ADDITIONAL FUNDING REQUIREMENTS.

SEC. 9303. ADDITIONAL FUNDING REQUIREMENTS. (a) Amendments to 1986 Code.— (1) In general.— Section 412 of the 1986 Code (relating to minimum funding standard) is amended by adding at the end thereof the following new subsection: “(l) Additional Funding Requirements for Plans Which Are Not Multiemployer Plans.— “(1) In general.— In the case of a defined benefit plan (other than a multiemployer plan) which has an unfunded current liability for any plan year, the amount charged to the funding standard account for such plan year shall be increased by the sum of— “(A) the excess (if any) of— “(i) the deficit reduction contribution determined under paragraph (2) for such plan year, over “(ii) the sum of the charges for such plan year under subparagraphs (B) (other than clauses (iv) and (v) thereof), (C), and (D) of subsection (b)(2), reduced by the sum of the credits for such plan year under subparagraph (B)(i) of subsection (b)(3), plus 101 STAT. 1330–334 “(B) the unpredictable contingent event amount (if any) for such plan year. Such increase shall not exceed the amount necessary to increase the funded current liability percentage to 100 percent. “(2) Deficit reduction contribution.— For purposes of paragraph (1), the deficit reduction contribution determined under this paragraph for any plan year is the sum of— “(A) the unfunded old liability amount, plus “(B) the unfunded new liability amount. “(3) Unfunded old liability amount.— For purposes of this subsection— “(A) In general.— The unfunded old liability amount with respect to any plan for any plan year is the amount necessary to amortize the unfunded old liability under the plan in equal annual installments over a period of 18 plan years (beginning with the 1st plan year beginning after December 31, 1988). “(B) Unfunded old liability.— The term ‘unfunded old liability’ means the unfunded current liability of the plan as of the beginning of the 1st plan year beginning after December 31, 1987 (determined without regard to any plan amendment increasing liabilities adopted after October 16, 1987). “(C) Special rules for benefit increases under existing collective bargaining agreements.— “(i) In general.— In the case of a plan maintained pursuant to 1 or more collective bargaining agreements between employee representatives and the employer ratified before October 17, 1987, the unfunded old liability amount with respect to such plan for any plan year shall be increased by the amount necessary to amortize the unfunded existing benefit increase liability in equal annual installments over a period of 18 plan years beginning with— “(I) the plan year in which the benefit increase with respect to such liability occurs, or “(II) if the taxpayer elects, the 1st plan year beginning after December 31, 1988. “(ii) Unfunded existing benefit increase liabilities— For purposes of clause (i), the unfunded existing benefit increase liability means, with respect to any benefit increase under the agreements described in clause (i) which takes effect during or after the 1st plan year beginning after December 31, 1987, the unfunded current liability determined— “(I) by taking into account only liabilities attributable to such benefit increase, and “(II) by reducing the amount determined under paragraph (8)(A)(ii) by the current liability determined without regard to such benefit increase, “(iii) Extensions, modifications, etc. not taken into account.— For purposes of this subparagraph, any extension, amendment, or other modification of an agreement after October 16, 1987, shall not be taken into account. “(4) Unfunded new liability amount.— For purposes of this subsection— 101 STAT. 1330–335 “(A) In general.— The unfunded new liability amount with respect to any plan for any plan year is the applicable percentage of the unfunded new liability. “(B) Unfunded new liability.— The term ‘unfunded new liability’ means the unfunded current liability of the plan for the plan year determined without regard to— “(i) the unamortized portion of the unfunded old liability, and “(ii) the liability with respect to any unpredictable contingent event benefits (without regard to whether the event has occurred). “(C) Applicable percentage.— The term ‘applicable percentage’ means, with respect to any plan year, 30 percent, reduced by the product of— “(i) .25 multiplied by “(ii) the number of percentage points (if any) by which the funded current liability percentage exceeds 35 percent. “(5) Unpredictable contingent event amount.— “(A) In general.— The unpredictable contingent event amount with respect to a plan for any plan year is an amount equal to the greater of— “(i) the applicable percentage of the product of— “(I) 100 percent, reduced (but not below zero) by the funded current liability percentage for the plan year, multiplied by “(II) the amount of unpredictable contingent event benefits paid during the plan year, including (except as provided by the Secretary) any payment for the purchase of an annuity contract for a participant or beneficiary with respect to such benefits, or “(ii) the amount which would be determined for the plan year if the unpredictable contingent event benefit liabilities were amortized in equal annual installments over 7 plan years (beginning with the plan year in which such event occurs). “(B) Applicable percentage.