[From the U.S. Government Printing Office via GPO Access]
[Enrolled Bill]
[DOCID: f:h4enr.txt]

        H.R.4

                       One Hundred Ninth Congress

                                 of the

                        United States of America


                          AT THE SECOND SESSION

          Begun and held at the City of Washington on Tuesday,
             the third day of January, two thousand and six


                                 An Act


 
 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 is--
                                                         percentage is--
                  1...............................................
                                                                     20 
                  2...............................................
                                                                     40 
                  3...............................................
                                                                     60 
                  4...............................................
                                                                     80.

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

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

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

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


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

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

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

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

                ``(ii) Base amount.--

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

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

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

                ``(v) Liquid assets.--The term `liquid assets' means 
            cash, marketable securities, and such other assets as 
            specified by the Secretary of the Treasury in regulations.
                ``(vi) Quarter.--The term `quarter' means, with respect 
            to any required installment, the 3-month period preceding 
            the month in which the due date for such installment 
            occurs.
            ``(F) Regulations.--The Secretary of the Treasury may 
        prescribe such regulations as are necessary to carry out this 
        paragraph.
    ``(k) Imposition of Lien Where Failure to Make Required 
Contributions.--
        ``(1) In general.--In the case of a plan to which this 
    subsection applies (as provided under paragraph (2)), if--
            ``(A) any person fails to make a contribution payment 
        required by section 302 and this section before the due date 
        for such payment, and
            ``(B) the unpaid balance of such payment (including 
        interest), when added to the aggregate unpaid balance of all 
        preceding such payments for which payment was not made before 
        the due date (including interest), exceeds $1,000,000,
    then there shall be a lien in favor of the plan in the amount 
    determined under paragraph (3) upon all property and rights to 
    property, whether real or personal, belonging to such 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, 
CFR) and that are also subject to the Defense Federal Acquisition 
Regulation Supplement (chapter 2 of title 48, CFR), 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 CFR 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 CFR 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 is--
                                                         percentage is--
                  1...............................................
                                                                     20 
                  2...............................................
                                                                     40 
                  3...............................................
                                                                     60 
                  4...............................................
                                                                     80.

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

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

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

 
 
 
``In the case of the following      The due date is:
 required installment:
  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 CFR 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           The portion is--
           or exchange is--
------------------------------------------------------------------------
Not more than $5,000,000.............  30 percent of the amount.
More than $5,000,000, but not more     $1,500,000, plus 35 percent of
 than $10,000,000.                      the amount in excess of
                                        $5,000,000.
More than $10,000,000, but not more    $3,250,000, plus 40 percent of
 than $15,000,000.                      the amount in excess of
                                        $10,000,000.
More than $15,000,000, but not more    $5,250,000, plus 45 percent of
 than $17,500,000.                      the amount in excess of
                                        $15,000,000.
More than $17,500,000, but not more    $6,375,000, plus 50 percent of
 than $20,000,000.                      the amount in excess of
                                        $17,500,000.
More than $20,000,000, but not more    $7,625,000, plus 60 percent of
 than $22,500,000.                      the amount in excess of
                                        $20,000,000.
More than $22,500,000, but not more    $9,125,000, plus 70 percent of
 than $25,000,000.                      the amount in excess of
                                        $22,500,000.
More than $25,000,000................  $10,875,000, plus 80 percent of
                                        the amount in excess of
                                        $25,000,000.''.
------------------------------------------------------------------------

