[111th Congress Public Law 192]
[From the U.S. Government Printing Office]
[[Page 1279]]
PRESERVATION OF ACCESS TO CARE FOR MEDICARE BENEFICIARIES AND PENSION
RELIEF ACT OF 2010
[[Page 124 STAT. 1280]]
Public Law 111-192
111th Congress
An Act
To provide a physician payment update, to provide pension funding
relief, and for other purposes. <<NOTE: June 25, 2010 - [H.R. 3962]>>
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, <<NOTE: Preservation of
Access to Care for Medicare Beneficiaries and Pension Relief Act of
2010. 29 USC 1001 note.>>
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Preservation of Access to Care for
Medicare Beneficiaries and Pension Relief Act of 2010''.
TITLE I--HEALTH PROVISIONS
SEC. 101. PHYSICIAN PAYMENT UPDATE.
(a) In General.--Section 1848(d) of the Social Security Act (42
U.S.C. 1395w-4(d)) is amended--
(1) in paragraph (10), in the heading, by striking
``portion'' and inserting ``January through may ''; and
(2) by adding at the end the following new paragraph:
``(11) <<NOTE: Time periods.>> Update for june through
november of 2010.--
``(A) In general.--Subject to paragraphs (7)(B),
(8)(B), (9)(B), and (10)(B), in lieu of the update to
the single conversion factor established in paragraph
(1)(C) that would otherwise apply for 2010 for the
period beginning on June 1, 2010, and ending on November
30, 2010, the update to the single conversion factor
shall be 2.2 percent.
``(B) No effect on computation of conversion factor
for remaining portion of 2010 and subsequent years.--The
conversion factor under this subsection shall be
computed under paragraph (1)(A) for the period beginning
on December 1, 2010, and ending on December 31, 2010,
and for 2011 and subsequent years as if subparagraph (A)
had never applied.''.
(b) Statutory Paygo.--The budgetary effects of this Act, for the
purpose of complying with the Statutory Pay-As-You-Go Act of 2010, shall
be determined by reference to the latest statement titled ``Budgetary
Effects of PAYGO Legislation'' for this Act, jointly submitted for
printing in the Congressional Record by the Chairmen of the House and
Senate Budget Committees, provided that such statement has been
submitted prior to the vote on passage in the House acting first on this
conference report or amendment between the Houses.
[[Page 124 STAT. 1281]]
SEC. 102. <<NOTE: 42 USC 1395ww note.>> CLARIFICATION OF 3-DAY
PAYMENT WINDOW.
(a) In General.--Section 1886 of the Social Security Act (42 U.S.C.
1395ww) is amended--
(1) by adding at the end of subsection (a)(4) the following
new sentence: ``In applying the first sentence of this
paragraph, the term `other services related to the admission'
includes all services that are not diagnostic services (other
than ambulance and maintenance renal dialysis services) for
which payment may be made under this title that are provided by
a hospital (or an entity wholly owned or operated by the
hospital) to a patient--
``(A) on the date of the patient's inpatient
admission; or
``(B) during the 3 days (or, in the case of a
hospital that is not a subsection (d) hospital, during
the 1 day) immediately preceding the date of such
admission unless the hospital demonstrates (in a form
and manner, and at a time, specified by the Secretary)
that such services are not related (as determined by the
Secretary) to such admission.''; and
(2) in subsection (d)(7)--
(A) in subparagraph (A), by striking ``and'' at the
end;
(B) in subparagraph (B), by striking the period and
inserting ``, and''; and
(C) by adding at the end the following new
subparagraph:
``(C) the determination of whether services provided
prior to a patient's inpatient admission are related to
the admission (as described in subsection (a)(4)).''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to services furnished on or after the date of the enactment of
this Act.
(c) No Reopening of Previously Bundled Claims.--
(1) In general.--The Secretary of Health and Human Services
may not reopen a claim, adjust a claim, or make a payment
pursuant to any request for payment under title XVIII of the
Social Security Act, submitted by an entity (including a
hospital or an entity wholly owned or operated by the hospital)
for services described in paragraph (2) for purposes of
treating, as unrelated to a patient's inpatient admission,
services provided during the 3 days (or, in the case of a
hospital that is not a subsection (d) hospital, during the 1
day) immediately preceding the date of the patient's inpatient
admission.
(2) Services described.--For purposes of paragraph (1), the
services described in this paragraph are other services related
to the admission (as described in section 1886(a)(4) of the
Social Security Act (42 U.S.C. 1395ww(a)(4)), as amended by
subsection (a)) which were previously included on a claim or
request for payment submitted under part A of title XVIII of
such Act for which a reopening, adjustment, or request for
payment under part B of such title, was not submitted prior to
the date of the enactment of this Act.
(d) Implementation.--Notwithstanding any other provision of law, the
Secretary of Health and Human Services may implement the provisions of
this section (and amendments made by this section) by program
instruction or otherwise.
[[Page 124 STAT. 1282]]
(e) Rule of Construction.--Nothing in the amendments made by this
section shall be construed as changing the policy described in section
1886(a)(4) of the Social Security Act (42 U.S.C. 1395ww(a)(4)), as
applied by the Secretary of Health and Human Services before the date of
the enactment of this Act, with respect to diagnostic services.
SEC. 103. ESTABLISH A CMS-IRS DATA MATCH TO IDENTIFY FRAUDULENT
PROVIDERS.
(a) Authority To Disclose Return Information Concerning Outstanding
Tax Debts for Purposes of Enhancing Medicare Program Integrity.--
(1) In general.--Section 6103(l) of the Internal Revenue
Code of 1986 <<NOTE: 26 USC 6103.>> is amended by adding at the
end the following new paragraph:
``(22) Disclosure of return information to department of
health and human services for purposes of enhancing medicare
program integrity.--
``(A) In general.--The Secretary shall, upon written
request from the Secretary of Health and Human Services,
disclose to officers and employees of the Department of
Health and Human Services return information with
respect to a taxpayer who has applied to enroll, or
reenroll, as a provider of services or supplier under
the Medicare program under title XVIII of the Social
Security Act. Such return information shall be limited
to--
``(i) the taxpayer identity information with
respect to such taxpayer;
``(ii) the amount of the delinquent tax debt
owed by that taxpayer; and
``(iii) the taxable year to which the
delinquent tax debt pertains.
