H.R. 2830 — Pension Security and Transparency Act of 2005

[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2830 Introduced in House (IH)]






109th CONGRESS
  1st Session
                                H. R. 2830

 To amend the Employee Retirement Income Security Act of 1974 and the 
Internal Revenue Code of 1986 to reform the pension funding rules, and 
                          for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              June 9, 2005

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

_______________________________________________________________________

                                 A BILL


 
 To amend the Employee Retirement Income Security Act of 1974 and the 
Internal Revenue Code of 1986 to reform the pension funding rules, 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 2005''.
    (b) Table of Contents.--The table of contents for this Act 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. Limitations on distributions and benefit accruals under 
                            single-employer plans.
Sec. 104. 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. Limitations on distributions and benefit accruals under 
                            single-employer plans.
Sec. 114. Technical and conforming amendments.
                      Subtitle C--Other provisions

Sec. 121. Modification of transition rule to pension funding 
                            requirements.
Sec. 122. Treatment of nonqualified deferred compensation plans when 
                            employer defined benefit plan in at-risk 
                            status.
    TITLE II--FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS

 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. Removal of restrictions with respect to procedures applicable 
                            to disputes involving withdrawal liability.
        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.
          TITLE III--OTHER INTEREST-RELATED FUNDING PROVISIONS

Sec. 301. Interest rate assumption for determination of lump sum 
                            distributions.
Sec. 302. Interest rate assumption for applying benefit limitations to 
                            lump sum distributions.
          TITLE IV--IMPROVEMENTS IN PBGC GUARANTEE PROVISIONS

Sec. 401. Increases in PBGC premiums.
                          TITLE V--DISCLOSURE

Sec. 501. Defined benefit plan funding notices.
Sec. 502. Additional disclosure requirements.
Sec. 503. Notice to participants and beneficiaries of section 4010 
                            filings with the PBGC.
                      TITLE VI--INVESTMENT ADVICE

Sec. 601. Amendments to Employee Retirement Income Security Act of 1974 
                            providing prohibited transaction exemption 
                            for provision of investment advice.
Sec. 602. Amendments to Internal Revenue Code of 1986 providing 
                            prohibited transaction exemption for 
                            provision of investment advice.
                    TITLE VII--DEDUCTION LIMITATIONS

Sec. 701. Increase in deduction limits.
Sec. 702. Updating deduction rules for combination of plans.

 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 306 of 
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1082 
through 1085a) 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 further by 
inserting after section 301 the following new section:

                      ``minimum funding standards

    ``Sec. 302. (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(i)) shall be paid by any employer responsible for 
        making contributions to or under the plan.
            ``(2) Joint and several liability where employer member of 
        controlled group.--In the case of a single-employer plan, 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), 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 
                subparagraphs (B) and (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(j), 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 amortization payment required to be 
                made for such plan year with respect to any 
                amortization described in subparagraph (B) of any 
                waived portion of the minimum funding standard 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 shortfall amortization 
                                charge (within the meaning of section 
                                303(c)(1)) for the plan year, and
                                    ``(II) the aggregate total of 
                                shortfall amortization installments 
                                determined for succeeding plan years 
                                under section 303(c)(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 
                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 the Secretary of the Treasury 
                determines such analysis is not necessary because the 
                taking into account of such member would not 
                significantly affect the determination under this 
                paragraph.
            ``(6) Notice to employee organizations.--
                    ``(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 employee organization representing employees 
                covered by the affected plan, and 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) 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 substantial business 
        hardship (as determined under subsection (c)(2)) 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 
306 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 2005.

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 further by inserting after section 302 the 
following new section.

``minimum funding standards for single-employer defined benefit pension 
                                 plans

    ``Sec. 303. (a) Minimum Required Contribution.--
            ``(1) In general.--For purposes of section 302(a)(2)(A), 
        except as otherwise provided in this subsection, the minimum 
        required contribution with respect to a plan for a plan year is 
        the target normal cost of the plan for the plan year.
            ``(2) Shortfall amortization charge.--In any case in which 
        the value of plan assets (determined without regard to 
        subsection (e)(1)) of the plan for the plan year which are held 
        by the plan immediately before the valuation date is less than 
        the funding target of the plan for the plan year, the minimum 
        required contribution with respect to the plan for the plan 
        year is the sum of the amount determined under paragraph (1) 
        plus a shortfall amortization charge for such plan year 
        determined under subsection (c).
            ``(3) Credit for excess assets.--In any case in which the 
        value of plan assets of the plan for the plan year which are 
        held by the plan immediately before the valuation date exceed 
        the funding target of the plan for the plan year, the minimum 
        required contribution with respect to the plan for the plan 
        year is the amount determined under paragraph (1), reduced by 
        such excess.
            ``(4) Pre-funding balance.--In the case of any plan year in 
        which--
                    ``(A) the ratio (expressed as a percentage) which--
                            ``(i) the value of plan assets (determined 
                        without regard to subsection (e)(1)(B)) for the 
                        preceding plan year, bears to
                            ``(ii) the funding target of the plan for 
                        the preceding plan year (determined without 
                        regard to subsection (g)(1)),
                is at least 80 percent, and
                    ``(B) the plan sponsor elects (in such form and 
                manner as shall be prescribed in regulations of the 
                Secretary of the Treasury) to credit against the 
                minimum required contribution for the current plan year 
                all or a portion of the funding standard carryover 
                balance and the pre-funding balance (to the extent 
                provided in subsection (h)) for the preceding plan year 
                (not in excess of such minimum required contribution),
        the minimum required contribution for the plan year shall be 
        reduced by the amount so credited by the plan sponsor.
    ``(b) Target Normal Cost.--For purposes of this section, subject to 
subsection (g)(2), 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. 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 shall be treated as having accrued during the 
current plan year.
    ``(c) Shortfall Amortization Charge.--
            ``(1) In general.--The shortfall amortization charge for a 
        plan for any plan year is the aggregate total 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.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the plan sponsor shall determine, with respect to the 
                shortfall amortization base of the plan for any plan 
                year, the amounts necessary to amortize such shortfall 
                amortization base, in level annual installments over a 
                period of 7 plan years beginning with such plan year. 
                The annual installment of such amortization for each 
                plan year in such 7-plan-year period is the shortfall 
                amortization installment for such plan year with 
                respect to such shortfall amortization base.
                    ``(B) Computation assumptions.--The determination 
                of any annual installment under subparagraph (A) for 
                any plan year shall be made as of the valuation date 
                for such plan year, using the effective rate of 
                interest for the plan for such plan year.
            ``(3) Shortfall amortization base.--The shortfall 
        amortization base of a plan for a plan year is the excess (if 
        any) of--
                    ``(A) the funding shortfall of such plan for such 
                plan year, over
                    ``(B) the present value (determined using the 
                effective interest rate of the plan for the plan year) 
                of the aggregate total of the shortfall amortization 
                installments, for such plan year and the 5 succeeding 
                plan years, which have been determined with respect to 
                the shortfall amortization bases of the plan for each 
                of the 6 plan years 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 for the 
                plan year which are held by the plan immediately before 
                the valuation date.
            ``(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 
        shortfall amortization charge for such plan year and succeeding 
        plan years, the shortfall amortization base for all preceding 
        plan years shall be reduced to zero.
    ``(d) Rules Relating to Funding Target.--For purposes of this 
section--
            ``(1) Funding target.--Except as provided in subsection 
        (g)(1), the funding target of a plan for a plan year is the 
        present value of all liabilities to participants and their 
        beneficiaries under the plan for 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, 
                bears to
                    ``(B) the funding target of the plan for the plan 
                year (determined without regard to subsection (g)(1)).
    ``(e) Valuation of Plan Assets and Liabilities.--
            ``(1) Value of plan assets.--For purposes of this section 
        (other than paragraph (4) and subsections (a)(2) and (h)(3)), 
        the term `value of plan assets' means the excess of the value 
        of plan assets (determined without regard to this paragraph) 
        over the sum of--
                    ``(A) the pre-funding balance of the plan 
                maintained under subsection (h)(1), and
                    ``(B) the funding standard carryover balance of the 
                plan maintained under subsection (h)(2).
            ``(2) 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.
            ``(3) 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 500 or fewer 
                participants, the plan may designate any day during the 
                plan year as its valuation date for such plan year. 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 
                employees of 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.
            ``(4) Authorization of use of actuarial value.--For 
        purposes of this section, the value of plan assets (determined 
        without regard to paragraph (1)) 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, 
        except that--
                    ``(A) any such method providing for averaging of 
                fair market values may not provide for averaging of 
                such values over more than the current plan year and 
                the 2 preceding plan years, and
                    ``(B) any such method may 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.
            ``(5) Accounting for contribution receipts.--For purposes 
        of this section--
                    ``(A) Contributions for prior plan years taken into 
                account.--For purposes of determining the value of plan 
                assets for any current plan year, in any case in which 
                a contribution properly allocable to amounts owed for a 
                preceding plan year is made on or after the valuation 
                date of the plan for such current plan year, such 
                contribution shall be taken into account, except that 
                any such contribution made during any such current plan 
                year beginning after 2006 shall be taken into account 
                only in an amount equal to its present value 
                (determined using the effective rate of interest for 
                the plan for the preceding plan year) as of the 
                valuation date of the plan for such current plan year.
                    ``(B) Contributions for current plan year 
                disregarded.--For purposes of determining the value of 
                plan assets for any current plan year, contributions 
                which are properly allocable to amounts owed for such 
                plan year shall not be taken into account, and, in the 
                case of any such contribution made before the valuation 
                date of the plan for such plan year, such value of plan 
                assets shall be reduced for interest on such amount 
                determined using the effective rate of interest of the 
                plan for the preceding plan year for the period 
                beginning when such payment was made and ending on the 
                valuation date of the plan.
            ``(6) Accounting for plan liabilities.--For purposes of 
        this section--
                    ``(A) Liabilities taken into account for current 
                plan year.--In determining the value of liabilities 
                under a plan for a plan year, liabilities shall be 
                taken into account to the extent attributable to 
                benefits (including any early retirement or similar 
                benefit) accrued as of the beginning of the plan year.
                    ``(B) Accruals during current plan year 
                disregarded.--For purposes of subparagraph (A), 
                benefits accrued during such plan year (after those 
                taken into account under subparagraph (A)) shall not be 
                taken into account, irrespective of whether the 
                valuation date of the plan for such plan year is later 
                than the first day of such plan year.
    ``(f) 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 liabilities referred to in 
                subsection (d)(1) would result in an amount equal to 
                the funding target of the plan for such plan year.
                    ``(B) Application to 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 liabilities 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 liabilities 
                        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 liabilities 
                        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 a 3-year weighted average of 
                        yields on investment grade corporate bonds with 
                        varying maturities.
                            ``(ii) 3-year weighted average.--The term 
                        `3-year weighted average' means an averaging 
                        methodology under which the most recent year is 
                        weighted 50 percent, the year preceding such 
                        year is weighted 35 percent, and the second 
                        year preceding such year is weighted 15 
                        percent.
                    ``(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 administrator, any 
                of the 4 months which precede such month. Any election 
                made under this subparagraph shall apply to the plan 
                year for which made and all succeeding plan years 
                unless 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 2006 or 2007, the 
                        first, second, and third segment rates 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 2005), 
                                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 
                        2006 and 66\2/3\ percent for plan years 
                        beginning in 2007.
            ``(3) Mortality table.--
                    ``(A) In general.--The mortality tables used in 
                determining any present value or making any computation 
                under this section shall be the RP-2000 Combined 
                Mortality Table, as published by the Society of 
                American Actuaries, as in effect on the date of the 
                enactment of the Pension Protection Act of 2005 and as 
                revised from time to time under subparagraph (B).
                    ``(B) Periodic revision.--The Secretary of the 
                Treasury shall (at least every 10 years) make revisions 
                in any tables in effect under this paragraph to reflect 
                the actual experience of pension plans and projected 
                trends in such experience.
                    ``(C) Transition rule.--Under regulations of the 
                Secretary of the Treasury, any difference in 
                assumptions as set forth in the mortality table 
                specified in subparagraph (A) and assumptions as set 
                forth in the mortality table described in section 
                302(d)(7)(C)(ii) (as in effect for plan years beginning 
                in 2005) shall be phased in ratably over the first 
                period of 5 plan years beginning in or after 2006 so as 
                to be fully effective for the fifth plan year.
            ``(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 single-employer 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 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
                            ``(ii) 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.
    ``(g) Special Rules for at-Risk Plans.--
            ``(1) Funding target for plans in at-risk status.--
                    ``(A) In general.--In any case in which a plan is 
                in at-risk status for a plan year, the funding target 
                of the plan for the plan year is the sum of--
                            ``(i) the present value of all liabilities 
                        to participants and their beneficiaries under 
                        the plan for the plan year, as determined by 
                        using, in addition to the actuarial assumptions 
                        described in subsection (f), the supplemental 
                        actuarial assumptions described in subparagraph 
                        (B), plus
                            ``(ii) a loading factor determined under 
                        subparagraph (C).
                    ``(B) Supplemental actuarial assumptions.--The 
                actuarial assumptions used in determining the valuation 
                of the funding target shall include, in addition to the 
                actuarial assumptions described in subsection (f), an 
                assumption that all participants will elect benefits at 
                such times and in such forms as will result in the 
                highest present value of liabilities under subparagraph 
                (A)(i).
                    ``(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.--
                    ``(A) In general.--In any case in which a plan is 
                in at-risk status for a plan year, the target normal 
                cost of the plan for such plan year shall be the sum 
                of--
                            ``(i) the present value of all benefits 
                        which are expected to accrue under the plan 
                        during the plan year, determined under the 
                        actuarial assumptions used under paragraph (1), 
                        plus
                            ``(ii) the loading factor under paragraph 
                        (1)(C), excluding the portion of the loading 
                        factor described in paragraph (1)(C)(i).
                    ``(B) Minimum amount.--In no event shall the target 
                normal cost of a plan determined under this paragraph 
                be less than the target normal cost of such plan as 
                determined without regard to this paragraph.
            ``(3) Determination of at-risk status.--For purposes of 
        this subsection, a plan is in `at-risk status' for a plan year 
        if the funding target attainment percentage of the plan for the 
        preceding plan year was less than 60 percent.
            ``(4) Transition between applicable funding targets and 
        between applicable target normal cost.--
                    ``(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 this 
                paragraph, the `transition percentage' for a plan year 
                is the product derived by multiplying--
                            ``(i) 20 percent, by
                            ``(ii) the number of plan years during the 
                        period described in subparagraph (A).
    ``(h) Pre-Funding and Funding Standard Carryover Balances.--
            ``(1) Pre-funding balance.--
                    ``(A) In general.--The plan sponsor of a pension 
                plan which is a single-employer plan shall maintain a 
                pre-funding balance for purposes of this subsection. 
                Such balance 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 (3).
                    ``(B) Increases.--As of the valuation date for each 
                plan year beginning after 2006, the pre-funding 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 (increased by 
                        interest on any portion of such minimum 
                        required contribution remaining unpaid, at the 
                        effective interest rate for the plan for the 
                        preceding plan year, for the period beginning 
                        with the first day of such preceding plan year 
                        and ending on the date that payment of such 
                        portion is made).
                    ``(C) Decreases.--As of the valuation date for each 
                plan year after 2006, the pre-funding balance of a plan 
                shall be decreased (but not below zero) by the sum of--
                            ``(i) the amount credited under subsection 
                        (a)(4) (if any) in reducing the minimum 
                        required contribution of the plan for the 
                        preceding plan year, and
                            ``(ii) the amount elected by the plan 
                        sponsor as a reduction in the pre-funding 
                        balance (for purposes of the determination 
                        under subsection (e)(1) and any other purpose 
                        under this section).
                    ``(D) Coordination with funding standard carryover 
                balance.--To the extent that any plan has a funding 
                standard carryover balance greater than zero--
                            ``(i) no amount of the pre-funding balance 
                        of such plan may be credited under subsection 
                        (a)(4) in reducing the minimum required 
                        contribution, and
                            ``(ii) no election may be made under 
                        subparagraph (C)(ii).
                    ``(E) No use of balance to reduce minimum required 
                contribution if used to avoid shortfall amortization.--
                The amount of the pre-funding balance of such plan may 
                be credited under subsection (a)(4) in reducing the 
                minimum required contribution only if the plan sponsor 
                has elected to apply subsection (a)(2) to the plan for 
                such plan year by substituting `subsection (e)(1)(B)' 
                for `subsection (e)(1)'.
            ``(2) Funding standard carryover balance.--
                    ``(A) In general.--The plan sponsor of a pension 
                plan to which this paragraph applies shall maintain a 
                funding standard carryover balance for purposes of this 
                subsection. Such balance shall consist of a beginning 
                balance determined under subparagraph (C), decreased to 
                the extent provided in subparagraph (D), and adjusted 
                further as provided in paragraph (3).
                    ``(B) Plans to which this paragraph applies.--This 
                paragraph applies to any plan which--
                            ``(i) is a single-employer plan subject to 
                        this part,
                            ``(ii) was in effect for a plan year 
                        beginning in 2005, and
                            ``(iii) 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.
                    ``(C) Beginning balance.--The beginning balance of 
                the funding standard carryover balance shall be the 
                positive balance described in subparagraph (B)(iii).
                    ``(D) Decreases.--As of the valuation date for each 
                plan year after 2006, the funding standard carryover 
                balance of a plan shall be decreased (but not below 
                zero) by the sum of--
                            ``(i) the amount credited under subsection 
                        (a)(4) (if any) in reducing the minimum 
                        required contribution of the plan for the 
                        preceding plan year, and
                            ``(ii) the amount elected by the plan 
                        sponsor as a reduction in the funding standard 
                        carryover balance (for purposes of the 
                        determination under subsection (e)(1) and any 
                        other purpose under this section).
            ``(3) Adjustments.--In determining the pre-funding balance 
        or the funding standard carryover balance of a plan as of the 
        valuation date of the plan (before applying any increase or 
        decrease under paragraph (1) or (2)), the plan sponsor shall, 
        in accordance with regulations which shall be prescribed by the 
        Secretary of the Treasury, adjust such balance of the plan so 
        as to reflect the rate of net gain or loss (determined, 
        notwithstanding subsection (e)(4), on the basis of fair market 
        value) experienced by all plan assets for the period beginning 
        with the valuation date for the preceding plan year and ending 
        with the date preceding the valuation date for the current plan 
        year, properly taking into account, in accordance with such 
        regulations, all contributions, distributions, and other plan 
        payments made during such period.
            ``(4) Elections.--Except as otherwise provided in this 
        subsection, any election made under this subsection shall be 
        made at such time and in such form and manner as the Secretary 
        of the Treasury may provide.
            ``(5) Coordination with waivers.--For purposes of this 
        subsection, the term `minimum required contribution' means for 
        any plan year the minimum required contribution for such plan 
        year determined without regard to this subsection and by taking 
        into account any waiver under section 302(c) and any waiver 
        amortization charge under subsection (j) for such plan year.
    ``(i) 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 made after the valuation date for such plan 
        year shall be increased by interest, for the period from the 
        valuation date to 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) Interest penalty for failure to meet 
                accelerated quarterly payment schedule.--In any case in 
                which the plan has a funding shortfall for the 
                preceding plan year, if the required installment is not 
                paid in full, then the minimum required contribution 
                for the plan year (as increased under paragraph (2)) 
                shall be further increased by an amount equal to the 
                interest on the amount of the underpayment for the 
                period of the underpayment, using an interest rate 
                equal to the excess of--
                            ``(i) 175 percent of the Federal mid-term 
                        rate (as in effect under section 1274 of the 
                        Internal Revenue Code of 1986 for the 1st month 
                        of such plan year), over
                            ``(ii) the effective rate of interest for 
                        the plan for the plan year.
                    ``(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 (without regard 
                                to any waiver under section 302(c)) to 
                                the plan for the plan year under this 
                                section, or
                                    ``(II) in the case of a plan year 
                                beginning after 2006, 100 percent of 
                                the minimum required contribution 
                                (without regard 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 that 
                would be described in subsection (e)(3)(B) if `100' 
                were substituted for `500' therein) 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 
                subparagraph:
                            ``(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.
    ``(j) Waiver Amortization Charge.--
            ``(1) In general.--The minimum required contribution for 
        any plan year under subsection (a) shall be increased by the 
        amount of the waiver amortization charge (if any) for such plan 
        year.
            ``(2) Determination of waiver amortization charge.--The 
        waiver amortization charge 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 such plan year and each of the 4 preceding plan years.
            ``(3) Waiver amortization installment.--For purposes of 
        paragraph (2), the plan sponsor shall determine, with respect 
        to the waiver amortization base of the plan for any plan year, 
        the amounts necessary to amortize such waiver amortization 
        base, in level annual installments over a period of 5 plan 
        years beginning with such plan year. The annual installment of 
        such amortization for each plan year in such 5-plan year period 
        is the waiver amortization installment for such plan year with 
        respect to such waiver amortization base.
            ``(4) Computation assumptions.--The determination of any 
        annual installment under paragraph (2) for any plan year shall 
        be made as of the valuation date for such plan year, using the 
        effective rate of interest for the plan for the preceding plan 
        year.
            ``(5) Waiver amortization base.--The waiver amortization 
        base of a plan for a plan year is the excess (if any) of--
                    ``(A) the portion of the minimum required 
                contribution of such plan waived under section 302(c) 
                for such plan year, over
                    ``(B) the aggregate total of the waiver 
                amortization installments, for such plan year and the 3 
                succeeding plan years, which have been determined with 
                respect to the waiver amortization bases of the plan 
                for each of the 4 plan years preceding such plan year.
    ``(k) Imposition of Lien Where Failure to Make Required 
Contributions.--
            ``(1) In general.--In the case of a plan covered under 
        section 4021 of this Act and 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 defined benefit plan which is a single-
        employer plan 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 (i).
                    ``(B) Due date; required installment.--The terms 
                `due date' and `required installment' have the meanings 
                given such terms by subsection (i), 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 2005.

