26 U.S.C. § 430 — Minimum funding standards for single-em-

Page 1485 TITLE 26—INTERNAL REVENUE CODE § 430 1 Editorially supplied. Section 431 added by Pub. L. 109–280 without corresponding amendment of subpart analysis. Subpart B. Benefit limitations under single-employer plans. Editorial Notes AMENDMENTS 2006—Pub. L. 109–280, title I, § 113(a)(1)(A), Aug. 17, 2006, 120 Stat. 846, substituted ‘‘RULES RELATING TO MINIMUM FUNDING STANDARDS AND BENEFIT LIMITATIONS’’ for ‘‘MINIMUM FUNDING STAND- ARDS FOR SINGLE-EMPLOYER DEFINED BENEFIT PENSION PLANS’’ in part heading and added subpart analysis. SUBPART A—MINIMUM FUNDING STANDARDS FOR PENSION PLANS Sec. 430. Minimum funding standards for single-em- ployer defined benefit pension plans. 431. Minimum funding standards for multiem- ployer plans.1 432. Additional funding rules for multiemployer plans in endangered status or critical sta- tus. 433. Minimum funding standards for CSEC plans. Editorial Notes AMENDMENTS 2018—Pub. L. 115–141, div. U, title IV, § 401(a)(109)(B), Mar. 23, 2018, 132 Stat. 1189, added item 433. 2006—Pub. L. 109–280, title II, § 212(d), Aug. 17, 2006, 120 Stat. 917, added item 432. § 430. Minimum funding standards for single-em- ployer defined benefit pension plans (a) Minimum required contribution For purposes of this section and section 412(a)(2)(A), except as provided in subsection (f), the term ‘‘minimum required contribution’’ means, with respect to any plan year of a de- fined benefit plan which is not a multiemployer plan— (1) in any case in which the value of plan as- sets of the plan (as reduced under subsection (f)(4)(B)) is less than the funding target of the plan for the plan year, the sum of— (A) the target normal cost of the plan for the plan year, (B) the shortfall amortization charge (if any) for the plan for the plan year deter- mined under subsection (c), and (C) the waiver amortization charge (if any) for the plan for the plan year as determined under subsection (e); (2) in any case in which the value of plan as- sets of the plan (as reduced under subsection (f)(4)(B)) equals or exceeds the funding target of the plan for the plan year, the target nor- mal cost of the plan for the plan year reduced (but not below zero) by such excess. (b) Target normal cost For purposes of this section: (1) In general Except as provided in subsection (i)(2) with respect to plans in at-risk status, the term ‘‘target normal cost’’ means, for any plan year, the excess of— (A) the sum of— (i) the present value of all benefits which are expected to accrue or to be earned under the plan during the plan year, plus (ii) the amount of plan-related expenses expected to be paid from plan assets dur- ing the plan year, over (B) the amount of mandatory employee contributions expected to be made during the plan year. (2) Special rule for increase in compensation For purposes of this subsection, if any ben- efit attributable to services performed in a preceding plan year is increased by reason of any increase in compensation during the cur- rent plan year, the increase in such benefit shall be treated as having accrued during the current plan year. (c) Shortfall amortization charge (1) In general For purposes of this section, the shortfall amortization charge for a plan for any plan year is the aggregate total (not less than zero) of the shortfall amortization installments for such plan year with respect to any shortfall amortization base which has not been fully amortized under this subsection. (2) Shortfall amortization installment For purposes of paragraph (1)— (A) Determination The shortfall amortization installments are the amounts necessary to amortize the shortfall amortization base of the plan for any plan year in level annual installments over the 7-plan-year period beginning with such plan year. (B) Shortfall installment The shortfall amortization installment for any plan year in the 7-plan-year period under subparagraph (A) with respect to any shortfall amortization base is the annual in- stallment determined under subparagraph (A) for that year for that base. (C) Segment rates In determining any shortfall amortization installment under this paragraph, the plan sponsor shall use the segment rates deter- mined under subparagraph (C) of subsection (h)(2), applied under rules similar to the rules of subparagraph (B) of subsection (h)(2). (D) Special election for eligible plan years (i) In general If a plan sponsor elects to apply this sub- paragraph with respect to the shortfall amortization base of a plan for any eligible plan year (in this subparagraph and para- graph (7) referred to as an ‘‘election year’’), then, notwithstanding subpara- graphs (A) and (B)— (I) the shortfall amortization install- ments with respect to such base shall be determined under clause (ii) or (iii), whichever is specified in the election, and Page 1486 TITLE 26—INTERNAL REVENUE CODE § 430 (II) the shortfall amortization install- ment 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 short- fall amortization base is the annual in- stallment determined under the applica- ble 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 short- fall amortization base of the plan for the election year (determined using the ef- fective 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 bal- ance 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 install- ments over the 15-plan-year period begin- ning with the election year (using the seg- ment 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 re- spect 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 sub- paragraph 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 eligi- ble 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, be- fore granting a revocation request, pro- vide the Pension Benefit Guaranty Cor- poration an opportunity to comment on the conditions applicable to the treat- ment of any portion of the election year shortfall amortization base that remains unamortized as of the revocation date. (v) 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 shall only be treat- ed 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) give notice of the election to par- ticipants and beneficiaries of the plan, and (II) inform the Pension Benefit Guar- anty Corporation of such election in such form and manner as the Director of the Pension Benefit Guaranty Corpora- tion may prescribe. (vii) Increases in required installments in certain cases For increases in required contributions in cases of excess compensation or extraor- dinary dividends or stock redemptions, see paragraph (7). (3) Shortfall amortization base For purposes of this section, the shortfall amortization base of a plan for a plan year is— (A) the funding shortfall of such plan for such plan year, minus (B) the present value (determined using the segment rates determined under sub- paragraph (C) of subsection (h)(2), applied under rules similar to the rules of subpara- graph (B) of subsection (h)(2)) of the aggre- gate total of the shortfall amortization in- stallments and waiver amortization install- ments which have been determined for such plan year and any succeeding plan year with respect to the shortfall amortization bases and waiver amortization bases of the plan for any plan year preceding such plan year. (4) Funding shortfall For purposes of this section, the funding shortfall of a plan for any plan year is the ex- cess (if any) of— (A) the funding target of the plan for the plan year, over (B) the value of plan assets of the plan (as reduced under subsection (f)(4)(B)) for the plan year which are held by the plan on the valuation date. (5) Exemption from new shortfall amortization base In any case in which the value of plan assets of the plan (as reduced under subsection (f)(4)(A)) is equal to or greater than the fund- ing target of the plan for the plan year, the shortfall amortization base of the plan for such plan year shall be zero. (6) Early deemed amortization upon attain- ment of funding target In any case in which the funding shortfall of a plan for a plan year is zero, for purposes of determining the shortfall amortization charge Page 1487 TITLE 26—INTERNAL REVENUE CODE § 430 for such plan year and succeeding plan years, the shortfall amortization bases for all pre- ceding plan years (and all shortfall amortiza- tion installments determined with respect to such bases) shall be reduced to zero. (7) Increases in alternate required installments in cases of excess compensation or extraor- dinary 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, sub- ject to the limitation under subparagraph (B), be increased by such amount. (B) Total installments limited to shortfall base Subject to rules prescribed by the Sec- retary, if a shortfall amortization install- ment with respect to any shortfall amortiza- tion base for an election year is required to be increased for any plan year under sub- paragraph (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 in- stallments with respect to such base shall, in reverse order of the otherwise required installments, be reduced to the extent nec- essary to limit the present value of such subsequent shortfall amortization install- ments (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 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 em- ployee compensation determined under subparagraph (D) with respect to all em- ployees for the plan year, plus (II) the aggregate amount of extraor- dinary dividends and redemptions deter- mined 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 amortiza- tion installments for the plan year and all preceding plan years in the amortiza- tion period elected under paragraph (2)(D) with respect to the shortfall amor- tization base with respect to an election year, determined without regard to para- graph (2)(D) and this paragraph, over (II) the sum of the shortfall amortiza- tion installments for such plan year and all such preceding plan years, deter- mined after application of paragraph (2)(D) (and in the case of any preceding plan year, after application of this para- graph). (iii) Carryover of excess installment accel- eration amounts (I) In general If the installment acceleration amount for any plan year (determined without regard to clause (ii)) exceeds the limita- tion under clause (ii), then, subject to subclause (II), such excess shall be treat- ed as an installment acceleration amount with respect to the succeeding plan year. (II) Cap to apply If any amount treated as an install- ment acceleration amount under sub- clause (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, ex- ceeds the limitation under clause (ii), the portion of such amount representing such excess shall be treated as an install- ment 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 sub- clause (I) or (II) to a plan year which be- gins after the first plan