USC - Minimum funding standards for single-employer defined benefit pension plans

View all text of Part 3 [§ 1081 - § 1086]

§ 1083. Minimum funding standards for single-employer defined benefit pension plans

(a) Minimum required contributionFor purposes of this section and section 1082(a)(2)(A) of this title, except as provided in subsection (f), the term “minimum required contribution” means, with respect to any plan year of a single-employer plan—

(1) in any case in which the value of plan assets of the plan (as reduced under subsection (f)(4)(B)) is less than the funding target of the plan for the plan year, the sum of—

(A) the target normal cost of the plan for the plan year,

(B) the shortfall amortization charge (if any) for the plan for the plan year determined under subsection (c), and

(2) in any case in which the value of plan assets of the plan (as reduced under subsection (f)(4)(B)) equals or exceeds the funding target of the plan for the plan year, the target normal cost of the plan for the plan year reduced (but not below zero) by such excess.

(b) Target normal costFor purposes of this section:

(1) In generalExcept as provided in subsection (i)(2) with respect to plans in at-risk status, the term “target normal cost” means, for any plan year, the excess of—

(A) the sum of—

(i) the present value of all benefits which are expected to accrue or to be earned under the plan during the plan year, plus

(ii) the amount of plan-related expenses expected to be paid from plan assets during the plan year, over

(B) the amount of mandatory employee contributions expected to be made during the plan year.

(2) Special rule for increase in compensation

(1) In general

(2) Shortfall amortization installmentFor purposes of paragraph (1)—

(A) Determination

(B) Shortfall installment

(D) Special election for eligible plan years

(i) In generalIf a plan sponsor elects to apply this subparagraph with respect to the shortfall amortization base of a plan for any eligible plan year (in this subparagraph and paragraph (7) referred to as an “election year”), then, notwithstanding subparagraphs (A) and (B)—(I) the shortfall amortization installments with respect to such base shall be determined under clause (ii) or (iii), whichever is specified in the election, and(II) the shortfall amortization installment for any plan year in the 9-plan-year period described in clause (ii) or the 15-plan-year period described in clause (iii), respectively, with respect to such shortfall amortization base is the annual installment determined under the applicable clause for that year for that base.

(ii) 2 plus 7 amortization scheduleThe shortfall amortization installments determined under this clause are—(I) in the case of the first 2 plan years in the 9-plan-year period beginning with the election year, interest on the shortfall amortization base of the plan for the election year (determined using the effective interest rate for the plan for the election year), and(II) in the case of the last 7 plan years in such 9-plan-year period, the amounts necessary to amortize the remaining balance of the shortfall amortization base of the plan for the election year in level annual installments over such last 7 plan years (using the segment rates under subparagraph (C) for the election year).

(iii) 15-year amortization

(iv) Election(I) In general(II) Amortization schedule(III) Other rules

(v) Eligible plan year

(vi) ReportingA plan sponsor of a plan who makes an election under clause (i) shall—(I) give notice of the election to participants and beneficiaries of the plan, and(II) inform the Pension Benefit Guaranty Corporation of such election in such form and manner as the Director of the Pension Benefit Guaranty Corporation may prescribe.

(vii) Increases in required installments in certain cases

(3) Shortfall amortization baseFor purposes of this section, the shortfall amortization base of a plan for a plan year is—

(A) the funding shortfall of such plan for such plan year, minus

(B) the present value (determined using the segment rates determined under subparagraph (C) of subsection (h)(2), applied under rules similar to the rules of subparagraph (B) of subsection (h)(2)) of the aggregate total of the shortfall amortization installments and waiver amortization installments which have been determined for such plan year and any succeeding plan year with respect to the shortfall amortization bases and waiver amortization bases of the plan for any plan year preceding such plan year.

(4) Funding shortfallFor purposes of this section, the funding shortfall of a plan for any plan year is the excess (if any) of—

(A) the funding target of the plan for the plan year, over

(B) the value of plan assets of the plan (as reduced under subsection (f)(4)(B)) for the plan year which are held by the plan on the valuation date.