``(B) Restriction on disclosure.--Return information
disclosed under subparagraph (A) may be used by officers
and employees of the Department of Health and Human
Services for the purposes of, and to the extent
necessary in, establishing the taxpayer's eligibility
for enrollment or reenrollment in the Medicare program,
or in any administrative or judicial proceeding relating
to, or arising from, a denial of such enrollment or
reenrollment, or in determining the level of enhanced
oversight to be applied with respect to such taxpayer
pursuant to section 1866(j)(3) of the Social Security
Act.
``(C) Delinquent tax debt. <<NOTE: Definition.>> --
For purposes of this paragraph, the term `delinquent tax
debt' means an outstanding debt under this title for
which a notice of lien has been filed pursuant to
section 6323, but the term does not include a debt that
is being paid in a timely manner pursuant to an
agreement under section 6159 or 7122, or a debt with
respect to which a collection due process hearing under
section 6330 is requested, pending, or completed and no
payment is required.''.
(2) Conforming amendments.--Section 6103(p)(4) of such Code,
as amended by sections 1414 and 3308 of Public Law 111-148, in
the matter preceding subparagraph (A) and in subparagraph
(F)(ii), is amended by striking ``or (17)'' and inserting
``(17), or (22)'' each place it appears.
[[Page 124 STAT. 1283]]
(b) Secretary's Authority To Use Information From the Department of
Treasury in Medicare Enrollments and Reenrollments.--Section 1866(j)(2)
of the Social Security Act (42 U.S.C. 1395cc(j)), as inserted by section
6401(a) of Public Law 111-148, is further amended--
(1) by redesignating subparagraph (E) as subparagraph (F);
and
(2) by inserting after subparagraph (D) the following new
subparagraph:
``(E) Use of information from the department of
treasury concerning tax debts.--
<<NOTE: Determination.>> In reviewing the application of
a provider of services or supplier to enroll or reenroll
under the program under this title, the Secretary shall
take into account the information supplied by the
Secretary of the Treasury pursuant to section
6103(l)(22) of the Internal Revenue Code of 1986, in
determining whether to deny such application or to apply
enhanced oversight to such provider of services or
supplier pursuant to paragraph (3) if the Secretary
determines such provider of services or supplier owes
such a debt.''.
(c) Authority To Adjust Payments of Providers of Services and
Suppliers With the Same Tax Identification Number for Medicare
Obligations.--Section 1866(j)(6) of the Social Security Act (42 U.S.C.
1395cc(j)(6)), as inserted by section 6401(a) of Public Law 111-148 and
as redesignated by section 1304 of Public Law 111-152, is amended--
(1) in the paragraph heading, by striking ``past-due'' and
inserting ``medicare'';
(2) in subparagraph (A), by striking ``past-due obligations
described in subparagraph (B)(ii) of an'' and inserting ``amount
described in subparagraph (B)(ii) due from such''; and
(3) in subparagraph (B)(ii), by striking ``a past-due
obligation'' and inserting ``an amount that is more than the
amount required to be paid''.
TITLE II--PENSION FUNDING RELIEF
Subtitle A--Single Employer Plans
SEC. 201. EXTENDED PERIOD FOR SINGLE-EMPLOYER DEFINED BENEFIT
PLANS TO AMORTIZE CERTAIN SHORTFALL
AMORTIZATION BASES.
(a) Amendments to ERISA.--
(1) In general.--Paragraph (2) of section 303(c) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1083(c)) is amended by adding at the end the following
subparagraph:
``(D) Special election for eligible plan years.--
``(i) In general. <<NOTE: Applicability.>> --
If 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
[[Page 124 STAT. 1284]]
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 schedule.--The
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.--The shortfall
amortization installments determined under this
subparagraph are the amounts necessary to amortize
the shortfall amortization base of the plan for
the election year in level annual installments
over the 15-plan-year period beginning with the
election year (using the segment rates under
subparagraph (C) for the election year).
``(iv) Election.--
``(I) In general.--The plan sponsor
of a plan may elect to have this
subparagraph apply to not more than 2
eligible plan years with respect to the
plan, except that in the case of a plan
described in section 106 of the Pension
Protection Act of 2006, the plan sponsor
may only elect to have this subparagraph
apply to a plan year beginning in 2011.
``(II) Amortization schedule.--Such
election shall specify whether the
amortization schedule under clause (ii)
or (iii) shall apply to an election
year, except that if a plan sponsor
elects to have this subparagraph apply
to 2 eligible plan years, the plan
sponsor must elect the same schedule for
both years.
``(III) Other rules.--Such election
shall be made at such time, and in such
form and manner, as shall be prescribed
by the Secretary of the Treasury, and
may be revoked only with the consent of
the Secretary of the Treasury. The
Secretary of the Treasury shall, before
granting a revocation request, provide
the Pension Benefit Guaranty Corporation
an opportunity to comment
[[Page 124 STAT. 1285]]
on the conditions applicable to the
treatment of any portion of the election
year shortfall amortization base that
remains unamortized as of the revocation
date.
``(v) Eligible plan
year. <<NOTE: Definition.>> --For purposes of this
subparagraph, the term `eligible plan year' means
any plan year beginning in 2008, 2009, 2010, or
2011, except that a plan year shall only be
treated as an eligible plan year if the due date
under subsection (j)(1) for the payment of the
minimum required contribution for such plan year
occurs on or after the date of the enactment of
this subparagraph.
``(vi) Reporting.--A plan sponsor of a plan
who makes an election under clause (i) shall--
``(I) <<NOTE: Notice.>> 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.--For increases in required
contributions in cases of excess compensation or
extraordinary dividends or stock redemptions, see
paragraph (7).''.