SEC. 103. LIMITATIONS ON DISTRIBUTIONS AND BENEFIT ACCRUALS UNDER 
              SINGLE-EMPLOYER PLANS.

    (a) Prohibition of Shutdown Benefits and Other Unpredictable 
Contingent Event Benefits 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) Prohibition of Shutdown Benefits and Other Unpredictable 
Contingent Event Benefits Under Single-Employer Plans.--
            ``(1) In general.--No pension plan which is a single-
        employer plan may provide benefits which are payable upon the 
        occurrence of--
                    ``(A) a plant shutdown, or
                    ``(B) any other unpredictable contingent event.
            ``(2) Unpredictable contingent event.--For purposes of this 
        subsection, the term `unpredictable contingent event' means an 
        event other than--
                    ``(A) attainment of any age, performance of any 
                service, receipt or derivation of any compensation, or 
                the occurrence of death or disability, or
                    ``(B) an event which is reasonably and reliably 
                predictable (as determined by the Secretary of the 
                Treasury).''.
    (b) Other Limits on Benefits and Benefit Accruals.--
            (1) In general.--Section 206 of such Act (as amended by 
        subsection (a)) is amended further by adding at the end the 
        following new subsection:
    ``(h) Funding-Based Limits on Benefits and Benefit Accruals Under 
Single-Employer Plans.--
            ``(1) Limitations on plan amendments increasing liability 
        for benefits.--
                    ``(A) In general.--No amendment to 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 to the plan may take 
                effect during any plan year if the funding target 
                attainment percentage as of the valuation date of the 
                plan 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 date of the plan year (or if later, the 
                effective date of the amendment), upon payment by the 
                plan sponsor of a contribution 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 a funding 
                        target attainment percentage of 80 percent.
            ``(2) Funding-based limitation on certain forms of 
        distribution.--A single-employer plan shall provide that, in 
        any case in which the plan's funding target attainment 
        percentage as of the valuation date of the plan for a plan year 
        is less than 80 percent, the plan may not after such date pay 
        any prohibited payment (as defined in section 206(e)).
            ``(3) Limitations on benefit accruals for plans with severe 
        funding shortfalls.--A single-employer plan shall provide that, 
        in any case in which the plan's funding target attainment 
        percentage as of the valuation date of the plan for a plan year 
        is less than 60 percent, all future benefit accruals under the 
        plan shall cease as of such date.
            ``(4) New plans.--Paragraphs (1) and (3) 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.
            ``(5) Presumed underfunding for purposes of benefit 
        limitations based on prior year's funding status.--
                    ``(A) Presumption of continued underfunding.--In 
                any case in which a benefit limitation under paragraph 
                (1), (2), or (3) has been applied to a plan with 
                respect to the plan year preceding the current plan 
                year, the funding target attainment percentage of the 
                plan as of the valuation date of the plan for the 
                current plan year shall be presumed to be equal to the 
                funding target attainment percentage of the plan as of 
                the valuation date of the plan for the preceding plan 
                year until the enrolled actuary of the plan certifies 
                the actual funding target attainment percentage of the 
                plan as of the valuation date of the plan for the 
                current plan year.
                    ``(B) Presumption of underfunding after 10th 
                month.--In any case in which no such certification is 
                made with respect to the plan before the first day of 
                the 10th month of the current plan year, for purposes 
                of paragraphs (1), (2), and (3), the plan's funding 
                target attainment percentage shall be conclusively 
                presumed to be less than 60 percent as of the first day 
                of such 10th month, and such day shall be deemed, for 
                purposes of such paragraphs, to be the valuation date 
                of the plan for the current plan year.
                    ``(C) Presumption of underfunding after 4th month 
                for nearly underfunded plans.--In any case in which--
                            ``(i) a benefit limitation under paragraph 
                        (1), (2), or (3) did not apply to a plan with 
                        respect to the plan year preceding the current 
                        plan year, but the 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 
                        funding target attainment percentage of the 
                        plan as of the valuation date 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 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 funding target 
                attainment percentage of the plan as of the valuation 
                date of the plan for such preceding plan year.
            ``(6) Restoration by plan amendment of benefits or benefit 
        accrual.--In any case in which a prohibition under paragraph 
        (2) of the payment of lump sum distributions or benefits in any 
        other accelerated form or a cessation of benefit accruals under 
        paragraph (3) is applied to a plan with respect to any plan 
        year and such prohibition or cessation, as the case may be, 
        ceases to apply to any subsequent plan year, the plan may 
        provide for the resumption of such benefit payment or such 
        benefit accrual only by means of the adoption of a plan 
        amendment after the valuation date of the plan for such 
        subsequent plan year. The preceding sentence shall not apply to 
        a prohibition or cessation required by reason of paragraph (5).
            ``(7) Funding target attainment percentage.--For purposes 
        of this subsection, the term `funding target attainment 
        percentage' has the meaning provided such term under section 
        303(d)(2).''.
            (2) Notice requirement.--
                    (A) In general.--Section 101 of such Act (29 U.S.C. 
                1021) is amended--
                            (i) by redesignating subsection (j) as 
                        subsection (k); and
                            (ii) 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 after the plan has become subject to the restriction described 
in section 206(h)(2) or at such other time as may be deterimined by the 
Secretary.''.
                    (B) Penalty.--Section 502(c)(1)(A) of such Act (29 
                U.S.C. 1132(c)(1)(A)) is amended by striking ``section 
                606'' and all that follows through ``101(f)'' and 
                inserting ``section 606, 101(e)(1), 101(f), or 
                101(j)''.
    (c) Special Rule for Plan Amendments.--A plan shall not fail to 
meet the requirements of section 204(g) of the Employee Retirement 
Income Security Act of 1974 or section 411(d)(6) of the Internal 
Revenue Code of 1986 solely by reason of the adoption by the plan of an 
amendment necessary to meet the requirements of the amendments made by 
this section.
    (d) Effective Date.--
            (1) Shutdown benefits.--Except as provided in paragraph 
        (3), the amendments made by subsection (a) shall apply with 
        respect to plant shutdowns, or other unpredictable contingent 
        events, occurring after 2006.
            (2) Other benefits.--Except as provided in paragraph (3), 
        the amendments made by subsection (b) shall apply with respect 
        to plan years beginning after 2006.
            (3) 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 the date of the enactment of this 
        Act, the amendments made by this subsection 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, 2009.
        For purposes of clause (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 subsection shall not be treated as a termination of such 
        collective bargaining agreement.

SEC. 104. TECHNICAL AND CONFORMING AMENDMENTS.

    (a) Security Required for Plan Amendment Resulting in Significant 
Underfunding.--Section 307 of the Employee Retirement Income Security 
Act of 1974 (29 U.S.C. 1085b) is amended--
            (1) in subsection (a)(1), by striking ``current liability 
        under the plan'' and inserting ``the funding target of the 
        plan'';
            (2) in subsection (a)(2), by striking ``funded current 
        liability percentage'' and inserting ``funding target 
        attainment percentage'', and by striking ``unfunded current 
        liability'' and inserting ``unfunded liabilities'';
            (3) in subsection (c)(1)(A), by striking ``funded current 
        liability percentage'' and inserting ``funding target 
        attainment percentage'', and by ``unfunded current liability'' 
        and inserting ``unfunded liabilities'';
            (4) in subsection (c)(1)(B), by striking ``current 
        liability'' and inserting ``funding target'';
            (5) in subsection (d), by striking ``funded current 
        liability percentage'' each place it appears and inserting 
        ``funding target attainment percentage''; and
            (6) in subsection (f), by striking ``the terms'' and all 
        that follows and inserting the following: ``the terms `funding 
        target' and `funding target attainment percentage' shall have 
        the meanings given such terms by sections 303(d) and 303(g)(4), 
        respectively, and the term `unfunded liabilities' means, with 
        respect to any plan year, the excess (if any) of the funding 
        target of the plan over the value of the plan's assets 
        determined under section 303(e)(4).''
    (b) Miscellaneous Amendments.--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(i)'';
            (2) in section 101(f)(2)(B), by striking clause (i) and 
        inserting the following:
                            ``(i) a statement as to whether--
                                    ``(I) in the case of a single-
                                employer plan, the plan's funding 
                                target attainment percentage (as 
                                defined in section 303(g)(4)), or
                                    ``(II) in the case of a 
                                multiemployer plan, the plan's funded 
                                current liability percentage (as 
                                defined in section 305(e)(4)),
                        is at least 100 percent (and, if note, the 
                        actual percentage);'';
            (3) in section 103(d)(8)(B), by striking ``the requirements 
        of section 302(c)(3)'' and inserting ``the applicable 
        requirements of sections 303(f) and 304(c)(3)'';
            (4) 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)) of the 
                plan, or
                    ``(B) in the case of a multiemployer plan, the 
                current liability (as defined in section 304(c)(6)(C)) 
                under the plan,
        the percentage which such value is of the amount described in 
        subparagraph (A) or (B).'';
            (5) in section 203(a)(3)(C), by striking ``section 
        302(c)(8)'' and inserting ``section 302(d)(2)'';
            (6) in section 204(g)(1), by striking ``section 302(c)(8)'' 
        and inserting ``section 302(d)(2)'';
            (7) in section 204(i)(2)(B), by striking ``section 
        302(c)(8)'' and inserting ``section 302(d)(2)'';
            (8) 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(g)(4))'';
            (9) 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)'';
            (10) in section 206(e)(1), by striking ``subject to the 
        additional funding requirements of section 302(d)'' and 
        inserting ``in at-risk status under section 303(g)'', and by 
        striking ``section 302(e)(5)'' and inserting ``section 
        303(i)(4)(E)(i)'';
            (11) in section 206(e)(3), by striking ``section 302(e) by 
        reason of paragraph (5)(A) thereof'' and inserting ``section 
        303(i)(3) by reason of section 303(i)(4)(A)''; and
            (12) 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 2005''.
    (c) Repeal of Expired Authority for Temporary Variances.--Section 
207 of such Act (29 U.S.C. 1057) is repealed.
    (d) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after 2005.

        Subtitle B--Amendments to Internal Revenue Code of 1986

SEC. 111. MINIMUM FUNDING STANDARDS.

    (a) In General.--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 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 430 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 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(i)) shall be paid by any employer responsible for 
        making contributions to or under the plan.
            ``(2) Joint and several liability where employer member of 
        controlled group.--In the case of a single-employer plan, 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), and
                            ``(ii) application of the standard would be 
                        adverse to the interests of plan participants 
                        in the aggregate,
                the Secretary may, subject to subparagraphs (B) and 
                (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 single-employer 
                        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(j), 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 amortization payment required to be made for such 
                plan year with respect to any amortization described in 
                subparagraph (B) of any waived portion of the minimum 
                funding standard 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 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 and 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 such 
                        Act), 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 
                                and 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 shortfall amortization 
                                charge (within the meaning of section 
                                303(c)(1)) for the plan year, and
                                    ``(II) the aggregate total of 
                                shortfall amortization installments 
                                determined for succeeding plan years 
                                under section 303(c)(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 
                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 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 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) Notice to employee organizations.--
                    ``(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 
                employee organization representing employees covered by 
                the affected plan, and participant, beneficiary, and 
                alternate payee (within the meaning of section 
                414(p)(8)). 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 shall consider any relevant information 
                provided by a person to whom notice was given under 
                subparagraph (A).
    ``(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 substantial business hardship (as 
        determined under subsection (c)(2)) 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.
            ``(4) 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.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after 2005.