        (2) Plans using attributable method.--Section 4225(a)(1)(B) of 
    such Act (29 U.S.C. 1405(a)(1)(B)) is amended to read as follows:
            ``(B) in the case of a plan using the attributable method 
        of allocating withdrawal liability, the unfunded vested 
        benefits attributable to employees of the employer.''.
        (3) Effective date.--The amendments made by this subsection 
    shall apply to sales occurring on or after January 1, 2007.
    (b) Withdrawal Liability Continues if Work Contracted Out.--
        (1) In general.--Clause (i) of section 4205(b)(2)(A) of such 
    Act (29 U.S.C. 1385(b)(2)(A)) is amended by inserting ``or to an 
    entity or entities owned or controlled by the employer'' after ``to 
    another location''.
        (2) Effective date.--The amendment made by this subsection 
    shall apply with respect to work transferred on or after the date 
    of the enactment of this Act.
    (c) Application of Rules to Plans Primarily Covering Employees in 
the Building and Construction Industry.--
        (1) In general.--Section 4210(b) of such Act (29 U.S.C. 
    1390(b)) is amended--
            (A) by striking paragraph (1); and
            (B) by redesignating paragraphs (2) through (4) as 
        paragraphs (1) through (3), respectively.
        (2) Fresh start option.--Section 4211(c)(5) of such Act (29 
    U.S.C. 1391(c)(5)) is amended by adding at the end the following 
    new subparagraph:
            ``(E) Fresh start option.--Notwithstanding paragraph (1), a 
        plan may be amended to provide that the withdrawal liability 
        method described in subsection (b) shall be applied by 
        substituting the plan year which is specified in the amendment 
        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 the 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. I22    ``(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 respect to 
            any period of service, or
                ``(iii) any new direct or indirect exclusion of younger 
            or newly hired employees from plan participation, and
            ``(B) no amendment of the plan which increases the 
        liabilities of the plan by reason of any increase in benefits, 
        any change in the accrual of benefits, or any change in the 
        rate at which benefits become nonforfeitable under the plan may 
        be adopted unless the amendment is required as a condition of 
        qualification under part I of subchapter D of chapter 1 or to 
        comply with other applicable law.
    ``(g) Expedited Resolution of Plan Sponsor Decisions.--If, within 
60 days of the due date for adoption of a funding improvement plan or a 
rehabilitation plan under subsection (e), the plan sponsor of a plan in 
endangered status or a plan in critical status has not agreed on a 
funding improvement plan or rehabilitation plan, then any member of the 
board or group that constitutes the plan sponsor may require that the 
plan sponsor enter into an expedited dispute resolution procedure for 
the development and adoption of a funding improvement plan or 
rehabilitation plan.
    ``(h) Nonbargained Participation.--
        ``(1) Both bargained and nonbargained employee-participants.--
    In the case of an employer that contributes to a multiemployer plan 
    with respect to both employees who are covered by one or more 
    collective bargaining agreements and employees who are not so 
    covered, if the plan is in endangered status or in critical status, 
    benefits of and contributions for the nonbargained employees, 
    including surcharges on those contributions, shall be determined as 
    if those nonbargained employees were covered under the first to 
    expire of the employer's collective bargaining agreements in effect 
    when the plan entered endangered or critical status.
        ``(2) Nonbargained employees only.--In the case of an employer 
    that contributes to a multiemployer plan only with respect to 
    employees who are not covered by a collective bargaining agreement, 
    this section shall be applied as if the employer were the 
    bargaining party, and its participation agreement with the plan 
    were a collective bargaining agreement with a term ending on the 
    first day of the plan year beginning after the employer is provided 
    the schedule or schedules described in subsections (c) and (e).
    ``(i) Definitions; Actuarial Method.--For purposes of this 
section--
        ``(1) Bargaining party.--The term `bargaining party' means--
            ``(A)(i) except as provided in clause (ii), an employer who 
        has an obligation to contribute under the plan; or
            ``(ii) in the case of a plan described under section 
        404(c), or a continuation of such a plan, the association of 
        employers that is the employer settlor of the plan; and
            ``(B) an employee organization which, for purposes of 
        collective bargaining, represents plan participants employed by 
        an employer who has an obligation to contribute under the plan.
        ``(2) Funded percentage.--The term `funded percentage' means 
    the percentage equal to a fraction--
            ``(A) the numerator of which is the value of the plan's 
        assets, as determined under section 431(c)(2), and
            ``(B) the denominator of which is the accrued liability of 
        the plan, determined using actuarial assumptions described in 
        section 431(c)(3).
        ``(3) Accumulated funding deficiency.--The term `accumulated 
    funding deficiency' has the meaning given such term in section 
    412(a).
        ``(4) Active participant.--The term `active participant' means, 
    in connection with a multiemployer plan, a participant who is in 
    covered service under the plan.
        ``(5) Inactive participant.--The term `inactive participant' 
    means, in connection with a multiemployer plan, a participant, or 
    the beneficiary or alternate payee of a participant, who--
            ``(A) is not in covered service under the plan, and
            ``(B) is in pay status under the plan or has a 
        nonforfeitable right to benefits under the plan.
        ``(6) Pay status.--A person is in pay status under a 
    multiemployer plan if--
            ``(A) at any time during the current plan year, such person 
        is a participant or beneficiary under the plan and is paid an 
        early, late, normal, or disability retirement benefit under the 
        plan (or a death benefit under the plan related to a retirement 
        benefit), or
            ``(B) to the extent provided in regulations of the 
        Secretary, such person is entitled to such a benefit under the 
        plan.
        ``(7) Obligation to contribute.--The term `obligation to 
    contribute' has the meaning given such term under section 4212(a) 
    of the Employee Retirement Income Security Act of 1974.
        ``(8) Actuarial method.--Notwithstanding any other provision of 
    this section, the actuary's determinations with respect to a plan's 
    normal cost, actuarial accrued liability, and improvements in a 