— “In the case of plan years beginning in: The applicable percentage is: 1989 and 1990 ................ 5 1991 ............................... 10 1992 ............................... 15 1993 ............................... 20 1994 ............................... 30 1995 ............................... 40 1996 50 1997 ............................... 60 1998 ............................... 70 1999 ............................... 80 2000 ............................... 90 2001 and thereafter ................ 100. “(C) Paragraph not to apply to existing benefits.— This paragraph shall not apply to unpredictable contingent event benefits (and liabilities attributable thereto) for which the event occurred before October 17, 1987. “(D) Special rule for first year of amortization.— Unless the employer elects otherwise, the amount deter-101 STAT. 1330–336mined under subparagraph (A) for the plan year in which the event occurs shall be equal to 150 percent of the amount determined under subparagraph (A)(i). The amount under subparagraph (A)(ii) for subsequent plan years in the amortization period shall be adjusted in the manner provided by the Secretary to reflect the application of this subparagraph. “(6) Special rules for small plans.— “(A) Plans with 100 or fewer participants.— This subsection shall not apply to any plan for any plan year if on each day during the preceding plan year such plan had no more than 100 participants. “(B) Plans with more than 100 but not more than 150 participants.— In the case of a plan to which subparagraph (A) does not apply and which on each day during the preceding plan year had no more than 150 participants, the amount of the increase under paragraph (1) for such plan year shall be equal to the product of— “(i) such increase determined without regard to this subparagraph, multiplied by “(ii) 2 percent for the highest number of participants in excess of 100 on any such day. “(C) Aggregation of plans.— For purposes of this paragraph, all defined benefit plans maintained by the same employer (or any member of such employer’s controlled group) shall be treated as 1 plan, but only employees of such employer or member shall be taken into account. “(7) Current liability.— For purposes of this subsection— “(A) In general.— The term ‘current liability’ means all liabilities to employees and their beneficiaries under the plan. “(B) Treatment of unpredictable contingent event benefits.— “(i) In general.— For purposes of subparagraph (A), any unpredictable contingent event benefit shall not be taken into account until the event on which the benefit is contingent occurs. “(ii) Unpredictable contingent event benefit.— The 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). “(C) Interest rates used.— The rate of interest used to determine current liability shall be t he rate of interest used under subsection (b)(5). “(D) Certain service disregarded.— “(i) In general.— In the case of a participant to whom this subparagraph applies, only the applicable percentage of the years of service before such individual became a participant shall be taken into account in computing the current liability of the plan. “(ii) Applicable percentage.— For purposes of this subparagraph, the applicable percentage shall be determined as follows: 101 STAT. 1330–337 “If the years of participation are: “The applicable percentage is: 1 ................................... 20 2 ................................... 40 3 ................................... 60 4 ................................... 80 5 or more .......................... 100. “(iii) Participants to whom subparagraph applies.— This 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, and “(II) who first becomes a participant under the plan in a plan year beginning after December 31, 1987. “(8) Other definitions.— For purposes of this subsection— “(A) Unfunded current liability.— The term ‘unfunded current liability’ means, with respect to any plan year, the excess (if any) of— “(i) the current liability under the plan, over “(ii) value of the plan’s assets determined under subsection (c)(2) reduced by any credit balance in the funding standard account. “(B) Funded current liability percentage.— The term ‘funded current liability percentage’ means, with respect to any plan year, the percentage which— “(i) the amount determined under subparagraph (A)(ii), is of “(ii) the current liability under the plan. “(C) Controlled group.— The term ‘controlled group’ means any group treated as a single employer under subsections (b), (c), (m), and (o) of section 414. “(D) Adjustments to prevent omissions and duplications.— The Secretary shall provide such adjustments in the unfunded old liability amount, the unfunded new liability amount, the unpredictable contingent event amount, the current payment amount, and any other charges or credits under this section as are necessary to avoid duplication or omission of any factors in the determination of such amounts, charges, or credits.” (2) Conforming amendment.