                                meaning of section 4212(a)) under the 
                                plan, and
                                    ``(III) each employee organization 
                                which, for purposes of collective 
                                bargaining, represents plan 
                                participants employed by such an 
                                employer.
                            ``(ii) Content of notice.--The notice under 
                        clause (i) shall contain--
                                    ``(I) sufficient information to 
                                enable participants and beneficiaries 
                                to understand the effect of any 
                                reduction on their benefits, including 
                                an estimate (on an annual or monthly 
                                basis) of any affected adjustable 
                                benefit that a participant or 
                                beneficiary would otherwise have been 
                                eligible for as of the general 
                                effective date described in clause (i), 
                                and
                                    ``(II) information as to the rights 
                                and remedies of plan participants and 
                                beneficiaries as well as how to contact 
                                the Department of Labor for further 
                                information and assistance where 
                                appropriate.
                            ``(iii) Form and manner.--Any notice under 
                        clause (i)--
                                    ``(I) shall be provided in a form 
                                and manner prescribed in regulations of 
                                the Secretary of Labor,
                                    ``(II) shall be written in a manner 
                                so as to be understood by the average 
                                plan participant, and
                                    ``(III) may be provided in written, 
                                electronic, or other appropriate form 
                                to the extent such form is reasonably 
                                accessible to persons to whom the 
                                notice is required to be provided.
                        The Secretary of Labor shall in the regulations 
                        prescribed under subclause (I) establish a 
                        model notice that a plan sponsor may use to 
                        meet the requirements of this subparagraph.
            ``(9) Adjustments disregarded in withdrawal liability 
        determination.--
                    ``(A) Benefit reductions.--Any benefit reductions 
                under this subsection shall be disregarded in 
                determining a plan's unfunded vested benefits for 
                purposes of determining an employer's withdrawal 
                liability under section 4201 of the Employee Retirement 
                Income Security Act of 1974.
                    ``(B) Surcharges.--Any surcharges under paragraph 
                (7) shall be disregarded in determining an employer's 
                withdrawal liability under section 4211 of such Act, 
                except for purposes of determining the unfunded vested 
                benefits attributable to an employer under section 
                4211(c)(4) of such Act or a comparable method approved 
                under section 4211(c)(5) of such Act.
                    ``(C) Simplified calculations.--The Pension Benefit 
                Guaranty Corporation shall prescribe simplified methods 
                for the application of this paragraph in determining 
                withdrawal liability.
    ``(f) Rules for Operation of Plan During Adoption and 
Rehabilitation Period.--
            ``(1) Compliance with rehabilitation plan.--
                    ``(A) In general.--A plan may not be amended after 
                the date of the adoption of a rehabilitation plan under 
                subsection (e) so as to be inconsistent with the 
                rehabilitation plan.
                    ``(B) Special rules for benefit increases.--A plan 
                may not be amended after the date of the adoption of a 
                rehabilitation plan under subsection (e) so as to 
                increase benefits, including future benefit accruals, 
                unless the plan actuary certifies that such increase is 
                paid for out of additional contributions not 
                contemplated by the rehabilitation plan, and, after 
                taking into account the benefit increase, the 
                multiemployer plan still is reasonably expected to 
                emerge from critical status by the end of the 
                rehabilitation period on the schedule contemplated in 
                the rehabilitation plan.
            ``(2) Restriction on lump sums and similar benefits.--
                    ``(A) In general.--Effective on the date the notice 
                of certification of the plan's critical status for the 
                initial critical year under subsection (b)(3)(D) is 
                sent, and notwithstanding section 411(d)(6), the plan 
                shall not pay--
                            ``(i) any payment, in excess of the monthly 
                        amount paid under a single life annuity (plus 
                        any social security supplements described in 
                        the last sentence of section 411(b)(1)(A)),
                            ``(ii) any payment for the purchase of an 
                        irrevocable commitment from an insurer to pay 
                        benefits, and
                            ``(iii) any other payment specified by the 
                        Secretary by regulations.
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                to a benefit which under section 411(a)(11) may be 
                immediately distributed without the consent of the 
                participant or to any makeup payment in the case of a 
                retroactive annuity starting date or any similar 
                payment of benefits owed with respect to a prior 
                period.
            ``(3) Adjustments disregarded in withdrawal liability 
        determination.--Any benefit reductions under this subsection 
        shall be disregarded in determining a plan's unfunded vested 
        benefits for purposes of determining an employer's withdrawal 
        liability under section 4201 of the Employee Retirement Income 
        Security Act of 1974.
            ``(4) Special rules for plan adoption period.--During the 
        rehabilitation plan adoption period--
                    ``(A) the plan sponsor may not accept a collective 
                bargaining agreement or participation agreement with 
                respect to the multiemployer plan that provides for--
                            ``(i) a reduction in the level of 
                        contributions for any participants,
                            ``(ii) a suspension of contributions with