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.--
            ``(1) In general.--For purposes of section 412(a)(2)(A), 
        except as otherwise provided in this subsection, the minimum 
        required contribution with respect to a plan for a plan year is 
        the target normal cost of the plan for the plan year.
            ``(2) Shortfall amortization charge.--In any case in which 
        the value of plan assets (determined without regard to 
        subsection (e)(1)) of the plan for the plan year which are held 
        by the plan immediately before the valuation date is less than 
        the funding target of the plan for the plan year, the minimum 
        required contribution with respect to the plan for the plan 
        year is the sum of the amount determined under paragraph (1) 
        plus a shortfall amortization charge for such plan year 
        determined under subsection (c).
            ``(3) Credit for excess assets.--In any case in which the 
        value of plan assets of the plan for the plan year which are 
        held by the plan immediately before the valuation date exceed 
        the funding target of the plan for the plan year, the minimum 
        required contribution with respect to the plan for the plan 
        year is the amount determined under paragraph (1), reduced by 
        such excess.
            ``(4) Pre-funding balance.--In the case of any plan year in 
        which--
                    ``(A) the ratio (expressed as a percentage) which--
                            ``(i) the value of plan assets (determined 
                        without regard to subsection (e)(1)(B)) for the 
                        preceding plan year, bears to
                            ``(ii) the funding target of the plan for 
                        the preceding plan year (determined without 
                        regard to subsection (g)(1)),
                is at least 80 percent, and
                    ``(B) the plan sponsor elects (in such form and 
                manner as shall be prescribed in regulations of the 
                Secretary) to credit against the minimum required 
                contribution for the current plan year all or a portion 
                of the funding standard carryover balance and the pre-
                funding balance (to the extent provided in subsection 
                (h)) for the preceding plan year (not in excess of such 
                minimum required contribution),
        the minimum required contribution for the plan year shall be 
        reduced by the amount so credited by the plan sponsor.
    ``(b) Target Normal Cost.--For purposes of this section, subject to 
subsection (g)(2), 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. 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 shall be treated as having accrued during the 
current plan year.
    ``(c) Shortfall Amortization Charge.--
            ``(1) In general.--The shortfall amortization charge for a 
        plan for any plan year is the aggregate total 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.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the plan sponsor shall determine, with respect to the 
                shortfall amortization base of the plan for any plan 
                year, the amounts necessary to amortize such shortfall 
                amortization base, in level annual installments over a 
                period of 7 plan years beginning with such plan year. 
                The annual installment of such amortization for each 
                plan year in such 7-plan-year period is the shortfall 
                amortization installment for such plan year with 
                respect to such shortfall amortization base.
                    ``(B) Computation assumptions.--The determination 
                of any annual installment under subparagraph (A) for 
                any plan year shall be made as of the valuation date 
                for such plan year, using the effective rate of 
                interest for the plan for such plan year.
            ``(3) Shortfall amortization base.--The shortfall 
        amortization base of a plan for a plan year is the excess (if 
        any) of--
                    ``(A) the funding shortfall of such plan for such 
                plan year, over
                    ``(B) the present value (determined using the 
                effective interest rate of the plan for the plan year) 
                of the aggregate total of the shortfall amortization 
                installments, for such plan year and the 5 succeeding 
                plan years, which have been determined with respect to 
                the shortfall amortization bases of the plan for each 
                of the 6 plan years 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 for the 
                plan year which are held by the plan immediately before 
                the valuation date.
            ``(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 
        shortfall amortization charge for such plan year and succeeding 
        plan years, the shortfall amortization base for all preceding 
        plan years shall be reduced to zero.
    ``(d) Rules Relating to Funding Target.--For purposes of this 
section--
            ``(1) Funding target.--Except as provided in subsection 
        (g)(1), the funding target of a plan for a plan year is the 
        present value of all liabilities to participants and their 
        beneficiaries under the plan for 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, 
                bears to
                    ``(B) the funding target of the plan for the plan 
                year (determined without regard to subsection (g)(1)).
    ``(e) Valuation of Plan Assets and Liabilities.--
            ``(1) Value of plan assets.--For purposes of this section 
        (other than paragraph (4) and subsections (a)(2) and (h)(3)), 
        the term `value of plan assets' means the excess of the value 
        of plan assets (determined without regard to this paragraph) 
        over the sum of--
                    ``(A) the pre-funding balance of the plan 
                maintained under subsection (h)(1), and
                    ``(B) the funding standard carryover balance of the 
                plan maintained under subsection (h)(2).
            ``(2) 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.
            ``(3) 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 500 or fewer 
                participants, the plan may designate any day during the 
                plan year as its valuation date for such plan year. 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 
                employees of 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.
            ``(4) Authorization of use of actuarial value.--For 
        purposes of this section, the value of plan assets (determined 
        without regard to paragraph (1)) 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, except that--
                    ``(A) any such method providing for averaging of 
                fair market values may not provide for averaging of 
                such values over more than the current plan year and 
                the 2 preceding plan years, and
                    ``(B) any such method may 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.
            ``(5) Accounting for contribution receipts.--For purposes 
        of this section--
                    ``(A) Contributions for prior plan years taken into 
                account.--For purposes of determining the value of plan 
                assets for any current plan year, in any case in which 
                a contribution properly allocable to amounts owed for a 
                preceding plan year is made on or after the valuation 
                date of the plan for such current plan year, such 
                contribution shall be taken into account, except that 
                any such contribution made during any such current plan 
                year beginning after 2006 shall be taken into account 
                only in an amount equal to its present value 
                (determined using the effective rate of interest for 
                the plan for the preceding plan year) as of the 
                valuation date of the plan for such current plan year.
                    ``(B) Contributions for current plan year 
                disregarded.--For purposes of determining the value of 
                plan assets for any current plan year, contributions 
                which are properly allocable to amounts owed for such 
                plan year shall not be taken into account, and, in the 
                case of any such contribution made before the valuation 
                date of the plan for such plan year, such value of plan 
                assets shall be reduced for interest on such amount 
                determined using the effective rate of interest of the 
                plan for the preceding plan year for the period 
                beginning when such payment was made and ending on the 
                valuation date of the plan.
            ``(6) Accounting for plan liabilities.--For purposes of 
        this section--
                    ``(A) Liabilities taken into account for current 
                plan year.--In determining the value of liabilities 
                under a plan for a plan year, liabilities shall be 
                taken into account to the extent attributable to 
                benefits (including any early retirement or similar 
                benefit) accrued as of the beginning of the plan year.
                    ``(B) Accruals during current plan year 
                disregarded.--For purposes of subparagraph (A), 
                benefits accrued during such plan year (after those 
                taken into account under subparagraph (A)) shall not be 
                taken into account, irrespective of whether the 
                valuation date of the plan for such plan year is later 
                than the first day of such plan year.
    ``(f) 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 liabilities referred to in 
                subsection (d)(1) would result in an amount equal to 
                the funding target of the plan for such plan year.
                    ``(B) Application to 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 liabilities 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 liabilities 
                        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 liabilities 
                        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 a 
                        3-year weighted average of yields on investment 
                        grade corporate bonds with varying maturities.
                            ``(ii) 3-year weighted average.--The term 
                        `3-year weighted average' means an averaging 
                        methodology under which the most recent year is 
                        weighted 50 percent, the year preceding such 
                        year is weighted 35 percent, and the second 
                        year preceding such year is weighted 15 
                        percent.
                    ``(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 administrator, any 
                of the 4 months which precede such month. Any election 
                made under this subparagraph shall apply to the plan 
                year for which made and all succeeding plan years 
                unless 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)(A)(iii)(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 2006 or 2007, the 
                        first, second, and third segment rates 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 2005), 
                                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 
                        2006 and 66\2/3\ percent for plan years 
                        beginning in 2007.
            ``(3) Mortality table.--
                    ``(A) In general.--The mortality tables used in 
                determining any present value or making any computation 
                under this section shall be the RP-2000 Combined 
                Mortality Table, as published by the Society of 
                American Actuaries, as in effect on the date of the 
                enactment of the Pension Protection Act of 2005 and as 
                revised from time to time under subparagraph (B).
                    ``(B) Periodic revision.--The Secretary shall (at 
                least every 10 years) make revisions in any tables in 
                effect under this paragraph to reflect the actual 
                experience of pension plans and projected trends in 
                such experience.
                    ``(C) Transition rule.--Under regulations of the 
                Secretary, any difference in assumptions as set forth 
                in the mortality table specified in subparagraph (A) 
                and assumptions as set forth in the mortality table 
                described in section 412(d)(7)(C)(ii) (as in effect for 
                plan years beginning in 2005) shall be phased in 
                ratably over the first period of 5 plan years beginning 
                in or after 2006 so as to be fully effective for the 
                fifth plan year.
            ``(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 single-employer 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 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 
                        and 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
                            ``(ii) 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.
    ``(g) Special Rules for at-Risk Plans.--
            ``(1) Funding target for plans in at-risk status.--
                    ``(A) In general.--In any case in which a plan is 
                in at-risk status for a plan year, the funding target 
                of the plan for the plan year is the sum of--
                            ``(i) the present value of all liabilities 
                        to participants and their beneficiaries under 
                        the plan for the plan year, as determined by 
                        using, in addition to the actuarial assumptions 
                        described in subsection (f), the supplemental 
                        actuarial assumptions described in subparagraph 
                        (B), plus
                            ``(ii) a loading factor determined under 
                        subparagraph (C).
                    ``(B) Supplemental actuarial assumptions.--The 
                actuarial assumptions used in determining the valuation 
                of the funding target shall include, in addition to the 
                actuarial assumptions described in subsection (f), an 
                assumption that all participants will elect benefits at 
                such times and in such forms as will result in the 
                highest present value of liabilities under subparagraph 
                (A)(i).
                    ``(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.--
                    ``(A) In general.--In any case in which a plan is 
                in at-risk status for a plan year, the target normal 
                cost of the plan for such plan year shall be the sum 
                of--
                            ``(i) the present value of all benefits 
                        which are expected to accrue under the plan 
                        during the plan year, determined under the 
                        actuarial assumptions used under paragraph (1), 
                        plus
                            ``(ii) the loading factor under paragraph 
                        (1)(C), excluding the portion of the loading 
                        factor described in paragraph (1)(C)(i).
                    ``(B) Minimum amount.--In no event shall the target 
                normal cost of a plan determined under this paragraph 
                be less than the target normal cost of such plan as 
                determined without regard to this paragraph.
            ``(3) Determination of at-risk status.--For purposes of 
        this subsection, a plan is in `at-risk status' for a plan year 
        if the funding target attainment percentage of the plan for the 
        preceding plan year was less than 60 percent.
            ``(4) Transition between applicable funding targets and 
        between applicable target normal cost.--
                    ``(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 this 
                paragraph, the `transition percentage' for a plan year 
                is the product derived by multiplying--
                            ``(i) 20 percent, by
                            ``(ii) the number of plan years during the 
                        period described in subparagraph (A).
    ``(h) Pre-Funding and Funding Standard Carryover Balances.--
            ``(1) Pre-funding balance.--
                    ``(A) In general.--The plan sponsor of a pension 
                plan which is a single-employer plan shall maintain a 
                pre-funding balance for purposes of this subsection. 
                Such balance 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 (3).
                    ``(B) Increases.--As of the valuation date for each 
                plan year beginning after 2006, the pre-funding 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 (increased by 
                        interest on any portion of such minimum 
                        required contribution remaining unpaid, at the 
                        effective interest rate for the plan for the 
                        preceding plan year, for the period beginning 
                        with the first day of such preceding plan year 
                        and ending on the date that payment of such 
                        portion is made).
                    ``(C) Decreases.--As of the valuation date for each 
                plan year after 2006, the pre-funding balance of a plan 
                shall be decreased (but not below zero) by the sum of--
                            ``(i) the amount credited under subsection 
                        (a)(4) (if any) in reducing the minimum 
                        required contribution of the plan for the 
                        preceding plan year, and
                            ``(ii) the amount elected by the plan 
                        sponsor as a reduction in the pre-funding 
                        balance (for purposes of the determination 
                        under subsection (e)(1) and any other purpose 
                        under this section).
                    ``(D) Coordination with funding standard carryover 
                balance.--To the extent that any plan has a funding 
                standard carryover balance greater than zero--
                            ``(i) no amount of the pre-funding balance 
                        of such plan may be credited under subsection 
                        (a)(4) in reducing the minimum required 
                        contribution, and
                            ``(ii) no election may be made under 
                        subparagraph (C)(ii).
                    ``(E) No use of balance to reduce minimum required 
                contribution if used to avoid shortfall amortization.--
                The amount of the pre-funding balance of such plan may 
                be credited under subsection (a)(4) in reducing the 
                minimum required contribution only if the plan sponsor 
                has elected to apply subsection (a)(2) to the plan for 
                such plan year by substituting `subsection (e)(1)(B)' 
                for `subsection (e)(1)'.
            ``(2) Funding standard carryover balance.--
                    ``(A) In general.--The plan sponsor of a pension 
                plan to which this paragraph applies shall maintain a 
                funding standard carryover balance for purposes of this 
                subsection. Such balance shall consist of a beginning 
                balance determined under subparagraph (C), decreased to 
                the extent provided in subparagraph (D), and adjusted 
                further as provided in paragraph (3).
                    ``(B) Plans to which this paragraph applies.--This 
                paragraph applies to any plan which--
                            ``(i) is a single-employer plan subject to 
                        this part,
                            ``(ii) was in effect for a plan year 
                        beginning in 2005, and
                            ``(iii) 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.
                    ``(C) Beginning balance.--The beginning balance of 
                the funding standard carryover balance shall be the 
                positive balance described in subparagraph (B)(iii).
                    ``(D) Decreases.--As of the valuation date for each 
                plan year after 2006, the funding standard carryover 
                balance of a plan shall be decreased (but not below 
                zero) by the sum of--
                            ``(i) the amount credited under subsection 
                        (a)(4) (if any) in reducing the minimum 
                        required contribution of the plan for the 
                        preceding plan year, and
                            ``(ii) the amount elected by the plan 
                        sponsor as a reduction in the funding standard 
                        carryover balance (for purposes of the 
                        determination under subsection (e)(1) and any 
                        other purpose under this section).
            ``(3) Adjustments.--In determining the pre-funding balance 
        or the funding standard carryover balance of a plan as of the 
        valuation date of the plan (before applying any increase or 
        decrease under paragraph (1) or (2)), the plan sponsor shall, 
        in accordance with regulations which shall be prescribed by the 
        Secretary, adjust such balance of the plan so as to reflect the 
        rate of net gain or loss (determined, notwithstanding 
        subsection (e)(4), on the basis of fair market value) 
        experienced by all plan assets for the period beginning with 
        the valuation date for the preceding plan year and ending with 
        the date preceding the valuation date for the current plan 
        year, properly taking into account, in accordance with such 
        regulations, all contributions, distributions, and other plan 
        payments made during such period.
            ``(4) Elections.--Except as otherwise provided in this 
        subsection, any election made under this subsection shall be 
        made at such time and in such form and manner as the Secretary 
        may provide.
            ``(5) Coordination with waivers.--For purposes of this 
        subsection, the term `minimum required contribution' means for 
        any plan year the minimum required contribution for such plan 
        year determined without regard to this subsection and by taking 
        into account any waiver under section 412(c) and any waiver 
        amortization charge under subsection (j) for such plan year.
    ``(i) 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 made after the valuation date for such plan 
        year shall be increased by interest, for the period from the 
        valuation date to 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) Interest penalty for failure to meet 
                accelerated quarterly payment schedule.--In any case in 
                which the plan has a funding shortfall for the 
                preceding plan year, if the required installment is not 
                paid in full, then the minimum required contribution 
                for the plan year (as increased under paragraph (2)) 
                shall be further increased by an amount equal to the 
                interest on the amount of the underpayment for the 
                period of the underpayment, using an interest rate 
                equal to the excess of--
                            ``(i) 175 percent of the Federal mid-term 
                        rate (as in effect under section 1274 for the 
                        1st month of such plan year), over
                            ``(ii) the effective rate of interest for 
                        the plan for the plan year.
                    ``(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 (without regard 
                                to any waiver under section 412(c)) to 
                                the plan for the plan year under this 
                                section, or
                                    ``(II) in the case of a plan year 
                                beginning after 2006, 100 percent of 
                                the minimum required contribution 
                                (without regard to any waiver under 
                                section 412(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 that 
                would be described in subsection (e)(3)(B) if `100' 
                were substituted for `500' therein) 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 
                subparagraph:
                            ``(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.
    ``(j) Waiver Amortization Charge.--
            ``(1) In general.--The minimum required contribution for 
        any plan year under subsection (a) shall be increased by the 
        amount of the waiver amortization charge (if any) for such plan 
        year.
            ``(2) Determination of waiver amortization charge.--The 
        waiver amortization charge 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 such plan year and each of the 4 preceding plan years.
            ``(3) Waiver amortization installment.--For purposes of 
        paragraph (2), the plan sponsor shall determine, with respect 
        to the waiver amortization base of the plan for any plan year, 
        the amounts necessary to amortize such waiver amortization 
        base, in level annual installments over a period of 5 plan 
        years beginning with such plan year. The annual installment of 
        such amortization for each plan year in such 5-plan year period 
        is the waiver amortization installment for such plan year with 
        respect to such waiver amortization base.
            ``(4) Computation assumptions.--The determination of any 
        annual installment under paragraph (2) for any plan year shall 
        be made as of the valuation date for such plan year, using the 
        effective rate of interest for the plan for the preceding plan 
        year.
            ``(5) Waiver amortization base.--The waiver amortization 
        base of a plan for a plan year is the excess (if any) of--
                    ``(A) the portion of the minimum required 
                contribution of such plan waived under section 412(c) 
                for such plan year, over
                    ``(B) the aggregate total of the waiver 
                amortization installments, for such plan year and the 3 
                succeeding plan years, which have been determined with 
                respect to the waiver amortization bases of the plan 
                for each of the 4 plan years preceding such plan year.
    ``(k) Imposition of Lien Where Failure to Make Required 
Contributions.--
            ``(1) In general.--In the case of a plan covered under 
        section 4021 of the Employee Retirement and Income Security Act 
        of 1974 and to which this subsection applies (as provided under 
        paragraph (2)), 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 which is a single-
        employer plan 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 and 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 (i).
                    ``(B) Due date; required installment.--The terms 
                `due date' and `required installment' have the meanings 
                given such terms by subsection (i), 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 2005.

SEC. 113. LIMITATIONS ON DISTRIBUTIONS AND BENEFIT ACCRUALS UNDER 
              SINGLE-EMPLOYER PLANS.

    (a) Prohibition of Shutdown Benefits and Other Unpredictable 
Contingent Event Benefits Under Single-Employer Plans.--Part III of 
subchapter D of chapter 1 of the Internal Revenue Code of 1986 
(relating to deferred compensation, etc.) is amended--
            (1) 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
            (2) by adding at the end the following new subpart:

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

``Sec. 436. Prohibition of shutdown benefits and other unpredictable 
                            contingent event benefits.

``SEC. 436. PROHIBITION OF SHUTDOWN BENEFITS AND OTHER UNPREDICTABLE 
              CONTINGENT EVENT BENEFITS.

    ``(a) In General.--No pension plan which is a single-employer plan 
may provide benefits which are payable upon the occurrence of--
            ``(1) a plant shutdown, or
            ``(2) any other unpredictable contingent event.
    ``(b) Unpredictable Contingent Event.--For purposes of this 
subsection, the term `unpredictable contingent event' means an event 
other than--
            ``(1) attainment of any age, performance of any service, 
        receipt or derivation of any compensation, or the occurrence of 
        death or disability, or
            ``(2) an event which is reasonably and reliably predictable 
        (as determined by the Secretary).''.
    (b) Other Limits on Benefits and Benefit Accruals.--
            (1) In general.--Subpart B of part III of subchapter D of 
        chapter 1 of such Code is amended by adding at the end the 
        following:

``SEC. 437. BENEFIT LIMIATIONS ON UNDERFUNDED PLANS.

    ``(a) Limitations on Plan Amendments Increasing Liability for 
Benefits.--
            ``(1) In general.--No amendment to a defined benefit plan 
        (other than a multiemployer 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 to the plan may take effect during any plan year 
        if the funding target attainment percentage as of the valuation 
        date of the plan 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 date of the 
        plan year (or if later, the effective date of the amendment), 
        upon payment by the plan sponsor of a contribution 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 subparagraph (1)(B), the 
                amount sufficient to result in a funding target 
                attainment percentage of 80 percent.
    ``(b) Funding-Based Limitation on Certain Forms of Distribution.--A 
defined benefit plan (other than a multiemployer plan) shall provide 
that, in any case in which the plan's funding target attainment 
percentage as of the valuation date of the plan for a plan year is less 
than 80 percent, the plan may not after such date pay any prohibited 
payment (as defined in section 206(e) of the Employee Retirement and 
Income Security Act of 1974).
    ``(c) Limitations on Benefit Accruals for Plans With Severe Funding 
Shortfalls.--A defined benefit plan (other than a multiemployer plan) 
shall provide that, in any case in which the plan's funding target 
attainment percentage as of the valuation date of the plan for a plan 
year is less than 60 percent, all future benefit accruals under the 
plan shall cease as of such date.
    ``(d) New Plans.--Subsections (a) and (c) 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.
    ``(e) Presumed Underfunding for Purposes of Benefit Limitations 
Based on Prior Year's Funding Status.--
            ``(1) Presumption of continued underfunding.--In any case 
        in which a benefit limitation under subsections (a), (b), or 
        (c) has been applied to a plan with respect to the plan year 
        preceding the current plan year, the funding target attainment 
        percentage of the plan as of the valuation date of the plan for 
        the current plan year shall be presumed to be equal to the 
        funding target attainment percentage of the plan as of the 
        valuation date of the plan for the preceding plan year until 
        the enrolled actuary of the plan certifies the actual funding 
        target attainment percentage of the plan as of the valuation 
        date of the plan for the current plan year.
            ``(2) Presumption of underfunding after 10th month.--In any 
        case in which no such certification is made with respect to the 
        plan before the first day of the 10th month of the current plan 
        year, for purposes of subsections (a), (b), and (c), the plan's 
        funding target attainment percentage shall be conclusively 
        presumed to be less than 60 percent as of the first day of such 
        10th month, and such day shall be deemed, for purposes of such 
        paragraphs, to be the valuation date of the plan for the 
        current plan year.
            ``(3) Presumption of underfunding after 4th month for 
        nearly underfunded plans.--In any case in which--
                    ``(A) a benefit limitation under subsections (a), 
                (b), or (c) did not apply to a plan with respect to the 
                plan year preceding the current plan year, but the 
                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
                    ``(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 funding target attainment 
                percentage of the plan as of the valuation date 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 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 funding target attainment 
        percentage of the plan as of the valuation date of the plan for 
        such preceding plan year.
    ``(f) Restoration by Plan Amendment of Benefits or Benefit 
Accrual.--In any case in which a prohibition under subsection (b) of 
the payment of lump sum distributions or benefits in any other 
accelerated form or a cessation of benefit accruals under subsection 
(c) is applied to a plan with respect to any plan year and such 
prohibition or cessation, as the case may be, ceases to apply to any 
subsequent plan year, the plan may provide for the resumption of such 
benefit payment or such benefit accrual only by means of the adoption 
of a plan amendment after the valuation date of the plan for such 
subsequent plan year. The preceding sentence shall not apply to a 
prohibition or cessation required by reason of subsection (e).
    ``(g) Funding Target Attainment Percentage.--For purposes of this 
section, the term `funding target attainment percentage' has the 
meaning provided such term under section 430(d)(2).''.
            (2) Clerical amendment.--The table of sections for such 
        subpart is amended by adding at the end the following new item:

``Sec. 437. Benefit limitations on underfunded plans.''.
    (c) Special Rule for Plan Amendments.--A plan shall not fail to 
meet the requirements of section 204(g) of the Employee Retirement 
Income Security Act of 1974 or section 411(d)(6) of the Internal 
Revenue Code of 1986 solely by reason of the adoption by the plan of an 
amendment necessary to meet the requirements of the amendments made by 
this section.
    (d) Effective Date.--
            (1) Shutdown benefits.--Except as provided in paragraph 
        (3), the amendments made by subsection (a) shall apply with 
        respect to plant shutdowns, or other unpredictable contingent 
        events, occurring after 2006.
            (2) Other benefits.--Except as provided in paragraph (3), 
        the amendments made by subsection (b) shall apply with respect 
        to plan years beginning after 2006.
            (3) 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 the date of the enactment of this 
        Act, the amendments made by this subsection 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, 2009.
        For purposes of clause (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 subsection 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 sections 436 and 437.''.
            (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(i)(4)'', and
                    (B) in subparagraph (C), by striking ``section 
                412(m)'' and inserting ``section 430(i)''.
            (3) Section 401(a) is amended by striking paragraph (33) 
        and by redesignating paragraph (34) as paragraph (33).
    (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(d)(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(d)(4)'', and
                    (B) by striking ``paragraphs (4), (5), and (6) of 
                section 412(i)'' and inserting ``subparagraphs (D), 
                (E), and (F) of section 412(d)(4)'', and
            (3) by striking ``section 412(c)(8)'' in subsection 
        (d)(6)(A) and inserting ``section 412(e)(3)''.
    (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 target liability amount 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 pre-funding balance and 
                        the funding standard carryover balance, as 
                        determined under section 430(e)(1)), or
                            ``(ii) the value of plan assets as 
                        determined under section 430(e)(4) after 
                        reduction under section 430(e)(1), over
                    ``(B) 125 percent of the sum of the target 
                liability amount 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, 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(i)(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(i)(4)'', and
                    (B) by striking ``section 412(m)'' and inserting 
                ``section 430(i)''.
            (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(f)(1) or 431(c)(3), 
                whichever are applicable, have been complied with.''.

                      Subtitle C--Other Provisions

SEC. 121. 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 2005.
    (b) Modified Rules.--The rules described in this subsection are as 
follows:
            (1) For purposes of section 430(i)(3) of the Internal 
        Revenue Code of 1986 and section 303(i)(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.
    (c) Conforming Amendment.--
            (1) Section 769 of the Retirement Protection Act of 1994 is 
        amended by striking subsection (c).
            (2) The amendment made this subsection shall apply to plan 
        years beginning after 2005.

SEC. 122. TREATMENT OF NONQUALIFIED DEFERRED COMPENSATION PLANS WHEN 
              EMPLOYER DEFINED BENEFIT PLAN IN AT-RISK STATUS.

    (a) In General.--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) Employer's defined benefit plan in at-risk status.--
        In the case of a plan to which section 412 applies, if--
                    ``(A) during any period in which any defined 
                benefit plan of an employer is in an at-risk status (as 
                defined in section 412(g)(3)), assets are set aside 
                (directly or indirectly) in a trust (or other 
                arrangement determined by the Secretary), or 
                transferred to such a trust or other arrangement, for 
                purposes of paying deferred compensation under a 
                nonqualified deferred compensation plan of the 
                employer, or
                    ``(B) a nonqualified deferred compensation plan of 
                the employer provides that assets will become 
                restricted to the provision of benefits under the plan 
                in connection with such at-risk status (or other 
                similar financial measure determined by the Secretary) 
                of 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.''.
    (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 
take effect on January 1, 2006.