— Paragraph (2) of section 412(b) of the 1986 Code is amended by adding at the end thereof the following new sentence: 9494Incorrect indention in copy. “For additional requirements in the case of plans other than multiemployer plans, see subsection (1).” (b) Amendments to ERISA.— (1) In general.— Section 302 of ERISA (29 U.S.C. 1082) is amended by redesignating subsection (d) as subsection (e) and by inserting after subsection (c) the following new subsection: “(d) Additional Funding Requirements for Plans Which Are Not Multiemployer Plans.— 101 STAT. 1330–338 “(1) In general.— In the case of a defined benefit plan (other than a multiemployer plan) which has an unfunded current liability for any plan year, the amount charged to the funding standard account for such plan year shall be increased by the sum of— “(A) the excess (if any) of— “(i) the deficit reduction contribution determined under paragraph (2) for such plan year, over “(ii) the sum of the charges for such plan year under subparagraphs (B) (other than clauses (iv) and (v) thereof), (C), and (D) of subsection (b)(2), reduced by the sum of the credits for such plan year under subparagraph (B)(i) of subsection (b)(8), plus “(B) the unpredictable contingent event amount (if any) for such plan year. Such increase shall not exceed the amount necessary to increase the funded current liability percentage to 100 percent. “(2) Deficit reduction contribution.— For purposes of paragraph (1), the deficit reduction contribution determined under this paragraph for any plan year is the sum of— “(A) the unfunded old liability amount, plus “(B) the unfunded new liability amount. “(3) Unfunded old liability amount.— For purposes of this subsection— “(A) In general.— The unfunded old liability amount with respect to any plan for any plan year is the amount necessary to amortize the unfunded old liability under the plan in equal annual installments over a period of 18 plan years (beginning with the 1st plan year beginning after December 31, 1988). “(B) Unfunded old liability.— The term ‘unfunded old liability’ means the unfunded current liability of the plan of the beginning of the 1st plan year beginning after December 31, 1987 (determined without regard to any plan amendment increasing liabilities adopted after October 16, 1987). “(C) Special rules for benefit increases under existing collective bargaining agreements.— “(i) In general.— In the case of a plan maintained pursuant to 1 or more collective bargaining agreements between employee representatives and the employer ratified before October 17, 1987, the unfunded old liability amount with respect to such plan for any plan year shall be increased by the amount necessary to amortize the unfunded existing benefit increase liability in equal annual installments over a period of 18 plan years beginning with— “(I) the plan year in which the benefit increase with respect to such liability occurs, or “(II) if the taxpayer elects, the 1st plan year beginning after December 31, 1988. “(ii) Unfunded existing benefit increase liabilities.— For purposes of clause (i), the unfunded existing benefit increase liability means, with respect to any benefit increase under the agreements described in clause (i) which takes effect during or after the 1st plan101 STAT. 1330–339 year beginning after December 31, 1987, the unfunded current liability determined— “(I) by taking into account only liabilities attributable to such benefit increase, and “(II) by reducing the amount determined under paragraph (8)(A)(ii) by the current liability determined without regard to such benefit increase, “(iii) Extensions, modifications, etc. not taken into account.— For purposes of this subparagraph, any extension, amendment, or other modification of an agreement after October 16, 1987, shall not be taken into account. “(4) Unfunded new liability amount.— For purposes of this subsection— “(A) In general.— The unfunded new liability amount with respect to any plan for any plan year is the applicable percentage of the unfunded new liability. “(B) Unfunded new liability.— The term ‘unfunded new liability’ means the unfunded current liability of the plan for the plan year determined without regard to— “(i) the unamortized portion of the unfunded old liability, and “(ii) the liability with respect to any unpredictable contingent event benefits (without regard to whether the event has occurred). “(C) Applicable percentage.— The term ‘applicable percentage’ means, with respect to any plan year, 30 percent, reduced by the product of— “(i) .25 multiplied by “(ii) the number of percentage points (if any) by which the funded current liability percentage exceeds 35 percent. “(5) Unpredictable contingent event amount.— “(A) In general.