29 USC 1081 - Coverage

§ 1081. Coverage
§ 1082. Minimum funding standards
§ 1083. Minimum funding standards for single-employer defined benefit pension plans
§ 1084. Minimum funding standards for multiemployer plans
§ 1085. Additional funding rules for multiemployer plans in endangered status or critical status
§ 1085a. Minimum funding standards
§§ 1085b, 1086. Repealed.

§ 1081. Coverage

(a) Plans excepted from applicability of this part

This part shall apply to any employee pension benefit plan described in section 1003(a) of this title, (and not exempted under section 1003(b) of this title), other than—

(1) an employee welfare benefit plan;

(2) an insurance contract plan described in subsection (b);

(3) a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees;

(4)

(A) a plan which is established and maintained by a society, order, or association described in section 501(c)(8) or (9) of title 26, if no part of the contributions to or under such plan are made by employers of participants in such plan; or

(B) a trust described in section 501(c)(18) of title 26;

(5) a plan which has not at any time after September 2, 1974, provided for employer contributions;

(6) an agreement providing payments to a retired partner or deceased partner or a deceased partner’s successor in interest as described in section 736 of title 26;

(7) an individual retirement account or annuity as described in section 408(a) of title 26, or a retirement bond described in section 409 of title 26 (as effective for obligations issued before January 1, 1984);

(8) an individual account plan (other than a money purchase plan) and a defined benefit plan to the extent it is treated as an individual account plan (other than a money purchase plan) under section 1002(35)(B) of this title;

(9) an excess benefit plan; or

(10) any plan, fund or program under which an employer, all of whose stock is directly or indirectly owned by employees, former employees or their beneficiaries, proposes through an unfunded arrangement to compensate retired employees for benefits which were forfeited by such employees under a pension plan maintained by a former employer prior to the date such pension plan became subject to this chapter.

(b) “Insurance contract plan” defined

For the purposes of paragraph (2) of subsection (a) a plan is an “insurance contract plan” if—

(1) the plan is funded exclusively by the purchase of individual insurance contracts,

(2) 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 became effective),

(3) 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,

(4) 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,

(5) no rights under such contracts have been subject to a security interest at any time during the plan year, and

(6) 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 of the Treasury to have the same characteristics as contracts described in the preceding sentence shall be treated as a plan described in this subsection.

(Pub. L. 93–406, title I, § 301, Sept. 2, 1974, 88 Stat. 868; Pub. L. 96–364, title III, § 304(a), title IV, § 411(b), Sept. 26, 1980, 94 Stat. 1293, 1308; Pub. L. 101–239, title VII, §§ 7891(a)(1), 7894(d)(1)(A), (4)(A), Dec. 19, 1989, 103 Stat. 2445, 2449; Pub. L. 109–280, title II, § 201(c)(1), Aug. 17, 2006, 120 Stat. 868.)

§ 1082. Minimum funding standards

(a) Requirement to meet minimum funding standard

(1) In general

(2) Minimum funding standardFor 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 (other than a CSEC 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 1083 of this title 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,

(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 1084 of this title as of the end of the plan year, and

(D) in the case of a CSEC plan, the employers make contributions to or under the plan for any plan year which, in the aggregate, are sufficient to ensure that the plan does not have an accumulated funding deficiency under section 1085a of this title as of the end of the plan year.

(b) Liability for contributions

(1) In general

(2) Joint and several liability where employer member of controlled group

(3) Multiemployer plans in critical status

(1) Waiver in case of business hardship

(A) In generalIf—

(i) an employer is (or in the case of a multiemployer plan or a CSEC plan, 10 percent or more of the number of employers contributing to or under the plan are) unable to satisfy the minimum funding standard for a plan year without temporary substantial business hardship (substantial business hardship in the case of a multiemployer plan), and

(ii) application of the standard would be adverse to the interests of plan participants in the aggregate,

the Secretary of the Treasury may, subject to subparagraph (C), waive the requirements of subsection (a) for such year with respect to all or any portion of the minimum funding standard. The Secretary of the Treasury shall not waive the minimum funding standard with respect to a plan for more than 3 of any 15 (5 of any 15 in the case of a multiemployer plan) consecutive plan years.

(B) Effects of waiverIf a waiver is granted under subparagraph (A) for any plan year—

(i) in the case of a single-employer plan (other than a CSEC plan), the minimum required contribution under section 1083 of this title 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 1083(e) of this title,

(ii) in the case of a multiemployer plan, the funding standard account shall be credited under section 1084(b)(3)(C) of this title with the amount of the waived funding deficiency and such amount shall be amortized as required under section 1084(b)(2)(C) of this title, and

(iii) in the case of a CSEC plan, the funding standard account shall be credited under

(2) Determination of business hardshipFor 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,

(D) it is reasonable to expect that the plan will be continued only if the waiver is granted.

(3) Waived funding deficiency

(4) Security for waivers for single-employer plans, consultations

(A) Security may be required

(i) In general

(ii) Special rules

(B) Consultation with the Pension Benefit Guaranty CorporationExcept as provided in subparagraph (C), the Secretary of the Treasury shall, before granting or modifying a waiver under this subsection or an extension under 1085a(d) 1

1 So in original. Probably should be preceded by “section”.

of this title 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, modification, or extension, 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 1002(4) of this title) 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 title 26.

(i) In generalThe preceding provisions of this paragraph shall not apply to any plan with respect to which the sum of—(I) the aggregate unpaid minimum required contributions for the plan year and all preceding plan years, or the accumulated funding deficiency under section 1085a of this title, whichever is applicable,(II) the present value of all waiver amortization installments determined for the plan year and succeeding plan years under section 1083(e)(2) or 1085a(b)(2)(C) of this title, whichever is applicable, and(III) the total amounts not paid by reason of an extension in effect under section 1085a(d) of this title,

is less than $1,000,000.

(ii) Treatment of waivers or extensions for which applications are pending

(iii) Unpaid minimum required contributionFor purposes of this subparagraph—(I) In general(II) Ordering rule

(5) Special rules for single-employer plans

(A) Application must be submitted before date 2½ months after close of year

(B) Special rule if employer is member of controlled groupIn the case of a single-employer plan, if an employer is a member of a controlled group, the temporary substantial business hardship requirements of paragraph (1) shall be treated as met only if such requirements are met—

(i) with respect to such employer, and

(ii) with respect to the controlled group of which such employer is a member (determined by treating all members of such group as a single employer).

The Secretary of the Treasury may provide that an analysis of a trade or business or industry of a member need not be conducted if such Secretary determines such analysis is not necessary because the taking into account of such member would not significantly affect the determination under this paragraph.

(6) Advance notice

(A) In general

(B) Consideration of relevant information

(7) Restriction on plan amendments

(A) In general

(B) ExceptionSubparagraph (A) shall not apply to any plan amendment which—

(i) the Secretary of the Treasury determines to be reasonable and which provides for only de minimis increases in the liabilities of the plan,

(ii) only repeals an amendment described in subsection (d)(2), or

(iii) is required as a condition of qualification under part I of subchapter D of chapter 1 of title 26.

(8) Cross reference

(d) Miscellaneous rules

(1) Change in method or year

(2) Certain retroactive plan amendmentsFor 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 2½ months after the close of the plan year (or, in the case of a multiemployer plan, no later than 2 years after the close of such plan year),

(B) does not reduce the accrued benefit of any participant determined as of the beginning of the first plan year to which the amendment applies, and

(C) does not reduce the accrued benefit of any participant determined as of the time of adoption except to the extent required by the circumstances,

shall, at the election of the plan administrator, be deemed to have been made on the first day of such plan year. No amendment described in this paragraph which reduces the accrued benefits of any participant shall take effect unless the plan administrator files a notice with the Secretary of the Treasury notifying him of such amendment and such Secretary has approved such amendment, or within 90 days after the date on which such notice was filed, failed to disapprove such amendment. No amendment described in this subsection shall be approved by the Secretary of the Treasury unless such Secretary determines that such amendment is necessary because of a temporary substantial business hardship (as determined under subsection (c)(2)) or a substantial business hardship (as so determined) in the case of a multiemployer plan and that a waiver under subsection (c) (or, in the case of a multiemployer plan or a CSEC plan, any extension of the amortization period under section 1084(d) of this title or section 1085a(d) of this title) is unavailable or inadequate.

(3) Controlled group

(Pub. L. 93–406, title I, § 302, as added and amended Pub. L. 109–280, title I, § 101(b), title II, § 202(d), Aug. 17, 2006, 120 Stat. 784, 885; Pub. L. 110–458, title I, §§ 101(a)(1), 102(b)(1)(A), Dec. 23, 2008, 122 Stat. 5093, 5100; Pub. L. 113–97, title I, § 102(b)(1), (2), Apr. 7, 2014, 128 Stat. 1115.)

§ 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.)