    plan's funded percentage under this section shall be based upon the 
    unit credit funding method (whether or not that method is used for 
    the plan's actuarial valuation).
        ``(9) Plan sponsor.--In the case of a plan described under 
    section 404(c), or a continuation of such a plan, the term `plan 
    sponsor' means the bargaining parties described under paragraph 
    (1).
        ``(10) Benefit commencement date.--The term `benefit 
    commencement date' means the annuity starting date (or in the case 
    of a retroactive annuity starting date, the date on which benefit 
    payments begin).''
    (b) Excise Taxes on Failures Relating to Multiemployer Plans in 
Endangered or Critical Status.--
        (1) In general.--Section 4971 of the Internal Revenue Code of 
    1986 is amended by redesignating subsection (g) as subsection (h) 
    and by inserting after subsection (f) the following:
    ``(g) Multiemployer Plans in Endangered or Critical Status.--
        ``(1) In general.--Except as provided in this subsection--
            ``(A) no tax shall be imposed under this section for a 
        taxable year with respect to a multiemployer plan if, for the 
        plan years ending with or within the taxable year, the plan is 
        in critical status pursuant to section 432, and
            ``(B) any tax imposed under this subsection for a taxable 
        year with respect to a multiemployer plan if, for the plan 
        years ending with or within the taxable year, the plan is in 
        endangered status pursuant to section 432 shall be in addition 
        to any other tax imposed by this section.
        ``(2) Failure to comply with funding improvement or 
    rehabilitation plan.--
            ``(A) In general.--If any funding improvement plan or 
        rehabilitation plan in effect under section 432 with respect to 
        a multiemployer plan requires an employer to make a 
        contribution to the plan, there is hereby imposed a tax on each 
        failure of the employer to make the required contribution 
        within the time required under such plan.
            ``(B) Amount of tax.--The amount of the tax imposed by 
        subparagraph (A) shall be equal to the amount of the required 
        contribution the employer failed to make in a timely manner.
            ``(C) Liability for tax.--The tax imposed by subparagraph 
        (A) shall be paid by the employer responsible for contributing 
        to or under the rehabilitation plan which fails to make the 
        contribution.
        ``(3) Failure to meet requirements for plans in endangered or 
    critical status.--If--
            ``(A) a plan which is in seriously endangered status fails 
        to meet the applicable benchmarks by the end of the funding 
        improvement period, or
            ``(B) a plan which is in critical status either--
                ``(i) fails to meet the requirements of section 432(e) 
            by the end of the rehabilitation period, or
                ``(ii) has received a certification under section 
            432(b)(3)(A)(ii) for 3 consecutive plan years that the plan 
            is not making the scheduled progress in meeting its 
            requirements under the rehabilitation plan,
        the plan shall be treated as having an accumulated funding 
        deficiency for purposes of this section for the last plan year 
        in such funding improvement, rehabilitation, or 3-consecutive 
        year period (and each succeeding plan year until such 
        benchmarks or requirements are met) in an amount equal to the 
        greater of the amount of the contributions necessary to meet 
        such benchmarks or requirements or the amount of such 
        accumulated funding deficiency without regard to this 
        paragraph.
        ``(4) Failure to adopt rehabilitation plan.--
            ``(A) In general.--In the case of a multiemployer plan 
        which is in critical status, there is hereby imposed a tax on 
        the failure of such plan to adopt a rehabilitation plan within 
        the time prescribed under section 432.
            ``(B) Amount of tax.--The amount of the tax imposed under 
        subparagraph (A) with respect to any plan sponsor for any 
        taxable year shall be the greater of--
                ``(i) the amount of tax imposed under subsection (a) 
            for the taxable year (determined without regard to this 
            subsection), or
                ``(ii) the amount equal to $1,100 multiplied by the 
            number of days during the taxable year which are included 
            in the period beginning on the first day of the 240-day 
            period described in section 432(e)(1)(A) and ending on the 
            day on which the rehabilitation plan is adopted.
            ``(C) Liability for tax.--
                ``(i) In general.--The tax imposed by subparagraph (A) 
            shall be paid by each plan sponsor.
                ``(ii) Plan sponsor.--For purposes of clause (i), the 
            term `plan sponsor' in the case of a multiemployer plan 
            means the association, committee, joint board of trustees, 
            or other similar group of representatives of the parties 
            who establish or maintain the plan.
        ``(5) Waiver.--In the case of a failure described in paragraph 
    (2) or (3) which is due to reasonable cause and not to willful 
    neglect, the Secretary may waive part or all of the tax imposed by 
    this subsection. For purposes of this paragraph, reasonable cause 
    includes unanticipated and material market fluctuations, the loss 
    of a significant contributing employer, or other factors to the 
    extent that the payment of tax under this subsection with respect 
    to the failure would be excessive or otherwise inequitable relative 
    to the failure involved.
        ``(6) Terms used in section 432.--For purposes of this 
    subsection, any term used in this subsection which is also used in 
    section 432 shall have the meaning given such term by section 
    432.''.
        (2) Controlled groups.--Section 4971(c)(2) of such Code is 
    amended--
            (A) by striking ``In the case of a plan other than a 
        multiemployer plan, if the'' and inserting ``If an'', and
            (B) by striking ``or (f)'' and inserting ``(f), or (g)''.
    (c) No Additional Contribution Required.--Section 412(b) of the 
Internal Revenue Code of 1986, as amended by this Act, is amended by 
adding at the end the following new paragraph:
        ``(3) Multiemployer plans in critical status.--Paragraph (1) 
    shall not apply in the case of a multiemployer plan for any plan 
    year in which the plan is in critical status pursuant to section 
    432. This paragraph shall only apply if the plan adopts a 
    rehabilitation plan in accordance with section 432(e) and complies 
    with such rehabilitation plan (and any modifications of the 
    plan).''.
    (d) Clerical Amendment.--The table of sections for subpart A of 
part III of subchapter D of chapter 1 of such Code is amended by adding 
at the end the following new item:

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

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

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

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

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

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

             Subtitle C--Sunset of Additional Funding Rules

SEC. 221. SUNSET OF ADDITIONAL FUNDING RULES.

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

                  TITLE III--INTEREST RATE ASSUMPTIONS

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

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

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

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

 
 
 
``In  the  case  of  plan  years    The applicable  percentage is:
 beginning in:
 
  2008............................      20 percent
  2009............................      40 percent
  2010............................      60 percent
  2011............................      80 percent.''.

    (b) Amendment to Internal Revenue Code of 1986.--Paragraph (3) of 
section 417(e) of the Internal Revenue Code of 1986 is amended to read 
as follows:
        ``(3) Determination of present value.--
            ``(A) In general.--For purposes of paragraphs (1) and (2), 
        the present value shall not be less than the present value 
        calculated by using the applicable mortality table and the 
        applicable interest rate.
            ``(B) Applicable mortality table.--For purposes of 
        subparagraph (A), the term `applicable mortality table' means a 
        mortality table, modified as appropriate by the Secretary, 
        based on the mortality table specified for the plan year under 
        subparagraph (A) of section 430(h)(3) (without regard to 
        subparagraph (C) or (D) of such section).
            ``(C) Applicable interest rate.--For purposes of 
        subparagraph (A), the term `applicable interest rate' means the 
        adjusted first, second, and third segment rates applied under 
        rules similar to the rules of section 430(h)(2)(C) for the 
        month before the date of the distribution or such other time as 
        the Secretary may by regulations prescribe.
            ``(D) Applicable segment rates.--For purposes of 
        subparagraph (C), the adjusted first, second, and third segment 
        rates are the first, second, and third segment rates which 
        would be determined under section 430(h)(2)(C) if--
                ``(i) section 430(h)(2)(D) were applied by substituting 
            the average yields for the month described in clause (ii) 
            for the average yields for the 24-month period described in 
            such section,
                ``(ii) section 430(h)(2)(G)(i)(II) were applied by 
            substituting `section 417(e)(3)(A)(ii)(II)' for `section 
            412(b)(5)(B)(ii)(II)', and
                ``(iii) the applicable percentage under section 
            430(h)(2)(G) were determined in accordance with the 
            following table:

 
 
 
``In  the  case  of  plan  years    The applicable  percentage is:
 beginning in:
 
  2008............................      20 percent
  2009............................      40 percent
  2010............................      60 percent
  2011............................      80 percent.''.

    (c) Effective Date.--The amendments made by this section shall 
apply with respect to plan years beginning after December 31, 2007.

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

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

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

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

            TITLE IV--PBGC GUARANTEE AND RELATED PROVISIONS

SEC. 401. PBGC PREMIUMS.