— The unpredictable contingent event amount with respect to a plan for any plan year is an amount equal to the greater of— “(i) the applicable percentage of the product of— “(I) 100 percent, reduced (but not below zero) by the funded current liability percentage for the plan year, multiplied by “(II) the amount of unpredictable contingent event benefits paid during the plan year, including (except as provided by the Secretary of the Treasury) any payment for the purchase of an annuity contract for a participant or beneficiary with respect to such benefits, or “(ii) the amount which would be determined for the plan year if the unpredictable contingent event benefit liabilities were amortized in equal annual installments over 7 plan years (beginning with the plan year in which such event occurs). “(B) Applicable percentage.— 101 STAT. 1330–340 “In the case of plan years beginning in: The applicable percentage is: 1989 and 1990 ..................... 5 1991 .................................. 10 1992 .................................. 15 1993 .................................. 20 1994 .................................. 30 1995 .................................. 40 1996 .................................. 50 1997 .................................. 60 1998 .................................. 70 1999 .................................. 80 2000 .................................. 90 2001 and thereafter ................... 100. “(C) Paragraph not to apply to existing benefits.— This paragraph shall not apply to unpredictable contingent event benefits (and liabilities attributable thereto) for which the event occurred before October 17, 1987. “(D) Special rule for first year of amortization.— Unless the employer elects otherwise, the amount determined under subparagraph (A) for the plan year in which the event occurs shall be equal to 150 percent of the amount determined under subparagraph (A)(i). The amount under subparagraph (A)(ii) for subsequent plan years in the amortization period shall be adjusted in the manner provided by the Secretary of the Treasury to reflect the application of this subparagraph. “(6) Special rules for small plans.— “(A) Plans with 100 or fewer participants.— This subsection shall not apply to any plan for any plan year if on each day during the preceding plan year such plan had no more than 100 participants. “(B) Plans with more than 100 but not more than 150 participants.— In the case of a plan to which subparagraph (A) does not apply and which on each day during the preceding plan year had no more than 150 participants, the amount of the increase under paragraph (1) for such plan year shall be equal to the product of— “(i) such increase determined without regard to this subparagraph, multiplied by “(ii) 2 percent for the highest number of participants in excess of 100 on any such day. “(C) Aggregation of plans.— For purposes of this paragraph, all defined benefit plans maintained by the same employer (or any member of such employer’s controlled group) shall be treated as 1 plan, but only employees of such employer or member shall be taken into account. “(7) Current liability.— For purposes of this subsection— “(A) In general.— The term ‘current liability’ means all liabilities to participants and their beneficiaries under the plan. “(B) Treatment of unpredictable contingent event benefits.— “(i) In general.— For purposes of subparagraph (A), any unpredictable contingent event benefit shall not be taken into account until the event on which the benefit is contingent occurs. “(ii) Unpredictable contingent event benefit.— 101 STAT. 1330–341 The 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). “(C) Interest rates used.— The rate of interest used to determine current liability shall be the rate of interest used under subsection (b)(5). “(D) Certain service disregarded.— “(i) In general.— In the case of a participant to whom this subparagraph applies, only the applicable percentage of the years of service before such individual became a participant shall be taken into account in computing the current liability of the plan. “(ii) Applicable percentage.— For purposes of this subparagraph, the applicable percentage shall be determined as follows: “If the years of participation are: The applicable percentage is: 1 ................................. 20 2 ................................. 40 3 ................................. 60 4 ................................. 80 5 or more ......................... 100. “(iii) Participants to whom subparagraph applies.— This 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, and “(II) who first becomes a participant under the plan in a plan year beginning after December 31, 1987. “(8) Other definitions.— For purposes of this subsection— “(A) Unfunded current liability.— The term ‘unfunded current liability’ means, with respect to any plan year, the excess (if any) of— “(i) the current liability under the plan, over “(ii) value of the plan’s assets determined under subsection (c)(2) reduced by any credit balance in the funding standard account. “(B) Funded current liability percentage.— The term ‘funded current liability percentage’ means, with respect to any plan year, the percentage which— “(i) the amount determined under subparagraph (A)(ii), is of “(ii) the current liability under the plan. “(C) Controlled group.— The term ‘controlled group’ means any group treated as a single employer under subsections 94a94aCopy read “subsection”. (b), (c), (m), and (o) of section 414 of the Internal Revenue Code of 1986. “(D) Adjustments to prevent omissions and duplications.