§ 1084. Minimum funding standards for multiemployer plans

(a) In general

(b) Funding standard account

(1) Account required

(2) Charges to accountFor a plan year, the funding standard account shall be charged with the sum of—

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

(B) the amounts necessary to amortize in equal annual installments (until fully amortized)—

(i) in the case of a plan which comes into existence on or after January 1, 2008, the unfunded past service liability under the plan on the first day of the first plan year to which this section applies, over a period of 15 plan years,

(ii) separately, with respect to each plan year, the net increase (if any) in unfunded past service liability under the plan arising from plan amendments adopted in such year, over a period of 15 plan years,

(iii) separately, with respect to each plan year, the net experience loss (if any) under the plan, over a period of 15 plan years, and

(iv) separately, with respect to each plan year, the net loss (if any) resulting from changes in actuarial assumptions used under the plan, over a period of 15 plan years,

(C) the amount necessary to amortize each waived funding deficiency (within the meaning of section 1082(c)(3) of this title) 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 1082(b)(3)(D) of this title (as in effect on the day before August 17, 2006), and

(E) the amount necessary to amortize in equal annual installments (until fully amortized) over a period of 20 years the contributions which would be required to be made under the plan but for the provisions of section 1082(c)(7)(A)(i)(I) of this title (as in effect on the day before August 17, 2006).

(3) Credits to accountFor 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 1082(c)(3) of this title) 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 1085 of this title (as in effect on the day before August 17, 2006), the excess (if any) of any debit balance in the funding standard account (determined without regard to this subparagraph) over any debit balance in the alternative minimum funding standard account.

(4) Special rule for amounts first amortized in plan years before 2008

(5) Combining and offsetting amounts to be amortizedUnder 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

(7) Special rules relating to charges and credits to funding standard accountFor purposes of this part—

(A) Withdrawal liability

(B) Adjustments when a multiemployer plan leaves reorganizationIf 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 1423(a) 1

1 See References in Text note below.

of this title as of the end of the last plan year that the plan was in reorganization.

(C)

(D) Interim withdrawal liability payments

(E) Election for deferral of charge for portion of net experience loss

(F) Financial assistance

(G) Short-term benefits

(8) Special relief rulesNotwithstanding any other provision of this subsection—

(A) Amortization of net investment losses

(i) In generalA multiemployer plan with respect to which the solvency test under subparagraph (C) is met may treat the portion of any experience loss or gain attributable to net investment losses incurred in either or both of the first two plan years ending after August 31, 2008, as an item separate from other experience losses, to be amortized in equal annual installments (until fully amortized) over the period—(I) beginning with the plan year in which such portion is first recognized in the actuarial value of assets, and(II) ending with the last plan year in the 30-plan year period beginning with the plan year in which such net investment loss was incurred.

(ii) Coordination with extensionsIf this subparagraph applies for any plan year—(I) no extension of the amortization period under clause (i) shall be allowed under subsection (d), and(II) if an extension was granted under subsection (d) for any plan year before the election to have this subparagraph apply to the plan year, such extension shall not result in such amortization period exceeding 30 years.

(iii) Net investment lossesFor purposes of this subparagraph—(I) In general(II) Criminally fraudulent investment arrangements

(B) Expanded smoothing period

(i) In generalA multiemployer plan with respect to which the solvency test under subparagraph (C) is met may change its asset valuation method in a manner which—(I) spreads the difference between expected and actual returns for either or both of the first 2 plan years ending after August 31, 2008, over a period of not more than 10 years,(II) provides that for either or both of the first 2 plan years beginning after August 31, 2008, the value of plan assets at any time shall not be less than 80 percent or greater than 130 percent of the fair market value of such assets at such time, or(III) makes both changes described in subclauses (I) and (II) to such method.

(ii) Asset valuation methodsIf this subparagraph applies for any plan year—(I) the Secretary of the Treasury shall not treat the asset valuation method of the plan as unreasonable solely because of the changes in such method described in clause (i), and(II) such changes shall be deemed approved by such Secretary under section 1082(d)(1) of this title and section 412(d)(1) of title 26.

(iii) Amortization of reduction in unfunded accrued liability

(D) Restriction on benefit increasesIf subparagraph (A) or (B) apply to a multiemployer plan for any plan year, then, in addition to any other applicable restrictions on benefit increases, a plan amendment increasing benefits may not go into effect during either of the 2 plan years immediately following such plan year unless—

(i) the plan actuary certifies that—(I) any such increase is paid for out of additional contributions not allocated to the plan immediately before the application of this paragraph to the plan, and(II) the plan’s funded percentage and projected credit balances for such 2 plan years are reasonably expected to be at least as high as such percentage and balances would have been if the benefit increase had not been adopted, or

(ii) the amendment is required as a condition of qualification under part I of subchapter D of chapter 1 of title 26 or to comply with other applicable law.

(E) ReportingA plan sponsor of a plan to which this paragraph applies shall—

(i) give notice of such application to participants and beneficiaries of the plan, and

(ii) inform the Pension Benefit Guaranty Corporation of such application in such form and manner as the Director of the Pension Benefit Guaranty Corporation may prescribe.

(F) Relief for 2020 and 2021A multiemployer plan with respect to which the solvency test under subparagraph (C) is met as of February 29, 2020, may elect to apply this paragraph (without regard to whether such plan previously elected the application of this paragraph)—

(i) by substituting “February 29, 2020” for “August 31, 2008” each place it appears in subparagraphs (A)(i), (B)(i)(I), and (B)(i)(II),

(ii) by inserting “and other losses related to the virus SARS–CoV–2 or coronavirus disease 2019 (COVID–19) (including experience losses related to reductions in contributions, reductions in employment, and deviations from anticipated retirement rates, as determined by the plan sponsor)” after “net investment losses” in subparagraph (A)(i), and

(iii) by substituting “this subparagraph or subparagraph (A)” for “this subparagraph and subparagraph (A) both” in subparagraph (B)(iii).

The preceding sentence shall not apply to a plan to which special financial assistance is granted under section 1432 of this title. For purposes of the application of this subparagraph, the Secretary of the Treasury shall rely on the plan sponsor’s calculations of plan losses unless such calculations are clearly erroneous.

(1) Determinations to be made under funding method

(2) Valuation of assets

(A) In general

(B) Election with respect to bonds

(3) Actuarial assumptions must be reasonableFor purposes of this section, all costs, liabilities, rates of interest, and other factors under the plan shall be determined on the basis of actuarial assumptions and methods—

(A) each of which is reasonable (taking into account the experience of the plan and reasonable expectations), and

(B) which, in combination, offer the actuary’s best estimate of anticipated experience under the plan.

(4) Treatment of certain changes as experience gain or lossFor purposes of this section, if—

(A) a change in benefits under the Social Security Act [42 U.S.C. 301 et seq.] 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 title 26, or a change in the amount of such wages taken into account under regulations prescribed for purposes of section 401(a)(5) of title 26,

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 fundingIf, as of the close of a plan year, a plan would (without regard to this paragraph) have an accumulated funding deficiency in excess of the full funding limitation—

(A) the funding standard account shall be credited with the amount of such excess, and

(B) all amounts described in subparagraphs (B), (C), and (D) of subsection (b) (2) and subparagraph (B) of subsection (b)(3) which are required to be amortized shall be considered fully amortized for purposes of such subparagraphs.

(6) Full-funding limitation

(A) In generalFor 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 generalIn 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

(D) Current liabilityFor purposes of this paragraph—

(i) In general

(ii) Treatment of unpredictable contingent event benefitsFor 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

(iv) Mortality tables(I) Commissioners’ standard table(II) Secretarial authority

(v) Separate mortality tables for the disabledNotwithstanding clause (iv)—(I) In general(II) Special rule for disabilities occurring after 1994

(vi) Periodic review

(E) Required change of interest rateFor purposes of determining a plan’s current liability for purposes of this paragraph—

(i) In general

(ii) Permissible rangeFor purposes of this subparagraph—(I) In general(II) Secretarial authority

(iii) AssumptionsNotwithstanding paragraph (3)(A), the interest rate used under the plan shall be—(I) determined without taking into account the experience of the plan and reasonable expectations, but(II) consistent with the assumptions which reflect the purchase rates which would be used by insurance companies to satisfy the liabilities under the plan.

(7) Annual valuation

(A) In general

(B) Valuation date

(i) Current year

(ii) Use of prior year valuation

(iii) Adjustments

(iv) Limitation

(8) Time when certain contributions deemed made

(d) Extension of amortization periods for multiemployer plans

(1) Automatic extension upon application by certain plans

(A) In generalIf the plan sponsor of a multiemployer plan—

(i) submits to the Secretary of the Treasury an application for an extension of the period of years required to amortize any unfunded liability described in any clause of subsection (b)(2)(B) or described in subsection (b)(4), and

(ii) includes with the application a certification by the plan’s actuary described in subparagraph (B),

the Secretary of the Treasury shall extend the amortization period for the period of time (not in excess of 5 years) specified in the application. Such extension shall be in addition to any extension under paragraph (2).