(5) Exemption from new shortfall amortization base

(6) Early deemed amortization upon attainment of funding target

(7) Increases in alternate required installments in cases of excess compensation or extraordinary dividends or stock redemptions

(A) In general

(B) Total installments limited to shortfall baseSubject to rules prescribed by the Secretary of the Treasury, if a shortfall amortization installment with respect to any shortfall amortization base for an election year is required to be increased for any plan year under subparagraph (A)—

(i) such increase shall not result in the amount of such installment exceeding the present value of such installment and all succeeding installments with respect to such base (determined without regard to such increase but after application of clause (ii)), and

(ii) subsequent shortfall amortization installments with respect to such base shall, in reverse order of the otherwise required installments, be reduced to the extent necessary to limit the present value of such subsequent shortfall amortization installments (after application of this paragraph) to the present value of the remaining unamortized shortfall amortization base.

(i) In generalThe term “installment acceleration amount” means, with respect to any plan year in a restriction period with respect to an election year, the sum of—(I) the aggregate amount of excess employee compensation determined under subparagraph (D) with respect to all employees for the plan year, plus(II) the aggregate amount of extraordinary dividends and redemptions determined under subparagraph (E) for the plan year.

(ii) Annual limitationThe installment acceleration amount for any plan year shall not exceed the excess (if any) of—(I) the sum of the shortfall amortization installments for the plan year and all preceding plan years in the amortization period elected under paragraph (2)(D) with respect to the shortfall amortization base with respect to an election year, determined without regard to paragraph (2)(D) and this paragraph, over(II) the sum of the shortfall amortization installments for such plan year and all such preceding plan years, determined after application of paragraph (2)(D) (and in the case of any preceding plan year, after application of this paragraph).

(iii) Carryover of excess installment acceleration amounts(I) In general(II) Cap to apply(III) Limitation on years to which amounts carried for(IV) Ordering rules

(D) Excess employee compensationFor purposes of this paragraph—

(i) In generalThe term “excess employee compensation” means, with respect to any employee for any plan year, the excess (if any) of—(I) the aggregate amount includible in income under chapter 1 of title 26 for remuneration during the calendar year in which such plan year begins for services performed by the employee for the plan sponsor (whether or not performed during such calendar year), over(II) $1,000,000.

(ii) Amounts set aside for nonqualified deferred compensation

(iii) Only remuneration for certain post-2009 services counted

(iv) Exception for certain equity payments(I) In general(II) Secretarial authority

(v) Other exceptionsThe following amounts includible in income shall not be taken into account under clause (i)(I):(I) Commissions(II) Certain payments under existing contracts

(vi) Self-employed individual treated as employee

(vii) Indexing of amountIn the case of any calendar year beginning after 2010, the dollar amount under clause (i)(II) shall be increased by an amount equal to—(I) such dollar amount, multiplied by(II) the cost-of-living adjustment determined under section 1(f)(3) of such title for the calendar year, determined by substituting “calendar year 2009” for “calendar year 1992” in subparagraph (B) thereof.

If the amount of any increase under clause (i) is not a multiple of $1,000, such increase shall be rounded to the next lowest multiple of $1,000.

(E) Extraordinary dividends and redemptions

(i) In generalThe amount determined under this subparagraph for any plan year is the excess (if any) of the sum of the dividends declared during the plan year by the plan sponsor plus the aggregate amount paid for the redemption of stock of the plan sponsor redeemed during the plan year over the greater of—(I) the adjusted net income (within the meaning of section 1343 of this title) of the plan sponsor for the preceding plan year, determined without regard to any reduction by reason of interest, taxes, depreciation, or amortization, or(II) in the case of a plan sponsor that determined and declared dividends in the same manner for at least 5 consecutive years immediately preceding such plan year, the aggregate amount of dividends determined and declared for such plan year using such manner.

(ii) Only certain post-2009 dividends and redemptions counted

(iii) Exception for intra-group dividends

(iv) Exception for certain redemptions

(v) Exception for certain preferred stock(I) In general(II) Applicable preferred stock

(F) Other definitions and rulesFor purposes of this paragraph—

(i) Plan sponsor

(ii) Restriction periodThe term “restriction period” means, with respect to any election year—(I) except as provided in subclause (II), the 3-year period beginning with the election year (or, if later, the first plan year beginning after December 31, 2009), and(II) if the plan sponsor elects 15-year amortization for the shortfall amortization base for the election year, the 5-year period beginning with the election year (or, if later, the first plan year beginning after December 31, 2009).