    TITLE II--FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS

 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 section 102) is 
amended further 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 in existence on 
                        January 1, 1974, the unfunded past service 
                        liability under the plan on the first day of 
                        the first plan year to which this section 
                        applies, over a period of 40 plan years,
                            ``(ii) in the case of a plan which comes 
                        into existence after January 1, 1974, 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,
                            ``(iii) separately, with respect to each 
                        plan year, the net increase (if any) in 
                        unfunded past service liability under the plan 
                        arising from plan amendments adopted in such 
                        year, over a period of 15 plan years,
                            ``(iv) separately, with respect to each 
                        plan year, the net experience loss (if any) 
                        under the plan, over a period of 15 plan years, 
                        and
                            ``(v) separately, with respect to each plan 
                        year, the net loss (if any) resulting from 
                        changes in actuarial assumptions used under the 
                        plan, over a period of 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 this section), 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 this 
                section).
            ``(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 this section), 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 to plan 
        years before 2006.--In the case of any amount amortized under 
        section 302(b) (as in effect before the date of the enactment 
        of Pension Protection Act of 2005) over any period beginning 
        with a plan year beginning before 2006, 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) Certain amortization charges and credits.--In the 
        case of a plan which, immediately before the date of the 
        enactment of the Multiemployer Pension Plan Amendments Act of 
        1980, was a multiemployer plan (within the meaning of section 
        3(37) as in effect immediately before such date)--
                    ``(A) any amount described in paragraph (2)(B)(ii), 
                (2)(B)(iii), or (3)(B)(i) of this subsection which 
                arose in a plan year beginning before such date shall 
                be amortized in equal annual installments (until fully 
                amortized) over 40 plan years, beginning with the plan 
                year in which the amount arose;
                    ``(B) any amount described in paragraph (2)(B)(iv) 
                or (3)(B)(ii) of this subsection which arose in a plan 
                year beginning before such date shall be amortized in 
                equal annual installments (until fully amortized) over 
                20 plan years, beginning with the plan year in which 
                the amount arose;
                    ``(C) any change in past service liability which 
                arises during the period of 3 plan years beginning on 
                or after such date, and results from a plan amendment 
                adopted before such date, shall be amortized in equal 
                annual installments (until fully amortized) over 40 
                plan years, beginning with the plan year in which the 
                change arises; and
                    ``(D) any change in past service liability which 
                arises during the period of 2 plan years beginning on 
                or after such date, and results from the changing of a 
                group of participants from one benefit level to another 
                benefit level under a schedule of plan benefits which--
                            ``(i) was adopted before such date, and
                            ``(ii) was effective for any plan 
                        participant before the beginning of the first 
                        plan year beginning on or after such date,
                shall be amortized in equal annual installments (until 
                fully amortized) over 40 plan years, beginning with the 
                plan year in which the change arises.
            ``(8) 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 this section) 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)(iv) 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 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 payable under the plan during a 
                period that does not exceed 14 years, paragraph 
                (2)(B)(iii) 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) which, in the aggregate, are 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 paragraph (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) 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 (D).
                            ``(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.--In the case of 
                                plan years beginning after December 31, 
                                1995, the Secretary of the Treasury 
                                shall establish mortality tables which 
                                may be used (in lieu of the tables 
                                under clause (ii)) 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.
                    ``(D) 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)(5) 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.
                    ``(E) 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).
            ``(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)(C) 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)(C) 
                        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.--
In the case of a multiemployer plan--
            ``(1) Automatic extension.--The Secretary of the Treasury 
        shall, upon application and subject to the requirements of 
        paragraph (4), extend the period of years required to amortize 
        any unfunded liability (described in any clause of subsection 
        (b)(2)(B)) of the plan for a period of time not in excess of 5 
        years.
            ``(2) Extension for cause.--The period of years required to 
        amortize any unfunded liability (described in any clause of 
        subsection (b)(2)(B)) of any multiemployer plan may be extended 
        (in addition to any extension under paragraph (1)) by the 
        Secretary of the Treasury for a period of time (not in excess 
        of 5 years) if he determines that such extension would carry 
        out the purposes of this Act and would provide adequate 
        protection for participants under the plan and their 
        beneficiaries and if he determines that the failure to permit 
        such extension would--
                    ``(A) result in--
                            ``(i) a substantial risk to the voluntary 
                        continuation of the plan, or
                            ``(ii) a substantial curtailment of pension 
                        benefit levels or employee compensation, and
                    ``(B) be adverse to the interests of plan 
                participants in the aggregate.
            ``(3) Interest rate.--The interest rate applicable for any 
        plan year under any arrangement entered into by the Secretary 
        of the Treasury in connection with an extension granted under 
        this subsection shall be the greater of--
                    ``(A) 150 percent of the Federal mid-term rate (as 
                in effect under section 1274 of the Internal Revenue 
                Code of 1986 for the 1st month of such plan year), or
                    ``(B) the rate of interest used under the plan for 
                determining costs.
            ``(4) Required notice.--
                    ``(A) In general.--The Secretary of the Treasury 
                shall, before granting an extension under this section, 
                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 employee organization representing 
                employees covered by the affected plan and to the 
                Pension Benefit Guaranty Corporation.
                    ``(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).
    ``(e) Restriction on Plan Amendments.--
            ``(1) In general.--No amendment of a multiemployer 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 section 
        302(c) or an extension of time under subsection (d) is in 
        effect with respect to the plan, or if a plan amendment 
        described in section 302(d)(2) has been made at any time in the 
        preceding 24 months. 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.
            ``(2) Exception.--Paragraph (1) shall not apply to any plan 
        amendment which--
                    ``(A) the Secretary determines to be reasonable and 
                which provides for only de minimis increases in the 
                liabilities of the plan,
                    ``(B) only repeals an amendment described in 
                section 302(d)(2), or
                    ``(C) is required as a condition of qualification 
                under part I of subchapter D, of chapter 1, of the 
                Internal Revenue Code of 1986.''.
    (b) 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 section 102 of this Act) is amended further by 
        inserting after the item relating to section 303 the following 
        new item:

``Sec. 304. Minimum funding standards for multiemployer plans.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after 2005.

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 further by inserting after section 
304 the following new section:

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

    ``Sec. 305. (a) Annual Certification by Plan Actuary.--
            ``(1) In general.--During the 90-day period beginning on 
        first day of each plan year of a multiemployer plan, the plan 
        actuary of shall certify to the Secretary of the Treasury 
        whether or not the plan is in endangered status for such plan 
        year and whether or not the plan is in critical status for such 
        plan year.
            ``(2) Actuarial projections of assets and liabilities.--
                    ``(A) In general.--In making the determinations 
                under paragraph (1), the plan actuary shall make 
                projections under subsections (b)(2) and (c)(2) for the 
                current and succeeding plan years, using reasonable 
                actuarial assumptions and methods, 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, as set forth in the actuarial statement 
                prepared for the preceding plan year under section 
                103(d).
                    ``(B) Determinations of future contributions.--Any 
                such actuarial projection of plan assets shall assume--
                            ``(i) reasonably anticipated employer and 
                        employee 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) employer and employee contributions 
                        projected for the current and succeeding plan 
                        years under the terms of such collective 
                        bargaining agreements (assuming the continued 
                        application of such terms indefinitely to such 
                        plan years), but only if the plan actuary 
                        determines there have been no significant 
                        demographic changes that would make continued 
                        application of such terms unreasonable.
            ``(3) Presumed status in absence of timely actuarial 
        certification.--If certification under this subsection is not 
        made before the end of the 90-day period specified in paragraph 
        (1), the plan shall be presumed to be in critical status for 
        such plan year until such time as the actuary makes a contrary 
        certification.
            ``(4) Notice.--In any case in which a multiemployer plan is 
        certified to be in endangered or critical status for a plan 
        year under paragraph (1), is presumed to be in critical status 
        under paragraph (3), or is deemed to be in critical status 
        under subsection (b)(7), the plan sponsor shall, not later than 
        30 days after the date of the certification, presumption, or 
        deeming, provide notification of the endangered or critical 
        status to the participants and beneficiaries, the bargaining 
        parties, the Pension Benefit Guaranty Corporation, the 
        Secretary of the Treasury, and the Secretary of Labor.
    ``(b) Funding Rules 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 
        shall, in accordance with this subsection, amend the plan to 
        include a funding improvement plan upon approval thereof by the 
        bargaining parties under this subsection. The amendment shall 
        be adopted not later than 240 days after the date on which the 
        plan is certified to be in endangered status under subsection 
        (a)(1).
            ``(2) Endangered status.--A multiemployer plan is in 
        endangered status for a plan year if, as determined by the plan 
        actuary under subsection (c)--
                    ``(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 under section 304 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).
            ``(3) Funding improvement plan.--
                    ``(A) Benchmarks.--A funding improvement plan shall 
                consist of amendments to the plan formulated to 
                provide, under reasonable actuarial assumptions, for 
                the attainment, during the funding improvement period 
                under the funding improvement plan, of the following 
                benchmarks:
                            ``(i) Reduction in unfunded current 
                        liability.--A percentage decrease in the plan's 
                        unfunded current liability from the amount for 
                        the first plan year of the funding improvement 
                        period to the amount for the last plan year of 
                        the funding improvement period, of at least 
                        33\1/3\ percent.
                            ``(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) Funding improvement period.--The funding 
                improvement period for any funding improvement plan 
                adopted pursuant to this subsection is the 10-year 
                period beginning on the earlier of--
                            ``(i) the second anniversary of the date of 
                        the adoption of the funding improvement plan, 
                        or
                            ``(ii) the first day of the first plan year 
                        of the multiemployer plan following the plan 
                        year in which occurs the first date after the 
                        day of the certification as of which collective 
                        bargaining agreements covering on the day of 
                        such certification at least 75 percent of 
                        active participants in such multiemployer plan 
                        have expired.
                    ``(C) Reporting.--A summary of any funding 
                improvement plan or modification thereto adopted during 
                any plan year shall be included in the annual report 
                for such plan year under section 104(a) and in the 
                summary annual report described in section 104(b)(3).
            ``(4) Development of funding improvement plan.--
                    ``(A) Actions by plan sponsor pending approval.--
                Pending the approval of a funding improvement plan 
                under this paragraph, the plan sponsor shall take all 
                reasonable actions, consistent with the terms of the 
                plan and applicable law, necessary to ensure--
                            ``(i) an increase in the plan's funded 
                        percentage, and
                            ``(ii) postponement of an accumulated 
                        funding deficiency for at least 1 additional 
                        plan year.
                Such actions 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.
                    ``(B) Recommendations by plan sponsor.--
                            ``(i) In general.--During the period of 90 
                        days following the date on which a 
                        multiemployer plan is certified to be in 
                        endangered status, the plan sponsor shall 
                        develop and provide to the bargaining parties 
                        alternative proposals for revised benefit 
                        structures, contribution structures, or both, 
                        which, if adopted as amendments to the plan, 
                        may be reasonably expected to meet the 
                        benchmarks described in paragraph (3)(A). Such 
                        proposals shall include--
                                    ``(I) at least one proposal for 
                                reductions in the amount of future 
                                benefit accruals necessary to achieve 
                                the benchmarks, assuming no amendments 
                                increasing contributions under the plan 
                                (other than amendments increasing 
                                contributions necessary to achieve the 
                                benchmarks after amendments have 
                                reduced future benefit accruals to the 
                                maximum extent permitted by law), and
                                    ``(II) at least one proposal for 
                                increases in contributions under the 
                                plan necessary to achieve the 
                                benchmarks, assuming no amendments 
                                reducing future benefit accruals under 
                                the plan.
                            ``(ii) Requests by bargaining parties.--
                        Upon the request of any bargaining party who--
                                    ``(I) employs at least 5 percent of 
                                the active participants, or
                                    ``(II) represents as an employee 
                                organization, for purposes of 
                                collective bargaining, at least 5 
                                percent of the active participants,
                        the plan sponsor shall provide all such parties 
                        information as to other combinations of 
                        increases in contributions and reductions in 
                        future benefit accruals which would result in 
                        achieving the benchmarks.
                            ``(iii) Other information.--The plan 
                        sponsor may, as it deems appropriate, prepare 
                        and provide the bargaining parties with 
                        additional information relating to contribution 
                        structures or benefit structures or other 
                        information relevant to the funding improvement 
                        plan.
            ``(5) Maintenance of contributions pending approval of 
        funding improvement plan.--Pending approval of a funding 
        improvement plan by the bargaining parties with respect to a 
        multiemployer plan, the multiemployer plan may not be amended 
        so as to provide--
                    ``(A) a reduction in the level of contributions for 
                participants who are not in pay status,
                    ``(B) a suspension of contributions with respect to 
                any period of service, or
                    ``(C) any new direct or indirect exclusion of 
                younger or newly hired employees from plan 
                participation.
            ``(6) Benefit restrictions pending approval of funding 
        improvement plan.--Pending approval of a funding improvement 
        plan by the bargaining parties with respect to a multiemployer 
        plan--
                    ``(A) Restrictions on lump sum distributions and 
                similar distributions.--The multiemployer plan may not 
                be amended so as to provide additional forms of 
                benefits.
                    ``(B) Prohibition on benefit increases.--
                            ``(i) In general.--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.
                            ``(ii) Exception.--Clause (i) 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 section 302(d)(2), or
                                    ``(III) is required as a condition 
                                of qualification under part I of 
                                subchapter D of chapter 1 of subtitle A 
                                of the Internal Revenue Code of 1986.
            ``(7) Default critical status if no funding improvement 
        plan adopted.--If no plan amendment adopting a funding 
        improvement plan has been adopted by the end of the 240-day 
        period referred to in subsection (a)(1), the plan shall be in 
        critical status as of the first day of the succeeding plan 
        year.
            ``(8) Restrictions upon approval of funding improvement 
        plan.--Upon adoption of a funding improvement plan with respect 
        to a multiemployer plan, the plan may not be amended--
                    ``(A) so as to be inconsistent with the funding 
                improvement plan, or
                    ``(B) so as to increase future benefit accruals, 
                unless the plan actuary certifies in advance that, 
                after taking into account the proposed increase, the 
                plan is reasonably expected to meet the the benchmarks 
                described in paragraph (3)(A).
    ``(c) Funding Rules 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 
        shall, in accordance with this subsection, amend the plan to 
        include a rehabilitation plan under this subsection. The 
        amendment shall be adopted not later than 240 days after the 
        date on which the plan is certified to be in critical status 
        under subsection (a)(1) or is presumed to be in critical status 
        under subsection (a)(3), or the first day of the plan year in 
        the case of a plan that is deemed to be in critical status 
        under subsection (b)(7).
            ``(2) Critical status.--A multiemployer plan is in critical 
        status for a plan year if--
                    ``(A) the plan is in endangered status for the plan 
                year and the requirements of subsection (b)(1) are not 
                met with respect to the plan for such plan year, or
                    ``(B) as determined by the plan actuary under 
                subsection (a), the plan is described in paragraph (3).
        Any multiemployer plan which is in critical status under 
        subparagraph (A) or (B) for a plan year shall be treated as in 
        critical status also for the succeeding plan year.
            ``(3) Criticality description.--For purposes of paragraph 
        (2)(B), a plan is described in this paragraph if the plan is 
        described in at least one of the following subparagraphs:
                    ``(A) A plan is described in this subparagraph if, 
                as of the beginning of the current plan year--
                            ``(i) the funded percentage of the plan is 
                        less than 65 percent, and
                            ``(ii) the sum of--
                                    ``(I) the market value of plan 
                                assets, plus
                                    ``(II) the present value of the 
                                reasonably anticipated employer and 
                                employee contributions for the current 
                                plan year and each of the 6 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,
                        is less than the present value of all 
                        nonforfeitable benefits for all participants 
                        and beneficiaries 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, 
                as of the beginning of the current plan year, the sum 
                of--
                            ``(i) the market value of plan assets, plus
                            ``(ii) the present value of the reasonably 
                        anticipated employer and employee contributions 
                        for the current plan year and each of the 4 
                        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 remain in 
                        effect for succeeding plan years,
                is less than the present value of all nonforfeitable 
                benefits for all participants and beneficiaries 
                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).
                    ``(C) A plan is described in this subparagraph if--
                            ``(i) as of the beginning of the current 
                        plan year, the funded percentage of the plan is 
                        less than 65 percent, and
                            ``(ii) the plan has an accumulated funding 
                        deficiency for the current plan year or is 
                        projected to have an accumulated funding 
                        deficiency for any of the 4 succeeding plan 
                        years, taking into account any extension of 
                        amortization periods under section 304(e).
                    ``(D) 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 cost 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, as of the 
                        beginning of the current plan year, 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, 
                        as of the beginning of the current plan year, 
                        of nonforfeitable benefits of active 
                        participants, and
                            ``(iii) the plan is projected to have an 
                        accumulated funding deficiency for the current 
                        plan year or any of the 4 succeeding plan 
                        years.
                    ``(E) A plan is described in this subparagraph if--
                            ``(i) the funded percentage of the plan is 
                        greater than 65 percent for the current plan 
                        year, and
                            ``(ii) the plan is projected to have an 
                        accumulated funding deficiency during either of 
                        the following 3 plan years.
            ``(4) Rehabilitation plan.--
                    ``(A) In general.--A rehabilitation plan shall 
                consist of--
                            ``(i) amendments to the plan providing 
                        (under reasonable actuarial assumptions) for 
                        measures, agreed to by the bargaining parties, 
                        to increase contributions, reduce plan 
                        expenditures (including plan mergers and 
                        consolidations), or reduce future benefit 
                        accruals, or to take any combination of such 
                        actions, determined necessary to cause the plan 
                        to cease, during the rehabilitation period, to 
                        be in critical status,
                            ``(ii) measures, agreed to by the 
                        bargaining parties, to provide funding relief, 
                        or
                            ``(iii) reasonable measures to forestall 
                        possible insolvency (within the meaning of 
                        section 4245) if the plan sponsor determines 
                        that, upon exhaustion of all reasonable 
                        measures, the plan would not cease during the 
                        rehabilitation period to be in critical status.
                    ``(B) Rehabilitation period.--The rehabilitation 
                period for any rehabilitation plan adopted pursuant to 
                this section is the 10-year period beginning on the 
                earlier of--
                            ``(i) the second anniversary of the date of 
                        the adoption of the rehabilitation plan, or
                            ``(ii) the first day of the first plan year 
                        of the multiemployer plan following the plan 
                        year in which occurs the first date after the 
                        day of the certification as of which collective 
                        bargaining agreements covering on the day of 
                        such certification at least 75 percent of 
                        active participants in such multiemployer plan 
                        have expired.
                    ``(C) Reporting.--A summary of any rehabilitation 
                plan or modification thereto adopted during any plan 
                year, together with annual updates regarding the 
                funding ratio of the plan, shall be included in the 
                annual report for such plan year under section 104(a) 
                and in the summary annual report described in section 
                104(b)(3).
            ``(5) Development of rehabilitation plan.--
                    ``(A) Proposals by plan sponsor.--
                            ``(i) In general.--Within 90 days after the 
                        date of the certification under subsection (a) 
                        that the plan is in critical status (or the 
                        date as of which the requirements of subsection 
                        (b)(1) are not met with respect to the plan), 
                        the plan sponsor shall propose to all 
                        bargaining parties a range of alternative 
                        schedules of increases in contributions and 
                        reductions in future benefit accruals that 
                        would serve to carry out a rehabilitation plan 
                        under this subsection.
                            ``(ii) Proposal assuming no contribution 
                        increases.--Such proposals shall include, as 
                        one of the proposed schedules, a schedule of 
                        those reductions in future benefit accruals 
                        that would be necessary to cause the plan to 
                        cease to be in critical status if there were no 
                        further increases in rates of contribution to 
                        the plan.
                            ``(iii) Proposal where contributions are 
                        necessary.--If the plan sponsor determines that 
                        the plan will not cease to be in critical 
                        status during the rehabilitation period unless 
                        the plan is amended to provide for an increase 
                        in contributions, the plan sponsor's proposals 
                        shall include a schedule of those increases in 
                        contribution rates that would be necessary to 
                        cause the plan to cease to be in critical 
                        status if future benefit accruals were reduced 
                        to the maximum extent permitted by law and the 
                        rate of future benefit accruals did not exceed 
                        1 percent per plan year.
                    ``(B) Requests for additional schedules.--Upon the 
                joint request of all bargaining parties, each of whom--
                            ``(i) employs at least 5 percent of the 
                        active participants, or
                            ``(ii) represents as an employee 
                        organization, for purposes of collective 
                        bargaining, at least 5 percent of the active 
                        participants,
                the plan sponsor shall include among the proposed 
                schedules such schedules of increases in contributions 
                and reductions in future benefit accruals as may be 
                specified by the bargaining parties.
                    ``(C) Default schedule.--In any case in which the 
                bargaining parties, as of 240 days after the later of 
                the date of the certification under subsection (a) or 
                the first day the plan is in critical status under 
                subsection (a)(3) or (b)(7), have not agreed to at 
                least one of the proposed schedules, the plan sponsor 
                shall amend the plan to implement the schedule required 
                by subparagraph (A)(ii).
                    ``(D) Subsequent amendments.--Upon the adoption of 
                a schedule of increases in contributions or reductions 
                in future benefit accruals as part of the 
                rehabilitation plan, the plan sponsor may amend the 
                plan thereafter to update the schedule to adjust for 
                any experience of the plan contrary to past actuarial 
                assumptions, except that such an amendment may be made 
                not more than once in any 3-year period.
                    ``(E) Allocation of reductions in future benefit 
                accruals.--Any schedule containing reductions in future 
                benefit accruals forming a part of a rehabilitation 
                plan shall be applicable with respect to any group of 
                active participants who are employed by any bargaining 
                party (as an employer obligated to contribute under the 
                plan) in proportion to the extent to which increases in 
                contributions under such schedule apply to such 
                bargaining party.
            ``(6) Maintenance of contributions and restrictions on 
        benefits pending adoption of rehabilitation plan.--The rules of 
        paragraphs (5) and (6) of subsection (b) shall apply for 
        purposes of this subsection by substituting the term 
        `rehabilitation plan' for `funding improvement plan'.
            ``(7) Deemed withdrawal.--Upon the failure of any employer 
        who has an obligation to contribute under the plan to make 
        contributions in compliance with the schedule adopted under 
        paragraph (6) as part of the rehabilitation plan, the failure 
        of the employer may, at the discretion of the plan sponsor, be 
        treated as a withdrawal by the employer from the plan under 
        section 4203 or a partial withdrawal by the employer under 
        section 4205.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Bargaining party.--The term `bargaining party' means, 
        in connection with a multiemployer plan--
                    ``(A) an employer who has an obligation to 
                contribute under the plan, and
                    ``(B) an employee organization which, for purposes 
                of collective bargaining, represents plan participants 
                employed by such an employer.
            ``(2) Current liability.--The term `current liability' has 
        the meaning provided such term in section 304(c)(6)(C).
            ``(3) Unfunded current liability.--The term `unfunded 
        current liability' means the excess (if any) of--
                    ``(A) the current liability of the plan, over
                    ``(B) the value of the plan's assets determined 
                under section 304(c)(2).
            ``(4) Funded percentage.--The term `funded percentage' 
        means the percentage expressed as a ratio of which--
                    ``(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.
            ``(5) Unfunded vested benefits.--The term `unfunded vested 
        benefits' has the meaning provided in section 4241(b)(9).
            ``(6) Accumulated funding deficiency.--The term 
        `accumulated funding deficiency' has the meaning provided such 
        term in section 304(a).
            ``(7) Active participant.--The term `active participant' 
        means, in connection with a multiemployer plan, a participant 
        who is in covered service under the plan.
            ``(8) Inactive participant.--The term `inactive 
        participant' means, in connection with a multiemployer plan, 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.
            ``(9) 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.
            ``(10) Obligation to contribute.--The term `obligation to 
        contribute' has the meaning provided such term under section 
        4212(a).''.
    (b) Conforming Amendment.--The table of contents in section 1 of 
such Act (as amended by the preceding provisions of this Act) is 
amended further 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.''.
    (c) Effective Date.--The amendment made by this section shall apply 
with respect to plan years beginning after 2005.