(B) CriteriaA certification with respect to a multiemployer plan is described in this subparagraph if the plan’s actuary certifies that, based on reasonable assumptions—

(i) absent the extension under subparagraph (A), the plan would have an accumulated funding deficiency in the current plan year or any of the 9 succeeding plan years,

(ii) the plan sponsor has adopted a plan to improve the plan’s funding status,

(iii) the plan is projected to have sufficient assets to timely pay expected benefits and anticipated expenditures over the amortization period as extended, and

(iv) the notice required under paragraph (3)(A) has been provided.

(2) Alternative extension

(A) In general

(B) DeterminationThe Secretary of the Treasury may grant an extension under subparagraph (A) if such Secretary determines that—

(i) such extension would carry out the purposes of this chapter and would provide adequate protection for participants under the plan and their beneficiaries, and

(ii) the failure to permit such extension would—(I) result in a substantial risk to the voluntary continuation of the plan, or a substantial curtailment of pension benefit levels or employee compensation, and(II) be adverse to the interests of plan participants in the aggregate.

(3) Advance notice

(A) In general

(B) Consideration of relevant information

(Pub. L. 93–406, title I, § 304, as added Pub. L. 109–280, title II, § 201(a), Aug. 17, 2006, 120 Stat. 858; amended Pub. L. 111–192, title II, § 211(a)(1), June 25, 2010, 124 Stat. 1302; Pub. L. 113–235, div. O, title I, §§ 101(b)(1), 108(a)(3)(B), Dec. 16, 2014, 128 Stat. 2774, 2787; Pub. L. 113–295, div. A, title I, § 171(b), Dec. 19, 2014, 128 Stat. 4023; Pub. L. 117–2, title IX, § 9703(a)(1), Mar. 11, 2021, 135 Stat. 188.)

§ 1085. Additional funding rules for multiemployer plans in endangered status or critical status

(a) General rule

(1) if the plan is in endangered status—

(A) the plan sponsor shall adopt and implement a funding improvement plan in accordance with the requirements of subsection (c), and

(B) the requirements of subsection (d) shall apply during the funding plan adoption period and the funding improvement period,

(2) if the plan is in critical status—

(A) the plan sponsor shall adopt and implement a rehabilitation plan in accordance with the requirements of subsection (e), and

(B) the requirements of subsection (f) shall apply during the rehabilitation plan adoption period and the rehabilitation period, and

(3) if the plan is in critical and declining status—

(A) the requirements of paragraph (2) shall apply to the plan; and

(B) the plan sponsor may, by plan amendment, suspend benefits in accordance with the requirements of subsection (e)(9).

(b) Determination of endangered and critical statusFor purposes of this section—

(1) Endangered statusA multiemployer plan is in endangered status for a plan year if, as determined by the plan actuary under paragraph (3), the plan is not in critical status for the plan year and is not described in paragraph (5), and, as of the beginning of the plan year, either—

(A) the plan’s funded percentage for such plan year is less than 80 percent, or

(B) the plan has an accumulated funding deficiency for such plan year, or is projected to have such an accumulated funding deficiency for any of the 6 succeeding plan years, taking into account any extension of amortization periods under section 1084(d) of this title.

For purposes of this section, a plan shall be treated as in seriously endangered status for a plan year if the plan is described in both subparagraphs (A) and (B).

(2) Critical statusA multiemployer plan is in critical status for a plan year if, as determined by the plan actuary under paragraph (3), the plan is described in 1 or more of the following subparagraphs as of the beginning of the plan year:

(A) A plan is described in this subparagraph if—

(i) the funded percentage of the plan is less than 65 percent, and

(ii) the sum of—(I) the fair market value of plan assets, plus(II) the present value of the reasonably anticipated employer contributions for the current plan year and each of the 6 succeeding plan years, assuming that the terms of all collective bargaining agreements pursuant to which the plan is maintained for the current plan year continue in effect for succeeding plan years,

is less than the present value of all nonforfeitable benefits projected to be payable under the plan during the current plan year and each of the 6 succeeding plan years (plus administrative expenses for such plan years).

(B) A plan is described in this subparagraph if—

(i) the plan has an accumulated funding deficiency for the current plan year, not taking into account any extension of amortization periods under section 1084(d) of this title, or

(ii) the plan is projected to have an accumulated funding deficiency for any of the 3 succeeding plan years (4 succeeding plan years if the funded percentage of the plan is 65 percent or less), not taking into account any extension of amortization periods under section 1084(d) of this title.

(i)(I) the plan’s normal cost for the current plan year, plus interest (determined at the rate used for determining costs under the plan) for the current plan year on the amount of unfunded benefit liabilities under the plan as of the last date of the preceding plan year, exceeds(II) the present value of the reasonably anticipated employer and employee contributions for the current plan year,

(ii) the present value, as of the beginning of the current plan year, of nonforfeitable benefits of inactive participants is greater than the present value of nonforfeitable benefits of active participants, and

(iii) the plan has an accumulated funding deficiency for the current plan year, or is projected to have such a deficiency for any of the 4 succeeding plan years, not taking into account any extension of amortization periods under section 1084(d) of this title.

(D) A plan is described in this subparagraph if the sum of—

(i) the fair market value of plan assets, plus

(ii) the present value of the reasonably anticipated employer contributions for the current plan year and each of the 4 succeeding plan years, assuming that the terms of all collective bargaining agreements pursuant to which the plan is maintained for the current plan year continue in effect for succeeding plan years,

is less than the present value of all benefits projected to be payable under the plan during the current plan year and each of the 4 succeeding plan years (plus administrative expenses for such plan years).

(3) Annual certification by plan actuary

(A) In generalNot later than the 90th day of each plan year of a multiemployer plan, the plan actuary shall certify to the Secretary of the Treasury and to the plan sponsor—

(i) whether or not the plan is in endangered status for such plan year, or would be in endangered status for such plan year but for paragraph (5),,1

1 So in original.

whether or not the plan is or will be in critical status for such plan year or for any of the succeeding 5 plan years, and whether or not the plan is or will be in critical and declining status for such plan year, and

(ii) in the case of a plan which is in a funding improvement or rehabilitation period, whether or not the plan is making the scheduled progress in meeting the requirements of its funding improvement or rehabilitation plan.

(B) Actuarial projections of assets and liabilities

(i) In generalExcept as provided in clause (iv), in making the determinations and projections under this subsection, the plan actuary shall make projections required for the current and succeeding plan years of the current value of the assets of the plan and the present value of all liabilities to participants and beneficiaries under the plan for the current plan year as of the beginning of such year. The actuary’s projections shall be based on reasonable actuarial estimates, assumptions, and methods that, except as provided in clause (iii), offer the actuary’s best estimate of anticipated experience under the plan. The projected present value of liabilities as of the beginning of such year shall be determined based on the most recent of either—(I) the actuarial statement required under section 1023(d) of this title with respect to the most recently filed annual report, or(II) the actuarial valuation for the preceding plan year.

(ii) Determinations of future contributionsAny actuarial projection of plan assets shall assume—(I) reasonably anticipated employer contributions for the current and succeeding plan years, assuming that the terms of the one or more collective bargaining agreements pursuant to which the plan is maintained for the current plan year continue in effect for succeeding plan years, or(II) that employer contributions for the most recent plan year will continue indefinitely, but only if the plan actuary determines there have been no significant demographic changes that would make such assumption unreasonable.

(iii) Projected industry activity

(iv)2

2 So in original. Two cls. (iv) have been enacted.

Projections relating to critical status in succeeding plan years

(iv)2 Projections of critical and declining statusIn determining whether a plan is in critical and declining status as described in subsection (e)(9), clauses (i), (ii), and (iii) shall apply, except that—(I) if reasonable, the plan actuary shall assume that each contributing employer in compliance continues to comply through the end of the rehabilitation period or such later time as provided in subsection (e)(3)(A)(ii) with the terms of the rehabilitation plan that correspond to the schedule adopted or imposed under subsection (e), and(II) the plan actuary shall take into account any suspensions of benefits described in subsection (e)(9) adopted in a prior plan year that are still in effect.

(D) Notice

(i) In general

(ii) Plans in critical statusIf it is certified under subparagraph (A) that a multiemployer plan is or will be in critical status, the plan sponsor shall include in the notice under clause (i) an explanation of the possibility that—(I) adjustable benefits (as defined in subsection (e)(8)) may be reduced, and(II) such reductions may apply to participants and beneficiaries whose benefit commencement date is on or after the date such notice is provided for the first plan year in which the plan is in critical status.

(iii) In the case of a multiemployer plan that would be in endangered status but for paragraph (5), the plan sponsor shall provide notice to the bargaining parties and the Pension Benefit Guaranty Corporation that the plan would be in endangered status but for such paragraph.