(iii) Elections for multiple plans

(iv) Mergers and acquisitions

(8) 15-year amortizationWith respect to plan years beginning after December 31, 2021 (or, at the election of the plan sponsor, plan years beginning after December 31, 2018, December 31, 2019, or December 31, 2020)—

(A) the shortfall amortization bases for all plan years preceding the first plan year beginning after December 31, 2021 (or after whichever earlier date is elected pursuant to this paragraph), and all shortfall amortization installments determined with respect to such bases, shall be reduced to zero, and

(B) subparagraphs (A) and (B) of paragraph (2) shall each be applied by substituting “15-plan-year period” for “7-plan-year period”.

(d) Rules relating to funding targetFor purposes of this section—

(1) Funding target

(2) Funding target attainment percentageThe “funding target attainment percentage” of a plan for a plan year is the ratio (expressed as a percentage) which—

(A) the value of plan assets for the plan year (as reduced under subsection (f)(4)(B)), bears to

(B) the funding target of the plan for the plan year (determined without regard to subsection (i)(1)).

(e) Waiver amortization charge

(1) Determination of waiver amortization charge

(2) Waiver amortization installmentFor purposes of paragraph (1)—

(A) Determination

(B) Waiver installment

(3) Interest rate

(4) Waiver amortization base

(5) Early deemed amortization upon attainment of funding target

(f) Reduction of minimum required contribution by prefunding balance and funding standard carryover balance

(1) Election to maintain balances

(A) Prefunding balance

(B) Funding standard carryover balance

(i) In general

(ii) Plans maintaining funding standard account in 2007A plan is described in this clause if the plan—(I) was in effect for a plan year beginning in 2007, and(II) had a positive balance in the funding standard account under section 1082(b) of this title as in effect for such plan year and determined as of the end of such plan year.

(2) Application of balancesA prefunding balance and a funding standard carryover balance maintained pursuant to this paragraph—

(A) shall be available for crediting against the minimum required contribution, pursuant to an election under paragraph (3),

(B) shall be applied as a reduction in the amount treated as the value of plan assets for purposes of this section, to the extent provided in paragraph (4), and

(3) Election to apply balances against minimum required contribution

(A) In general

(B)

(C) Limitation for underfunded plansThe preceding provisions of this paragraph shall not apply for any plan year if the ratio (expressed as a percentage) which—

(i) the value of plan assets for the preceding plan year (as reduced under paragraph (4)(C)), bears to

(ii) the funding target of the plan for the preceding plan year (determined without regard to subsection (i)(1)),

is less than 80 percent. In the case of plan years beginning in 2008, the ratio under this subparagraph may be determined using such methods of estimation as the Secretary of the Treasury may prescribe.

(D) Special rule for certain years of plans maintained by charities

(i) In generalFor purposes of applying subparagraph (C) for plan years beginning after August 31, 2009, and before September 1, 2011, the ratio determined under such subparagraph for the preceding plan year shall be the greater of—(I) such ratio, as determined without regard to this subparagraph, or(II) the ratio for such plan for the plan year beginning after August 31, 2007, and before September 1, 2008, as determined under rules prescribed by the Secretary of the Treasury.

(ii) Special ruleIn the case of a plan for which the valuation date is not the first day of the plan year—(I) clause (i) shall apply to plan years beginning after December 31, 2008, and before January 1, 2011, and(II) clause (i)(II) shall apply based on the last plan year beginning before September 1, 2007, as determined under rules prescribed by the Secretary of the Treasury.

(iii) Limitation to charities

(4) Effect of balances on amounts treated as value of plan assetsIn the case of any plan maintaining a prefunding balance or a funding standard carryover balance pursuant to this subsection, the amount treated as the value of plan assets shall be deemed to be such amount, reduced as provided in the following subparagraphs:

(A) Applicability of shortfall amortization base

(B) Determination of excess assets, funding shortfall, and funding target attainment percentage

(i) In general

(ii) Special rule for certain binding agreements with PBGC

(5) Election to reduce balance prior to determinations of value of plan assets and crediting against minimum required contribution

(A) In general

(B) Coordination between prefunding balance and funding standard carryover balance

(6) Prefunding balance

(A) In general

(B) Increases

(i) In generalAs of the first day of each plan year beginning after 2008, the prefunding balance of a plan shall be increased by the amount elected by the plan sponsor for the plan year. Such amount shall not exceed the excess (if any) of—(I) the aggregate total of employer contributions to the plan for the preceding plan year, over—(II) the minimum required contribution for such preceding plan year.