(2) Increases in required installments in certain cases.--
Section 303(c) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1083(c)) is amended by adding at the end the
following paragraph:
``(7) Increases in alternate required installments in cases
of excess compensation or extraordinary dividends or stock
redemptions.--
``(A) In general.--If there is an installment
acceleration amount with respect to a plan for any plan
year in the restriction period with respect to an
election year under paragraph (2)(D), then the shortfall
amortization installment otherwise determined and
payable under such paragraph for such plan year shall,
subject to the limitation under subparagraph (B), be
increased by such amount.
``(B) Total installments limited to shortfall
base. <<NOTE: Regulations.>> --Subject 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.
[[Page 124 STAT. 1286]]
``(C) Installment acceleration amount.--For purposes
of this paragraph--
``(i) In general.-- <<NOTE: Definition.>> The
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 limitation.--The 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.--If the
installment acceleration amount for any
plan year (determined without regard to
clause (ii)) exceeds the limitation
under clause (ii), then, subject to
subclause (II), such excess shall be
treated as an installment acceleration
amount with respect to the succeeding
plan year.
``(II) Cap to apply.--If any amount
treated as an installment acceleration
amount under subclause (I) or this
subclause with respect any succeeding
plan year, when added to other
installment acceleration amounts
(determined without regard to clause
(ii)) with respect to the plan year,
exceeds the limitation under clause
(ii), the portion of such amount
representing such excess shall be
treated as an installment acceleration
amount with respect to the next
succeeding plan year.
``(III) Limitation on years to which
amounts carried for.--No amount shall be
carried under subclause (I) or (II) to a
plan year which begins after the first
plan year following the last plan year
in the restriction period (or after the
second plan year following such last
plan year in the case of an election
year with respect to which 15-year
amortization was elected under paragraph
(2)(D)).
[[Page 124 STAT. 1287]]
``(IV) Ordering rules.--For purposes
of applying subclause (II), installment
acceleration amounts for the plan year
(determined without regard to any
carryover under this clause) shall be
applied first against the limitation
under clause (ii) and then carryovers to
such plan year shall be applied against
such limitation on a first-in, first-out
basis.
``(D) Excess employee compensation.--For purposes of
this paragraph--
``(i) In general. <<NOTE: Definition.>> --The
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
the Internal Revenue Code of 1986 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.--If during any calendar
year assets are set aside or reserved (directly or
indirectly) in a trust (or other arrangement as
determined by the Secretary of the Treasury), or
transferred to such a trust or other arrangement,
by a plan sponsor for purposes of paying deferred
compensation of an employee under a nonqualified
deferred compensation plan (as defined in section
409A of such Code) of the plan sponsor, then, for
purposes of clause (i), the amount of such assets
shall be treated as remuneration of the employee
includible in income for the calendar year unless
such amount is otherwise includible in income for
such year. An amount to which the preceding
sentence applies shall not be taken into account
under this paragraph for any subsequent calendar
year.
``(iii) Only remuneration for certain post-
2009 services counted.--Remuneration shall be
taken into account under clause (i) only to the
extent attributable to services performed by the
employee for the plan sponsor after February 28,
2010.
``(iv) Exception for certain equity
payments.--
``(I) In general.--There shall not
be taken into account under clause
(i)(I) any amount includible in income
with respect to the granting after
February 28, 2010, of service recipient
stock (within the meaning of section
409A of the Internal Revenue Code of
1986) that, upon such grant, is subject
to a substantial risk of forfeiture (as
defined under section 83(c)(1) of such
Code) for at least 5 years from the date
of such grant.
``(II) Secretarial authority.--The
Secretary of the Treasury may by
regulation provide for the application
of this clause in the case of a person
other than a corporation.
[[Page 124 STAT. 1288]]
``(v) Other exceptions.--The following amounts
includible in income shall not be taken into
account under clause (i)(I):
``(I) Commissions.--Any remuneration
payable on a commission basis solely on
account of income directly generated by
the individual performance of the
individual to whom such remuneration is
payable.
``(II) Certain payments under
existing contracts.--Any remuneration
consisting of nonqualified deferred
compensation, restricted stock, stock
options, or stock appreciation rights
payable or granted under a written
binding contract that was in effect on
March 1, 2010, and which was not
modified in any material respect before
such remuneration is paid.
``(vi) Self-employed individual treated as
employee.--The term `employee' includes, with
respect to a calendar year, a self-employed
individual who is treated as an employee under
section 401(c) of such Code for the taxable year
ending during such calendar year, and the term
`compensation' shall include earned income of such
individual with respect to such self-employment.
``(vii) Indexing of amount. <<NOTE: Effective
date.>> --In 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
Code 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 general.--The 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 4043) 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.
[[Page 124 STAT. 1289]]
``(ii) Only certain post-2009 dividends and
redemptions counted.--For purposes of clause (i),
there shall only be taken into account dividends
declared, and redemptions occurring, after
February 28, 2010.
``(iii) Exception for intra-group dividends.--
Dividends paid by one member of a controlled group
(as defined in section 302(d)(3)) to another
member of such group shall not be taken into
account under clause (i).
``(iv) Exception for certain redemptions.--
Redemptions that are made pursuant to a plan
maintained with respect to employees, or that are
made on account of the death, disability, or
termination of employment of an employee or
shareholder, shall not be taken into account under
clause (i).
``(v) Exception for certain preferred stock.--
``(I) In general.--Dividends and
redemptions with respect to applicable
preferred stock shall not be taken into
account under clause (i) to the extent
that dividends accrue with respect to
such stock at a specified rate in all
events and without regard to the plan
sponsor's income, and interest accrues
on any unpaid dividends with respect to
such stock.
``(II) Applicable preferred
stock. <<NOTE: Definition.>> --For
purposes of subclause (I), the term
`applicable preferred stock' means
preferred stock which was issued before
March 1, 2010 (or which was issued after
such date and is held by an employee
benefit plan subject to the provisions
of this title).