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 
2005.

SEC. 204. WITHDRAWAL LIABILITY REFORMS.

    (a) Repeal of Limitation on Withdrawal Liability in the Event of 
Certain Sales of Employer Assets to Unrelated Parties.--
            (1) In general.--Section 4225 of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1405) is repealed.
            (2) Conforming amendment.--The table of contents in section 
        1 of such Act is amended by striking the item relating to 
        section 4225.
            (3) Effective date.--The amendments made by this section 
        shall apply with respect to sales occurring on or after January 
        1, 2006.
    (b) Repeal of Limitation to 20 Annual Payments.--
            (1) In general.--Section 4219(c)(1) of such Act (29 U.S.C. 
        1399(c)(1)) is amended by striking subparagraph (B).
            (2) Effective date.--The amendment made by this section 
        shall apply with respect to withdrawals occurring on or after 
        January 1, 2006.
    (c) Partial Withdrawals by Means of Outsourcing.--
            (1) In general.--Section 4205(b)(2)(A) of such Act (29 
        U.S.C. 1385(b)(2)(A)) is amended--
                    (A) by striking ``or'' at the end of clause (i);
                    (B) by striking ``ceased.'' at the end of clause 
                (ii) and inserting ``ceased, or''; and
                    (C) by adding at the end the following new clause:
                            ``(iii) an employer continues to perform 
                        work of the type for which contributions are 
                        made under the plan by means of services of 
                        individuals who are not employees of such 
                        employer covered by such plan.''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply with respect to work performed on or after January 
        1, 2006.
    (d) Repeal of Special Rule for Long and Short Haul Trucking 
Industry.--
            (1) In general.--Subsection (d) of section 4203 of such Act 
        (29 U.S.C. 1383(d)) is repealed.
            (2) Effective date.--The repeal under this subsection shall 
        apply with respect to cessations to have obligations to 
        contribute to multiemployer plans and cessations of covered 
        operations under such plans occurring on or after January 1, 
        2006.
    (e) Application of Forgiveness Rule to Plans Primarily Covering 
Employees in the Building and Construction.--
            (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) Effective date.--The amendments made by this subsection 
        shall apply with respect to plan withdrawals occurring on or 
        after January 1, 2006.

SEC. 205. REMOVAL OF RESTRICTIONS WITH RESPECT TO PROCEDURES APPLICABLE 
              TO DISPUTES INVOLVING WITHDRAWAL LIABILITY.

    (a) In General.--Section 4221(f)(1) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1401(f)(1)) is amended--
            (1) in subparagraph (A) by inserting ``and'' after 
        ``plan,'', and
            (2) by striking subparagraphs (B) and (C) and inserting the 
        following new subparagraph:
                    ``(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 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,''.
    (b) Small Employer.--Paragraph (2) of section 4221(f) of such Act 
is amended by adding at the end the following new subparagraph:
                    ``(C) Small employer.--For purposes of paragraph 
                (1)(B)--
                            ``(i) In general.--The term `small 
                        employer' means any employer who (as of 
                        immediately before the transaction referred to 
                        in paragraph (1)(B)) employs not more than 250 
                        employees.
                            ``(ii) Controlled group.--Any group treated 
                        as a single employer under subsection (b), (c), 
                        (m), or (o) of section 414 of the Internal 
                        Revenue Code of 1986 shall be treated as a 
                        single employer for purposes of this 
                        subparagraph.''.
    (c) Conforming Amendment.--Subparagraph (A) of section 4221(f)(2) 
of such Act is amended by striking ``Notwithstanding'' and inserting 
``In the case of a transaction occurring before January 1, 1999, and at 
least 5 years before the date of the complete or partial withdrawal, 
notwithstanding''.
    (d) Effective Date.--The amendments made by this section shall 
apply to any employer that receives a notification under section 
4219(b)(1) of the Employee Retirement Income Security Act of 1974 on or 
after the date of the enactment of this Act.

        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 (added by section 112 of this Act) 
is amended by adding at the end 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 418B.
    ``(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 in existence on 
                        January 1, 1974, the unfunded past service 
                        liability under the plan on the first day of 
                        the first plan year to which this section 
                        applies, over a period of 40 plan years,
                            ``(ii) in the case of a plan which comes 
                        into existence after January 1, 1974, 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,
                            ``(iii) separately, with respect to each 
                        plan year, the net increase (if any) in 
                        unfunded past service liability under the plan 
                        arising from plan amendments adopted in such 
                        year, over a period of 15 plan years,
                            ``(iv) separately, with respect to each 
                        plan year, the net experience loss (if any) 
                        under the plan, over a period of 15 plan years, 
                        and
                            ``(v) separately, with respect to each plan 
                        year, the net loss (if any) resulting from 
                        changes in actuarial assumptions used under the 
                        plan, over a period of 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 this section), 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 this 
                section).
            ``(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 this section), 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 to plan 
        years before 2006.--In the case of any amount amortized under 
        section 412(b) (as in effect before the date of the enactment 
        of Pension Protection Act of 2005) over any period beginning 
        with a plan year beginning before 2006, 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) with interest at the 
        appropriate rate consistent with the rate or rates of interest 
        used under the plan to determine costs.
            ``(7) Certain amortization charges and credits.--In the 
        case of a plan which, immediately before the date of the 
        enactment of the Multiemployer Pension Plan Amendments Act of 
        1980, was a multiemployer plan (within the meaning of section 
        414(f) as in effect immediately before such date)--
                    ``(A) any amount described in paragraph (2)(B)(ii), 
                (2)(B)(iii), or (3)(B)(i) of this subsection which 
                arose in a plan year beginning before such date shall 
                be amortized in equal annual installments (until fully 
                amortized) over 40 plan years, beginning with the plan 
                year in which the amount arose;
                    ``(B) any amount described in paragraph (2)(B)(iv) 
                or (3)(B)(ii) of this subsection which arose in a plan 
                year beginning before such date shall be amortized in 
                equal annual installments (until fully amortized) over 
                20 plan years, beginning with the plan year in which 
                the amount arose;
                    ``(C) any change in past service liability which 
                arises during the period of 3 plan years beginning on 
                or after such date, and results from a plan amendment 
                adopted before such date, shall be amortized in equal 
                annual installments (until fully amortized) over 40 
                plan years, beginning with the plan year in which the 
                change arises; and
                    ``(D) any change in past service liability which 
                arises during the period of 2 plan years beginning on 
                or after such date, and results from the changing of a 
                group of participants from one benefit level to another 
                benefit level under a schedule of plan benefits which--
                            ``(i) was adopted before such date, and
                            ``(ii) was effective for any plan 
                        participant before the beginning of the first 
                        plan year beginning on or after such date,
                shall be amortized in equal annual installments (until 
                fully amortized) over 40 plan years, beginning with the 
                plan year in which the change arises.
            ``(8) 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 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 
                418B(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 the 
                Employee Retirement Income Security Act of 1974 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 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 this section) 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)(iv) 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 payable under the plan during a 
                period that does not exceed 14 years, paragraph 
                (2)(B)(iii) shall be applied separately with respect to 
                such increase in unfunded past service liability by 
                substituting the number of years of the period during 
                which such benefits are payable for `15'.
    ``(c) Additional Rules.--
            ``(1) Determinations to be made under funding method.--For 
        purposes of this part, normal costs, accrued liability, past 
        service liabilities, and experience gains and losses shall be 
        determined under the funding method used to determine costs 
        under the plan.
            ``(2) Valuation of assets.--
                    ``(A) In general.--For purposes of this part, the 
                value of the plan's assets shall be determined on the 
                basis of any reasonable actuarial method of valuation 
                which takes into account fair market value and which is 
                permitted under regulations prescribed by the 
                Secretary.
                    ``(B) Election with respect to bonds.--The value of 
                a bond or other evidence of indebtedness which is not 
                in default as to principal or interest may, at the 
                election of the plan administrator, be determined on an 
                amortized basis running from initial cost at purchase 
                to par value at maturity or earliest call date. Any 
                election under this subparagraph shall be made at such 
                time and in such manner as the Secretary shall by 
                regulations provide, shall apply to all such evidences 
                of indebtedness, and may be revoked only with the 
                consent of the Secretary.
            ``(3) Actuarial assumptions must be reasonable.--For 
        purposes of this section, all costs, liabilities, rates of 
        interest, and other factors under the plan shall be determined 
        on the basis of actuarial assumptions and methods--
                    ``(A) which, in the aggregate, are 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 paragraph (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) 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 (D).
                            ``(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.--In the case of 
                                plan years beginning after December 31, 
                                1995, the Secretary shall establish 
                                mortality tables which may be used (in 
                                lieu of the tables under clause (ii)) 
                                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 the 
                        Secretary determines necessary, by regulation 
                        update the tables to reflect the actual 
                        experience of pension plans and projected 
                        trends in such experience.
                    ``(D) 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)(5) 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.
                    ``(E) 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)).
            ``(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)(C) 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)(C) 
                        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.--
In the case of a multiemployer plan--
            ``(1) Automatic extension.--The Secretary shall, upon 
        application and subject to the requirements of paragraph (4), 
        extend the period of years required to amortize any unfunded 
        liability (described in any clause of subsection (b)(2)(B)) of 
        the plan for a period of time not in excess of 5 years.
            ``(2) Extension for cause.--The period of years required to 
        amortize any unfunded liability (described in any clause of 
        subsection (b)(2)(B)) of any multiemployer plan may be extended 
        (in addition to any extension under paragraph (1)) by the 
        Secretary for a period of time (not in excess of 5 years) if he 
        determines that such extension would carry out the purposes of 
        this Act and would provide adequate protection for participants 
        under the plan and their beneficiaries and if he determines 
        that the failure to permit such extension would--
                    ``(A) result in--
                            ``(i) a substantial risk to the voluntary 
                        continuation of the plan, or
                            ``(ii) a substantial curtailment of pension 
                        benefit levels or employee compensation, and
                    ``(B) be adverse to the interests of plan 
                participants in the aggregate.
            ``(3) Interest rate.--The interest rate applicable for any 
        plan year under any arrangement entered into by the Secretary 
        in connection with an extension granted under this subsection 
        shall be the greater of--
                    ``(A) 150 percent of the Federal mid-term rate (as 
                in effect under section 1274 for the 1st month of such 
                plan year), or
                    ``(B) the rate of interest used under the plan for 
                determining costs.
            ``(4) Required notice.--
                    ``(A) In general.--The Secretary shall, before 
                granting an extension under this section, require each 
                applicant to provide evidence satisfactory to the 
                Secretary that the applicant has provided notice of the 
                filing of the application for such extension to each 
                employee organization representing employees covered by 
                the affected plan and to the Pension Benefit Guaranty 
                Corporation.
                    ``(B) Consideration of relevant information.--The 
                Secretary shall consider any relevant information 
                provided by a person to whom notice was given under 
                paragraph (1).
    ``(e) Restriction on Plan Amendments.--
            ``(1) In general.--No amendment of a multiemployer 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 section 
        412(c) or an extension of time under subsection (d) is in 
        effect with respect to the plan, or if a plan amendment 
        described in section 412(d)(2) has been made at any time in the 
        preceding 24 months. 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.
            ``(2) Exception.--Paragraph (1) shall not apply to any plan 
        amendment which--
                    ``(A) the Secretary determines to be reasonable and 
                which provides for only de minimis increases in the 
                liabilities of the plan,
                    ``(B) only repeals an amendment described in 
                section 412(d)(2), or
                    ``(C) is required as a condition of qualification 
                under part I of subchapter D, of chapter 1.''.
    (b) Conforming Amendments.--
            (1) Section 418(b)(2) of such Code is amended--
                    (A) by striking ``section 412(b)(2)'' in 
                subparagraph (A) and inserting ``section 431(b)(2)'', 
                and
                    (B) by striking ``section 412(b)(3)(B)'' in 
                subparagraph (B) and inserting ``section 
                431(b)(3)(B)''.
            (2) Section 418B of such Code is amended--
                    (A) by striking ``section 412(b)(2)(A) or (B)'' in 
                subsection (d)(1)(B) and inserting ``section 
                431(b)(2)(A) or (B)'',
                    (B) by striking ``section 412(c)(8)'' in subsection 
                (e) and inserting ``section 412(g)(2)'', and
                    (C) by striking ``section 412(c)(3)'' in subsection 
                (g) and inserting ``section 431(c)(3)''.
            (3) Section 418D(a)(2) of such Code is amended--
                    (A) by striking ``section 412(c)(8)'' and inserting 
                ``section 412(g)(2)'', and
                    (B) by striking ``section 412(c)(10)'' and 
                inserting ``section 431(c)(8)''.
    (c) 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 
after the item relating to section 430 the following new item:

``Sec. 431. Minimum funding standards for multiemployer plans.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after 2005.