(ii) Adjustments for interest

(iii) Certain contributions necessary to avoid benefit limitations disregarded

(i) as of the first day of each plan year after 2008, the amount of such balance credited under paragraph (2) (if any) in reducing the minimum required contribution of the plan for the preceding plan year, and

(ii) as of the time specified in paragraph (5)(A), any reduction in such balance elected under paragraph (5).

(7) Funding standard carryover balance

(A) In general

(B) Beginning balance

(ii) as of the time specified in paragraph (5)(A), any reduction in such balance elected under paragraph (5).

(8) Adjustments for investment experience

(9) Elections

(g) Valuation of plan assets and liabilities

(1) Timing of determinations

(2) Valuation dateFor purposes of this section—

(A) In general

(B) Exception for small plans

(i) Plans not in existence in preceding year

(ii) Predecessors

(3) Determination of value of plan assetsFor purposes of this section—

(A) In general

(B) Averaging allowedA plan may determine the value of plan assets on the basis of the averaging of fair market values, but only if such method—

(i) is permitted under regulations prescribed by the Secretary of the Treasury,

(ii) does not provide for averaging of such values over more than the period beginning on the last day of the 25th month preceding the month in which the valuation date occurs and ending on the valuation date (or a similar period in the case of a valuation date which is not the 1st day of a month), and

(iii) does not result in a determination of the value of plan assets which, at any time, is lower than 90 percent or greater than 110 percent of the fair market value of such assets at such time.

Any such averaging shall be adjusted for contributions, distributions, and expected earnings (as determined by the plan’s actuary on the basis of an assumed earnings rate specified by the actuary but not in excess of the third segment rate applicable under subsection (h)(2)(C)(iii)), as specified by the Secretary of the Treasury.

(4) Accounting for contribution receiptsFor purposes of determining the value of assets under paragraph (3)—

(A) Prior year contributionsIf—

(i) an employer makes any contribution to the plan after the valuation date for the plan year in which the contribution is made, and

(ii) the contribution is for a preceding plan year,

the contribution shall be taken into account as an asset of the plan as of the valuation date, except that in the case of any plan year beginning after 2008, only the present value (determined as of the valuation date) of such contribution may be taken into account. For purposes of the preceding sentence, present value shall be determined using the effective interest rate for the preceding plan year to which the contribution is properly allocable.

(B) Special rule for current year contributions made before valuation dateIf any contributions for any plan year are made to or under the plan during the plan year but before the valuation date for the plan year, the assets of the plan as of the valuation date shall not include—

(i) such contributions, and

(ii) interest on such contributions for the period between the date of the contributions and the valuation date, determined by using the effective interest rate for the plan year.

(h) Actuarial assumptions and methods

(1) In generalSubject 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

(B) Interest rates for determining funding targetFor purposes of determining the funding target and normal cost of a plan for any plan year, the interest rate used in determining the present value of the benefits of the plan shall be—

(i) in the case of benefits reasonably determined to be payable during the 5-year period beginning on the valuation date for the plan year, the first segment rate with respect to the applicable month,

(ii) in the case of benefits reasonably determined to be payable during the 15-year period beginning at the end of the period described in clause (i), the second segment rate with respect to the applicable month, and

(iii) in the case of benefits reasonably determined to be payable after the period described in clause (ii), the third segment rate with respect to the applicable month.