``(F) Other definitions and rules.--For purposes of
this paragraph--
``(i) Plan sponsor.--The term ` plan sponsor'
includes any member of the plan sponsor's
controlled group (as defined in section
302(d)(3)).
``(ii) Restriction period.--The 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.--If a
plan sponsor makes elections under paragraph
(2)(D) with respect to 2 or more plans, the
Secretary of the Treasury shall provide rules for
the application of this paragraph to such plans,
including rules for the ratable allocation of any
installment acceleration amount among such plans
on the basis of each plan's relative reduction in
the plan's shortfall amortization installment for
the first plan year in the amortization period
[[Page 124 STAT. 1290]]
described in subparagraph (A) (determined without
regard to this paragraph).
``(iv) Mergers and acquisitions.--The
Secretary of the Treasury shall prescribe rules
for the application of paragraph (2)(D) and this
paragraph in any case where there is a merger or
acquisition involving a plan sponsor making the
election under paragraph (2)(D).''.
(3) Conforming amendments.--Section 303 of such Act (29
U.S.C. 1083) is amended--
(A) in subsection (c)(1), by striking ``the
shortfall amortization bases for such plan year and each
of the 6 preceding plan years'' and inserting ``any
shortfall amortization base which has not been fully
amortized under this subsection'', and
(B) in subsection (j)(3), by adding at the end the
following:
``(F) Quarterly contributions not to include certain
increased contributions. <<NOTE: Applicability.>> --
Subparagraph (D) shall be applied without regard to any
increase under subsection (c)(7).''.
(b) Amendments to Internal Revenue Code of 1986.--
(1) In general.--Paragraph (2) of section 430(c) <<NOTE: 26
USC 430.>> is amended by adding at the end the following
subparagraph:
``(D) Special election for eligible plan years.--
``(i) <<NOTE: Applicability.>> In general.--If
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 schedule.--The
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
[[Page 124 STAT. 1291]]
years (using the segment rates under
subparagraph (C) for the election year).
``(iii) 15-year amortization.--The shortfall
amortization installments determined under this
subparagraph are the amounts necessary to amortize
the shortfall amortization base of the plan for
the election year in level annual installments
over the 15-plan-year period beginning with the
election year (using the segment rates under
subparagraph (C) for the election year).
``(iv) Election.--
``(I) In general.--The plan sponsor
of a plan may elect to have this
subparagraph apply to not more than 2
eligible plan years with respect to the
plan, except that in the case of a plan
described in section 106 of the Pension
Protection Act of 2006, the plan sponsor
may only elect to have this subparagraph
apply to a plan year beginning in 2011.
``(II) Amortization schedule.--Such
election shall specify whether the
amortization schedule under clause (ii)
or (iii) shall apply to an election
year, except that if a plan sponsor
elects to have this subparagraph apply
to 2 eligible plan years, the plan
sponsor must elect the same schedule for
both years.
``(III) Other rules.--Such election
shall be made at such time, and in such
form and manner, as shall be prescribed
by the Secretary, and may be revoked
only with the consent of the Secretary.
The Secretary shall, before granting a
revocation request, provide the Pension
Benefit Guaranty Corporation an
opportunity to comment on the conditions
applicable to the treatment of any
portion of the election year shortfall
amortization base that remains
unamortized as of the revocation date.
``(v) Eligible plan
year. <<NOTE: Definition.>> --For purposes of this
subparagraph, the term `eligible plan year' means
any plan year beginning in 2008, 2009, 2010, or
2011, except that a plan year shall only be
treated as an eligible plan year if the due date
under subsection (j)(1) for the payment of the
minimum required contribution for such plan year
occurs on or after the date of the enactment of
this subparagraph.
``(vi) Reporting.--A plan sponsor of a plan
who makes an election under clause (i) shall--
``(I) <<NOTE: Notice.>> 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.--For increases in required
contributions in cases of excess compensation or
extraordinary dividends or stock redemptions, see
paragraph (7).''.
[[Page 124 STAT. 1292]]
(2) Increases in required contributions if excess
compensation paid.--Section 430(c) <<NOTE: 26 USC 430.>> is
amended by adding at the end the following paragraph:
``(7) Increases in alternate required installments in cases
of excess compensation or extraordinary dividends or stock
redemptions.--
``(A) In general.--If there is an installment
acceleration amount with respect to a plan for any plan
year in the restriction period with respect to an
election year under paragraph (2)(D), then the shortfall
amortization installment otherwise determined and
payable under such paragraph for such plan year shall,
subject to the limitation under subparagraph (B), be
increased by such amount.
``(B) Total installments limited to shortfall
base. <<NOTE: Regulations.>> --Subject to rules
prescribed by the Secretary, 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.
``(C) Installment acceleration amount.--For purposes
of this paragraph--
``(i) In general. <<NOTE: Definition.>> --The
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 limitation.--The 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
[[Page 124 STAT. 1293]]
``(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.--If the
installment acceleration amount for any
plan year (determined without regard to
clause (ii)) exceeds the limitation
under clause (ii), then, subject to
subclause (II), such excess shall be
treated as an installment acceleration
amount with respect to the succeeding
plan year.
``(II) Cap to apply.--If any amount
treated as an installment acceleration
amount under subclause (I) or this
subclause with respect any succeeding
plan year, when added to other
installment acceleration amounts
(determined without regard to clause
(ii)) with respect to the plan year,
exceeds the limitation under clause
(ii), the portion of such amount
representing such excess shall be
treated as an installment acceleration
amount with respect to the next
succeeding plan year.
``(III) Limitation on years to which
amounts carried for.--No amount shall be
carried under subclause (I) or (II) to a
plan year which begins after the first
plan year following the last plan year
in the restriction period (or after the
second plan year following such last
plan year in the case of an election
year with respect to which 15-year
amortization was elected under paragraph
(2)(D)).
