FUNDING WAIVERS.

SEC. 9306. FUNDING WAIVERS. (a) Requirements for Waivers.— (1) Amendments to 1986 code.— (A) Application must be submitted before date 2½ months after close of year.— Subsection (d) of section 412 of the 1986 Code (relating to variance from minimum funding standard) is amended by adding at the end thereof the following new paragraph: “(4) Application must be submitted before date 2½ months after close of year.— In the case of a plan other than a multiemployer plan, no waiver may be granted under this subsection with respect to any plan for any plan year unless an application therefor is submitted to the Secretary not later than the 15th day of the 3rd month beginning after the close of such plan year.” (B) Waiver allowed only for temporary hardship.— Subsection (d) of section 412 of the 1986 Code is amended— (i) by striking out “substantial business hardship” in paragraphs (1) and (2) and inserting in lieu thereof “temporary substantial business hardship (substantial business hardship in the case of a multiemployer plan)”, and 101 STAT. 1330–353 (ii) by striking out “substantial— in the headings of paragraphs (1) and (2). (C) Hardship must also exist at controlled group level.— Subsection (d) of section 412 of the 1986 Code is amended by adding at the end thereof the following new paragraph: “(5) Special rule if employer is member of controlled group.— “(A) In general.— In the case of a plan other than a multiemployer plan, if an employer is a member of a controlled group, the temporary substantial business hardship requirements of paragraph (1) shall be treated as met only if such requirements are met— “(i) with respect to such employer, and “(ii) with respect to the controlled group of which such employer is a member (determined by treating all members of such group as a single employer). The Secretary may provide that an analysis of a trade or business or industry of a member need not be conducted if the Secretary determines such analysis is not necessary because the taking into account of such member would not significantly affect the determination under this subsection. “(B) Controlled group.— For purposes of subparagraph (A), the term ‘controlled group’ means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414.” (2) Amendments to erisa.— (A) Application must be submitted before date 2½ months after close of year.— Section 303 of ERISA (relating to variance from minimum funding standard) (29 U.S.C. 1083) is amended by redesignating subsection (d) as subsection (f) and by inserting after subsection (c) the following new subsection: “(d) Special Rules.— “(1) Application must be submitted before date 2½ months after close of year.— In the case of a plan other than a multiemployer plan, no waiver may be granted under this section with respect to any plan for any plan year unless an application therefor is submitted to t h e Secretary of t h e Treasury not later than the 15th day of the 3rd month beginning after the close of such plan year.” (B) Waiver allowed only for temporary hardship.— Section 303 of ERISA (29 U.S.C. 1083) is amended by striking out “substantial business hardship” in subsections (a) and (b) and inserting in lieu thereof “temporary substantial business hardship (substantial business hardship in the case of a multiemployer plan)”. (C) Hardship must also exist at controlled group level.— Subsection (d) of section 303 of ERISA (as amended by subparagraph (A)) (29 U.S.C. 1083) is amended by adding at the end thereof the following new paragraph: “(2) Special rule if employer is member of controlled group.— “(A) In general.— In the case of a plan other than a multiemployer plan, if an employer is a member of a controlled group, the temporary substantial business hard-101 STAT. 1330–354ship requirements of subsection (a) shall be treated as met only if such requirements are met— “(i) with respect to such employer, and “(ii) with respect to the controlled group of which such employer is a member (determined by treating all members of such group as a single employer). The Secretary of the Treasury may provide that an analysis of a trade or business or industry of a member need not be conducted if the Secretary of the Treasury determines such analysis is not necessary because the taking into account of such member would not significantly affect the determination under this subsection. “(B) Controlled group.— For purposes of subparagraph (A), the term ‘controlled group’ means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of 1986.” (b) Frequency of Waivers.— (1) Amendments to 1986 code.— The second sentence of section 412(d)(1) of the 1986 Code is amended by striking out “more than 5 of any 15” and inserting in lieu thereof “more than 3 of any 15 (5 of any 15 in the case of a multiemployer plan)”. (2) Amendments to erisa.— The second sentence of section 303(a) of ERISA (29 U.S.C. 1083(a)) is amended by striking out “more than 5 of any 15” and inserting in lieu thereof “more than 3 of any 15 (5 of any 15 in the case of a multiemployer plan)”. (c) Interest on Repayment of Waived Contributions.— (1) Amendments to 1986 code.