(i) First segment rate

(ii) Second segment rate

(iii) Third segment rate

(iv) Segment rate stabilization(I) In general(II) Applicable minimum percentage; applicable maximum percentage

(D) Corporate bond yield curveFor purposes of this paragraph—

(i) In general

(ii) Election to use yield curve

(E) Applicable month

(F) Publication requirements

(3) Mortality tables

(A) In general

(B) Periodic revision

(i) In general

(ii) Early termination of periodNotwithstanding clause (i), a mortality table described in clause (i) shall cease to be in effect as of the earliest of—(I) the date on which there is a significant change in the participants in the plan by reason of a plan spinoff or merger or otherwise, or(II) the date on which the plan actuary determines that such table does not meet the requirements of clause (iii).

(iii) RequirementsA mortality table meets the requirements of this clause if—(I) there is a sufficient number of plan participants, and the pension plans have been maintained for a sufficient period of time, to have credible information necessary for purposes of subclause (II), and(II) such table reflects the actual experience of the pension plans maintained by the sponsor and projected trends in general mortality experience.

(iv) All plans in controlled group must use separate tableExcept as provided by the Secretary of the Treasury, a plan sponsor may not use a mortality table under this subparagraph for any plan maintained by the plan sponsor unless—(I) a separate mortality table is established and used under this subparagraph for each other plan maintained by the plan sponsor and if the plan sponsor is a member of a controlled group, each member of the controlled group, and(II) the requirements of clause (iii) are met separately with respect to the table so established for each such plan, determined by only taking into account the participants of such plan, the time such plan has been in existence, and the actual experience of such plan.

(v) Deadline for submission and disposition of application(I) Submission(II) Disposition

(D) Separate mortality tables for the disabledNotwithstanding subparagraph (A)—

(i) In general

(ii) Special rule for disabilities occurring after 1994

(iii) Periodic revision

(4) Probability of benefit payments in the form of lump sums or other optional formsFor 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

(B) Plans to which paragraph appliesThis paragraph shall apply to a plan only if—

(i) the plan is a single-employer plan to which subchapter III applies,

(ii) the aggregate unfunded vested benefits as of the close of the preceding plan year (as determined under section 1306(a)(3)(E)(iii) of this title) of such plan and all other plans maintained by the contributing sponsors (as defined in section 1301(a)(13) of this title) and members of such sponsors’ controlled groups (as defined in section 1301(a)(14) of this title) which are covered by subchapter III (disregarding plans with no unfunded vested benefits) exceed $50,000,000, and

(iii) the change in assumptions (determined after taking into account any changes in interest rate and mortality table) results in a decrease in the funding shortfall of the plan for the current plan year that exceeds $50,000,000, or that exceeds $5,000,000 and that is 5 percent or more of the funding target of the plan before such change.

(i) Special rules for at-risk plans

(1) Funding target for plans in at-risk status

(A) In generalIn the case of a plan which is in at-risk status for a plan year, the funding target of the plan for the plan year shall be equal to the sum of—

(i) the present value of all benefits accrued or earned under the plan as of the beginning of the plan year, as determined by using the additional actuarial assumptions described in subparagraph (B), and

(ii) in the case of a plan which also has been in at-risk status for at least 2 of the 4 preceding plan years, a loading factor determined under subparagraph (C).

(B) Additional actuarial assumptionsThe actuarial assumptions described in this subparagraph are as follows:

(i) All employees who are not otherwise assumed to retire as of the valuation date but who will be eligible to elect benefits during the plan year and the 10 succeeding plan years shall be assumed to retire at the earliest retirement date under the plan but not before the end of the plan year for which the at-risk funding target and at-risk target normal cost are being determined.

(ii) All employees shall be assumed to elect the retirement benefit available under the plan at the assumed retirement age (determined after application of clause (i)) which would result in the highest present value of benefits.

(C) Loading factorThe 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 plansIn the case of a plan which is in at-risk status for a plan year, the target normal cost of the plan for such plan year shall be equal to the sum of—

(A) the excess of—

(i) the sum of—(I) the present value of all benefits which are expected to accrue or to be earned under the plan during the plan year, determined using the additional actuarial assumptions described in paragraph (1)(B), plus(II) the amount of plan-related expenses expected to be paid from plan assets during the plan year, over

(ii) the amount of mandatory employee contributions expected to be made during the plan year, plus

(B) in the case of a plan which also has been in at-risk status for at least 2 of the 4 preceding plan years, a loading factor equal to 4 percent of the amount determined under subsection (b)(1)(A)(i) with respect to the plan for the plan year.