``(IV) Ordering rules.--For purposes
of applying subclause (II), installment
acceleration amounts for the plan year
(determined without regard to any
carryover under this clause) shall be
applied first against the limitation
under clause (ii) and then carryovers to
such plan year shall be applied against
such limitation on a first-in, first-out
basis.
``(D) Excess employee compensation.--For purposes of
this paragraph--
``(i) In general. <<NOTE: Definition.>> --The
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 this chapter
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.--If during any calendar
year assets are set aside or reserved (directly or
[[Page 124 STAT. 1294]]
indirectly) in a trust (or other arrangement as
determined by the Secretary), or transferred to
such a trust or other arrangement, by a plan
sponsor for purposes of paying deferred
compensation of an employee under a nonqualified
deferred compensation plan (as defined in section
409A) of the plan sponsor, then, for purposes of
clause (i), the amount of such assets shall be
treated as remuneration of the employee includible
in income for the calendar year unless such amount
is otherwise includible in income for such
year. <<NOTE: Applicability.>> An amount to which
the preceding sentence applies shall not be taken
into account under this paragraph for any
subsequent calendar year.
``(iii) Only remuneration for certain post-
2009 services counted.--Remuneration shall be
taken into account under clause (i) only to the
extent attributable to services performed by the
employee for the plan sponsor after February 28,
2010.
``(iv) Exception for certain equity
payments.--
``(I) In general.--There shall not
be taken into account under clause
(i)(I) any amount includible in income
with respect to the granting after
February 28, 2010, of service recipient
stock (within the meaning of section
409A) that, upon such grant, is subject
to a substantial risk of forfeiture (as
defined under section 83(c)(1)) for at
least 5 years from the date of such
grant.
``(II) Secretarial authority.--The
Secretary may by regulation provide for
the application of this clause in the
case of a person other than a
corporation.
``(v) Other exceptions.--The following amounts
includible in income shall not be taken into
account under clause (i)(I):
``(I) Commissions.--Any remuneration
payable on a commission basis solely on
account of income directly generated by
the individual performance of the
individual to whom such remuneration is
payable.
``(II) Certain payments under
existing contracts.--Any remuneration
consisting of nonqualified deferred
compensation, restricted stock, stock
options, or stock appreciation rights
payable or granted under a written
binding contract that was in effect on
March 1, 2010, and which was not
modified in any material respect before
such remuneration is paid.
``(vi) Self-employed individual treated as
employee.--The term `employee' includes, with
respect to a calendar year, a self-employed
individual who is treated as an employee under
section 401(c) for the taxable year ending during
such calendar year, and the term `compensation'
shall include earned income of such individual
with respect to such self-employment.
``(vii) Indexing of amount. <<NOTE: Effective
date.>> --In the case of any calendar year
beginning after 2010, the dollar amount
[[Page 124 STAT. 1295]]
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) 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 general.--The 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 4043 of
the Employee Retirement Income Security
Act of 1974) 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.--For purposes of clause (i),
there shall only be taken into account dividends
declared, and redemptions occurring, after
February 28, 2010.
``(iii) Exception for intra-group dividends.--
Dividends paid by one member of a controlled group
(as defined in section 412(d)(3)) to another
member of such group shall not be taken into
account under clause (i).
``(iv) Exception for certain redemptions.--
Redemptions that are made pursuant to a plan
maintained with respect to employees, or that are
made on account of the death, disability, or
termination of employment of an employee or
shareholder, shall not be taken into account under
clause (i).
``(v) Exception for certain preferred stock.--
``(I) In general.--Dividends and
redemptions with respect to applicable
preferred stock shall not be taken into
account under clause (i) to the extent
that dividends accrue with respect to
such stock at a specified rate in all
events and without regard to the plan
sponsor's income, and interest accrues
on any unpaid dividends with respect to
such stock.
[[Page 124 STAT. 1296]]
``(II) Applicable preferred
stock. <<NOTE: Definition.>> --For
purposes of subclause (I), the term
`applicable preferred stock' means
preferred stock which was issued before
March 1, 2010 (or which was issued after
such date and is held by an employee
benefit plan subject to the provisions
of title I of Employee Retirement Income
Security Act of 1974).
``(F) Other definitions and rules.--For purposes of
this paragraph--
``(i) Plan sponsor.--The term ` plan sponsor'
includes any member of the plan sponsor's
controlled group (as defined in section
412(d)(3)).
``(ii) Restriction period.--The 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.--If a
plan sponsor makes elections under paragraph
(2)(D) with respect to 2 or more plans, the
Secretary shall provide rules for the application
of this paragraph to such plans, including rules
for the ratable allocation of any installment
acceleration amount among such plans on the basis
of each plan's relative reduction in the plan's
shortfall amortization installment for the first
plan year in the amortization period described in
subparagraph (A) (determined without regard to
this paragraph).
``(iv) Mergers and acquisitions.--The
Secretary shall prescribe rules for the
application of paragraph (2)(D) and this paragraph
in any case where there is a merger or acquisition
involving a plan sponsor making the election under
paragraph (2)(D).''.
(3) Conforming amendments.--Section 430 <<NOTE: 26 USC
430.>> is amended--
(A) in subsection (c)(1), by striking ``the
shortfall amortization bases for such plan year and each
of the 6 preceding plan years'' and inserting ``any
shortfall amortization base which has not been fully
amortized under this subsection'', and
(B) in subsection (j)(3), by adding at the end the
following:
``(F) Quarterly contributions not to include certain
increased contributions. <<NOTE: Applicability.>> --
Subparagraph (D) shall be applied without regard to any
increase under subsection (c)(7).''.
(c) <<NOTE: 26 USC 430 note.>> Effective Date.--The amendments made
by this section shall apply to plan years beginning after December 31,
2007.
[[Page 124 STAT. 1297]]
SEC. 202. APPLICATION OF EXTENDED AMORTIZATION PERIOD TO PLANS
SUBJECT TO PRIOR LAW FUNDING RULES.