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 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) Annual Certification by Plan Actuary.--
            ``(1) In general.--During the 90-day period beginning on 
        first day of each plan year of a multiemployer plan, the plan 
        actuary of shall certify to the Secretary whether or not the 
        plan is in endangered status for such plan year and whether or 
        not the plan is in critical status for such plan year.
            ``(2) Actuarial projections of assets and liabilities.--
                    ``(A) In general.--In making the determinations 
                under paragraph (1), the plan actuary shall make 
                projections under subsections (b)(2) and (c)(2) for the 
                current and succeeding plan years, using reasonable 
                actuarial assumptions and methods, 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, as set forth in the actuarial statement 
                prepared for the preceding plan year under section 
                6058.
                    ``(B) Determinations of future contributions.--Any 
                such actuarial projection of plan assets shall assume--
                            ``(i) reasonably anticipated employer and 
                        employee 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) employer and employee contributions 
                        projected for the current and succeeding plan 
                        years under the terms of such collective 
                        bargaining agreements (assuming the continued 
                        application of such terms indefinitely to such 
                        plan years), but only if the plan actuary 
                        determines there have been no significant 
                        demographic changes that would make continued 
                        application of such terms unreasonable.
            ``(3) Presumed status in absence of timely actuarial 
        certification.--If certification under this subsection is not 
        made before the end of the 90-day period specified in paragraph 
        (1), the plan shall be presumed to be in critical status for 
        such plan year until such time as the actuary makes a contrary 
        certification.
            ``(4) Notice.--In any case in which a multiemployer plan is 
        certified to be in endangered or critical status for a plan 
        year under paragraph (1), is presumed to be in critical status 
        under paragraph (3), or is deemed to be in critical status 
        under subsection (b)(7), the plan sponsor shall, not later than 
        30 days after the date of the certification, presumption, or 
        deeming, provide notification of the endangered or critical 
        status to the participants and beneficiaries, the bargaining 
        parties, the Pension Benefit Guaranty Corporation, the 
        Secretary of the Treasury, and the Secretary of Labor.
    ``(b) Funding Rules 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 
        shall, in accordance with this subsection, amend the plan to 
        include a funding improvement plan upon approval thereof by the 
        bargaining parties under this subsection. The amendment shall 
        be adopted not later than 240 days after the date on which the 
        plan is certified to be in endangered status under subsection 
        (a)(1).
            ``(2) Endangered status.--A multiemployer plan is in 
        endangered status for a plan year if, as determined by the plan 
        actuary under subsection (c)--
                    ``(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 under section 431 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).
            ``(3) Funding improvement plan.--
                    ``(A) Benchmarks.--A funding improvement plan shall 
                consist of amendments to the plan formulated to 
                provide, under reasonable actuarial assumptions, for 
                the attainment, during the funding improvement period 
                under the funding improvement plan, of the following 
                benchmarks:
                            ``(i) Reduction in unfunded current 
                        liability.--A percentage decrease in the plan's 
                        unfunded current liability from the amount for 
                        the first plan year of the funding improvement 
                        period to the amount for the last plan year of 
                        the funding improvement period, of at least 
                        33\1/3\ percent.
                            ``(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 
                        431(d)).
                    ``(B) Funding improvement period.--The funding 
                improvement period for any funding improvement plan 
                adopted pursuant to this subsection is the 10-year 
                period beginning on the earlier of--
                            ``(i) the second anniversary of the date of 
                        the adoption of the funding improvement plan, 
                        or
                            ``(ii) the first day of the first plan year 
                        of the multiemployer plan following the plan 
                        year in which occurs the first date after the 
                        day of the certification as of which collective 
                        bargaining agreements covering on the day of 
                        such certification at least 75 percent of 
                        active participants in such multiemployer plan 
                        have expired.
                    ``(C) Reporting.--A summary of any funding 
                improvement plan or modification thereto adopted during 
                any plan year shall be included in the annual report 
                for such plan year under section 104(a) of the Employee 
                Retirement and Income Security Act of 1974 and in the 
                summary annual report described in section 104(b)(3) of 
                such Act.
            ``(4) Development of funding improvement plan.--
                    ``(A) Actions by plan sponsor pending approval.--
                Pending the approval of a funding improvement plan 
                under this paragraph, the plan sponsor shall take all 
                reasonable actions, consistent with the terms of the 
                plan and applicable law, necessary to ensure--
                            ``(i) an increase in the plan's funded 
                        percentage, and
                            ``(ii) postponement of an accumulated 
                        funding deficiency for at least 1 additional 
                        plan year.
                Such actions 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.
                    ``(B) Recommendations by plan sponsor.--
                            ``(i) In general.--During the period of 90 
                        days following the date on which a 
                        multiemployer plan is certified to be in 
                        endangered status, the plan sponsor shall 
                        develop and provide to the bargaining parties 
                        alternative proposals for revised benefit 
                        structures, contribution structures, or both, 
                        which, if adopted as amendments to the plan, 
                        may be reasonably expected to meet the 
                        benchmarks described in paragraph (3)(A). Such 
                        proposals shall include--
                                    ``(I) at least one proposal for 
                                reductions in the amount of future 
                                benefit accruals necessary to achieve 
                                the benchmarks, assuming no amendments 
                                increasing contributions under the plan 
                                (other than amendments increasing 
                                contributions necessary to achieve the 
                                benchmarks after amendments have 
                                reduced future benefit accruals to the 
                                maximum extent permitted by law), and
                                    ``(II) at least one proposal for 
                                increases in contributions under the 
                                plan necessary to achieve the 
                                benchmarks, assuming no amendments 
                                reducing future benefit accruals under 
                                the plan.
                            ``(ii) Requests by bargaining parties.--
                        Upon the request of any bargaining party who--
                                    ``(I) employs at least 5 percent of 
                                the active participants, or
                                    ``(II) represents as an employee 
                                organization, for purposes of 
                                collective bargaining, at least 5 
                                percent of the active participants,
                        the plan sponsor shall provide all such parties 
                        information as to other combinations of 
                        increases in contributions and reductions in 
                        future benefit accruals which would result in 
                        achieving the benchmarks.
                            ``(iii) Other information.--The plan 
                        sponsor may, as it deems appropriate, prepare 
                        and provide the bargaining parties with 
                        additional information relating to contribution 
                        structures or benefit structures or other 
                        information relevant to the funding improvement 
                        plan.
            ``(5) Maintenance of contributions pending approval of 
        funding improvement plan.--Pending approval of a funding 
        improvement plan by the bargaining parties with respect to a 
        multiemployer plan, the multiemployer plan may not be amended 
        so as to provide--
                    ``(A) a reduction in the level of contributions for 
                participants who are not in pay status,
                    ``(B) a suspension of contributions with respect to 
                any period of service, or
                    ``(C) any new direct or indirect exclusion of 
                younger or newly hired employees from plan 
                participation.
            ``(6) Benefit restrictions pending approval of funding 
        improvement plan.--Pending approval of a funding improvement 
        plan by the bargaining parties with respect to a multiemployer 
        plan--
                    ``(A) Restrictions on lump sum distributions and 
                similar distributions.--The multiemployer plan may not 
                be amended so as to provide additional forms of 
                benefits.
                    ``(B) Prohibition on benefit increases.--
                            ``(i) In general.--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.
                            ``(ii) Exception.--Clause (i) 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 section 430(d)(2), or
                                    ``(III) is required as a condition 
                                of qualification under part I of 
                                subchapter D of chapter 1 of subtitle 
                                A.
            ``(7) Default critical status if no funding improvement 
        plan adopted.--If no plan amendment adopting a funding 
        improvement plan has been adopted by the end of the 240-day 
        period referred to in subsection (a)(1), the plan shall be in 
        critical status as of the first day of the succeeding plan 
        year.
            ``(8) Restrictions upon approval of funding improvement 
        plan.--Upon adoption of a funding improvement plan with respect 
        to a multiemployer plan, the plan may not be amended--
                    ``(A) so as to be inconsistent with the funding 
                improvement plan, or
                    ``(B) so as to increase future benefit accruals, 
                unless the plan actuary certifies in advance that, 
                after taking into account the proposed increase, the 
                plan is reasonably expected to meet the the benchmarks 
                described in paragraph (3)(A).
    ``(c) Funding Rules 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 
        shall, in accordance with this subsection, amend the plan to 
        include a rehabilitation plan under this subsection. The 
        amendment shall be adopted not later than 240 days after the 
        date on which the plan is certified to be in critical status 
        under subsection (a)(1) or is presumed to be in critical status 
        under subsection (a)(3), or the first day of the plan year in 
        the case of a plan that is deemed to be in critical status 
        under subsection (b)(7).
            ``(2) Critical status.--A multiemployer plan is in critical 
        status for a plan year if--
                    ``(A) the plan is in endangered status for the plan 
                year and the requirements of subsection (b)(1) are not 
                met with respect to the plan for such plan year, or
                    ``(B) as determined by the plan actuary under 
                subsection (a), the plan is described in paragraph (3).
        Any multiemployer plan which is in critical status under 
        subparagraph (A) or (B) for a plan year shall be treated as in 
        critical status also for the succeeding plan year.
            ``(3) Criticality description.--For purposes of paragraph 
        (2)(B), a plan is described in this paragraph if the plan is 
        described in at least one of the following subparagraphs:
                    ``(A) A plan is described in this subparagraph if, 
                as of the beginning of the current plan year--
                            ``(i) the funded percentage of the plan is 
                        less than 65 percent, and
                            ``(ii) the sum of--
                                    ``(I) the market value of plan 
                                assets, plus
                                    ``(II) the present value of the 
                                reasonably anticipated employer and 
                                employee contributions for the current 
                                plan year and each of the 6 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,
                        is less than the present value of all 
                        nonforfeitable benefits for all participants 
                        and beneficiaries 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, 
                as of the beginning of the current plan year, the sum 
                of--
                            ``(i) the market value of plan assets, plus
                            ``(ii) the present value of the reasonably 
                        anticipated employer and employee contributions 
                        for the current plan year and each of the 4 
                        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 remain in 
                        effect for succeeding plan years,
                is less than the present value of all nonforfeitable 
                benefits for all participants and beneficiaries 
                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).
                    ``(C) A plan is described in this subparagraph if--
                            ``(i) as of the beginning of the current 
                        plan year, the funded percentage of the plan is 
                        less than 65 percent, and
                            ``(ii) the plan has an accumulated funding 
                        deficiency for the current plan year or is 
                        projected to have an accumulated funding 
                        deficiency for any of the 4 succeeding plan 
                        years, taking into account any extension of 
                        amortization periods under section 431(d).
                    ``(D) 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 cost 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, as of the 
                        beginning of the current plan year, 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, 
                        as of the beginning of the current plan year, 
                        of nonforfeitable benefits of active 
                        participants, and
                            ``(iii) the plan is projected to have an 
                        accumulated funding deficiency for the current 
                        plan year or any of the 4 succeeding plan 
                        years.
                    ``(E) A plan is described in this subparagraph if--
                            ``(i) the funded percentage of the plan is 
                        greater than 65 percent for the current plan 
                        year, and
                            ``(ii) the plan is projected to have an 
                        accumulated funding deficiency during either of 
                        the following 3 plan years.
            ``(4) Rehabilitation plan.--
                    ``(A) In general.--A rehabilitation plan shall 
                consist of--
                            ``(i) amendments to the plan providing 
                        (under reasonable actuarial assumptions) for 
                        measures, agreed to by the bargaining parties, 
                        to increase contributions, reduce plan 
                        expenditures (including plan mergers and 
                        consolidations), or reduce future benefit 
                        accruals, or to take any combination of such 
                        actions, determined necessary to cause the plan 
                        to cease, during the rehabilitation period, to 
                        be in critical status,
                            ``(ii) measures, agreed to by the 
                        bargaining parties, to provide funding relief, 
                        or
                            ``(iii) reasonable measures to forestall 
                        possible insolvency (within the meaning of 
                        section 418E) if the plan sponsor determines 
                        that, upon exhaustion of all reasonable 
                        measures, the plan would not cease during the 
                        rehabilitation period to be in critical status.
                    ``(B) Rehabilitation period.--The rehabilitation 
                period for any rehabilitation plan adopted pursuant to 
                this section is the 10-year period beginning on the 
                earlier of--
                            ``(i) the second anniversary of the date of 
                        the adoption of the rehabilitation plan, or
                            ``(ii) the first day of the first plan year 
                        of the multiemployer plan following the plan 
                        year in which occurs the first date after the 
                        day of the certification as of which collective 
                        bargaining agreements covering on the day of 
                        such certification at least 75 percent of 
                        active participants in such multiemployer plan 
                        have expired.
                    ``(C) Reporting.--A summary of any rehabilitation 
                plan or modification thereto adopted during any plan 
                year, together with annual updates regarding the 
                funding ratio of the plan, shall be included in the 
                annual report for such plan year under section 104(a) 
                and in the summary annual report described in section 
                104(b)(3) of the Employee Retirement and Income 
                Security Act of 1974.
            ``(5) Development of rehabilitation plan.--
                    ``(A) Proposals by plan sponsor.--
                            ``(i) In general.--Within 90 days after the 
                        date of the certification under subsection (a) 
                        that the plan is in critical status (or the 
                        date as of which the requirements of subsection 
                        (b)(1) are not met with respect to the plan), 
                        the plan sponsor shall propose to all 
                        bargaining parties a range of alternative 
                        schedules of increases in contributions and 
                        reductions in future benefit accruals that 
                        would serve to carry out a rehabilitation plan 
                        under this subsection.
                            ``(ii) Proposal assuming no contribution 
                        increases.--Such proposals shall include, as 
                        one of the proposed schedules, a schedule of 
                        those reductions in future benefit accruals 
                        that would be necessary to cause the plan to 
                        cease to be in critical status if there were no 
                        further increases in rates of contribution to 
                        the plan.
                            ``(iii) Proposal where contributions are 
                        necessary.--If the plan sponsor determines that 
                        the plan will not cease to be in critical 
                        status during the rehabilitation period unless 
                        the plan is amended to provide for an increase 
                        in contributions, the plan sponsor's proposals 
                        shall include a schedule of those increases in 
                        contribution rates that would be necessary to 
                        cause the plan to cease to be in critical 
                        status if future benefit accruals were reduced 
                        to the maximum extent permitted by law and the 
                        rate of future benefit accruals did not exceed 
                        1 percent per plan year.
                    ``(B) Requests for additional schedules.--Upon the 
                joint request of all bargaining parties, each of whom--
                            ``(i) employs at least 5 percent of the 
                        active participants, or
                            ``(ii) represents as an employee 
                        organization, for purposes of collective 
                        bargaining, at least 5 percent of the active 
                        participants,
                the plan sponsor shall include among the proposed 
                schedules such schedules of increases in contributions 
                and reductions in future benefit accruals as may be 
                specified by the bargaining parties.
                    ``(C) Default schedule.--In any case in which the 
                bargaining parties, as of 240 days after the later of 
                the date of the certification under subsection (a) or 
                the first day the plan is in critical status under 
                subsection (a)(3) or (b)(7), have not agreed to at 
                least one of the proposed schedules, the plan sponsor 
                shall amend the plan to implement the schedule required 
                by subparagraph (A)(ii).
                    ``(D) Subsequent amendments.--Upon the adoption of 
                a schedule of increases in contributions or reductions 
                in future benefit accruals as part of the 
                rehabilitation plan, the plan sponsor may amend the 
                plan thereafter to update the schedule to adjust for 
                any experience of the plan contrary to past actuarial 
                assumptions, except that such an amendment may be made 
                not more than once in any 3-year period.
                    ``(E) Allocation of reductions in future benefit 
                accruals.--Any schedule containing reductions in future 
                benefit accruals forming a part of a rehabilitation 
                plan shall be applicable with respect to any group of 
                active participants who are employed by any bargaining 
                party (as an employer obligated to contribute under the 
                plan) in proportion to the extent to which increases in 
                contributions under such schedule apply to such 
                bargaining party.
            ``(6) Maintenance of contributions and restrictions on 
        benefits pending adoption of rehabilitation plan.--The rules of 
        paragraphs (5) and (6) of subsection (b) shall apply for 
        purposes of this subsection by substituting the term 
        `rehabilitation plan' for `funding improvement plan'.
            ``(7) Deemed withdrawal.--Upon the failure of any employer 
        who has an obligation to contribute under the plan to make 
        contributions in compliance with the schedule adopted under 
        paragraph (6) as part of the rehabilitation plan, the failure 
        of the employer may, at the discretion of the plan sponsor, be 
        treated as a withdrawal by the employer from the plan under 
        section 4203 of the Employee Retirement and Income Security Act 
        of 1974 or a partial withdrawal by the employer under section 
        4205 of such Act.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Bargaining party.--The term `bargaining party' means, 
        in connection with a multiemployer plan--
                    ``(A) an employer who has an obligation to 
                contribute under the plan, and
                    ``(B) an employee organization which, for purposes 
                of collective bargaining, represents plan participants 
                employed by such an employer.
            ``(2) Current liability.--The term `current liability' has 
        the meaning provided such term in section 431(c)(6)(C).
            ``(3) Unfunded current liability.--The term `unfunded 
        current liability' means the excess (if any) of--
                    ``(A) the current liability of the plan, over
                    ``(B) the value of the plan's assets determined 
                under section 431(c)(2).
            ``(4) Funded percentage.--The term `funded percentage' 
        means the percentage expressed as a ratio of which--
                    ``(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.
            ``(5) Unfunded vested benefits.--The term `unfunded vested 
        benefits' has the meaning provided in section 418(b)(7).
            ``(6) Accumulated funding deficiency.--The term 
        `accumulated funding deficiency' has the meaning provided such 
        term in section 431(a).
            ``(7) Active participant.--The term `active participant' 
        means, in connection with a multiemployer plan, a participant 
        who is in covered service under the plan.
            ``(8) Inactive participant.--The term `inactive 
        participant' means, in connection with a multiemployer plan, 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.
            ``(9) 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.
            ``(10) Obligation to contribute.--The term `obligation to 
        contribute' has the meaning provided such term under section 
        4212(a).''.
    (b) 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.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after 2005.

          TITLE III--OTHER INTEREST-RELATED FUNDING PROVISIONS

SEC. 301. INTEREST RATE ASSUMPTION FOR DETERMINATION OF LUMP SUM 
              DISTRIBUTIONS.

    (a) Amendments to Employee Retirement Income Security Act of 
1974.--Subparagraph (B) of section 205(g)(3) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1055(g)(3)) is amended to read 
as follows:
    ``(B) For purposes of subparagraph (A)--
            ``(i) The term `applicable mortality table' means the 
        mortality table specified for the plan year under section 
        303(f)(3).
            ``(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(f)(2)(B).
            ``(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(f)(2)(C) if--
                    ``(I) section 303(f)(2)(D)(i) were applied by 
                substituting `the yields' for `a 3-year weighted 
                average of yields', and
                    ``(II) the applicable percentage under section 
                303(f)(2)(G) were determined in accordance with the 
                following table:

 
 
 
``In the case of plan years         The applicable percentage is:
 beginning in:
  2006............................  20 percent
  2007............................  40 percent
  2008............................  60 percent
  2009............................  80 percent.''.

    (b) Amendments to Internal Revenue Code of 1986.--Section 
417(e)(3)(A) of the Internal Revenue Code of 1986 is amended by 
striking clause (ii) and inserting the following:
                            ``(ii) Applicable mortality table.--For 
                        purposes of clause (i), the term `applicable 
                        mortality table' means the mortality table 
                        specified for the plan under section 430(f)(3).
                            ``(iii) Applicable interest rate.--For 
                        purposes of clause (i), the term `applicable 
                        interest rate' means the adjusted first, 
                        second, and third segment rates applied under 
                        rules similar to the rules of section 
                        430(f)(2)(B).
                            ``(iv) Adjusted first, second, and third 
                        segment rates.--For purposes of clause (iii), 
                        the adjusted first, second, and third segment 
                        rates are the first, second, and third segment 
                        rates which would be determined under section 
                        430(f)(2)(C) if--
                                    ``(I) section 430(f)(2)(D)(i) were 
                                applied by substituting `the yields' 
                                for `a 3-year weighted average of 
                                yields', and
                                    ``(II) the applicable percentage 
                                under section 430(f)(2)(G) were 
                                determined in accordance with the 
                                following table:

 
 
 
``In the case of plan years         The applicable percentage is:
 beginning in:
  2006............................  20 percent
  2007............................  40 percent
  2008............................  60 percent
  2009............................  80 percent.''.

    (c) Effective Date.--The amendments made by this section shall 
apply with respect to plan years beginning after 2005.

SEC. 302. 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 greater 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 2005.

          TITLE IV--IMPROVEMENTS IN PBGC GUARANTEE PROVISIONS

SEC. 401. INCREASES IN PBGC PREMIUMS.

    (a) Flat-Rate Premiums.--Section 4006(a)(3) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)(3)) is 
amended--
            (1) by striking clause (i) of subparagraph (A) and 
        inserting the following:
            ``(i) in the case of a single-employer plan--
                    ``(I) for plan years beginning after December 31, 
                1990, and before January 1, 2008, an amount equal to 
                the sum of $19, and
                    ``(II) for plan years beginning after December 31, 
                2007, an amount determined under subparagraph (F),
        plus the additional premium (if any) determined under 
        subparagraph (E) for each individual who is a participant in 
        such plan during the plan year;''; and
            (2) by adding at the end the following new subparagraph:
    ``(F)(i) Except as otherwise provided in this subparagraph, for 
purposes of determining the annual premium rate payable to the 
corporation by a single-employer plan for basic benefits guaranteed 
under this title, the amount determined under this subparagraph is the 
greater of $30 or the adjusted amount determined under clause (ii).
    ``(ii) The adjusted amount determined under this clause is the 
product derived by multiplying $30 by the ratio of--
            ``(I) the national average wage index (as defined in 
        section 209(k)(1) of the Social Security Act) for the first of 
        the 2 calendar years preceding the calendar year before the 
        calendar year in which the plan year begins, to
            ``(II) the national average wage index (as so defined) for 
        2006,
with such product, if not a multiple of $1, being rounded to the next 
higher multiple of $1 where such product is a multiple of $0.50 but not 
of $1, and to the nearest multiple of $1 in any other case.
    ``(iii) For purposes of determining the annual premium rate payable 
to the corporation by a single-employer plan for basic benefits 
guaranteed under this title for any plan year beginning after 2007 and 
before 2012--
            ``(I) except as provided in subclause (II), the premium 
        amount referred to in subparagraph (A)(i)(II) for any such plan 
        year is the amount set forth in connection with such plan year 
        in the following table:

 
 
 
``If the plan year begins in:       The amount is:
  2008............................  $21.20
  2009............................  $23.40
  2010............................  $25.60
  2011............................  $27.80; or

            ``(II) if the plan's funding target attainment percentage 
        for the plan year preceding the current plan year was less than 
        80 percent, the premium amount referred to in subparagraph 
        (A)(i)(II) for such current plan year is the amount set forth 
        in connection with such current plan year in the following 
        table:

 
 
 
``If the plan year begins in:       The amount is:
  2008............................  $22.67
  2009............................  $26.33
  2010 or 2011....................  the amount provided under clause (i)

    ``(iv) For purposes of this subparagraph, the term `funding target 
attainment percentage' has the meaning provided such term in section 
303(d)(2).''.
    (b) Risk-Based Premiums.--
            (1) In general.--Section 4006(a)(3)(E) of such Act (29 
        U.S.C. 1306(a)(3)(E)) is amended--
                    (A) in clause (ii), by striking ``$9.00'' and 
                inserting ``the greater of $9.00 or the adjusted amount 
                determined under clause (iii)'';
                    (B) by redesignating clauses (iii) and (iv) as 
                clauses (iv) and (v), respectively; and
                    (C) by inserting after clause (ii) the following 
                new clause:
    ``(iii) The adjusted amount determined under this clause is the 
product derived by multiplying $9.00 by the ratio of--
            ``(I) the national average wage index (as defined in 
        section 209(k)(1) of the Social Security Act) for the first of 
        the 2 calendar years preceding the calendar year before the 
        calendar year in which the plan year begins, to
            ``(II) the national average wage index (as so defined) for 
        2006,
with such product, if not a multiple of $1.00, being rounded to the 
next higher multiple of $1.00 where such product is a multiple of $0.50 
but not of $1.00, and to the nearest multiple of $1.00 in any other 
case.''.
            (2) Conforming amendments related to funding rules for 
        single-employer plans.--Section 4006(a)(3)(E) of such Act (as 
        amended by paragraph (1)) is amended further--
                    (A) by striking clause (iv) and inserting the 
                following:
    ``(iv)(I) For purposes of clause (ii), except as provided in 
subclause (II) or (III), the term `unfunded benefits' means, for a plan 
year, the amount which would be the plan's funding shortfall (as 
defined in section 303(c)(4)), if the value of plan assets of the plan 
were equal to the fair market value of such assets and determined 
without regard to section 303(e)(1), and only vested benefits were 
taken into account.
    ``(II) The interest rate used in valuing vested benefits for 
purposes of subclause (I) shall be equal to the first, second, or third 
segment rate which would be determined under section 303(f)(2)(C) if 
section 303(f)(2)(D)(i) were applied by substituting `the yields' for 
`the 3-year weighted average of yields', as applicable under rules 
similar to the rules under section 303(f)(2)(B).''; and
                    (B) by striking clause (iv).
            (3) Effective dates.--
                    (A) The amendments made by paragraph (1) shall 
                apply with respect to premiums for plan years after 
                2007.
                    (B) The amendments made by paragraph (2) shall 
                apply with respect to plan years beginning after 2005.

                          TITLE V--DISCLOSURE

SEC. 501. DEFINED BENEFIT PLAN FUNDING NOTICES.

