REQUIRED UPON ADOPTION OF PLAN AMENDMENT RESULTING IN SIGNIFICANT UNDERFUNDING.

SEC. 9341. SECURITY REQUIRED UPON ADOPTION OF PLAN AMENDMENT RESULTING IN SIGNIFICANT UNDERFUNDING. (a) Amendments to 1986 code.—9999Copy read “Code—”. Subsection (a) of section 401 of the 1986 Code (relating to requirements for qualification) is amended by inserting after paragraph (28) the following new paragraph: 100100Copy read “paragraph:—”. “(29) Security required upon adoption of plan amendment resulting in significant underfunding.— “(A) In general.—If— “(i) a defined benefit plan (other than a multiemployer plan) adopts an amendment an effect of which is to increase current liability under the plan for a plan year, and “(ii) the funded current liability percentage of the plan for the plan year in which the amendment takes effect is less than 60 percent, including the amount of the unfunded current liability under the plan attributable to the plan amendment, the trust of which such plan is a part shall not constitute a qualified trust under this subsection unless such amendment does not take effect until the contributing sponsor (or any member of the controlled group of the contributing sponsor) provides security to the plan. “(B) Form of security.— The security required under subparagraph (A) shall consist of— “(i) a bond issued by a corporate surety company that is an acceptable surety for purposes of section 412 of the Employee Retirement Income Security Act of 1974, “(ii) cash, or United States obligations which mature in 3 years or less, held in escrow by a bank or similar financial institution, or “(iii) such other form of security as is satisfactory to the Secretary and the parties involved. “(C) Amount of security.— The security shall be in an amount equal to the excess of— “(i) the lesser of— “(I) the amount of additional plan assets which would be necessary to increase the funded current101 STAT. 1330–370 liability percentage under the plan to 60 percent, including the amount of the unfunded current liability under the plan attributable to the plan amendment, or “(II) the amount of the increase in current liability under the plan attributable to the plan amendment, over “(ii) $10,000,000. “(D) Release of security.— The security shall be released (and any amounts thereunder shall be refunded together with any interest accrued thereon) at the end of the first plan year which ends after the provision of the security and for which the funded current liability percentage under the plan is not less than 60 percent. The Secretary may prescribe regulations for partial releases of the security by reason of increases in the funded current liability percentage. “(E) Definitions.— For purposes of this paragraph, the terms ‘current liability’, ‘funded current liability percentage’, and ‘unfunded current liability’ shall have the meanings given such terms by section 412(1), except that in computing unfunded current liability there shall not be taken into account any unamortized portion of the unfunded old liability amount as of the close of the plan year.” (b) Amendments to ERISA.— Part 3 of subtitle B of title I of ERISA (29 U.S.C. 1081 et seq.) is amended— (1) by redesignating section 307 as section 308; and (2) by inserting after section 306 the following new section: “security required upon adoption of plan amendment resulting in significant underfunding “Sec. 307. (a) In General.— If— “(1) a defined benefit plan (other than a multiemployer plan) adopts an amendment an effect of which is to increase current liability under the plan for a plan year, and “(2) the funded current liability percentage of the plan for the plan year in which the amendment takes effect is less than 60 percent, including the amount of the unfunded current liability under the plan attributable to the plan amendment, the contributing sponsor (or any member of the controlled group of the contributing sponsor) shall provide security to the plan. “(b) Form of Security.— The security required under subsection (a) shall consist of— “(1) a bond issued by a corporate surety company that is an acceptable surety for purposes of section 412, “(2) cash, or United States obligations which mature in 3 years or less, held in escrow by a bank or similar financial institution, or “(3) such other form of security as is satisfactory to the Secretary of the Treasury and the parties involved. “(c) Amount of Security.— The security shall be in an amount equal to the excess of— “(1) the lesser of— “(A) the amount of additional plan assets which would be necessary to increase the funded current liability percentage under the plan to 60 percent, including the amount of101 STAT. 1330–371 the unfunded current liability under the plan attributable to the plan amendment, or “(B) the amount of the increase in current liability under the plan attributable to the plan amendment, over “(2) $10,000,000. “(d) Release of Security.— The security shall be released (and any amounts thereunder shall be refunded together with any interest accrued thereon) at the end of the first plan year which ends after the provision of the security and for which the funded current liability percentage under the plan is not less than 60 percent. The Secretary may prescribe regulations for partial releases of the security by reason of increases in the funded current liability percentage. “(e) Definitions.— For purposes of this section, the terms ‘current liability’, ‘funded current liability percentage’, and ‘unfunded current liability’ shall have the meanings given such terms by section 302(d), except that in computing unfunded current liability there shall not be taken into account any unamortized portion of the unfunded old liability amount as of the close of the plan year.” (b) Clerical Amendment.— The table of contents in section 1 of ERISA (29 U.S.C. 1001 note) is amended by striking out the item relating to section 307 and inserting in lieu thereof the following new items: “Sec. 307. Security required upon adoption of plan amendment resulting in significant underfunding. “Sec. 308. Effective dates.” (c) Effective Date.— (1) In general.— Except sis provided in this subsection, the amendments made by this section shall apply to plan amendments adopted after the date of the enactment of this Act. (2) Collective bargaining agreements.— In the case of a plan maintained pursuant to 1 or more collective bargaining agreements between employee representatives and 1 or more employers ratified before the date of the enactment of this Act, the amendments made by this section shall not apply to plan amendments adopted pursuant to collective bargaining agreements ratified before the date of enactment.