(a) In General.--Title I of the Pension Protection Act of 2006 is
amended by redesignating section 107 <<NOTE: 120 Stat. 818.>> as section
108 and by inserting the following after section 106:
``SEC. 107. <<NOTE: 26 USC 401 note.>> APPLICATION OF EXTENDED
AMORTIZATION PERIODS TO PLANS WITH DELAYED
EFFECTIVE DATE.
``(a) In General.--If the plan sponsor of a plan to which section
104, 105, or 106 of this Act applies elects to have this section apply
for any eligible plan year (in this section referred to as an `election
year'), section 302 of the Employee Retirement Income Security Act of
1974 and section 412 of the Internal Revenue Code of 1986 (as in effect
before the amendments made by this subtitle and subtitle B) shall apply
to such year in the manner described in subsection (b) or (c), whichever
is specified in the election. All references in this section to `such
Act' or `such Code' shall be to such Act or such Code as in effect
before the amendments made by this subtitle and subtitle B.
``(b) Application of 2 and 7 Rule.--In the case of an election year
to which this subsection applies--
``(1) 2-year lookback for determining deficit reduction
contributions for certain plans.--For purposes of applying
section 302(d)(9) of such Act and section 412(l)(9) of such
Code, the funded current liability percentage (as defined in
subparagraph (C) thereof) for such plan for such plan year shall
be such funded current liability percentage of such plan for the
second plan year preceding the first election year of such plan.
``(2) Calculation of deficit reduction contribution.--For
purposes of applying section 302(d) of such Act and section
412(l) of such Code to a plan to which such sections apply
(after taking into account paragraph (1))--
``(A) in the case of the increased unfunded new
liability of the plan, the applicable percentage
described in section 302(d)(4)(C) of such Act and
section 412(l)(4)(C) of such Code shall be the third
segment rate described in sections 104(b), 105(b), and
106(b) of this Act, and
``(B) in the case of the excess of the unfunded new
liability over the increased unfunded new liability,
such applicable percentage shall be determined without
regard to this section.
``(c) Application of 15-year Amortization.--In the case of an
election year to which this subsection applies, for purposes of applying
section 302(d) of such Act and section 412(l) of such Code--
``(1) in the case of the increased unfunded new liability of
the plan, the applicable percentage described in section
302(d)(4)(C) of such Act and section 412(l)(4)(C) of such Code
for any pre-effective date plan year beginning with or after the
first election year shall be the ratio of--
``(A) the annual installments payable in each year
if the increased unfunded new liability for such plan
year were amortized over 15 years, using an interest
rate equal to the third segment rate described in
sections 104(b), 105(b), and 106(b) of this Act, to
[[Page 124 STAT. 1298]]
``(B) the increased unfunded new liability for such
plan year, and
``(2) in the case of the excess of the unfunded new
liability over the increased unfunded new liability, such
applicable percentage shall be determined without regard to this
section.
``(d) Election.--
``(1) In general.--The plan sponsor of a plan may elect to
have this section apply to not more than 2 eligible plan years
with respect to the plan, except that in the case of a plan to
which section 106 of this Act applies, the plan sponsor may only
elect to have this section apply to 1 eligible plan year.
``(2) Amortization schedule.--Such election shall specify
whether the rules under subsection (b) or (c) shall apply to an
election year, except that if a plan sponsor elects to have this
section apply to 2 eligible plan years, the plan sponsor must
elect the same rule for both years.
``(3) Other rules.--Such election shall be made at such
time, and in such form and manner, as shall be prescribed by the
Secretary of the Treasury, and may be revoked only with the
consent of the Secretary of the Treasury.
``(e) Definitions.--For purposes of this section--
``(1) Eligible plan year.--For purposes of this
subparagraph, the term `eligible plan year' means any plan year
beginning in 2008, 2009, 2010, or 2011, except that a plan year
beginning in 2008 shall only be treated as an eligible plan year
if the due date for the payment of the minimum required
contribution for such plan year occurs on or after the date of
the enactment of this clause.
``(2) Pre-effective date plan year.--The term `pre-effective
date plan year' means, with respect to a plan, any plan year
prior to the first year in which the amendments made by this
subtitle and subtitle B apply to the plan.
``(3) Increased unfunded new liability.--The term `increased
unfunded new liability' means, with respect to a year, the
excess (if any) of the unfunded new liability over the amount of
unfunded new liability determined as if the value of the plan's
assets determined under subsection 302(c)(2) of such Act and
section 412(c)(2) of such Code equaled the product of the
current liability of the plan for the year multiplied by the
funded current liability percentage (as defined in section
302(d)(8)(B) of such Act and 412(l)(8)(B) of such Code) of the
plan for the second plan year preceding the first election year
of such plan.
``(4) Other definitions.--The terms `unfunded new liability'
and `current liability' shall have the meanings set forth in
section 302(d) of such Act and section 412(l) of such Code.''.
(b) Eligible Charity Plans.--Section 104 of the Pension Protection
Act of 2006 <<NOTE: 26 USC 401 note.>> is amended--
(1) by striking ``eligible cooperative plan'' wherever it
appears in subsections (a) and (b) and inserting ``eligible
cooperative plan or an eligible charity plan'', and
(2) by adding at the end the following new subsection:
``(d) Eligible Charity Plan Defined.--For purposes of this section,
a plan shall be treated as an eligible charity plan for a plan year if
the plan is maintained by more than one employer
[[Page 124 STAT. 1299]]
(determined without regard to section 414(c) of the Internal Revenue
Code) and 100 percent of the employers are described in section
501(c)(3) of such Code.''.
(c) <<NOTE: 26 USC 401 note.>> Effective Date.--
(1) In general.--The amendment made by subsection (a) shall
take effect as if included in the Pension Protection Act of
2006.
(2) Eligible charity plan.--The amendments made by
subsection (b) shall apply to plan years beginning after
December 31, 2007, except that a plan sponsor may elect to apply
such amendments to plan years beginning after December 31, 2008.