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

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

    (a) In General.--The plan sponsor of an eligible plan may elect to 
either--
        (1) have the rules of subsection (b) apply, or
        (2) have section 303 of the Employee Retirement Income Security 
    Act of 1974 and section 430 of the Internal Revenue Code of 1986 
    applied to its first taxable year beginning in 2008 by amortizing 
    the shortfall amortization base for such taxable year over a period 
    of 10 plan years (rather than 7 plan years) beginning with such 
    plan year.
    (b) Alternative Funding Schedule.--
        (1) In general.--If an election is made under subsection (a)(1) 
    to have this subsection apply to an eligible plan and the 
    requirements of paragraphs (2) and (3) are met with respect to the 
    plan--
            (A) in the case of any applicable plan year beginning 
        before January 1, 2008, the plan shall not have an accumulated 
        funding deficiency for purposes of section 302 of the Employee 
        Retirement Income Security Act of 1974 and sections 412 and 
        4971 of the Internal Revenue Code of 1986 if contributions to 
        the plan for the plan year are not less than the minimum 
        required contribution determined under subsection (e) for the 
        plan for the plan year, and
            (B) in the case of any applicable plan year beginning on or 
        after January 1, 2008, the minimum required contribution 
        determined under sections 303 of such Act and 430 of such Code 
        shall, for purposes of sections 302 and 303 of such Act and 
        sections 412, 430, and 4971 of such Code, be equal to the 
        minimum required contribution determined under subsection (e) 
        for the plan for the plan year.
        (2) Accrual restrictions.--
            (A) In general.--The requirements of this paragraph are met 
        if, effective as of the first day of the first applicable plan 
        year and at all times thereafter while an election under this 
        section is in effect, the plan provides that--
                (i) the accrued benefit, any death or disability 
            benefit, and any social security supplement described in 
            the last sentence of section 411(a)(9) of such Code and 
            section 204(b)(1)(G) of such Act, of each participant are 
            frozen at the amount of such benefit or supplement 
            immediately before such first day, and
                (ii) all other benefits under the plan are eliminated,
        but only to the extent the freezing or elimination of such 
        benefits would have been permitted under section 411(d)(6) of 
        such Code and section 204(g) of such Act if they had been 
        implemented by a plan amendment adopted immediately before such 
        first day.
            (B) Increases in section 415 limits.--If a plan provides 
        that an accrued benefit of a participant which has been subject 
        to any limitation under section 415 of such Code will be 
        increased if such limitation is increased, the plan shall not 
        be treated as meeting the requirements of this section unless, 
        effective as of the first day of the first applicable plan year 
        (or, if later, the date of the enactment of this Act) and at 
        all times thereafter while an election under this section is in 
        effect, the plan provides that any such increase shall not take 
        effect. A plan shall not fail to meet the requirements of 
        section 411(d)(6) of such Code and section 204(g) of such Act 
        solely because the plan is amended to meet the requirements of 
        this subparagraph.
        (3) Restriction on applicable benefit increases.--
            (A) In general.--The requirements of this paragraph are met 
        if no applicable benefit increase takes effect at any time 
        during the period beginning on July 26, 2005, and ending on the 
        day before the first day of the first applicable plan year.
            (B) Applicable benefit increase.--For purposes of this 
        paragraph, the term ``applicable benefit increase'' means, with 
        respect to any plan year, any increase in liabilities of the 
        plan by plan amendment (or otherwise provided in regulations 
        provided by the Secretary) which, but for this paragraph, would 
        occur during the plan year by reason of--
                (i) any increase in benefits,
                (ii) any change in the accrual of benefits, or
                (iii) any change in the rate at which benefits become 
            nonforfeitable under the plan.
        (4) Exception for imputed disability service.--Paragraphs (2) 
    and (3) shall not apply to any accrual or increase with respect to 
    imputed service provided to a participant during any period of the 
    participant's disability occurring on or after the effective date 
    of the plan amendment providing the restrictions under paragraph 
    (2) (or on or after July 26, 2005, in the case of the restrictions 
    under paragraph (3)) if the participant--
            (A) was receiving disability benefits as of such date, or
            (B) was receiving sick pay and subsequently determined to 
        be eligible for disability benefits as of such date.
    (c) Definitions.--For purposes of this section--
        (1) Eligible plan.--The term ``eligible plan'' means a defined 
    benefit plan (other than a multiemployer plan) to which sections 
    302 of such Act and 412 of such Code applies which is sponsored by 
    an employer--
            (A) which is a commercial airline passenger airline, or
            (B) the principal business of which is providing catering 
        services to a commercial passenger airline.
        (2) Applicable plan year.--The term ``applicable plan year'' 
    means each plan year to which the election under subsection (a)(1) 
    applies under subsection (d)(1)(A).
    (d) Elections and Related Terms.--
        (1) Years for which election made.--
            (A) Alternative funding schedule.--If an election under 
        subsection (a)(1) was made with respect to an eligible plan, 
        the plan sponsor may select either a plan year beginning in 
        2006 or a plan year beginning in 2007 as the first plan year to 
        which such election applies. The election shall apply to such 
        plan year and all subsequent years. The election shall be 
        made--
                (i) not later than December 31, 2006, in the case of an 
            election for a plan year beginning in 2006, or
                (ii) not later than December 31, 2007, in the case of 
            an election for a plan year beginning in 2007.
            (B) 10 year amortization.--An election under subsection 
        (a)(2) shall be made not later than December 31, 2007.
            (C) Election of new plan year for alternative funding 
        schedule.--In the case of an election under subsection (a)(1), 
        the plan sponsor may specify a new plan year in such election 
        and the plan year of the plan may be changed to such new plan 
        year without the approval of the Secretary of the Treasury.
        (2) Manner of election.--A plan sponsor shall make any election 
    under subsection (a) in such manner as the Secretary of the 
    Treasury may prescribe. Such election, once made, may be revoked 
    only with the consent of such Secretary.
    (e) Minimum Required Contribution.--In the case of an eligible plan 
with respect to which an election is made under subsection (a)(1)--
        (1) In general.--In the case of any applicable plan year during 
    the amortization period, the minimum required contribution shall be 
    the amount necessary to amortize the unfunded liability of the 
    plan, determined as of the first day of the plan year, in equal 
    annual installments (until fully amortized) over the remainder of 
    the amortization period. Such amount shall be separately determined 
    for each applicable plan year.
        (2) Years after amortization period.--In the case of any plan 
    year beginning after the end of the amortization period, section 
    302(a)(2)(A) of such Act and section 412(a)(2)(A) of such Code 
    shall apply to such plan, but the prefunding balance and funding 
    standard carryover balance as of the first day of the first of such 
    years under section 303(f) of such Act and section 430(f) of such 
    Code shall be zero.
        (3) Definitions.--For purposes of this section--
            (A) Unfunded liability.--The term ``unfunded liability'' 
        means the unfunded accrued liability under the plan, determined 
        under the unit credit funding method.
            (B) Amortization period.--The term ``amortization period'' 
        means the 17-plan year period beginning with the first 
        applicable plan year.