(iv) Model notice

(v) Notice of projection to be in critical status in a future plan year

(4) Election to be in critical statusNotwithstanding paragraph (2) and subject to paragraph (3)(B)(iv)—

(A) the plan sponsor of a multiemployer plan that is not in critical status for a plan year but that is projected by the plan actuary, pursuant to the determination under paragraph (3), to be in critical status in any of the succeeding 5 plan years may, not later than 30 days after the date of the certification under paragraph (3)(A), elect to be in critical status effective for the current plan year,

(B) the plan year in which the plan sponsor elects to be in critical status under subparagraph (A) shall be treated for purposes of this section as the first year in which the plan is in critical status, regardless of the date on which the plan first satisfies the criteria for critical status under paragraph (2), and

(C) a plan that is in critical status under this paragraph shall not emerge from critical status except in accordance with subsection (e)(4)(B).

(5) Special ruleA plan is described in this paragraph if—

(A) as part of the actuarial certification of endangered status under paragraph (3)(A) for the plan year, the plan actuary certifies that the plan is projected to no longer be described in either paragraph (1)(A) or paragraph (1)(B) as of the end of the tenth plan year ending after the plan year to which the certification relates, and

(B) the plan was not in critical or endangered status for the immediately preceding plan year.

(6) Critical and declining status

(1) In generalIn any case in which a multiemployer plan is in endangered status for a plan year, the plan sponsor, in accordance with this subsection—

(A) shall adopt a funding improvement plan not later than 240 days following the required date for the actuarial certification of endangered status under subsection (b)(3)(A), and

(B) within 30 days after the adoption of the funding improvement plan—

(i) shall provide to the bargaining parties 1 or more schedules showing revised benefit structures, revised contribution structures, or both, which, if adopted, may reasonably be expected to enable the multiemployer plan to meet the applicable benchmarks in accordance with the funding improvement plan, including—(I) one proposal for reductions in the amount of future benefit accruals necessary to achieve the applicable benchmarks, assuming no amendments increasing contributions under the plan (other than amendments increasing contributions necessary to achieve the applicable benchmarks after amendments have reduced future benefit accruals to the maximum extent permitted by law), and(II) one proposal for increases in contributions under the plan necessary to achieve the applicable benchmarks, assuming no amendments reducing future benefit accruals under the plan, and

(ii) may, if the plan sponsor deems appropriate, prepare and provide the bargaining parties with additional information relating to contribution rates or benefit reductions, alternative schedules, or other information relevant to achieving the applicable benchmarks in accordance with the funding improvement plan.

For purposes of this section, the term “applicable benchmarks” means the requirements applicable to the multiemployer plan under paragraph (3) (as modified by paragraph (5)).

(2) Exception for years after process begins

(3) Funding improvement plan

(A) In generalA funding improvement plan is a plan which consists of the actions, including options or a range of options to be proposed to the bargaining parties, formulated to provide, based on reasonably anticipated experience and reasonable actuarial assumptions, for the attainment by the plan during the funding improvement period of the following requirements:

(i) Increase in plan’s funding percentageThe plan’s funded percentage as of the close of the funding improvement period equals or exceeds a percentage equal to the sum of—(I) such percentage as of the beginning of the first plan year for which the plan is certified to be in endangered status pursuant to paragraph (b)(3), plus(II) 33 percent of the difference between 100 percent and the percentage under subclause (I).

(ii) Avoidance of accumulated funding deficiencies

(B) Seriously endangered plans

(4) Funding improvement periodFor purposes of this section—

(A) In generalThe funding improvement period for any funding improvement plan adopted pursuant to this subsection is the 10-year period beginning on the first day of the first plan year of the multiemployer plan beginning after the earlier of—

(i) the second anniversary of the date of the adoption of the funding improvement plan, or

(ii) the expiration of the collective bargaining agreements in effect on the due date for the actuarial certification of endangered status for the initial determination year under subsection (b)(3)(A) and covering, as of such due date, at least 75 percent of the active participants in such multiemployer plan.

(B) Seriously endangered plans

(i) Plans no longer in endangered status

(ii) Plans in critical status

(D) Plans in endangered status at end of period

(5) Special rules for seriously endangered plans more than 70 percent funded

(A) In generalIf the funded percentage of a plan in seriously endangered status was more than 70 percent as of the beginning of the initial determination year—

(i) paragraphs (3)(B) and (4)(B) shall apply only if the plan’s actuary certifies, within 30 days after the certification under subsection (b)(3)(A) for the initial determination year, that, based on the terms of the plan and the collective bargaining agreements in effect at the time of such certification, the plan is not projected to meet the requirements of paragraph (3)(A) (without regard to paragraphs (3)(B) and (4)(B)), and

(ii) if there is a certification under clause (i), the plan may, in formulating its funding improvement plan, only take into account the rules of paragraph 4

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

(3)(B) and (4)(B) for plan years in the funding improvement period beginning on or before the date on which the last of the collective bargaining agreements described in paragraph (4)(A)(ii) expires.

(B) Special rule after expiration of agreements

(6) Updates to funding improvement plan and schedules

(A) Funding improvement plan

(B) Schedules

(7) Imposition of schedule where failure to adopt funding improvement plan

(A) Initial contribution scheduleIf—

(i) a collective bargaining agreement providing for contributions under a multiemployer plan that was in effect at the time the plan entered endangered status expires, and

(ii) after receiving one or more schedules from the plan sponsor under paragraph (1)(B), the bargaining parties with respect to such agreement fail to adopt a contribution schedule with terms consistent with the funding improvement plan and a schedule from the plan sponsor,

the plan sponsor shall implement the schedule described in paragraph (1)(B)(i)(I) beginning on the date specified in subparagraph (C).

(B) Subsequent contribution scheduleIf—

(i) a collective bargaining agreement providing for contributions under a multiemployer plan in accordance with a schedule provided by the plan sponsor pursuant to a funding improvement plan (or imposed under subparagraph (A)) expires while the plan is still in endangered status, and

(ii) after receiving one or more updated schedules from the plan sponsor under paragraph (6)(B), the bargaining parties with respect to such agreement fail to adopt a contribution schedule with terms consistent with the updated funding improvement plan and a schedule from the plan sponsor,

then the contribution schedule applicable under the expired collective bargaining agreement, as updated and in effect on the date the collective bargaining agreement expires, shall be implemented by the plan sponsor beginning on the date specified in subparagraph (C).

(D) Failure to make scheduled contributions

(8) Funding plan adoption period

(d) Rules for operation of plan during adoption and improvement periods

(1) Compliance with funding improvement plan

(A) In general

(B) Special rules for benefit increases

(2) Special rules for plan adoption periodDuring the period beginning on the date of the certification under subsection (b)(3)(A) for the initial determination year and ending on the date of the adoption of a funding improvement plan—

(A) the plan sponsor may not accept a collective bargaining agreement or participation agreement with respect to the multiemployer plan that provides for—

(i) a reduction in the level of contributions for any participants,

(ii) a suspension of contributions with respect to any period of service, or

(iii) any new direct or indirect exclusion of younger or newly hired employees from plan participation, and

(B) no amendment of the plan which increases the liabilities of the plan by reason of any increase in benefits, any change in the accrual of benefits, or any change in the rate at which benefits become nonforfeitable under the plan may be adopted unless the amendment is required as a condition of qualification under part I of subchapter D of chapter 1 of title 26 or to comply with other applicable law.

(e) Rehabilitation plan must be adopted for multiemployer plans in critical status

(1) In generalIn any case in which a multiemployer plan is in critical status for a plan year, the plan sponsor, in accordance with this subsection—

(A) shall adopt a rehabilitation plan not later than 240 days following the required date for the actuarial certification of critical status under subsection (b)(3)(A), and

(B) within 30 days after the adoption of the rehabilitation plan—

(ii) may, if the plan sponsor deems appropriate, prepare and provide the bargaining parties with additional information relating to contribution rates or benefit reductions, alternative schedules, or other information relevant to emerging from critical status in accordance with the rehabilitation plan.

The schedule or schedules described in subparagraph (B)(i) shall reflect reductions in future benefit accruals and adjustable benefits, and increases in contributions, that the plan sponsor determines are reasonably necessary to emerge from critical status. One schedule shall be designated as the default schedule and such schedule shall assume that there are no increases in contributions under the plan other than the increases necessary to emerge from critical status after future benefit accruals and other benefits (other than benefits the reduction or elimination of which are not permitted under section 1054(g) of this title) have been reduced to the maximum extent permitted by law.