— The Secretary of the Treasury shall provide such adjustments in the unfunded old liability amount, the un-101 STAT. 1330–342funded new liability amount, the unpredictable contingent event amount, the current payment amount, and any other charges or credits under this section as are necessary to avoid duplication or omission of any factors in the determination of such amounts, charges, or credits.” (c) Revision of valuation regulations.— Effective with respect to plan years beginning after December 31, 1987, the provisions of the regulations prescribed under section 412(c)(2) of the 1986 Code which permit asset valuations to be based on a range between 85 percent and 115 percent of average value shall have no force and effect with respect to plans other than multiemployer plans (as defined in section 414(f) of the 1986 Code). The Secretary of the Treasury or his delegate shall amend such regulations to carry out the purposes of the preceding sentence. (d) Valuation of Bonds.— (1) Amendment to 1986 code.— Subparagraph (B) of section 412(c)(2) of the 1986 Code is amended by adding at the end thereof the following new sentence: “In the case of a plan other than a multiemployer plan, this subparagraph shall not apply, but the Secretary may by regulations provide that the value of any dedicated bond portfolio of such plan shall be determined by using the interest rate under subsection (b)(5).” (2) Amendment to ERISA.— Subparagraph (B) of section 302(c)(2) of ERISA is amended by adding at the end thereof the following new sentence: “In the case of a plan other than a multiemployer plan, this subparagraph shall not apply, but the Secretary of the Treasury may by regulations provide that the value of any dedicated bond portfolio of such plan shall be determined by using the interest rate under subsection (b)(5).” (e) Effective Date.— (1) In general.— Except as provided in this subsection, the amendments made by this section shall apply with respect to plan years beginning after December 31, 1988. (2) Subsections (c) and (d).— The amendments made by subsections (c) and (d) shall apply with respect to years beginning after December 31, 1987. (3) Special rule for steel companies.— (A) In general.— For any plan year beginning before January 1, 1994, any increase in the funding standard account under section 412(1) of the 1986 Code or section 302(d) of ERISA (as added by this section) with respect to any steel employee plan shall not exceed the sum of— (i) the required percentage of the current liability under such plan, plus (ii) the amount determined under subparagraph (C)(i) for such plan year. (B) Required percentage.— For purposes of subparagraph (A), the term “required percentage” means, with respect to any plan year, the excess (if any) of— (i) the sum of— (I) the funded current liability percentage as of the beginning of the 1st plan year beginning after December 31, 1988 (determined without regard to any plan amendment adopted after June 30, 1987), plus (II) 1 percentage point for the plan year for which the determination under this paragraph is being made and for each prior plan year beginning after December 31, 1988, over 101 STAT. 1330–343 (ii) the funded current liability percentage as of the beginning of the plan year for which such determination is being made. (C) Special rules for contingent events.— In the case of any unpredictable contingent event benefit with respect to which the event on which such benefits are contingent occurs after December 17, 1987— (i) Amortization amount.— For purposes of subparagraph (A)(ii), the amount determined under this clause for any plan year is the amount which would be determined if the unpredictable contingent event benefit liability were amortized in equal annual installments over 10 plan years beginning with the plan year in which such event occurs). (ii) Benefit and contributions not taken into account.— For purposes of subparagraph (B), in determining the funded current liability percentage for any plan year, there shall not be taken into account— (I) the unpredictable contingent event benefit liability, or (II) any amount contributed to the plan which is attributable to clause (i). (D) Steel employee plan.— For purposes of this paragraph, the term “steel employee plan” means any plan if— (i) such plan is maintained by a steel company, and (ii) substantially all of the employees covered by such plan are employees of such company. (E) Other definitions.— For purposes of this paragraph— (i) Steel company.— The term “steel company” means any corporation described in section 80603) of the Steel Import Stabilization Act. (ii) Other definitions.— The terms “current liability”, “funded current liability percentage”, and “unpredictable contingent event benefit” have the meanings given such terms by section 412(1) of the 1986 Code (as added by this section). (F) 9595Copy read “(E)”. Special rule.— The provisions of this paragraph shall apply in the case of a company which was originally incorporated on April 25, 1927, in Michigan and reincorporated on June 3, 1968, in Delaware in the same manner sis if such company were a steel company.