FULL-FUNDING LIMITATION FOR DEDUCTIONS TO QUALIFIED PLANS.

SEC. 9301. FULL-FUNDING LIMITATION FOR DEDUCTIONS TO QUALIFIED PLANS. (a) General Rule.— Paragraph (7) of section 412(c) of the Internal Revenue Code of 1986 (defining full-funding limitation) is amended to read as follows: “(7) Full-funding limitation.— “(A) In general.— For purposes of paragraph (6), the term ‘full-funding limitation’ means the excess (if any) of— 101 STAT. 1330–332 “(i) the lesser of (I) 150 percent of current liability, or (II) 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) Current liability.— For purposes of subparagraphs (A) and (D), the term ‘current liability’ has the meaning given such term by subsection (1)(7) (without regard to subparagraph (D) thereof). “(C) Special rule for paragraph (6)(b).— For purposes of paragraph (6)(B), subparagraph (A)(i) shall be applied without regard to subclause (I) thereof. “(D) Regulatory authority.— The Secretary may by regulations provide— “(i) for adjustments to the percentage contained in subparagraph (A)(i) to take into account the respective ages or lengths of service of the participants, “(ii) alternative methods based on factors other than current liability for the determination of the amount taken into account under subparagraph (A)(i), and “(iii) for the treatment under this section of contributions which would be required to be made under the plan but for the provisions of subparagraph (A)(i)(I).” (b) Amendment To ERISA.— Paragraph (7) of section 302(c) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1082(c)(7)) is amended to read as follows: “(7) Full-funding limitation.— “(A) In general.— For purposes of paragraph (6), the term ‘full-funding limitation’ means the excess (if any) of— “(i) the lesser of (I) 150 percent of current liability, or (II) t he 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) Current liability.— For purposes of subparagraphs (A) and (D), the term ‘current liability’ has the meaning given such term by subsection (d)(7) (without regard to subparagraph (D) thereof). “(C) Special rule for paragraph (6)(b).— For purposes of paragraph (6)(B), subparagraph (A)(i) shall be applied without regard to subclause (I) thereof. “(D) Regulatory authority.— The Secretary of the Treasury may by regulations provide— “(i) for adjustments to the percentage contained in subparagraph (A)(i) to take into account the respective ages or lengths of service of the participants, 101 STAT. 1330–333 “(ii) alternative methods based on factors other than current liability for the determination of the amount taken into account under subparagraph (A)(i), and “(iii) for the treatment under this section of contributions which would be required to be made under the plan but for the provisions of subparagraph (A)(i)(I).” (c) Effective Date.— (1) In general.— The amendments made by this section shall apply to years beginning after December 31, 1987. (2) Regulations.— The Secretary of the Treasury or his delegate shall prescribe such regulations as are necessary to carry out the amendments made by this section no later than August 15, 1988. (3) Study.— The Secretary of the Treasury or his delegate shall study the effect of the amendments made by this section on benefit security under defined benefit pension plans and shall report the results of such study to the Committee on Ways and Means of the House of Representatives and to the Committee on Finance of the Senate no later than August 15, 1988.