(2) Exception for years after process begins

(3) Rehabilitation planFor purposes of this section—

(A) In generalA rehabilitation plan is a plan which consists of—

(i) actions, including options or a range of options to be proposed to the bargaining parties, formulated, based on reasonably anticipated experience and reasonable actuarial assumptions, to enable the plan to cease to be in critical status by the end of the rehabilitation period and may include reductions in plan expenditures (including plan mergers and consolidations), reductions in future benefit accruals or increases in contributions, if agreed to by the bargaining parties, or any combination of such actions, or

(ii) if the plan sponsor determines that, based on reasonable actuarial assumptions and upon exhaustion of all reasonable measures, the plan can not reasonably be expected to emerge from critical status by the end of the rehabilitation period, reasonable measures to emerge from critical status at a later time or to forestall possible insolvency (within the meaning of section 1426 of this title).

A rehabilitation plan must provide annual standards for meeting the requirements of such rehabilitation plan. Such plan shall also include the schedules required to be provided under paragraph (1)(B)(i) and if clause (ii) applies, shall set forth the alternatives considered, explain why the plan is not reasonably expected to emerge from critical status by the end of the rehabilitation period, and specify when, if ever, the plan is expected to emerge from critical status in accordance with the rehabilitation plan.

(B) Updates to rehabilitation plan and schedules

(i) Rehabilitation plan

(ii) Schedules

(iii) Duration of schedule

(i) Initial contribution scheduleIf—(I) a collective bargaining agreement providing for contributions under a multiemployer plan that was in effect at the time the plan entered critical status expires, and(II) after receiving one or more schedules from the plan sponsor under paragraph (1)(B), the bargaining parties with respect to such agreement fail to adopt a contribution schedule with terms consistent with the rehabilitation plan and a schedule from the plan sponsor under paragraph (1)(B)(i),

the plan sponsor shall implement the schedule described in the last sentence of paragraph (1) beginning on the date specified in clause (iii).

(ii) Subsequent contribution scheduleIf—(I) a collective bargaining agreement providing for contributions under a multiemployer plan in accordance with a schedule provided by the plan sponsor pursuant to a rehabilitation plan (or imposed under subparagraph (C)(i)) expires while the plan is still in critical status, and(II) after receiving one or more updated schedules from the plan sponsor under subparagraph (B)(ii), the bargaining parties with respect to such agreement fail to adopt a contribution schedule with terms consistent with the updated rehabilitation plan and a schedule from the plan sponsor,

(iii) Date of implementation

(iv) Failure to make scheduled contributions

(4) Rehabilitation periodFor purposes of this section—

(A) In generalThe rehabilitation period for a plan in critical status is the 10-year period beginning on the first day of the first plan year of the multiemployer plan following the earlier of—

(i) the second anniversary of the date of the adoption of the rehabilitation plan, or

(ii) the expiration of the collective bargaining agreements in effect on the due date for the actuarial certification of critical status for the initial critical year under subsection (a)(1) and covering, as of such date 6

6 So in original. Probably should be followed by a comma.

at least 75 percent of the active participants in such multiemployer plan.

If a plan emerges from critical status as provided under subparagraph (B) before the end of such 10-year period, the rehabilitation period shall end with the plan year preceding the plan year for which the determination under subparagraph (B) is made.

(B) Emergence

(i) In generalA plan in critical status shall remain in such status until a plan year for which the plan actuary certifies, in accordance with subsection (b)(3)(A), that—(I) the plan is not described in one or more of the subparagraphs in subsection (b)(2) as of the beginning of the plan year;(II) the plan is not projected to have an accumulated funding deficiency for the plan year or any of the 9 succeeding plan years, without regard to the use of the shortfall method but taking into account any extension of amortization periods under section 1084(d)(2) of this title or section 1084 of this title (as in effect prior to the enactment of the Pension Protection Act of 2006); and(III) the plan is not projected to become insolvent within the meaning of section 1426 of this title for any of the 30 succeeding plan years.

(ii) Plans with certain amortization extensions(I) Special emergence ruleNotwithstanding clause (i), a plan in critical status that has an automatic extension of amortization periods under section 1084(d)(1) of this title shall no longer be in critical status if the plan actuary certifies for a plan year, in accordance with subsection (b)(3)(A), that—(aa) the plan is not projected to have an accumulated funding deficiency for the plan year or any of the 9 succeeding plan years, without regard to the use of the shortfall method but taking into account any extension of amortization periods under section 1084(d)(1) of this title; and(bb) the plan is not projected to become insolvent within the meaning of section 1426 of this title for any of the 30 succeeding plan years,

regardless of whether the plan is described in one or more of the subparagraphs in subsection (b)(2) as of the beginning of the plan year.

(II) Reentry into critical statusA plan that emerges from critical status under subclause (I) shall not reenter critical status for any subsequent plan year unless—(aa) the plan is projected to have an accumulated funding deficiency for the plan year or any of the 9 succeeding plan years, without regard to the use of the shortfall method but taking into account any extension of amortization periods under section 1084(d) of this title; or(bb) the plan is projected to become insolvent within the meaning of section 1426 of this title for any of the 30 succeeding plan years.

(5) Rehabilitation plan adoption period

(6) Limitation on reduction in rates of future accrualsAny reduction in the rate of future accruals under the default schedule described in the last sentence of paragraph (1) shall not reduce the rate of future accruals below—

(A) a monthly benefit (payable as a single life annuity commencing at the participant’s normal retirement age) equal to 1 percent of the contributions required to be made with respect to a participant, or the equivalent standard accrual rate for a participant or group of participants under the collective bargaining agreements in effect as of the first day of the initial critical year, or

(B) if lower, the accrual rate under the plan on such first day.

The equivalent standard accrual rate shall be determined by the plan sponsor based on the standard or average contribution base units which the plan sponsor determines to be representative for active participants and such other factors as the plan sponsor determines to be relevant. Nothing in this paragraph shall be construed as limiting the ability of the plan sponsor to prepare and provide the bargaining parties with alternative schedules to the default schedule that establish lower or higher accrual and contribution rates than the rates otherwise described in this paragraph.

(7) Automatic employer surcharge

(A) Imposition of surcharge

(B) Enforcement of surcharge

(D) Surcharge not to apply until employer receives notice

(E) Surcharge not to generate increased benefit accruals

(8) Benefit adjustments

(A) Adjustable benefits

(i) In general

(ii) Exception for retirees

(iii) Plan sponsor flexibility

(iv) Adjustable benefit definedFor purposes of this paragraph, the term “adjustable benefit” means—(I) benefits, rights, and features under the plan, including post-retirement death benefits, 60-month guarantees, disability benefits not yet in pay status, and similar benefits,(II) any early retirement benefit or retirement-type subsidy (within the meaning of section 1054(g)(2)(A) of this title) and any benefit payment option (other than the qualified joint and survivor annuity), and(III) benefit increases that would not be eligible for a guarantee under section 1322a of this title on the first day of initial critical year because the increases were adopted (or, if later, took effect) less than 60 months before such first day.

(B) Normal retirement benefits protected

(i) In generalNo reduction may be made to adjustable benefits under subparagraph (A) unless notice of such reduction has been given at least 30 days before the general effective date of such reduction for all participants and beneficiaries to—(I) plan participants and beneficiaries,(II) each employer who has an obligation to contribute (within the meaning of section 1392(a) of this title) under the plan, and(III) each employee organization which, for purposes of collective bargaining, represents plan participants employed by such an employer.

(ii) Content of noticeThe notice under clause (i) shall contain—(I) sufficient information to enable participants and beneficiaries to understand the effect of any reduction on their benefits, including an estimate (on an annual or monthly basis) of any affected adjustable benefit that a participant or beneficiary would otherwise have been eligible for as of the general effective date described in clause (i), and(II) information as to the rights and remedies of plan participants and beneficiaries as well as how to contact the Department of Labor for further information and assistance where appropriate.

(iii) Form and mannerAny notice under clause (i)—(I) shall be provided in a form and manner prescribed in regulations of the Secretary of the Treasury, in consultation with the Secretary,(II) shall be written in a manner so as to be understood by the average plan participant, and(III) may be provided in written, electronic, or other appropriate form to the extent such form is reasonably accessible to persons to whom the notice is required to be provided.

The Secretary of the Treasury shall in the regulations prescribed under subclause (I) establish a model notice that a plan sponsor may use to meet the requirements of this subparagraph.

(9) Benefit suspensions for multiemployer plans in critical and declining status

(A) In general

(B) Suspension of benefits

(i) Suspension of benefits defined

(ii) Length of suspensions

(iii) No liability

(iv) Applicability

(v) Retiree representative(I) In general(II) Reasonable expenses from plan(III) Special rule relating to fiduciary status

(C) Conditions for suspensionsThe plan sponsor of a plan in critical and declining status for a plan year may suspend benefits only if the following conditions are met:

(i) Taking into account the proposed suspensions of benefits (and, if applicable, a proposed partition of the plan under section 1413 of this title), the plan actuary certifies that the plan is projected to avoid insolvency within the meaning of section 1426 of this title, assuming the suspensions of benefits continue until the suspensions of benefits expire by their own terms or if no such expiration date is set, indefinitely.