    (a) Application of Plan Funding Notice Requirements to All Defined 
Benefit Plans.--Section 101(f) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1021(f)) is amended--
            (1) in the heading, by striking ``Multiemployer'';
            (2) in paragraph (1), by striking ``which is a 
        multiemployer plan''; and
            (3) in paragraph (2)(B)(iii), by inserting after ``plan'' 
        the following: ``, and a summary of the rules governing 
        termination of single-employer plans under subtitle C of title 
        IV''.
    (b) Inclusion of Statement of the Ratio of Inactive Participants to 
Active Participants.--Section 101(f)(2)(B) of such Act (29 U.S.C. 
1021(f)(2)(B)) is amended--
            (1) in clause (iii)(II) (added by subsection (a)(3) of this 
        section), by striking ``and'' at the end;
            (2) in clause (iv), by striking ``apply.'' and inserting 
        ``apply; and''; and
            (3) by adding at the end the following new clause:
                            ``(v) a statement of the ratio, as of the 
                        end of the plan year to which the notice 
                        relates, of--
                                    ``(I) the number of participants 
                                who are not in covered service under 
                                the plan and are in pay status under 
                                the plan or have a nonforfeitable right 
                                to benefits under the plan, to
                                    ``(II) the number of participants 
                                who are in covered service under the 
                                plan.''.
    (c) Comparison of Monthly Average of Value of Plan Assets to 
Projected Current Liabilities.--Section 101(f)(2)(B) of such Act (29 
U.S.C. 1021(f)(2)(B)) (as amended by the preceding provisions of this 
section) is amended further--
            (1) by striking clause (ii) and inserting the following:
                            ``(ii) a statement of a reasonable estimate 
                        of--
                                    ``(I) the value of the plan's 
                                assets for the plan year to which the 
                                notice relates,
                                    ``(II) projected liabilities of the 
                                plan for the plan year to which the 
                                notice relates, and
                                    ``(III) the ratio of the estimated 
                                amount determined under subclause (I) 
                                to the estimated amount determined 
                                under subclause (II);''; and
            (2) by adding at the end (after and below clause (v)) the 
        following:
                ``For purposes of determining a plan's projected 
                liabilities for a plan year under clause (ii)(II), such 
                projected liabilities shall be determined by projecting 
                forward in a reasonable manner to the end of the plan 
                year the liabilities of the plan to participants and 
                beneficiaries as of the first day of the plan year, 
                taking into account any significant events that occur 
                during the plan year and that have a material effect on 
                such liabilities, including any plan amendments in 
                effect for the plan year.''.
    (d) Statement of Plan's Funding Policy and Method of Asset 
Allocation.--Section 101(f)(2)(B) of such Act (as amended by the 
preceding provisions of this section) is amended further--
            (1) in clause (iv), by striking ``and'' at the end;
            (2) in clause (v), by striking the period and inserting 
        ``; and''; and
            (3) by inserting after clause (v) the following new clause:
                            ``(vi) 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.''.
    (e) Notice of Funding Improvement Plan or Rehabilitation Plan 
Adopted by Multiemployer Plan.--Section 101(f)(2)(B) of such Act (as 
amended by the preceding provisions of this section) is amended 
further--
            (1) in clause (v), by striking ``and'' at the end;
            (2) in clause (vi), by striking the period and inserting 
        ``; and''; and
            (3) by inserting after clause (vi) the following new 
        clause:
                            ``(vii) 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.''.
    (f) Notice Provided to Alternate Payees.--Section 101(f)(1) of such 
Act (29 U.S.C. 1021(f)(1)) is amended by adding at the end the 
following new sentence: ``For purposes of this paragraph, the term 
`beneficiary' includes an alternate payee (within the meaning of 
section 206(d)(3)(K)) under an applicable qualified domestic relations 
order (within the meaning of section 206(d)(3)(B)(i)) receiving 
benefits under the plan.''.
    (g) Notice Due 90 Days After Plan's Valuation Date.--Section 
101(f)(3) of such Act (29 U.S.C. 1021(f)(3)) is amended by striking 
``two months after the deadline (including extensions) for filing the 
annual report for the plan year'' and inserting ``90 days after the end 
of the plan year''.
    (h) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2005.

SEC. 502. ADDITIONAL DISCLOSURE REQUIREMENTS.

    (a) Additional Annual Reporting Requirements.--Section 103 of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1023) is 
amended--
            (1) in subsection (a)(1)(B), by striking ``subsections (d) 
        and (e)'' and inserting ``subsections (d), (e), and (f)''; and
            (2) by adding at the end the following new subsection:
    ``(f)(1) With respect to any defined benefit plan, an annual report 
under this section for a plan year shall include the following:
            ``(A)(i) The ratio of the number of inactive participants 
        under the plan as of the end of such plan year to the number of 
        active participants as of the end of such plan year.
            ``(ii) For purposes of clause (i)--
                    ``(I) the term `active participant' means an 
                individual who is in covered service under the plan, 
                and
                    ``(II) the term `inactive participant' means an 
                individual who is not in covered service under the plan 
                who is in pay status under the plan or has a 
                nonforfeitable right to benefits under the plan.
            ``(B) In any case in which any liabilities to participants 
        or their beneficiaries under such plan as of the end of such 
        plan year consist (in whole or in part) of liabilities to such 
        participants and beneficiaries borne by 2 or more pension plans 
        as of immediately before such plan year, the funded ratio of 
        each of such 2 or more pension plans as of immediately before 
        such plan year and the funded ratio of the plan with respect to 
        which the annual report is filed as of the end of such plan 
        year.
            ``(C) For purposes of this paragraph, the term `funded 
        ratio' means, in connection with a plan, the percentage which--
                    ``(i) the value of the plan's assets is of
                    ``(ii) the liabilities to participants and 
                beneficiaries under the plan.
    ``(2) With respect to any defined benefit plan which is a 
multiemployer plan, an annual report under this section for a plan year 
shall include the following:
            ``(A) The number of employers obligated to contribute to 
        the plan as of the end of such plan year.
            ``(B) The number of participants under the plan on whose 
        behalf no employer contributions have been made to the plan for 
        such plan year. For purposes of this subparagraph, the term 
        `employer contribution' means, in connection with a 
        participant, a contribution made by an employer as an employer 
        of such participant.''.
    (b) Additional Information in Annual Actuarial Statement Regarding 
Plan Retirement Projections.--Section 103(d) of such Act (29 U.S.C. 
1023(d)) is amended--
            (1) by redesignating paragraphs (12) and (13) as paragraphs 
        (13) and (14), respectively; and
            (2) by inserting after paragraph (11) the following new 
        paragraph:
            ``(12) A statement explaining the actuarial assumptions and 
        methods used in projecting future retirements and asset 
        distributions under the plan.''.
    (c) Summary Annual Report Filed Within 15 Days After Deadline for 
Filing of Annual Report.--Section 104(b)(3) of such Act (29 U.S.C. 
1024(b)(3)) is amended--
            (1) by striking ``Within 210 days after the close of the 
        fiscal year,'' and inserting ``Within 15 business days after 
        the due date under subsection (a)(1) for the filing of the 
        annual report for the fiscal year of the plan''; and
            (2) by striking ``the latest'' and inserting ``such''.
    (d) Information Made Available to Participants, Beneficiaries, and 
Employers With Respect to Multiemployer Plans.--
            (1) In general.--Section 101 of the Employee Retirement 
        Income Security Act of 1974 (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) Multiemployer Plan Information Made Available on Request.--
            ``(1) In general.--Each administrator of a multiemployer 
        plan shall furnish to any plan participant or beneficiary or 
        any employer having an obligation to contribute to the plan, 
        who so requests in writing--
                    ``(A) a copy of any actuary report received by the 
                plan for any plan year which has been in receipt by the 
                plan for at least 30 days, and
                    ``(B) a copy of any financial report prepared for 
                the plan by any plan investment manager or advisor or 
                other person who is a plan fiduciary which has been in 
                receipt by the plan for at least 30 days.
            ``(2) Compliance.--Information required to be provided 
        under paragraph (1) --
                    ``(A) shall be provided to the requesting 
                participant, beneficiary, or employer within 30 days 
                after the request in a form and manner prescribed in 
                regulations of the Secretary, and
                    ``(B) may be provided in written, electronic, or 
                other appropriate form to the extent such form is 
                reasonably accessible to persons to whom the 
                information is required to be provided.
            ``(3) Limitations.--In no case shall a participant, 
        beneficiary, or employer be entitled under this subsection to 
        receive more than one copy of any report described in paragraph 
        (1) during any one 12-month period. The administrator may make 
        a reasonable charge to cover copying, mailing, and other costs 
        of furnishing copies of information pursuant to paragraph (1). 
        The Secretary may by regulations prescribe the maximum amount 
        which will constitute a reasonable charge under the preceding 
        sentence.''.
            (2) Enforcement.--Section 502(c)(4) of such Act (29 U.S.C. 
        1132(c)(4)) is amended by inserting ``or 101(j)'' after 
        ``101(f)(1)''.
            (3) Regulations.--The Secretary shall prescribe regulations 
        under section 101(j)(2) of the Employee Retirement Income 
        Security Act of 1974 (added by paragraph (1) of this 
        subsection) not later than 90 days after the date of the 
        enactment of this Act.
    (e) Notice of Potential Withdrawal Liability to Multiemployer 
Plans.--
            (1) In general.--Section 101 of such Act (as amended by 
        subsection (e) of this section) is amended further--
                    (A) by redesignating subsection (k) as subsection 
                (l); and
                    (B) by inserting after subsection (j) the following 
                new subsection:
    ``(k) Notice of Potential Withdrawal Liability.--
            ``(1) In general.--The plan sponsor or administrator shall 
        furnish to any employer who has an obligation to contribute 
        under the plan and who so requests in writing notice of--
                    ``(A) the amount which would be the amount of such 
                employer's withdrawal liability under part 1 of 
                subtitle E of title IV if such employer withdrew on the 
                last day of the plan year preceding the date of the 
                request, and
                    ``(B) the average increase, per participant under 
                the plan, in accrued liabilities under the plan as of 
                the end of such plan year to participants under such 
                plan on whose behalf no employer contributions are 
                payable (or their beneficiaries), which would be 
                attributable to such a withdrawal by such employer.
        For purposes of subparagraph (B), the term `employer 
        contribution' means, in connection with a participant, a 
        contribution made by an employer as an employer of such 
        participant.
            ``(2) Compliance.--Any notice required to be provided under 
        paragraph (1)--
                    ``(A) shall be provided to the requesting employer 
                within 180 days after the request in a form and manner 
                prescribed in regulations of the Secretary, and
                    ``(B) may be provided in written, electronic, or 
                other appropriate form to the extent such form is 
                reasonably accessible to employers to whom the 
                information is required to be provided.
            ``(3) Limitations.--In no case shall an employer be 
        entitled under this subsection to receive more than one notice 
        described in paragraph (1) during any one 12-month period. The 
        person required to provide such notice may make a reasonable 
        charge to cover copying, mailing, and other costs of furnishing 
        such notice pursuant to paragraph (1). The Secretary may by 
        regulations prescribe the maximum amount which will constitute 
        a reasonable charge under the preceding sentence.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2005.

SEC. 503. NOTICE TO PARTICIPANTS AND BENEFICIARIES OF SECTION 4010 
              FILINGS WITH THE PBGC.

    (a) In General.--Section 4010 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1310) is amended by adding at the end 
the following new subsection:
    ``(d) Notice to Participants and Beneficiaries.--
            ``(1) In general.--Not later than 90 days after the 
        submission by any person to the corporation of information or 
        documentary material with respect to any plan pursuant to 
        subsection (a), such person shall provide notice of such 
        submission to each participant and beneficiary under the plan 
        (and under all plans maintained by members of the controlled 
        group of each contributing sponsor of the plan). Such notice 
        shall also set forth--
                    ``(A) the number of single-employer plans covered 
                by this title which are in at-risk status and are 
                maintained by contributing sponsors of such plan (and 
                by members of their controlled groups) with respect to 
                which the funding target attainment percentage for the 
                preceding plan year of each plan is less than 60 
                percent;
                    ``(B) the value of the assets of each of the plans 
                described in subparagraph (A) for the plan year, the 
                funding target for each of such plans for the plan 
                year, and the funding target attainment percentage of 
                each of such plans for the plan year; and
                    ``(C) taking into account all single-employer plans 
                maintained by the contributing sponsor and the members 
                of its controlled group as of the end of such plan 
                year--
                            ``(i) the aggregate total of the values of 
                        plan assets of such plans as of the end of such 
                        plan year,
                            ``(ii) the aggregate total of the funding 
                        targets of such plans, as of the end of such 
                        plan year, taking into account only benefits to 
                        which participants and beneficiaries have a 
                        nonforfeitable right, and
                            ``(iii) the aggregate funding targets 
                        attainment percentage with respect to the 
                        contributing sponsor for the preceding plan 
                        year.
            ``(2) Definitions.--For purposes of this subsection--
                    ``(A) Value of plan assets.--The term `value of 
                plan assets' means the value of plan assets, as 
                determined under section 303(a)(2).
                    ``(B) Funding target.--The term `funding target' 
                has the meaning provided under section 303(d)(1).
                    ``(C) Funding target attainment percentage.--The 
                term `funding target attainment percentage' has the 
                meaning provided in section 303(d)(2).
                    ``(D) Aggregate funding target attainment 
                percentage.--The term `aggregate funding targets 
                attainment percentage' with respect to a contributing 
                sponsor for a plan year is the percentage, taking into 
                account all plans maintained by the contributing 
                sponsor and the members of its controlled group as of 
                the end of such plan year, which
                            ``(i) the aggregate total of the values of 
                        plan assets, as of the end of such plan year, 
                        of such plans, is of
                            ``(ii) the aggregate total of the funding 
                        targets of such plans, as of the end of such 
                        plan year, taking into account only benefits to 
                        which participants and beneficiaries have a 
                        nonforfeitable right.
                    ``(E) At-risk status.--The term `at-risk status' 
                has the meaning provided in section 303(h)(3).
            ``(3) Compliance.--
                    ``(A) In general.--Any notice required to be 
                provided under paragraph (1) may be provided in 
                written, electronic, or other appropriate form to the 
                extent such form is reasonably accessible to 
                individuals to whom the information is required to be 
                provided.
                    ``(B) Limitations.--In no case shall a participant 
                or beneficiary be entitled under this subsection to 
                receive more than one notice described in paragraph (1) 
                during any one 12-month period. The person required to 
                provide such notice may make a reasonable charge to 
                cover copying, mailing, and other costs of furnishing 
                such notice pursuant to paragraph (1). The corporation 
                may by regulations prescribe the maximum amount which 
                will constitute a reasonable charge under the preceding 
                sentence.''.
    (b) Effective Date.--The amendment made by this section shall apply 
with respect to plan years beginning after 2006.

                      TITLE VI--INVESTMENT ADVICE

SEC. 601. AMENDMENTS TO EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 
              PROVIDING PROHIBITED TRANSACTION EXEMPTION FOR PROVISION 
              OF INVESTMENT ADVICE.

    (a) Exemption From Prohibited Transactions.--Section 408(b) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1108(b)) is 
amended by adding at the end the following new paragraph:
            ``(14)(A) Any transaction described in subparagraph (B) in 
        connection with the provision of investment advice described in 
        section 3(21)(A)(ii), in any case in which--
                    ``(i) the investment of assets of the plan is 
                subject to the direction of plan participants or 
                beneficiaries,
                    ``(ii) the advice is provided to the plan or a 
                participant or beneficiary of the plan by a fiduciary 
                adviser in connection with any sale, acquisition, or 
                holding of a security or other property for purposes of 
                investment of plan assets, and
                    ``(iii) the requirements of subsection (g) are met 
                in connection with the provision of the advice.
            ``(B) The transactions described in this subparagraph are 
        the following:
                    ``(i) the provision of the advice to the plan, 
                participant, or beneficiary;
                    ``(ii) the sale, acquisition, or holding of a 
                security or other property (including any lending of 
                money or other extension of credit associated with the 
                sale, acquisition, or holding of a security or other 
                property) pursuant to the advice; and
                    ``(iii) the direct or indirect receipt of fees or 
                other compensation by the fiduciary adviser or an 
                affiliate thereof (or any employee, agent, or 
                registered representative of the fiduciary adviser or 
                affiliate) in connection with the provision of the 
                advice or in connection with a sale, acquisition, or 
                holding of a security or other property pursuant to the 
                advice.''.
    (b) Requirements.--Section 408 of such Act is amended further by 
adding at the end the following new subsection:
    ``(g) Requirements Relating to Provision of Investment Advice by 
Fiduciary Advisers.--
            ``(1) In general.--The requirements of this subsection are 
        met in connection with the provision of investment advice 
        referred to in section 3(21)(A)(ii), provided to an employee 
        benefit plan or a participant or beneficiary of an employee 
        benefit plan by a fiduciary adviser with respect to the plan in 
        connection with any sale, acquisition, or holding of a security 
        or other property for purposes of investment of amounts held by 
        the plan, if--
                    ``(A) in the case of the initial provision of the 
                advice with regard to the security or other property by 
                the fiduciary adviser to the plan, participant, or 
                beneficiary, the fiduciary adviser provides to the 
                recipient of the advice, at a time reasonably 
                contemporaneous with the initial provision of the 
                advice, a written notification (which may consist of 
                notification by means of electronic communication)--
                            ``(i) of all fees or other compensation 
                        relating to the advice that the fiduciary 
                        adviser or any affiliate thereof is to receive 
                        (including compensation provided by any third 
                        party) in connection with the provision of the 
                        advice or in connection with the sale, 
                        acquisition, or holding of the security or 
                        other property,
                            ``(ii) of any material affiliation or 
                        contractual relationship of the fiduciary 
                        adviser or affiliates thereof in the security 
                        or other property,
                            ``(iii) of any limitation placed on the 
                        scope of the investment advice to be provided 
                        by the fiduciary adviser with respect to any 
                        such sale, acquisition, or holding of a 
                        security or other property,
                            ``(iv) of the types of services provided by 
                        the fiduciary adviser in connection with the 
                        provision of investment advice by the fiduciary 
                        adviser,
                            ``(v) that the adviser is acting as a 
                        fiduciary of the plan in connection with the 
                        provision of the advice, and
                            ``(vi) that a recipient of the advice may 
                        separately arrange for the provision of advice 
                        by another adviser, that could have no material 
                        affiliation with and receive no fees or other 
                        compensation in connection with the security or 
                        other property,
                    ``(B) the fiduciary adviser provides appropriate 
                disclosure, in connection with the sale, acquisition, 
                or holding of the security or other property, in 
                accordance with all applicable securities laws,
                    ``(C) the sale, acquisition, or holding occurs 
                solely at the direction of the recipient of the advice,
                    ``(D) the compensation received by the fiduciary 
                adviser and affiliates thereof in connection with the 
                sale, acquisition, or holding of the security or other 
                property is reasonable, and
                    ``(E) the terms of the sale, acquisition, or 
                holding of the security or other property are at least 
                as favorable to the plan as an arm's length transaction 
                would be.
            ``(2) Standards for presentation of information.--
                    ``(A) In general.--The notification required to be 
                provided to participants and beneficiaries under 
                paragraph (1)(A) shall be written in a clear and 
                conspicuous manner and in a manner calculated to be 
                understood by the average plan participant and shall be 
                sufficiently accurate and comprehensive to reasonably 
                apprise such participants and beneficiaries of the 
                information required to be provided in the 
                notification.
                    ``(B) Model form for disclosure of fees and other 
                compensation.--The Secretary shall issue a model form 
                for the disclosure of fees and other compensation 
                required in paragraph (1)(A)(i) which meets the 
                requirements of subparagraph (A).
            ``(3) Exemption conditioned on making required information 
        available annually, on request, and in the event of material 
        change.--The requirements of paragraph (1)(A) shall be deemed 
        not to have been met in connection with the initial or any 
        subsequent provision of advice described in paragraph (1) to 
        the plan, participant, or beneficiary if, at any time during 
        the provision of advisory services to the plan, participant, or 
        beneficiary, the fiduciary adviser fails to maintain the 
        information described in clauses (i) through (iv) of 
        subparagraph (A) in currently accurate form and in the manner 
        described in paragraph (2) or fails--
                    ``(A) to provide, without charge, such currently 
                accurate information to the recipient of the advice no 
                less than annually,
                    ``(B) to make such currently accurate information 
                available, upon request and without charge, to the 
                recipient of the advice, or
                    ``(C) in the event of a material change to the 
                information described in clauses (i) through (iv) of 
                paragraph (1)(A), to provide, without charge, such 
                currently accurate information to the recipient of the 
                advice at a time reasonably contemporaneous to the 
                material change in information.
            ``(4) Maintenance for 6 years of evidence of compliance.--A 
        fiduciary adviser referred to in paragraph (1) who has provided 
        advice referred to in such paragraph shall, for a period of not 
        less than 6 years after the provision of the advice, maintain 
        any records necessary for determining whether the requirements 
        of the preceding provisions of this subsection and of 
        subsection (b)(14) have been met. A transaction prohibited 
        under section 406 shall not be considered to have occurred 
        solely because the records are lost or destroyed prior to the 
        end of the 6-year period due to circumstances beyond the 
        control of the fiduciary adviser.
            ``(5) Exemption for plan sponsor and certain other 
        fiduciaries.--
                    ``(A) In general.--Subject to subparagraph (B), a 
                plan sponsor or other person who is a fiduciary (other 
                than a fiduciary adviser) shall not be treated as 
                failing to meet the requirements of this part solely by 
                reason of the provision of investment advice referred 
                to in section 3(21)(A)(ii) (or solely by reason of 
                contracting for or otherwise arranging for the 
                provision of the advice), if--
                            ``(i) the advice is provided by a fiduciary 
                        adviser pursuant to an arrangement between the 
                        plan sponsor or other fiduciary and the 
                        fiduciary adviser for the provision by the 
                        fiduciary adviser of investment advice referred 
                        to in such section,
                            ``(ii) the terms of the arrangement require 
                        compliance by the fiduciary adviser with the 
                        requirements of this subsection, and
                            ``(iii) the terms of the arrangement 
                        include a written acknowledgment by the 
                        fiduciary adviser that the fiduciary adviser is 
                        a fiduciary of the plan with respect to the 
                        provision of the advice.
                    ``(B) Continued duty of prudent selection of 
                adviser and periodic review.--Nothing in subparagraph 
                (A) shall be construed to exempt a plan sponsor or 
                other person who is a fiduciary from any requirement of 
                this part for the prudent selection and periodic review 
                of a fiduciary adviser with whom the plan sponsor or 
                other person enters into an arrangement for the 
                provision of advice referred to in section 
                3(21)(A)(ii). The plan sponsor or other person who is a 
                fiduciary has no duty under this part to monitor the 
                specific investment advice given by the fiduciary 
                adviser to any particular recipient of the advice.
                    ``(C) Availability of plan assets for payment for 
                advice.--Nothing in this part shall be construed to 
                preclude the use of plan assets to pay for reasonable 
                expenses in providing investment advice referred to in 
                section 3(21)(A)(ii).
            ``(6) Definitions.--For purposes of this subsection and 
        subsection (b)(14)--
                    ``(A) Fiduciary adviser.--The term `fiduciary 
                adviser' means, with respect to a plan, a person who is 
                a fiduciary of the plan by reason of the provision of 
                investment advice by the person to the plan or to a 
                participant or beneficiary and who is--
                            ``(i) registered as an investment adviser 
                        under the Investment Advisers Act of 1940 (15 
                        U.S.C. 80b-1 et seq.) or under the laws of the 
                        State in which the fiduciary maintains its 
                        principal office and place of business,
                            ``(ii) a bank or similar financial 
                        institution referred to in section 408(b)(4) or 
                        a savings association (as defined in section 
                        3(b)(1) of the Federal Deposit Insurance Act 
                        (12 U.S.C. 1813(b)(1))), but only if the advice 
                        is provided through a trust department of the 
                        bank or similar financial institution or 
                        savings association which is subject to 
                        periodic examination and review by Federal or 
                        State banking authorities,
                            ``(iii) an insurance company qualified to 
                        do business under the laws of a State,
                            ``(iv) a person registered as a broker or 
                        dealer under the Securities Exchange Act of 
                        1934 (15 U.S.C. 78a et seq.),
                            ``(v) an affiliate of a person described in 
                        any of clauses (i) through (iv), or
                            ``(vi) an employee, agent, or registered 
                        representative of a person described in any of 
                        clauses (i) through (v) who satisfies the 
                        requirements of applicable insurance, banking, 
                        and securities laws relating to the provision 
                        of the advice.
                    ``(B) Affiliate.--The term `affiliate' of another 
                entity means an affiliated person of the entity (as 
                defined in section 2(a)(3) of the Investment Company 
                Act of 1940 (15 U.S.C. 80a-2(a)(3))).
                    ``(C) Registered representative.--The term 
                `registered representative' of another entity means a 
                person described in section 3(a)(18) of the Securities 
                Exchange Act of 1934 (15 U.S.C. 78c(a)(18)) 
                (substituting the entity for the broker or dealer 
                referred to in such section) or a person described in 
                section 202(a)(17) of the Investment Advisers Act of 
                1940 (15 U.S.C. 80b-2(a)(17)) (substituting the entity 
                for the investment adviser referred to in such 
                section).''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to advice referred to in section 3(21)(A)(ii) of the 
Employee Retirement Income Security Act of 1974 provided on or after 
January 1, 2006.