        (4) Other rules.--In determining the minimum required 
    contribution and amortization amount under this subsection--
            (A) the provisions of section 302(c)(3) of such Act and 
        section 412(c)(3) of such Code, as in effect before the date of 
        enactment of this section, shall apply,
            (B) a rate of interest of 8.85 percent shall be used for 
        all calculations requiring an interest rate, and
            (C) the value of plan assets shall be equal to their fair 
        market value.
        (5) Special rule for certain plan spinoffs.--For purposes of 
    subsection (b), if, with respect to any eligible plan to which this 
    subsection applies--
            (A) any applicable plan year includes the date of the 
        enactment of this Act,
            (B) a plan was spun off from the eligible plan during the 
        plan year but before such date of enactment,
    the minimum required contribution under paragraph (1) for the 
    eligible plan for such applicable plan year shall be an aggregate 
    amount determined as if the plans were a single plan for that plan 
    year (based on the full 12-month plan year in effect prior to the 
    spin-off). The employer shall designate the allocation of such 
    aggregate amount between such plans for the applicable plan year.
    (f) Special Rules for Certain Balances and Waivers.--In the case of 
an eligible plan with respect to which an election is made under 
subsection (a)(1)--
        (1) Funding standard account and credit balances.--Any charge 
    or credit in the funding standard account under section 302 of such 
    Act or section 412 of such Code, and any prefunding balance or 
    funding standard carryover balance under section 303 of such Act or 
    section 430 of such Code, as of the day before the first day of the 
    first applicable plan year, shall be reduced to zero.
        (2) Waived funding deficiencies.--Any waived funding deficiency 
    under sections 302 and 303 of such Act or section 412 of such Code, 
    as in effect before the date of enactment of this section, shall be 
    deemed satisfied as of the first day of the first applicable plan 
    year and the amount of such waived funding deficiency shall be 
    taken into account in determining the plan's unfunded liability 
    under subsection (e)(3)(A). In the case of a plan amendment adopted 
    to satisfy the requirements of subsection (b)(2), the plan shall 
    not be deemed to violate section 304(b) of such Act or section 
    412(f) of such Code, as so in effect, by reason of such amendment 
    or any increase in benefits provided to such plan's participants 
    under a separate plan that is a defined contribution plan or a 
    multiemployer plan.
    (g) Other Rules for Plans Making Election Under This Section.--
        (1) Successor plans to certain plans.--If--
            (A) an election under paragraph (1) or (2) of subsection 
        (a) is in effect with respect to any eligible plan, and
            (B) the eligible plan is maintained by an employer that 
        establishes or maintains 1 or more other defined benefit plans 
        (other than any multiemployer plan), and such other plans in 
        combination provide benefit accruals to any substantial number 
        of successor employees,
    the Secretary of the Treasury may, in the Secretary's discretion, 
    determine that any trust of which any other such plan is a part 
    does not constitute a qualified trust under section 401(a) of the 
    Internal Revenue Code of 1986 unless all benefit obligations of the 
    eligible plan have been satisfied. For purposes of this paragraph, 
    the term ``successor employee'' means any employee who is or was 
    covered by the eligible plan and any employees who perform 
    substantially the same type of work with respect to the same 
    business operations as an employee covered by such eligible plan.
        (2) Special rules for terminations.--
            (A) PBGC liability limited.--Section 4022 of the Employee 
        Retirement Income Security Act of 1974, as amended by this Act, 
        is amended by adding at the end the following new subsection:
    ``(h) Special Rule for Plans Electing Certain Funding 
Requirements.--If any plan makes an election under section 402(a)(1) of 
the Pension Protection Act of 2006 and is terminated effective before 
the end of the 10-year period beginning on the first day of the first 
applicable plan year--
        ``(1) this section shall be applied--
            ``(A) by treating the first day of the first applicable 
        plan year as the termination date of the plan, and
            ``(B) by determining the amount of guaranteed benefits on 
        the basis of plan assets and liabilities as of such assumed 
        termination date, and
        ``(2) notwithstanding section 4044(a), plan assets shall first 
    be allocated to pay the amount, if any, by which--
            ``(A) the amount of guaranteed benefits under this section 
        (determined without regard to paragraph (1) and on the basis of 
        plan assets and liabilities as of the actual date of plan 
        termination), exceeds
            ``(B) the amount determined under paragraph (1).''.
            (B) Termination premium.--In applying section 4006(a)(7)(A) 
        of the Employee Retirement Income Security Act of 1974 to an 
        eligible plan during any period in which an election under 
        subsection (a)(1) is in effect--
                (i) ``$2,500'' shall be substituted for ``$1,250'' in 
            such section if such plan terminates during the 5-year 
            period beginning on the first day of the first applicable 
            plan year with respect to such plan, and
                (ii) such section shall be applied without regard to 
            subparagraph (B) of section 8101(d)(2) of the Deficit 
            Reduction Act of 2005 (relating to special rule for plans 
            terminated in bankruptcy).
        The substitution described in clause (i) shall not apply with 
        respect to any plan if the Secretary of Labor determines that 
        such plan terminated as a result of extraordinary circumstances 
        such as a terrorist attack or other similar event.
        (3) Limitation on deductions under certain plans.--Section 
    404(a)(7)(C)(iv) of the Internal Revenue Code of 1986, as added by 
    this Act, shall not apply with respect to any taxable year of a 
    plan sponsor of an eligible plan if any applicable plan year with 
    respect to such plan ends with or within such taxable year.
        (4) Notice.--In the case of a plan amendment adopted in order 
    to comply with this section, any notice required under section 
    204(h) of such Act or section 4980F(e) of such Code shall be 
    provided within 15 days of the effective date of such plan 
    amendment. This subsection shall not apply to any plan unless such 
    plan is maintained pursuant to one or more collective bargaining 
    agreements between employee representatives and 1 or more 
    employers.
    (h) Exclusion of Certain Employees From Minimum Coverage 
Requirements.--
        (1) In general.--Section 410(b)(3) of such Code is amended by 
    striking the last sentence and inserting the following: ``For 
    purposes of subparagraph (B), management pilots who are not 
    represented in accordance with title II of the Railway Labor Act 
    shall be treated as covered by a collective bargaining agreement 
    described in such subparagraph if the management pilots manage the 
    flight operations of air pilots who are so represented and the 
    management pilots are, pursuant to the terms of the agreement, 
    included in the group of employees benefitting under the trust 
    described in such subparagraph. Subparagraph (B) shall not apply in 
    the case of a plan which provides contributions or benefits for 
    employees whose principal duties are not customarily performed 
    aboard an aircraft in flight (other than management pilots 
    described in the preceding sentence).''
        (2) Effective date.--The amendment made by this subsection 
    shall apply to years beginning before, on, or after the date of the 
    enactment of this Act.
    (i) Extension of Special Rule for Additional Funding 
Requirements.--In the case of an employer which is a commercial 
passenger airline, section 302(d)(12) of the Employee Retirement Income 
Security Act of 1974 and section 412(l)(12) of the Internal Revenue 
Code of 1986, as in effect before the date of the enactment of this 
Act, shall each be applied--
        (1) by substituting ``December 28, 2007'' for ``December 28, 
    2005'' in subparagraph (D)(i) thereof, and
        (2) without regard to subparagraph (D)(ii).
    (j) Effective Date.--Except as otherwise provided in this section, 
the provisions of and amendments made by this section shall apply to 
plan years ending after the date of the enactment of this Act.