(ii) The plan sponsor determines, in a written record to be maintained throughout the period of the benefit suspension, that the plan is still projected to become insolvent unless benefits are suspended under this paragraph, although all reasonable measures to avoid insolvency have been taken (and continue to be taken during the period of the benefit suspension). In its determination, the plan sponsor may take into account factors including the following:(I) Current and past contribution levels.(II) Levels of benefit accruals (including any prior reductions in the rate of benefit accruals).(III) Prior reductions (if any) of adjustable benefits.(IV) Prior suspensions (if any) of benefits under this subsection.(V) The impact on plan solvency of the subsidies and ancillary benefits available to active participants.(VI) Compensation levels of active participants relative to employees in the participants’ industry generally.(VII) Competitive and other economic factors facing contributing employers.(VIII) The impact of benefit and contribution levels on retaining active participants and bargaining groups under the plan.(IX) The impact of past and anticipated contribution increases under the plan on employer attrition and retention levels.(X) Measures undertaken by the plan sponsor to retain or attract contributing employers.

(D) Limitations on suspensionsAny suspensions of benefits made by a plan sponsor pursuant to this paragraph shall be subject to the following limitations:

(i) The monthly benefit of any participant or beneficiary may not be reduced below 110 percent of the monthly benefit which is guaranteed by the Pension Benefit Guaranty Corporation under section 1322a of this title on the date of the suspension.

(ii)(I) In the case of a participant or beneficiary who has attained 75 years of age as of the effective date of the suspension, not more than the applicable percentage of the maximum suspendable benefits of such participant or beneficiary may be suspended under this paragraph.(II) For purposes of subclause (I), the maximum suspendable benefits of a participant or beneficiary is the portion of the benefits of such participant or beneficiary that would be suspended pursuant to this paragraph without regard to this clause;(III) For purposes of subclause (I), the applicable percentage is a percentage equal to the quotient obtained by dividing—(aa) the number of months during the period beginning with the month after the month in which occurs the effective date of the suspension and ending with the month during which the participant or beneficiary attains the age of 80, by(bb) 60 months.

(iii) No benefits based on disability (as defined under the plan) may be suspended under this paragraph.

(iv) Any suspensions of benefits, in the aggregate (and, if applicable, considered in combination with a partition of the plan under section 1413 of this title), shall be reasonably estimated to achieve, but not materially exceed, the level that is necessary to avoid insolvency.

(v) In any case in which a suspension of benefits with respect to a plan is made in combination with a partition of the plan under section 1413 of this title, the suspension of benefits may not take effect prior to the effective date of such partition.

(vi) Any suspensions of benefits shall be equitably distributed across the participant and beneficiary population, taking into account factors, with respect to participants and beneficiaries and their benefits, that may include one or more of the following:(I) Age and life expectancy.(II) Length of time in pay status.(III) Amount of benefit.(IV) Type of benefit: survivor, normal retirement, early retirement.(V) Extent to which participant or beneficiary is receiving a subsidized benefit.(VI) Extent to which participant or beneficiary has received post-retirement benefit increases.(VII) History of benefit increases and reductions.(VIII) Years to retirement for active employees.(IX) Any discrepancies between active and retiree benefits.(X) Extent to which active participants are reasonably likely to withdraw support for the plan, accelerating employer withdrawals from the plan and increasing the risk of additional benefit reductions for participants in and out of pay status.(XI) Extent to which benefits are attributed to service with an employer that failed to pay its full withdrawal liability.

(vii) In the case of a plan that includes the benefits described in clause (III), benefits suspended under this paragraph shall—(I) first, be applied to the maximum extent permissible to benefits attributable to a participant’s service for an employer which withdrew from the plan and failed to pay (or is delinquent with respect to paying) the full amount of its withdrawal liability under section 1381(b)(1) of this title or an agreement with the plan,(II) second, except as provided by subclause (III), be applied to all other benefits that may be suspended under this paragraph, and(III) third, be applied to benefits under a plan that are directly attributable to a participant’s service with any employer which has, prior to December 16, 2014—(aa) withdrawn from the plan in a complete withdrawal under section 1383 of this title and has paid the full amount of the employer’s withdrawal liability under section 1381(b)(1) of this title or an agreement with the plan, and(bb) pursuant to a collective bargaining agreement, assumed liability for providing benefits to participants and beneficiaries of the plan under a separate, single-employer plan sponsored by the employer, in an amount equal to any amount of benefits for such participants and beneficiaries reduced as a result of the financial status of the plan.

(E) Benefit improvements

(i) In generalThe plan sponsor may, in its sole discretion, provide benefit improvements while any suspension of benefits under the plan remains in effect, except that the plan sponsor may not increase the liabilities of the plan by reason of any benefit improvement for any participant or beneficiary not in pay status by the first day of the plan year for which the benefit improvement takes effect, unless—(I) such action is accompanied by equitable benefit improvements in accordance with clause (ii) for all participants and beneficiaries whose benefit commencement dates were before the first day of the plan year for which the benefit improvement for such participant or beneficiary not in pay status took effect; and(II) the plan actuary certifies that after taking into account such benefits improvements the plan is projected to avoid insolvency indefinitely under section 1426 of this title.

(ii) Equitable distribution of benefit improvements(I) Limitation(II) Equitable distribution of benefits

(iii) Special rule for resumptions of benefits only for participants in pay status

(iv) Special rule for certain benefit increasesThis subparagraph shall not apply to a resumption of suspended benefits or plan amendment which increases liabilities with respect to participants and beneficiaries not in pay status by the first day of the plan year in which the benefit improvements took effect which—(I) the Secretary of the Treasury, in consultation with the Pension Benefit Guaranty Corporation and the Secretary of Labor, determines to be reasonable and which provides for only de minimis increases in the liabilities of the plan, or(II) is required as a condition of qualification under part I of subchapter D of chapter 1 of subtitle A of title 26 or to comply with other applicable law, as determined by the Secretary of the Treasury.

(v) Additional limitations

(vi) Definition of benefit improvement

(F) Notice requirements

(i) In generalNo suspension of benefits may be made pursuant to this paragraph unless notice of such proposed suspension has been given by the plan sponsor concurrently with an application for approval of such suspension submitted under subparagraph (G) to the Secretary of the Treasury to—(I) such plan participants and beneficiaries who may be contacted by reasonable efforts,(II) each employer who has an obligation to contribute (within the meaning of section 1392(a) of this title) under the plan, and(III) each employee organization which, for purposes of collective bargaining, represents plan participants employed by such an employer.

(ii) Content of noticeThe notice under clause (i) shall contain—(I) sufficient information to enable participants and beneficiaries to understand the effect of any suspensions of benefits, including an individualized estimate (on an annual or monthly basis) of such effect on each participant or beneficiary,(II) a description of the factors considered by the plan sponsor in designing the benefit suspensions,(III) a statement that the application for approval of any suspension of benefits shall be available on the website of the Department of the Treasury and that comments on such application will be accepted,(IV) information as to the rights and remedies of plan participants and beneficiaries,(V) if applicable, a statement describing the appointment of a retiree representative, the date of appointment of such representative, identifying information about the retiree representative (including whether the representative is a plan trustee), and how to contact such representative, and(VI) information on how to contact the Department of the Treasury for further information and assistance where appropriate.

(iii) Form and mannerAny notice under clause (i)—(I) shall be provided in a form and manner prescribed in guidance by the Secretary of the Treasury, in consultation with the Pension Benefit Guaranty Corporation and the Secretary of Labor, notwithstanding any other provision of law,(II) shall be written in a manner so as to be understood by the average plan participant, and(III) may be provided in written, electronic, or other appropriate form to the extent such form is reasonably accessible to persons to whom the notice is required to be provided.

(iv) Other notice requirement

(v) Model notice

(G) Approval process by the Secretary of the Treasury in consultation with the Pension Benefit Guaranty Corporation and the Secretary of Labor

(i) In general

(ii) Solicitation of comments

(iii) Required action; deemed approval

(iv) Agency review

(v) Standard for accepting plan sponsor determinations

(H) Participant ratification process

(i) In general

(ii) Administration of vote

(iii) BallotsThe plan sponsor shall provide a ballot for the vote (subject to approval by the Secretary of the Treasury, in consultation with the Pension Benefit Guaranty Corporation and the Secretary of Labor) that includes the following:(I) A statement from the plan sponsor in support of the suspension.(II) A statement in opposition to the suspension compiled from comments received pursuant to subparagraph (G)(ii).(III) A statement that the suspension has been approved by the Secretary of the Treasury, in consultation with the Pension Benefit Guaranty Corporation and the Secretary of Labor.(IV) A statement that the plan sponsor has determined that the plan will become insolvent unless the suspension takes effect.(V) A statement that insolvency of the plan could result in benefits lower than benefits paid under the suspension.(VI) A statement that insolvency of the Pension Benefit Guaranty Corporation would result in benefits lower than benefits paid in the case of plan insolvency.