Any such election shall be made at such time, and in such form
and manner, as shall be prescribed by the Secretary of the
Treasury, and may be revoked only with the consent of the
Secretary of the Treasury.
SEC. 203. <<NOTE: 26 USC 436 note. Applicability.>> LOOKBACK FOR
CERTAIN BENEFIT RESTRICTIONS.
(a) In General.--
(1) Amendment to erisa.--Section 206(g)(9) of the Employee
Retirement Income Security Act of 1974 <<NOTE: 29 USC 1056.>> is
amended by adding at the end the following:
``(D) Special rule for certain years.--Solely for
purposes of any applicable provision--
``(i) <<NOTE: Time periods.>> In general.--For
plan years beginning on or after October 1, 2008,
and before October 1, 2010, the adjusted funding
target attainment percentage of a plan shall be
the greater of--
``(I) such percentage, as determined
without regard to this subparagraph, or
``(II) the adjusted funding target
attainment percentage for such plan for
the plan year beginning after October 1,
2007, and before October 1, 2008, as
determined under rules prescribed by the
Secretary of the Treasury.
``(ii) Special rule.--In 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, 2007,
and before January 1, 2010, and
``(II) clause (i)(II) shall apply
based on the last plan year beginning
before November 1, 2007, as determined
under rules prescribed by the Secretary
of the Treasury.
``(iii) Applicable provision.--For purposes of
this subparagraph, the term `applicable provision'
means--
``(I) paragraph (3), but only for
purposes of applying such paragraph to a
payment which, as determined under rules
prescribed by the Secretary of the
Treasury, is a payment under a social
security leveling option which
accelerates payments under the plan
before, and reduces payments after, a
participant starts receiving social
security benefits in order to provide
substantially similar aggregate payments
both before and after such benefits are
received, and
``(II) paragraph (4).''.
[[Page 124 STAT. 1300]]
(2) Amendment to internal revenue code of 1986.--Section
436(j) of the Internal Revenue Code of 1986 <<NOTE: 26 USC
436.>> is amended by adding at the end the following:
``(3) Special rule for certain years.--Solely for purposes
of any applicable provision--
``(A) <<NOTE: Time periods.>> In general.--For plan
years beginning on or after October 1, 2008, and before
October 1, 2010, the adjusted funding target attainment
percentage of a plan shall be the greater of--
``(i) such percentage, as determined without
regard to this paragraph, or
``(ii) the adjusted funding target attainment
percentage for such plan for the plan year
beginning after October 1, 2007, and before
October 1, 2008, as determined under rules
prescribed by the Secretary.
``(B) Special rule.--In the case of a plan for which
the valuation date is not the first day of the plan
year--
``(i) subparagraph (A) shall apply to plan
years beginning after December 31, 2007, and
before January 1, 2010, and
``(ii) subparagraph (A)(ii) shall apply based
on the last plan year beginning before November 1,
2007, as determined under rules prescribed by the
Secretary.
``(C) <<NOTE: Definition.>> Applicable provision.--
For purposes of this paragraph, the term `applicable
provision' means--
``(i) subsection (d), but only for purposes of
applying such paragraph to a payment which, as
determined under rules prescribed by the
Secretary, is a payment under a social security
leveling option which accelerates payments under
the plan before, and reduces payments after, a
participant starts receiving social security
benefits in order to provide substantially similar
aggregate payments both before and after such
benefits are received, and
``(ii) subsection (e).''.
(b) Interaction With Wrera Rule.--Section 203 of the Worker,
Retiree, and Employer Recovery Act of 2008 shall apply to a plan for any
plan year in lieu of the amendments made by this section applying to
sections 206(g)(4) of the Employee Retirement Income Security Act of
1974 and 436(e) of the Internal Revenue Code of 1986 only to the extent
that such section produces a higher adjusted funding target attainment
percentage for such plan for such year.
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to plan years
beginning on or after October 1, 2008.
(2) Special rule.--In the case of a plan for which the
valuation date is not the first day of the plan year, the
amendments made by this section shall apply to plan years
beginning after December 31, 2007.
SEC. 204. <<NOTE: Applicability.>> LOOKBACK FOR CREDIT BALANCE
RULE FOR PLANS MAINTAINED BY CHARITIES.
(a) Amendment to Erisa.--Paragraph (3) of section 303(f) of the
Employee Retirement Income Security Act of 1974 <<NOTE: 29 USC
1083.>> is amended by adding the following at the end thereof:
[[Page 124 STAT. 1301]]
``(D) Special rule for certain years of plans
maintained by charities.--
``(i) <<NOTE: Time periods.>> In general.--For
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 rule.--In 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.--This
subparagraph shall not apply to any plan unless
such plan is maintained exclusively by one or more
organizations described in section 501(c)(3) of
the Internal Revenue Code of 1986.''.
(b) Amendment to Internal Revenue Code of 1986.--Paragraph (3) of
section 430(f) of the Internal Revenue Code <<NOTE: 26 USC 430.>> of
1986 is amended by adding the following at the end thereof:
``(D) Special rule for certain years of plans
maintained by charities.--
``(i) <<NOTE: Time periods.>> In general.--For
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 of a plan
shall be the greater of--
``(I) such ratio, as determined
without regard to this subsection, 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.
``(ii) Special rule.--In 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, 2007,
and before January 1, 2010, 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.
``(iii) Limitation to charities.--This
subparagraph shall not apply to any plan unless
such plan
[[Page 124 STAT. 1302]]
is maintained exclusively by one or more
organizations described in section 501(c)(3).''.
(c) <<NOTE: 26 USC 430 note.>> Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to plan years
beginning after August 31, 2009.
(2) Special rule.--In the case of a plan for which the
valuation date is not the first day of the plan year, the
amendments made by this section shall apply to plan years
beginning after December 31, 2008.