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

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

SEC. 404. RULES RELATING TO BANKRUPTCY OF EMPLOYER.

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

SEC. 405. PBGC PREMIUMS FOR SMALL PLANS.

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

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

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

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

    (a) Modification of Phase-In of Guarantee.--Section 4022(b)(5) of 
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1322(b)(5)) is amended to read as follows:
    ``(5)(A) For purposes of this paragraph, the term `majority owner' 
means an individual who, at any time during the 60-month period ending 
on the date the determination is being made--
        ``(i) owns the entire interest in an unincorporated trade or 
    business,
        ``(ii) in the case of a partnership, is a partner who owns, 
    directly or indirectly, 50 percent or more of either the capital 
    interest or the profits interest in such partnership, or
        ``(iii) in the case of a corporation, owns, directly or 
    indirectly, 50 percent or more in value of either the voting stock 
    of that corporation or all the stock of that corporation.
For purposes of clause (iii), the constructive ownership rules of 
section 1563(e) of the Internal Revenue Code of 1986 (other than 
paragraph (3)(C) thereof) shall apply, including the application of 
such rules under section 414(c) of such Code.
    ``(B) In the case of a participant who is a majority owner, the 
amount of benefits guaranteed under this section shall equal the 
product of--
        ``(i) a fraction (not to exceed 1) the numerator of which is 
    the number of years from the later of the effective date or the 
    adoption date of the plan to the termination date, and the 
    denominator of which is 10, and
        ``(ii) the amount of benefits that would be guaranteed under 
    this section if the participant were not a majority owner.''
    (b) Modification of Allocation of Assets.--
        (1) Section 4044(a)(4)(B) of the Employee Retirement Income 
    Security Act of 1974 (29 U.S.C. 1344(a)(4)(B)) is amended by 
    striking ``section 4022(b)(5)'' and inserting ``section 
    4022(b)(5)(B)''.
        (2) Section 4044(b) of such Act (29 U.S.C. 1344(b)) is 
    amended--
            (A) by striking ``(5)'' in paragraph (2) and inserting 
        ``(4), (5),'', and
            (B) by redesignating paragraphs (3) through (6) as 
        paragraphs (4) through (7), respectively, and by inserting 
        after paragraph (2) the following new paragraph:
        ``(3) If assets available for allocation under paragraph (4) of 
    subsection (a) are insufficient to satisfy in full the benefits of 
    all individuals who are described in that paragraph, the assets 
    shall be allocated first to benefits described in subparagraph (A) 
    of that paragraph. Any remaining assets shall then be allocated to 
    benefits described in subparagraph (B) of that paragraph. If assets 
    allocated to such subparagraph (B) are insufficient to satisfy in 
    full the benefits described in that subparagraph, the assets shall 
    be allocated pro rata among individuals on the basis of the present 
    value (as of the termination date) of their respective benefits 
    described in that subparagraph.''.
    (c) Conforming Amendments.--
        (1) Section 4021 of the Employee Retirement Income Security Act 
    of 1974 (29 U.S.C. 1321) is amended--
            (A) in subsection (b)(9), by striking ``as defined in 
        section 4022(b)(6)'', and
            (B) by adding at the end the following new subsection:
    ``(d) For purposes of subsection (b)(9), the term `substantial 
owner' means an individual who, at any time during the 60-month period 
ending on the date the determination is being made--
        ``(1) owns the entire interest in an unincorporated trade or 
    business,
        ``(2) in the case of a partnership, is a partner who owns, 
    directly or indirectly, more than 10 percent of either the capital 
    interest or the profits interest in such partnership, or
        ``(3) in the case of a corporation, owns, directly or 
    indirectly, more than 10 percent in value of either the voting 
    stock of that corporation or all the stock of that corporation.
For purposes of paragraph (3), the constructive ownership rules of 
section 1563(e) of the Internal Revenue Code of 1986 (other than 
paragraph (3)(C) thereof) shall apply, including the application of 
such rules under section 414(c) of such Code.''.
        (2) Section 4043(c)(7) of such Act (29 U.S.C. 1343(c)(7)) is 
    amended by striking ``section 4022(b)(6)'' and inserting ``section 
    4021(d)''.
    (d) Effective Dates.--
        (1) In general.--Except as provided in paragraph (2), the 
    amendments made by this section shall apply to plan terminations--
            (A) under section 4041(c) of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1341(c)) with respect to which 
        notices of intent to terminate are provided under section 
        4041(a)(2) of such Act (29 U.S.C. 1341(a)(2)) after December 
        31, 2005, and
            (B) under section 4042 of such Act (29 U.S.C. 1342) with 
        respect to which notices of determination are provided under 
        such section after such date.
        (2) Conforming amendments.--The amendments made by subsection 
    (c) shall take effect on January 1, 2006.