SEC. 602. AMENDMENTS TO INTERNAL REVENUE CODE OF 1986 PROVIDING 
              PROHIBITED TRANSACTION EXEMPTION FOR PROVISION OF 
              INVESTMENT ADVICE.

    (a) Exemption From Prohibited Transactions.--Subsection (d) of 
section 4975 of the Internal Revenue Code of 1986 (relating to 
exemptions from tax on prohibited transactions) is amended--
            (1) in paragraph (14), by striking ``or'' at the end;
            (2) in paragraph (15), by striking the period at the end 
        and inserting ``; or''; and
            (3) by adding at the end the following new paragraph:
            ``(16) any transaction described in subsection (f)(7)(A) in 
        connection with the provision of investment advice described in 
        subsection (e)(3)(B)(i), in any case in which--
                    ``(A) the investment of assets of the plan is 
                subject to the direction of plan participants or 
                beneficiaries,
                    ``(B) the advice is provided to the plan or a 
                participant or beneficiary of the plan by a fiduciary 
                adviser in connection with any sale, acquisition, or 
                holding of a security or other property for purposes of 
                investment of plan assets, and
                    ``(C) the requirements of subsection (f)(7)(B) are 
                met in connection with the provision of the advice.''.
    (b) Allowed Transactions and Requirements.--Subsection (f) of such 
section 4975 (relating to other definitions and special rules) is 
amended by adding at the end the following new paragraph:
            ``(7) Provisions relating to investment advice provided by 
        fiduciary advisers.--
                    ``(A) Transactions allowable in connection with 
                investment advice provided by fiduciary advisers.--The 
                transactions referred to in subsection (d)(16), in 
                connection with the provision of investment advice by a 
                fiduciary adviser, are the following:
                            ``(i) the provision of the advice to the 
                        plan, participant, or beneficiary;
                            ``(ii) the sale, acquisition, or holding of 
                        a security or other property (including any 
                        lending of money or other extension of credit 
                        associated with the sale, acquisition, or 
                        holding of a security or other property) 
                        pursuant to the advice; and
                            ``(iii) the direct or indirect receipt of 
                        fees or other compensation by the fiduciary 
                        adviser or an affiliate thereof (or any 
                        employee, agent, or registered representative 
                        of the fiduciary adviser or affiliate) in 
                        connection with the provision of the advice or 
                        in connection with a sale, acquisition, or 
                        holding of a security or other property 
                        pursuant to the advice.
                    ``(B) Requirements relating to provision of 
                investment advice by fiduciary advisers.--The 
                requirements of this subparagraph (referred to in 
                subsection (d)(16)(C)) are met in connection with the 
                provision of investment advice referred to in 
                subsection (e)(3)(B), provided to a plan or a 
                participant or beneficiary of a plan by a fiduciary 
                adviser with respect to the plan in connection with any 
                sale, acquisition, or holding of a security or other 
                property for purposes of investment of amounts held by 
                the plan, if--
                            ``(i) in the case of the initial provision 
                        of the advice with regard to the security or 
                        other property by the fiduciary adviser to the 
                        plan, participant, or beneficiary, the 
                        fiduciary adviser provides to the recipient of 
                        the advice, at a time reasonably 
                        contemporaneous with the initial provision of 
                        the advice, a written notification (which may 
                        consist of notification by means of electronic 
                        communication)--
                                    ``(I) of all fees or other 
                                compensation relating to the advice 
                                that the fiduciary adviser or any 
                                affiliate thereof is to receive 
                                (including compensation provided by any 
                                third party) in connection with the 
                                provision of the advice or in 
                                connection with the sale, acquisition, 
                                or holding of the security or other 
                                property,
                                    ``(II) of any material affiliation 
                                or contractual relationship of the 
                                fiduciary adviser or affiliates thereof 
                                in the security or other property,
                                    ``(III) of any limitation placed on 
                                the scope of the investment advice to 
                                be provided by the fiduciary adviser 
                                with respect to any such sale, 
                                acquisition, or holding of a security 
                                or other property,
                                    ``(IV) of the types of services 
                                provided by the fiduciary adviser in 
                                connection with the provision of 
                                investment advice by the fiduciary 
                                adviser,
                                    ``(V) that the adviser is acting as 
                                a fiduciary of the plan in connection 
                                with the provision of the advice, and
                                    ``(VI) that a recipient of the 
                                advice may separately arrange for the 
                                provision of advice by another adviser, 
                                that could have no material affiliation 
                                with and receive no fees or other 
                                compensation in connection with the 
                                security or other property,
                            ``(ii) the fiduciary adviser provides 
                        appropriate disclosure, in connection with the 
                        sale, acquisition, or holding of the security 
                        or other property, in accordance with all 
                        applicable securities laws,
                            ``(iii) the sale, acquisition, or holding 
                        occurs solely at the direction of the recipient 
                        of the advice,
                            ``(iv) the compensation received by the 
                        fiduciary adviser and affiliates thereof in 
                        connection with the sale, acquisition, or 
                        holding of the security or other property is 
                        reasonable, and
                            ``(v) the terms of the sale, acquisition, 
                        or holding of the security or other property 
                        are at least as favorable to the plan as an 
                        arm's length transaction would be.
                    ``(C) Standards for presentation of information.--
                The notification required to be provided to 
                participants and beneficiaries under subparagraph 
                (B)(i) shall be written in a clear and conspicuous 
                manner and in a manner calculated to be understood by 
                the average plan participant and shall be sufficiently 
                accurate and comprehensive to reasonably apprise such 
                participants and beneficiaries of the information 
                required to be provided in the notification.
                    ``(D) Exemption conditioned on making required 
                information available annually, on request, and in the 
                event of material change.--The requirements of 
                subparagraph (B)(i) shall be deemed not to have been 
                met in connection with the initial or any subsequent 
                provision of advice described in subparagraph (B) to 
                the plan, participant, or beneficiary if, at any time 
                during the provision of advisory services to the plan, 
                participant, or beneficiary, the fiduciary adviser 
                fails to maintain the information described in 
                subclauses (I) through (IV) of subparagraph (B)(i) in 
                currently accurate form and in the manner required by 
                subparagraph (C), or fails--
                            ``(i) to provide, without charge, such 
                        currently accurate information to the recipient 
                        of the advice no less than annually,
                            ``(ii) to make such currently accurate 
                        information available, upon request and without 
                        charge, to the recipient of the advice, or
                            ``(iii) in the event of a material change 
                        to the information described in subclauses (I) 
                        through (IV) of subparagraph (B)(i), to 
                        provide, without charge, such currently 
                        accurate information to the recipient of the 
                        advice at a time reasonably contemporaneous to 
                        the material change in information.
                    ``(E) Maintenance for 6 years of evidence of 
                compliance.--A fiduciary adviser referred to in 
                subparagraph (B) who has provided advice referred to in 
                such subparagraph shall, for a period of not less than 
                6 years after the provision of the advice, maintain any 
                records necessary for determining whether the 
                requirements of the preceding provisions of this 
                paragraph and of subsection (d)(16) have been met. A 
                transaction prohibited under subsection (c)(1) shall 
                not be considered to have occurred solely because the 
                records are lost or destroyed prior to the end of the 
                6-year period due to circumstances beyond the control 
                of the fiduciary adviser.
                    ``(F) Exemption for plan sponsor and certain other 
                fiduciaries.--A plan sponsor or other person who is a 
                fiduciary (other than a fiduciary adviser) shall not be 
                treated as failing to meet the requirements of this 
                section solely by reason of the provision of investment 
                advice referred to in subsection (e)(3)(B) (or solely 
                by reason of contracting for or otherwise arranging for 
                the provision of the advice), if--
                            ``(i) the advice is provided by a fiduciary 
                        adviser pursuant to an arrangement between the 
                        plan sponsor or other fiduciary and the 
                        fiduciary adviser for the provision by the 
                        fiduciary adviser of investment advice referred 
                        to in such section,
                            ``(ii) the terms of the arrangement require 
                        compliance by the fiduciary adviser with the 
                        requirements of this paragraph,
                            ``(iii) the terms of the arrangement 
                        include a written acknowledgment by the 
                        fiduciary adviser that the fiduciary adviser is 
                        a fiduciary of the plan with respect to the 
                        provision of the advice, and
                            ``(iv) the requirements of part 4 of 
                        subtitle B of title I of the Employee 
                        Retirement Income Security Act of 1974 are met 
                        in connection with the provision of such 
                        advice.
                    ``(G) Definitions.--For purposes of this paragraph 
                and subsection (d)(16)--
                            ``(i) Fiduciary adviser.--The term 
                        `fiduciary adviser' means, with respect to a 
                        plan, a person who is a fiduciary of the plan 
                        by reason of the provision of investment advice 
                        by the person to the plan or to a participant 
                        or beneficiary and who is--
                                    ``(I) registered as an investment 
                                adviser under the Investment Advisers 
                                Act of 1940 (15 U.S.C. 80b-1 et seq.) 
                                or under the laws of the State in which 
                                the fiduciary maintains its principal 
                                office and place of business,
                                    ``(II) a bank or similar financial 
                                institution referred to in subsection 
                                (d)(4) or a savings association (as 
                                defined in section 3(b)(1) of the 
                                Federal Deposit Insurance Act (12 
                                U.S.C. 1813(b)(1))), but only if the 
                                advice is provided through a trust 
                                department of the bank or similar 
                                financial institution or savings 
                                association which is subject to 
                                periodic examination and review by 
                                Federal or State banking authorities,
                                    ``(III) an insurance company 
                                qualified to do business under the laws 
                                of a State,
                                    ``(IV) a person registered as a 
                                broker or dealer under the Securities 
                                Exchange Act of 1934 (15 U.S.C. 78a et 
                                seq.),
                                    ``(V) an affiliate of a person 
                                described in any of subclauses (I) 
                                through (IV), or
                                    ``(VI) an employee, agent, or 
                                registered representative of a person 
                                described in any of subclauses (I) 
                                through (V) who satisfies the 
                                requirements of applicable insurance, 
                                banking, and securities laws relating 
                                to the provision of the advice.
                            ``(ii) Affiliate.--The term `affiliate' of 
                        another entity means an affiliated person of 
                        the entity (as defined in section 2(a)(3) of 
                        the Investment Company Act of 1940 (15 U.S.C. 
                        80a-2(a)(3))).
                            ``(iii) Registered representative.--The 
                        term `registered representative' of another 
                        entity means a person described in section 
                        3(a)(18) of the Securities Exchange Act of 1934 
                        (15 U.S.C. 78c(a)(18)) (substituting the entity 
                        for the broker or dealer referred to in such 
                        section) or a person described in section 
                        202(a)(17) of the Investment Advisers Act of 
                        1940 (15 U.S.C. 80b-2(a)(17)) (substituting the 
                        entity for the investment adviser referred to 
                        in such section).''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to advice referred to in section 4975(c)(3)(B) of 
the Internal Revenue Code of 1986 provided on or after January 1, 2006.

                    TITLE VII--DEDUCTION LIMITATIONS

SEC. 701. INCREASE IN DEDUCTION LIMITS.

    (a) Increase in Deduction Limit for Single-Employer Plans.--Section 
404 of the Internal Revenue Code of 1986 (relating to deduction for 
contributions of an employer to an employees' trust or annuity plan and 
compensation under a deferred payment plan) is amended--
            (1) in subsection (a)(1)(A), by inserting ``in the case of 
        a defined benefit plan other than a multiemployer plan, in an 
        amount determined under subsection (o), and in the case of any 
        other plan'' after ``section 501(a),'', and
            (2) by inserting at the end the following new subsection:
    ``(o) Deduction Limit for Single-Employer Plans.--For purposes of 
subsection (a)(1)(A)--
            ``(1) In general.--In the case of a defined benefit plan to 
        which subsection (a)(1)(A) applies (other than a multiemployer 
        plan), the amount determined under this subsection for any 
        taxable year shall be equal to the amount determined under 
        paragraph (2) with respect to each plan year ending with or 
        within the taxable year.
            ``(2) Determination of amount.--The amount determined under 
        this paragraph for any plan year shall be equal to the excess 
        (if any) of--
                    ``(A) the greater of--
                            ``(i) the sum of--
                                    ``(I) 150 percent of the funding 
                                target applicable to the plan for such 
                                plan year, determined under section 
                                430(e), plus
                                    ``(II) the target normal cost 
                                applicable to the plan for such plan 
                                year, determined under section 430(b), 
                                or
                            ``(ii) in the case of a plan that is not in 
                        an at-risk status (as determined under 430(g)), 
                        the sum of--
                                    ``(I) the funding target which 
                                would be applicable to the plan for 
                                such plan year if such plan were in an 
                                at-risk status, determined under 
                                section 430(e) (with regard to section 
                                430(g)), plus
                                    ``(II) the target normal cost which 
                                would be applicable to the plan for 
                                such plan year if such plan were in an 
                                at-risk status, determined under 
                                section 430(b) (with regard to section 
                                430(g)), over
                    ``(B) the value of the plan assets (determined 
                under section 430(e) as of the valuation date of the 
                plan).
            ``(3) Special rule for terminating plans.--In the case of a 
        plan which, subject to section 4041 of the Employee Retirement 
        Income Security Act of 1974, terminates during the plan year, 
        the amount determined under paragraph (2) shall not be less 
        than the amount required to make the plan sufficient for 
        benefit liabilities (within the meaning of section 4041(d) of 
        such Act).
            ``(4) Definitions.--Any term used in this subsection which 
        is also used in section 430 shall have the same meaning given 
        such term by section 430.''.
    (b) Increase in Deduction Limit for Multiemployer Plans.--Section 
404(a)(1)(D) of such Code is amended to read as follows:
                    ``(D) Amount determined on basis of unfunded 
                current liability.--
                            ``(i) In general.--In the case of a defined 
                        benefit plan which is a multiemployer plan, 
                        except as provided in regulations, the maximum 
                        amount deductible under the limitations of this 
                        paragraph shall not be less than the unfunded 
                        current liability of the plan.
                            ``(ii) Unfunded current liability.--For 
                        purposes of clause (i), the term `unfunded 
                        current liability' means the excess (if any) 
                        of--
                                    ``(I) 140 percent of the current 
                                liability of the plan determined under 
                                section 431(c)(6)(C), over
                                    ``(II) the value of the plan's 
                                assets determined under section 
                                431(c)(2).''.
    (c) Technical and Conforming Amendments.--
            (1) The last sentence of section 404(a)(1)(A) of such Code 
        is amended by striking ``section 412'' each place it appears 
        and inserting ``section 431''.
            (2) Section 404(a)(1)(B) of such Code is amended--
                    (A) by striking ``In the case of a plan'' and 
                inserting ``In the case of a multiemployer plan'',
                    (B) by striking ``section 412(c)(7)'' each place it 
                appears and inserting ``section 431(c)(6)'',
                    (C) by striking ``section 412(c)(7)(B)'' and 
                inserting ``section 431(c)(6)(A)(ii)'',
                    (D) by striking ``section 412(c)(7)(A)'' and 
                inserting ``section 431(c)(6)(A)(i)'', and
                    (E) by striking ``section 412'' and inserting 
                ``section 431''.
            (3) Section 404(a)(1) of such Code is amended by striking 
        subparagraph (F).
            (4) Section 404(a)(7) of such Code is amended--
                    (A) in subparagraph (A)(ii), by striking ``for the 
                plan year'' and all that follows and inserting ``which 
                are multiemployer plans for the plan year which ends 
                with or within such taxable year (or for any prior plan 
                year) and the maximum amount of employer contributions 
                allowable under subsection (o) with respect to any such 
                defined benefit plans which are not multiemployer plans 
                for the plan year.'',
                    (B) by striking ``section 412(l)'' in the last 
                sentence of subparagraph (A) and inserting ``paragraph 
                (1)(D)(ii)'', and
                    (C) by striking subparagraph (D) and inserting:
                    ``(D) Insurance contract plans.--For purposes of 
                this paragraph, a plan described in section 412(d)(3) 
                shall be treated as a defined benefit plan.''.
            (5) Section 404A(g)(3)(A) of such Code is amended by 
        striking ``paragraphs (3) and (7) of section 412(c)'' and 
        inserting ``sections 430(d)(1) and 431(c) (3) and (6)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to contributions for taxable years beginning after 2005.

SEC. 702. UPDATING DEDUCTION RULES FOR COMBINATION OF PLANS.

    (a) In General.--Subparagraph (C) of section 404(a)(7) (relating to 
limitation on deductions where combination of defined contribution plan 
and defined benefit plan) is amended by adding after clause (ii) the 
following new clause:
                            ``(iii) Limitation.--In the case of 
                        employer contributions to 1 or more defined 
                        contribution plans, this paragraph shall only 
                        apply to the extent that such contributions 
                        exceed 6 percent of the compensation otherwise 
                        paid or accrued during the taxable year to the 
                        beneficiaries under such plans. For purposes of 
                        this clause, amounts carried over from 
                        preceding taxable years under subparagraph (B) 
                        shall be treated as employer contributions to 1 
                        or more defined contributions to the extent 
                        attributable to employer contributions to such 
                        plans in such preceding taxable years.''.
    (b) Conforming Amendments.--Subparagraph (A) of section 4972(c)(6) 
of such Code (relating to nondeductible contributions) is amended to 
read as follows:
                    ``(A) so much of the contributions to 1 or more 
                defined contribution plans which are not deductible 
                when contributed solely because of section 404(a)(7) as 
                does not exceed the amount of contributions described 
                in section 401(m)(4)(A), or''.
    (c) Effective Date.--The amendments made by this section shall 
apply to contributions for taxable years beginning after December 31, 
2005.
                                 <all>
Pension Security and Transparency Act of 2005

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