(iv) Communication by plan sponsor

(v) Systemically important plans(I) In generalNot later than 14 days after a vote under this subparagraph rejecting a suspension, the Secretary of the Treasury, in consultation with the Pension Benefit Guaranty Corporation and the Secretary of Labor, shall determine whether the plan is a systemically important plan. If the Secretary of the Treasury, in consultation with the Pension Benefit Guaranty Corporation and the Secretary of Labor, determines that the plan is a systemically important plan, not later than the end of the 90-day period beginning on the date the results of the vote are certified, the Secretary of the Treasury shall, notwithstanding such adverse vote—(aa) permit the implementation of the suspension proposed by the plan sponsor; or(bb) permit the implementation of a modification by the Secretary of the Treasury, in consultation with the Pension Benefit Guaranty Corporation and the Secretary of Labor, of such suspension (so long as the plan is projected to avoid insolvency within the meaning of section 1426 of this title under such modification).(II) Recommendations(III) Systemically important plan defined(aa) In general(bb) Indexing

(vi) Final authorization to suspend

(I) Judicial review

(i) Denial of application

(ii) Approval of suspension of benefits(I) Timing of action(II) Standards of review(aa) In general(bb) Temporary injunction

(iii) Restricted cause of action

(iv) Limitation on action to suspend benefits

(J) Special rule for emergence from critical statusA plan certified to be in critical and declining status pursuant to projections made under subsection (b)(3) for which a suspension of benefits has been made by the plan sponsor pursuant to this paragraph shall not emerge from critical status under paragraph (4)(B), until such time as—

(i) the plan is no longer certified to be in critical or endangered status under paragraphs (1) and (2) of subsection (b), and

(ii) the plan is projected to avoid insolvency under section 1426 of this title.

(f) Rules for operation of plan during adoption and rehabilitation period

(1) Compliance with rehabilitation plan

(A) In general

(B) Special rules for benefit increases

(2) Restriction on lump sums and similar benefits

(A) In generalEffective on the date the notice of certification of the plan’s critical status for the initial critical year under subsection (b)(3)(D) is sent, and notwithstanding section 1054(g) of this title, the plan shall not pay—

(i) any payment, in excess of the monthly amount paid under a single life annuity (plus any social security supplements described in the last sentence of section 1054(b)(1)(G) of this title), to a participant or beneficiary whose annuity starting date (as defined in section 1055(h)(2) of this title) occurs after the date such notice is sent,

(ii) any payment for the purchase of an irrevocable commitment from an insurer to pay benefits, and

(iii) any other payment specified by the Secretary of the Treasury by regulations.

(B) Exception

(3) Special rules for plan adoption periodDuring the period beginning on the date of the certification under subsection (b)(3)(A) for the initial critical year and ending on the date of the adoption of a rehabilitation plan—

(A) the plan sponsor may not accept a collective bargaining agreement or participation agreement with respect to the multiemployer plan that provides for—

(i) a reduction in the level of contributions for any participants,

(ii) a suspension of contributions with respect to any period of service, or

(iii) any new direct or indirect exclusion of younger or newly hired employees from plan participation, and

(g) Adjustments disregarded in withdrawal liability determination

(1) Benefit reduction

(2) Surcharges

(3) Contribution increases required by funding improvement or rehabilitation plan

(A) In general

(B) Special rules

(4) Emergence from endangered or critical status

(5) Simplified calculations

(h) Expedited resolution of plan sponsor decisions

(i) Nonbargained participation

(1) Both bargained and nonbargained employee-participants

(2) Nonbargained employees only

(j) Definitions; actuarial methodFor purposes of this section—

(1) Bargaining partyThe term “bargaining party” means—

(A)

(i) except as provided in clause (ii), an employer who has an obligation to contribute under the plan; or

(ii) in the case of a plan described under section 404(c) of title 26, or a continuation of such a plan, the association of employers that is the employer settlor of the plan; and

(B) an employee organization which, for purposes of collective bargaining, represents plan participants employed by an employer who has an obligation to contribute under the plan.

(2) Funded percentageThe term “funded percentage” means the percentage equal to a fraction—

(A) the numerator of which is the value of the plan’s assets, as determined under section 1084(c)(2) of this title, and

(B) the denominator of which is the accrued liability of the plan, determined using actuarial assumptions described in section 1084(c)(3) of this title.

(3) Accumulated funding deficiency

(4) Active participant

(5) Inactive participantThe term “inactive participant” means, in connection with a multiemployer plan, a participant, or the beneficiary or alternate payee of a participant, who—

(A) is not in covered service under the plan, and

(B) is in pay status under the plan or has a nonforfeitable right to benefits under the plan.

(6) Pay statusA person is in pay status under a multiemployer plan if—

(A) at any time during the current plan year, such person is a participant or beneficiary under the plan and is paid an early, late, normal, or disability retirement benefit under the plan (or a death benefit under the plan related to a retirement benefit), or

(B) to the extent provided in regulations of the Secretary of the Treasury, such person is entitled to such a benefit under the plan.

(7) Obligation to contribute

(8) Actuarial method

(9) Plan sponsor

(10) Benefit commencement date

(Pub. L. 93–406, title I, § 305, as added Pub. L. 109–280, title II, § 202(a), Aug. 17, 2006, 120 Stat. 868; amended Pub. L. 110–458, title I, § 102(b)(1)(B)–(G), Dec. 23, 2008, 122 Stat. 5100, 5101; Pub. L. 113–235, div. O, title I, §§ 102(a), 103(a), 104(a), 105(a), 106(a), 107(a), 109(a), title II, § 201(a)(1)–(3), (5)–(7)(A), Dec. 16, 2014, 128 Stat. 2774, 2777, 2779, 2781, 2783, 2789, 2798, 2799–2809.)

§ 1085a. Minimum funding standards

(a) General rule

(b) Funding standard account

(1) Account required

(2) Charges to accountFor a plan year, the funding standard account shall be charged with the sum of—

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

(B) the amounts necessary to amortize in equal annual installments (until fully amortized)—

(i) in the case of a plan in existence on January 1, 1974, the unfunded past service liability under the plan on the first day of the first plan year to which section 1082 of this title applies, over a period of 40 plan years,

(ii) in the case of a plan which comes into existence after January 1, 1974, but before the first day of the first plan year beginning after December 31, 2013, the unfunded past service liability under the plan on the first day of the first plan year to which section 1082 of this title applies, over a period of 30 plan years,

(iii) separately, with respect to each plan year, the net increase (if any) in unfunded past service liability under the plan arising from plan amendments adopted in such year, over a period of 15 plan years,

(iv) separately, with respect to each plan year, the net experience loss (if any) under the plan, over a period of 5 plan years, and

(v) separately, with respect to each plan year, the net loss (if any) resulting from changes in actuarial assumptions used under the plan, over a period of 10 plan years,

(D) the amount necessary to amortize in equal annual installments (until fully amortized) over a period of 5 plan years any amount credited to the funding standard account under paragraph (3)(D), and

(3) Credits to accountFor 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)—

(ii) separately, with respect to each plan year, the net experience gain (if any) under the plan, over a period of 5 plan years, and

(iii) separately, with respect to each plan year, the net gain (if any) resulting from changes in actuarial assumptions used under the plan, over a period of 10 plan years,

(C) the amount of the waived funding deficiency (within the meaning of section 1082(c)(3) of this title) for the plan year, and

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

(4) Combining and offsetting amounts to be amortizedUnder regulations prescribed by the Secretary of the Treasury, amounts required to be amortized under paragraph (2) or paragraph (3), as the case may be—

(5) Interest

(A) In general

(B) ExceptionThe interest rate used for purposes of computing the amortization charge described in subsection (b)(2)(C) or for purposes of any arrangement under subsection (d) for any plan year shall be the greater of—

(i) 150 percent of the Federal mid-term rate (as in effect under section 1274 of title 26 for the 1st month of such plan year), or

(ii) the rate of interest determined under subparagraph (A).

(6) Amortization schedules in effect

(1) Determinations to be made under funding method

(2) Valuation of assets

(A) In general

(B) Dedicated bond portfolio

(A) each of which is reasonable (taking into account the experience of the plan and reasonable expectations), and

(B) which, in combination, offer the actuary’s best estimate of anticipated experience under the plan.

(4) Treatment of certain changes as experience gain or lossFor purposes of this section, if—

(A) a change in benefits under the Social Security Act [42 U.S.C. 301 et seq.] 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 title 26 or a change in the amount of such wages taken into account under regulations prescribed for purposes of section 401(a)(5) of such title,

results in an increase or decrease in accrued liability under a plan, such increase or decrease shall be treated as an experience loss or gain.