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

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

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

    (a) In General.--Section 4041(b) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1341(b)) is amended by adding at the 
end the following new paragraph:
        ``(5) Special rule for certain plans where cessation or change 
    in membership of a controlled group.--
            ``(A) In general.--Except as provided in subparagraph (B), 
        if--
                ``(i) there is transaction or series of transactions 
            which result in a person ceasing to be a member of a 
            controlled group, and
                ``(ii) such person immediately before the transaction 
            or series of transactions maintained a single-employer plan 
            which is a defined benefit plan which is fully funded,
        then the interest rate used in determining whether the plan is 
        sufficient for benefit liabilities or to otherwise assess plan 
        liabilities for purposes of this subsection or section 
        4042(a)(4) shall be not less than the interest rate used in 
        determining whether the plan is fully funded.
            ``(B) Limitations.--Subparagraph (A) shall not apply to any 
        transaction or series of transactions unless--
                ``(i) any employer maintaining the plan immediately 
            before or after such transaction or series of 
            transactions--

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

                ``(ii) the employer maintaining the plan after the 
            transaction or series of transactions employs at least 20 
            percent of the employees located in the United States who 
            were employed by such employer immediately before the 
            transaction or series of transactions.
            ``(C) Fully funded.--For purposes of subparagraph (A), a 
        plan shall be treated as fully funded with respect to any 
        transaction or series of transactions if--
                ``(i) in the case of a transaction or series of 
            transactions which occur in a plan year beginning before 
            January 1, 2008, the funded current liability percentage 
            determined under section 302(d) for the plan year is at 
            least 100 percent, and
                ``(ii) in the case of a transaction or series of 
            transactions which occur in a plan year beginning on or 
            after such date, the funding target attainment percentage 
            determined under section 303 is, as of the valuation date 
            for such plan year, at least 100 percent.
            ``(D) 2 year limitation.--Subparagraph (A) shall not apply 
        to any transaction or series of transactions if the plan 
        referred to in subparagraph (A)(ii) is terminated under section 
        4041(c) or 4042 after the close of the 2-year period beginning 
        on the date on which the first such transaction occurs.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to any transaction or series of transactions occurring on and 
after the date of the enactment of this Act.

SEC. 410. MISSING PARTICIPANTS.

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

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

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

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

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

                          TITLE V--DISCLOSURE

SEC. 501. DEFINED BENEFIT PLAN FUNDING NOTICE.

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

                    ``(aa) the total assets (separately stating the 
                prefunding balance and the funding standard carryover 
                balance) and liabilities of the plan, determined in the 
                same manner as under section 303, for the plan year for 
                which the latest annual report filed under section 
                104(a) was filed and for the 2 preceding plan years, as 
                reported in the annual report for each such plan year, 
                and
                    ``(bb) the value of the plan's assets and 
                liabilities for the plan year to which the notice 
                relates as of the last day of the plan year to which 
                the notice relates determined using the asset valuation 
                under subclause (II) of section 4006(a)(3)(E)(iii) and 
                the interest rate under section 4006(a)(3)(E)(iv), and

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

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

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

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

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