(3) Minimum amountIn no event shall—

(A) the at-risk funding target be less than the funding target, as determined without regard to this subsection, or

(B) the at-risk target normal cost be less than the target normal cost, as determined without regard to this subsection.

(4) Determination of at-risk statusFor purposes of this subsection—

(A) In generalA plan is in at-risk status for a plan year if—

(i) the funding target attainment percentage for the preceding plan year (determined under this section without regard to this subsection) is less than 80 percent, and

(ii) the funding target attainment percentage for the preceding plan year (determined under this section by using the additional actuarial assumptions described in paragraph (1)(B) in computing the funding target) is less than 70 percent.

(B) Transition ruleIn the case of plan years beginning in 2008, 2009, and 2010, subparagraph (A)(i) shall be applied by substituting the following percentages for “80 percent”:

(i) 65 percent in the case of 2008.

(ii) 70 percent in the case of 2009.

(iii) 75 percent in the case of 2010.

In the case of plan years beginning in 2008, the funding target attainment percentage for the preceding plan year under subparagraph (A) may be determined using such methods of estimation as the Secretary of the Treasury may provide.

(i) In generalFor purposes of subparagraph (A)(ii), the additional actuarial assumptions described in paragraph (1)(B) shall not be taken into account with respect to any employee if—(I) such employee is employed by a specified automobile manufacturer,(II) such employee is offered a substantial amount of additional cash compensation, substantially enhanced retirement benefits under the plan, or materially reduced employment duties on the condition that by a specified date (not later than December 31, 2010) the employee retires (as defined under the terms of the plan),(III) such offer is made during 2006 and pursuant to a bona fide retirement incentive program and requires, by the terms of the offer, that such offer can be accepted not later than a specified date (not later than December 31, 2006), and(IV) such employee does not elect to accept such offer before the specified date on which the offer expires.

(ii) Specified automobile manufacturerFor purposes of clause (i), the term “specified automobile manufacturer” means—(I) any manufacturer of automobiles, and(II) any manufacturer of automobile parts which supplies such parts directly to a manufacturer of automobiles and which, after a transaction or series of transactions ending in 1999, ceased to be a member of a controlled group which included such manufacturer of automobiles.

(5) Transition between applicable funding targets and between applicable target normal costs

(A) In generalIn 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

(6) Small plan exception

(j) Payment of minimum required contributions

(1) In general

(2) Interest

(3) Accelerated quarterly contribution schedule for underfunded plans

(A) Failure to timely make required installment

(B) Amount of underpayment, period of underpaymentFor purposes of subparagraph (A)—

(i) AmountThe 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

(iii) Order of crediting contributions

(i) Payable in 4 installments

(ii) Time for payment of installments

(D) Amount of required installmentFor purposes of this paragraph—

(i) In general

(ii) Required annual paymentFor purposes of clause (i), the term “required annual payment” means the lesser of—(I) 90 percent of the minimum required contribution (determined without regard to this subsection) to the plan for the plan year under this section, or(II) 100 percent of the minimum required contribution (determined without regard to this subsection or to any waiver under section 1082(c) of this title) to the plan for the preceding plan year.

Subclause (II) shall not apply if the preceding plan year referred to in such clause 4

4 So in original. Probably should be “subclause”.

was not a year of 12 months.

(E) Fiscal years, short years, and years with alternate valuation date

(i) Fiscal years

(ii) Short plan year

(iii) Plan with alternate valuation date

(F) Quarterly contributions not to include certain increased contributions

(4) Liquidity requirement in connection with quarterly contributions

(A) In general

(B) Plans to which paragraph appliesThis paragraph shall apply to a plan (other than a plan described in subsection (g)(2)(B)) which—

(i) is required to pay installments under paragraph (3) for a plan year, and

(ii) has a liquidity shortfall for any quarter during such plan year.