(5) Funding method and plan year

(A) Funding methods available

(B) Changes

(C) Approval required for certain changes in assumptions by certain single-employer plans subject to additional funding requirement

(i) In general

(ii) Plans to which subparagraph appliesThis subparagraph shall apply to a plan only if—(I) the plan is a CSEC plan,(II) the aggregate unfunded vested benefits as of the close of the preceding plan year (as determined under section 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 current liability of the plan before such change.

(6) Full fundingIf, as of the close of a plan year, a plan would (without regard to this paragraph) have an accumulated funding deficiency (determined without regard to the alternative minimum funding standard account permitted under subsection (e)) in excess of the full funding limitation—

(A) the funding standard account shall be credited with the amount of such excess, and

(B) all amounts described in paragraphs (2)(B), (C), and (D) and (3)(B) of subsection (b) which are required to be amortized shall be considered fully amortized for purposes of such paragraphs.

(7) Full-funding limitationFor purposes of paragraph (6), the term “full-funding limitation” means the excess (if any) of—

(A) the accrued liability (including normal cost) under the plan (determined under the entry age normal funding method if such accrued liability cannot be directly calculated under the funding method used for the plan), over

(B) the lesser of—

(i) the fair market value of the plan’s assets, or

(ii) the value of such assets determined under paragraph (2).

(C)Minimum amount.—

(i)In general.—In no event shall the full-funding limitation determined under subparagraph (A) be less than the excess (if any) of—(I) 90 percent of the current liability (determined without regard to paragraph (4) of subsection (h)) of the plan (including the expected increase in such current liability due to benefits accruing during the plan year), over(II) the value of the plan’s assets determined under paragraph (2).

(ii)Assets.—For purposes of clause (i), assets shall not be reduced by any credit balance in the funding standard account.

(8) Annual valuation

(A) In general

(B) Valuation date

(i) Current year

(ii) Use of prior year valuation

(iii) Adjustments

(iv) Limitation

(9) Time when certain contributions deemed madeFor purposes of this section, any contributions for a plan year made by an employer during the period—

(A) beginning on the day after the last day of such plan year, and

(B) ending on the day which is 8½ months after the close of the plan year,

shall be deemed to have been made on such last day.

(10) Anticipation of benefit increases effective in the future

(d) Extension of amortization periodsThe period of years required to amortize any unfunded liability (described in any clause of subsection (b)(2)(B)) of any plan may be extended by the Secretary of the Treasury for a period of time (not in excess of 10 years) if such Secretary determines that such extension would carry out the purposes of this chapter and provide adequate protection for participants under the plan and their beneficiaries, and if such Secretary determines that the failure to permit such extension would result in—

(1) a substantial risk to the voluntary continuation of the plan, or

(2) a substantial curtailment of pension benefit levels or employee compensation.

(e) Alternative minimum funding standard

(1) In general

(2) Charges and credits to accountFor a plan year the alternative minimum funding standard account shall be—

(A) charged with the sum of—

(i) the lesser of normal cost under the funding method used under the plan or normal cost determined under the unit credit method,

(ii) the excess, if any, of the present value of accrued benefits under the plan over the fair market value of the assets, and

(iii) an amount equal to the excess (if any) of credits to the alternative minimum standard account for all prior plan years over charges to such account for all such years, and

(B) credited with the amount considered contributed by the employer to or under the plan for the plan year.

(3) Interest

(f) Quarterly contributions required

(1) In general

(A) 175 percent of the Federal mid-term rate (as in effect under section 1274 of title 26 for the 1st month of such plan year), or

(B) the rate of interest used under the plan in determining costs.

(2) Amount of underpayment, period of underpaymentFor purposes of paragraph (1)—

(A) 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.

(B) Period of underpayment

(3) Number of required installments; due datesFor purposes of this subsection—

(A) Payable in 4 installments

(B) Time for payment of installments

(4) Amount of required installmentFor purposes of this subsection—

(A) In general

(B) Required annual paymentFor purposes of subparagraph (A), the term “required annual payment” means the lesser of—

(i) 90 percent of the amount required to be contributed to or under the plan by the employer for the plan year under section 1082 of this title (without regard to any waiver under subsection (c) thereof), or

(ii) 100 percent of the amount so required for the preceding plan year.

Clause (ii) shall not apply if the preceding plan year was not a year of 12 months.

(5) Liquidity requirement

(A) In general

(B) Plans to which paragraph appliesThis paragraph shall apply to a CSEC plan other than a plan described in section 1082(d)(6)(A) of this title (as in effect on the day before August 17, 2006) which—

(i) is required to pay installments under this subsection for a plan year, and

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

(D) Limitation on increase

(E) DefinitionsFor purposes of this paragraph—

(i) Liquidity shortfall

(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 funded current liability percentage for the plan year, and(II) the sum of the purchases of annuities, payments of single sums, and such other disbursements as the Secretary of the Treasury shall provide in regulations.

(v) Liquid assets

(vi) Quarter

(F) Regulations

(6) Fiscal years and short years

(A) Fiscal years

(B) Short plan year

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

(1) In generalIn the case of a plan to which this section applies, if—

(A) any person fails to make a required installment under subsection (f) or any other payment required under this section before the due date for such installment or other payment, and

(B) the unpaid balance of such installment or other payment (including interest), when added to the aggregate unpaid balance of all preceding such installments or other payments for which payment was not made before the due date (including interest), exceeds $1,000,000,

(2) Plans to which subsection applies

(3) Amount of lienFor purposes of paragraph (1), the amount of the lien shall be equal to the aggregate unpaid balance of required installments and other payments required under this section (including interest)—

(A) for plan years beginning after 1987, and

(B) for which payment has not been made before the due date.

(4) Notice of failure; lien

(A) Notice of failure

(B) Period of lien

(5) Enforcement

(6) DefinitionsFor purposes of this subsection—

(A) Due date; required installment

(B) Controlled group

(h) Current liabilityFor purposes of this section—

(1) In general

(2) Treatment of unpredictable contingent event benefits

(A) In general

(B) Unpredictable contingent event benefitThe term “unpredictable contingent event benefit” means any benefit contingent on an event other than—

(i) age, service, compensation, death, or disability, or

(ii) an event which is reasonably and reliably predictable (as determined by the Secretary of the Treasury).

(3) Interest rate and mortality assumptions used

(A) Interest rate

(B) Mortality tables

(i) Secretarial authority

(ii) Periodic review

(i) In general

(ii) Special rule for disabilities occurring after 1994

(4) Certain service disregarded

(A) In general

(B) Applicable percentage

(C) Participants to whom paragraph appliesThis subparagraph shall apply to any participant who, at the time of becoming a participant—

(i) has not accrued any other benefit under any defined benefit plan (whether or not terminated) maintained by the employer or a member of the same controlled group of which the employer is a member,

(ii) who first becomes a participant under the plan in a plan year beginning after December 31, 1987, and

(iii) has years of service greater than the minimum years of service necessary for eligibility to participate in the plan.

(D) Election

(i) Funded current liability percentageFor purposes of this section, the term “funded current liability percentage” means, with respect to any plan year, the percentage which—

(1) the value of the plan’s assets determined under subsection (c)(2), is of

(2) the current liability under the plan.

(j) Funding restoration statusNotwithstanding any other provisions of this section—

(1) Normal cost payment

(A) In generalIn the case of a CSEC plan that is in funding restoration status for a plan year, for purposes of section 1082 of this title, the term “accumulated funding deficiency” means, for such plan year, the greater of—

(i) the amount described in subsection (a), or

(ii) the excess of the normal cost of the plan for the plan year over the amount actually contributed to or under the plan for the plan year.

(B) Normal cost

(2) Plan amendments

(3) Funding restoration plan

(4) Annual certification by plan actuaryNot later than the 90th day of each plan year of a CSEC plan, the plan actuary shall certify to the plan sponsor whether or not the plan is in funding restoration status for the plan year, based on the plan’s funded percentage as of the beginning of the plan year. For this purpose, the actuary may conclusively rely on an estimate of—

(A) the plan’s funding liability, based on the funding liability of the plan for the preceding plan year and on reasonable actuarial estimates, assumptions, and methods, and

(B) the amount of any contributions reasonably anticipated to be made for the preceding plan year.

Contributions described in subparagraph (B) shall be taken into account in determining the plan’s funded percentage as of the beginning of the plan year.

(5) DefinitionsFor purposes of this subsection—

(A) Funding restoration status

(B) Funded percentageThe term “funded percentage” means the ratio (expressed as a percentage) which—

(i) the value of plan assets (as determined under subsection (c)(2)), bears to

(ii) the plan’s funding liability.

(D) Spread gain funding method

(Pub. L. 93–406, title I, § 306, as added Pub. L. 113–97, title I, § 102(a), Apr. 7, 2014, 128 Stat. 1102.)

§§ 1085b, 1086. Repealed. Pub. L. 109–280, title I, § 101(a), Aug. 17, 2006, 120 Stat. 784