Subtitle B--Multiemployer Plans
SEC. 211. ADJUSTMENTS TO FUNDING STANDARD ACCOUNT RULES.
(a) Adjustments.--
(1) Amendment to erisa.--Section 304(b) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1084(b)) is
amended by adding at the end the following new paragraph:
``(8) Special relief rules.--Notwithstanding any other
provision of this subsection--
``(A) Amortization of net investment losses.--
``(i) In general.--A 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) <<NOTE: Applicability.>> Coordination
with extensions.--If 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 losses.--For purposes
of this subparagraph--
``(I) <<NOTE: Determination.>> In
general.--Net investment losses shall be
determined in the manner prescribed by
the Secretary of the Treasury on the
basis of the difference between actual
and expected returns (including any
difference attributable to any
criminally fraudulent investment
arrangement).
``(II) Criminally fraudulent
investment arrangements.--The
determination as to whether
[[Page 124 STAT. 1303]]
an arrangement is a criminally
fraudulent investment arrangement shall
be made under rules substantially
similar to the rules prescribed by the
Secretary of the Treasury for purposes
of section 165 of the Internal Revenue
Code of 1986.
``(B) Expanded smoothing period.--
``(i) In general.--A 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 methods.--If 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
302(d)(1) and section 412(d)(1) of such
Code.
``(iii) Amortization of reduction in unfunded
accrued liability.--If this subparagraph and
subparagraph (A) both apply for any plan year, the
plan shall treat any reduction in unfunded accrued
liability resulting from the application of this
subparagraph as a separate experience amortization
base, to be amortized in equal annual installments
(until fully amortized) over a period of 30 plan
years rather than the period such liability would
otherwise be amortized over.
``(C) Solvency test.--The solvency test under this
paragraph is met only if the plan actuary certifies that
the plan is projected to have sufficient assets to
timely pay expected benefits and anticipated
expenditures over the amortization period, taking into
account the changes in the funding standard account
under this paragraph.
``(D) Restriction on benefit increases.--If
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) <<NOTE: Certification.>> the plan
actuary certifies that--
[[Page 124 STAT. 1304]]
``(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 the Internal Revenue
Code of 1986 or to comply with other applicable
law.
``(E) <<NOTE: Notice.>> Reporting.--A 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.''.
(2) Amendment to internal revenue code of 1986.--Section
431(b) <<NOTE: 26 USC 431.>> is amended by adding at the end the
following new paragraph:
``(8) Special relief rules.--Notwithstanding any other
provision of this subsection--
``(A) Amortization of net investment losses.--
``(i) In general.--A 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 extensions.--If 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 losses.--For purposes
of this subparagraph--
``(I) <<NOTE: Determination.>> In
general.--Net investment losses shall be
determined in the manner prescribed by
the Secretary on the basis of the
difference between
[[Page 124 STAT. 1305]]
actual and expected returns (including
any difference attributable to any
criminally fraudulent investment
arrangement).
``(II) Criminally fraudulent
investment arrangements.--The
determination as to whether an
arrangement is a criminally fraudulent
investment arrangement shall be made
under rules substantially similar to the
rules prescribed by the Secretary for
purposes of section 165.
``(B) Expanded smoothing period.--
``(i) In general.--A 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 methods.--If this
subparagraph applies for any plan year--
``(I) the Secretary 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 the Secretary under section
302(d)(1) of the Employee Retirement
Income Security Act of 1974 and section
412(d)(1).
``(iii) <<NOTE: Applicability.>> Amortization
of reduction in unfunded accrued liability.--If
this subparagraph and subparagraph (A) both apply
for any plan year, the plan shall treat any
reduction in unfunded accrued liability resulting
from the application of this subparagraph as a
separate experience amortization base, to be
amortized in equal annual installments (until
fully amortized) over a period of 30 plan years
rather than the period such liability would
otherwise be amortized over.
``(C) <<NOTE: Certification.>> Solvency test.--The
solvency test under this paragraph is met only if the
plan actuary certifies that the plan is projected to
have sufficient assets to timely pay expected benefits
and anticipated expenditures over the amortization
period, taking into account the changes in the funding
standard account under this paragraph.
``(D) <<NOTE: Applicability.>> Restriction on
benefit increases.--If 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
[[Page 124 STAT. 1306]]
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 or to comply with other applicable
law.
``(E) <<NOTE: Notice.>> Reporting.--A 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.''.
(b) <<NOTE: 26 USC 431 note.>> Effective Dates.--
(1) In general.--The amendments made by this section shall
take effect as of the first day of the first plan year ending
after August 31, 2008, except that any election a plan makes
pursuant to this section that affects the plan's funding
standard account for the first plan year beginning after August
31, 2008, shall be disregarded for purposes of applying the
provisions of section 305 of the Employee Retirement Income
Security Act of 1974 and section 432 of the Internal Revenue
Code of 1986 to such plan year.
(2) Restrictions on benefit increases.--Notwithstanding
paragraph (1), the restrictions on plan amendments increasing
benefits in sections 304(b)(8)(D) of such Act and 431(b)(8)(D)
of such Code, as added by this section, shall take effect on the
date of enactment of this Act.
TITLE III--BUDGETARY PROVISIONS
SEC. 301. BUDGETARY PROVISIONS.
The budgetary effects of this Act, for the purpose of complying with
the Statutory Pay-As-You-Go-Act of 2010, shall be determined by
reference to the latest statement titled ``Budgetary Effects of PAYGO
Legislation'' for this Act, submitted for printing in the
[[Page 124 STAT. 1307]]
Congressional Record by the Chairman of the Senate Budget Committee,
provided that such statement has been submitted prior to the vote on
passage.
Approved June 25, 2010.
LEGISLATIVE HISTORY--H.R. 3962:
---------------------------------------------------------------------------
CONGRESSIONAL RECORD:
Vol. 155 (2009):
Nov. 7, considered and passed House.
Vol. 156 (2010):
June 18, considered and passed
Senate, amended.
June 24, House concurred in Senate
amendments.
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