(D) Limitation on increase

(E) DefinitionsFor purposes of this paragraph—

(i) Liquidity shortfallThe 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(II) Special rule

(iii) Disbursements from the plan

(iv) Adjusted disbursementsThe 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

(vi) Quarter

(F) Regulations

(k) Imposition of lien where failure to make required contributions

(1) In generalIn the case of a plan to which this subsection applies (as provided under paragraph (2)), if—

(A) any person fails to make a contribution payment required by section 1082 of this title 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

(3) Amount of lien

(4) Notice of failure; lien

(A) Notice of failure

(B) Period of lien

(5) Enforcement

(6) DefinitionsFor purposes of this subsection—

(A) Contribution payment

(B) Due date; required installment

(l) Qualified transfers to health benefit accounts

(m) Special rules for community newspaper plans

(1) In general

(2) Eligible newspaper plan sponsorThe term “eligible newspaper plan sponsor” means the plan sponsor of—

(A) any community newspaper plan, or

(B) any other plan sponsored, as of April 2, 2019, by a member of the same controlled group of a plan sponsor of a community newspaper plan if such member is in the trade or business of publishing 1 or more newspapers.

(3) Election

(4) Alternative minimum funding standardsThe alternative standards described in this paragraph are the following:

(A) Interest rates

(i) In general

(ii) New benefit accruals

(iii) United States Treasury obligation yield curve

(B) Shortfall amortization base

(i) Previous shortfall amortization bases

(ii) New shortfall amortization base

(i) 30-year period

(ii) No special election

(D) Exemption from at-risk treatment

(5) Community newspaper planFor purposes of this subsection—

(A) In generalThe term “community newspaper plan” means a plan to which this section applies maintained as of December 31, 2018, by an employer which—

(i) maintains the plan on behalf of participants and beneficiaries with respect to employment in the trade or business of publishing 1 or more newspapers which were published by the employer at any time during the 11-year period ending on December 20, 2019,

(ii)(I) is not a company the stock of which is publicly traded (on a stock exchange or in an over-the-counter market), and is not controlled, directly or indirectly, by such a company, or(II) is controlled, directly, or indirectly, during the entire 30-year period ending on December 20, 2019, by individuals who are members of the same family, and does not publish or distribute a daily newspaper that is carrier-distributed in printed form in more than 5 States, and

(iii) is controlled, directly, or indirectly—(I) by 1 or more persons residing primarily in a State in which the community newspaper has been published on newsprint or carrier-distributed,(II) during the entire 30-year period ending on December 20, 2019, by individuals who are members of the same family,(III) by 1 or more trusts, the sole trustees of which are persons described in subclause (I) or (II), or(IV) by a combination of persons described in subclause (I), (II), or (III).

(B) NewspaperThe term “newspaper” does not include any newspaper (determined without regard to this subparagraph) to which any of the following apply:

(i) Is not in general circulation.

(ii) Is published (on newsprint or electronically) less frequently than 3 times per week.

(iii) Has not ever been regularly published on newsprint.

(iv) Does not have a bona fide list of paid subscribers.

(6) Controlled group

(7) Effect on premium rate calculation

(Pub. L. 93–406, title I, § 303, as added Pub. L. 109–280, title I, § 102(a), Aug. 17, 2006, 120 Stat. 789; amended Pub. L. 110–458, title I, §§ 101(b)(1), 121(a), title II, § 202(a), Dec. 23, 2008, 122 Stat. 5093, 5113, 5117; Pub. L. 111–192, title II, §§ 201(a), 204(a), June 25, 2010, 124 Stat. 1283, 1300; Pub. L. 112–141, div. D, title II, § 40211(b)(1), (3)(A), July 6, 2012, 126 Stat. 847, 849; Pub. L. 113–159, title II, § 2003(b)(1), (d)(2), Aug. 8, 2014, 128 Stat. 1849, 1851; Pub. L. 113–295, div. A, title II, § 221(a)(57)(C)(ii), (D)(ii), Dec. 19, 2014, 128 Stat. 4046; Pub. L. 114–74, title V, § 504(b)(1), Nov. 2, 2015, 129 Stat. 593; Pub. L. 116–94, div. O, title I, § 115(b), Dec. 20, 2019, 133 Stat. 3158; Pub. L. 117–2, title IX, §§ 9705(b), 9706(b)(1), (2), 9707(b), Mar. 11, 2021, 135 Stat. 200, 201, 204; Pub. L. 117–58, div. H, title VI, § 80602(b)(1), Nov. 15, 2021, 135 Stat. 1339.)