— (A) Paragraph (1) of section 412(d) of the 1986 Code is amended by striking out the last sentence and inserting in lieu thereof the following new sentence: “The interest rate used for purposes of computing the amortization charge described in subsection (b)(2)(C) for any plan year shall be— “(A) in the case of a plan other than a multiemployer plan, the greater of (i) 150 percent of the Federal midterm rate (as in effect under section 1274 for the 1st month of such plan year), or (ii) the rate of interest used under the plan in determining costs, and “(B) in the case of a multiemployer plan, the rate determined under section 6621(b).” (B) Subsection (e) of section 412 of the 1986 Code is amended by striking out the last sentence and inserting in lieu thereof the following new sentence: "In the case of a plan other than a multiemployer plan, the interest rate applicable for any plan year under any arrangement entered into by the Secretary in connection with an extension granted under this subsection shall be the greater of (A) 150 percent of the Federal mid-term rate (as in effect under section 1274 for the 1st month of such plan year), or (B) the rate of interest used under the plan in determining costs. In the case of a multiemployer plan, such rate shall be the rate determined under section 6621(b).” (2) Amendments to erisa.— (A) Subsection (a) of section 303 of ERISA (29 U.S.C. 1083(a)) is amended by striking out the last sentence and inserting in lieu thereof the following new sentence: “The interest rate used for purposes of computing the amortiza-101 STAT. 1330–355tion charge described in subsection (b)(2)(C) for any plan year shall be— “(A) in the case of a plan other than a multiemployer plan, the greater of (i) 150 percent of the Federal midterm rate (as in effect under section 1274 of the Internal Revenue Code of 1986 for the 1st month of such plan year), or (ii) the rate of interest used under the plan in determining costs, and “(B) in the case of a multiemployer plan, the rate determined under section 6621(b).” (B) Subsection (a) of section 304 of ERISA (29 U.S.C. 1084(a)) is amended by striking out the last sentence and inserting in lieu thereof the following new sentence: “In the case of a plan other than a multiemployer plan, the interest rate applicable for any plan year under any arrangement entered into by the Secretary in connection with an extension granted under this subsection shall be the greater of (A) 150 percent of the Federal mid-term rate (as in effect under section 1274 of the Internal Revenue Code of 1986 for the 1st month of such plan year), or (B) the rate of interest used under the plan in determining costs. In the case of a multiemployer plan, such rate shall be the rate determined under section 6621(b) of such Code.” (d) Notice to Participants of Application for Funding Waivers.— (1) Amendment to 1986 code.— Section 412 (f)(4)(A) of the 1986 Code (relating to advance notice) is amended by striking out “plan.” and inserting in lieu thereof “plan, and each participant, beneficiary, and alternate payee (within the meaning of section 414(p)(8)). Such notice shall include a description of the extent to which the plan is funded for benefits which are guaranteed under title IV of such Act and the benefit liabilities.”. (2) Amendment to erisa.— Section 303(e)(1) of ERISA (relating to advance notice) (29 U.S.C. 1083(e)(1)) is amended by striking out “plan.” and inserting in lieu thereof “plan, and each affected party (as defined in section 4001(a)(21)) other than the Pension Benefit Guaranty Corporation. Such notice shall include a description of the extent to which the plan is funded for benefits which are guaranteed under title IV and the benefit liabilities.”. (e) Decrease in Amount of Deficiencies Required Before Security Required.— (1) Amendment to 1986 code.— Subparagraph (C) of section 412 (0(3) is amended by striking out “$2,000,000” and inserting in lieu thereof “$1,000,000”. (2) Amendment to erisa.— Section 306(c)(1) of ERISA (29 U.S.C. 1085a(c)(1)) is amended by striking out “$2,000,000” and inserting in lieu thereof “$1,000,000”. (f) Effective Dates.— (1) In general.— Except as provided in this subsection, the amendments made by this section shall apply in the case of— (A) any application submitted after December 17, 1987, and (B) any waiver granted pursuant to such an application. (2) Special rule for application requirement.— 101 STAT. 1330–356 (A) In general.— The amendments made by subsections (a)(1)(A) and (a)(2)(A) shall apply to plan years beginning after December 31, 1987. (B) Transitional rule for years beginning in 1988.— In the case of any plan year beginning during calendar 1988, section 412(d)(4) of the 1986 Code and section 303(d)(1) of ERISA (as added by subsection (a)(1)) shall be applied by substituting “6th month” for “3rd month”. (3) Frequency of waivers.— In applying the second sentence of section 412(d) of the 1986 Code and section 303(a) of ERISA to plans other than multiemployer plans, the number of waivers which may be granted pursuant to applications submitted after December 17, 1987, shall be determined without regard to waivers granted with respect to plan years beginning before January 1, 1988. (4) Subsection (d).— The amendments made by subsection (d) shall apply to applications submitted more than 90 days after the date of the enactment of this Act.