year following the last plan year in the restriction pe- riod (or after the second plan year fol- lowing 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 re- gard to any carryover under this clause) shall be applied first against the limita- tion under clause (ii) and then carryovers to such plan year shall be ap- plied against such limitation on a first- in, first-out basis. (D) Excess employee compensation For purposes of this paragraph— (i) In general The term ‘‘excess employee compensa- tion’’ 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 remunera- tion during the calendar year in which such plan year begins for services per- formed by the employee for the plan sponsor (whether or not performed dur- ing such calendar year), over Page 1488 TITLE 26—INTERNAL REVENUE CODE § 430 (II) $1,000,000. (ii) Amounts set aside for nonqualified de- ferred compensation If during any calendar year assets are set aside or reserved (directly or indirectly) in a trust (or other arrangement as deter- mined by the Secretary), or transferred to such a trust or other arrangement, by a plan sponsor for purposes of paying de- ferred 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 includ- ible in income for the calendar year unless such amount is otherwise includible in in- come 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 ac- count under clause (i) only to the extent attributable to services performed by the employee for the plan sponsor after Feb- ruary 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 recipi- ent stock (within the meaning of section 409A) that, upon such grant, is subject to a substantial risk of forfeiture (as de- fined under section 83(c)(1)) for at least 5 years from the date of such grant. (II) Secretarial authority The Secretary may by regulation pro- vide for the application of this clause in the case of a person other than a cor- poration. (v) Other exceptions The following amounts includible in in- come shall not be taken into account under clause (i)(I): (I) Commissions Any remuneration payable on a com- mission basis solely on account of in- come directly generated by the indi- vidual performance of the individual to whom such remuneration is payable. (II) Certain payments under existing con- tracts Any remuneration consisting of non- qualified deferred compensation, re- stricted 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 re- spect 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 In the case of any calendar year begin- ning 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 de- termined under section 1(f)(3) for the cal- endar year, determined by substituting ‘‘calendar year 2009’’ for ‘‘calendar year 2016’’ in subparagraph (A)(ii) 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 mul- tiple of $1,000. (E) Extraordinary dividends and redemp- tions (i) In general The amount determined under this sub- paragraph for any plan year is the excess (if any) of the sum of the dividends de- clared 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 de- clared, and redemptions occurring, after February 28, 2010. (iii) Exception for intra-group dividends Dividends paid by one member of a con- trolled 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 employ- ees, or that are made on account of the death, disability, or termination of em- ployment of an employee or shareholder, shall not be taken into account under clause (i). Page 1489 TITLE 26—INTERNAL REVENUE CODE § 430 (v) Exception for certain preferred stock (I) In general Dividends and redemptions with re- spect 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 re- spect to such stock. (II) Applicable preferred stock For purposes of subclause (I), the term ‘‘applicable preferred stock’’ means pre- ferred 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 the Employee Retirement In- come 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 amortiza- tion base for the election year, the 5- year period beginning with the election year (or, if later, the first plan year be- ginning 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 allo- cation 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 para- graph (2)(D). (8) 15-year amortization With respect to plan years beginning after December 31, 2021 (or, at the election of the plan sponsor, plan years beginning after De- cember 31, 2018, December 31, 2019, or Decem- ber 31, 2020)— (A) the shortfall amortization bases for all plan years preceding the first plan year be- ginning after December 31, 2021 (or after whichever earlier date is elected pursuant to this paragraph), and all shortfall amortiza- tion installments determined with respect to such bases, shall be reduced to zero, and (B) subparagraphs (A) and (B) of paragraph (2) shall each be applied by substituting ‘‘15- plan-year period’’ for ‘‘7-plan-year period’’. (d) Rules relating to funding target For purposes of this section— (1) Funding target Except as provided in subsection (i)(1) with respect to plans in at-risk status, the funding target of a plan for a plan year is the present value of all benefits accrued or earned under the plan as of the beginning of the plan year. (2) Funding target attainment percentage The ‘‘funding target attainment percentage’’ of a plan for a plan year is the ratio (expressed as a percentage) which— (A) the value of plan assets for the plan year (as reduced under subsection (f)(4)(B)), bears to (B) the funding target of the plan for the plan year (determined without regard to subsection (i)(1)). (e) Waiver amortization charge (1) Determination of waiver amortization charge The waiver amortization charge (if any) for a plan for any plan year is the aggregate total of the waiver amortization installments for such plan year with respect to the waiver am- ortization bases for each of the 5 preceding plan years. (2) Waiver amortization installment For purposes of paragraph (1)— (A) Determination The waiver amortization installments are the amounts necessary to amortize the waiv- er amortization base of the plan for any plan year in level annual installments over a pe- riod of 5 plan years beginning with the suc- ceeding plan year. (B) Waiver installment The waiver amortization installment for any plan year in the 5-year period under sub- paragraph (A) with respect to any waiver amortization base is the annual installment determined under subparagraph (A) for that year for that base. (3) Interest rate In determining any waiver amortization in- stallment under this subsection, the plan sponsor shall use the segment rates deter- mined under subparagraph (C) of subsection (h)(2), applied under rules similar to the rules of subparagraph (B) of subsection (h)(2). (4) Waiver amortization base The waiver amortization base of a plan for a plan year is the amount of the waived funding deficiency (if any) for such plan year under section 412(c). Page 1490 TITLE 26—INTERNAL REVENUE CODE § 430 (5) Early deemed amortization upon attain- ment of funding target In any case in which the funding shortfall of a plan for a plan year is zero, for purposes of determining the waiver amortization charge for such plan year and succeeding plan years, the waiver amortization bases for all pre- ceding plan years (and all waiver amortization installments determined with respect to such bases) shall be reduced to zero. (f) Reduction of minimum required contribution by prefunding balance and funding standard carryover balance (1) Election to maintain balances (A) Prefunding balance The plan sponsor of a defined benefit plan which is not a multiemployer plan may elect to maintain a prefunding balance. (B) Funding standard carryover balance (i) In general In the case of a defined benefit plan (other than a multiemployer plan) de- scribed in clause (ii), the plan sponsor may elect to maintain a funding standard car- ryover balance, until such balance is re- duced to zero. (ii) Plans maintaining funding standard ac- count in 2007 A plan is described in this clause if the plan— (I) was in effect for a plan year begin- ning in 2007, and (II) had a positive balance in the fund- ing standard account under section 412(b) as in effect for such plan year and deter- mined as of the end of such plan year. (2) Application of balances A prefunding balance and a funding standard carryover balance maintained pursuant to this paragraph— (A) shall be available for crediting against the minimum required contribution, pursu- ant to an election under paragraph (3), (B) shall be applied as a reduction in the amount treated as the value of plan assets for purposes of this section, to the extent provided in paragraph (4), and (C) may be reduced at any time, pursuant to an election under paragraph (5). (3) Election to apply balances against min- imum required contribution (A) In general Except as provided in subparagraphs (B) and (C), in the case of any plan year in which the plan sponsor elects to credit against the minimum required contribution for the cur- rent plan year all or a portion of the prefunding balance or the funding standard carryover balance for the current plan year (not in excess of such minimum required contribution), the minimum required con- tribution for the plan year shall be reduced as of the first day of the plan year by the amount so credited by the plan sponsor. For purposes of the preceding sentence, the min- imum required contribution shall be deter- mined after taking into account any waiver under section 412(c). (B) Coordination with funding standard car- ryover balance To the extent that any plan has a funding standard carryover balance greater than zero, no amount of the prefunding balance of such plan may be credited under this para- graph in reducing the minimum required contribution. (C) Limitation for underfunded plans The preceding provisions of this paragraph shall not apply for any plan year if the ratio (expressed as a percentage) which— (i) the value of plan assets for the pre- ceding plan year (as reduced under para- graph (4)(C)), bears to (ii) the funding target of the plan for the preceding plan year (determined without regard to subsection (i)(1)), is less than 80 percent. In the case of plan years beginning in 2008, the ratio under this subparagraph may be determined using such methods of estimation as the Secretary may prescribe. (D) Special rule for certain years of plans maintained by charities (i) 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 valu- ation 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 Sep- tember 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 is maintained exclu- sively by one or more organizations de- scribed in section 501(c)(3). (4) Effect of balances on amounts treated as value of plan assets In the case of any plan maintaining a prefunding balance or a funding standard car- ryover balance pursuant to this subsection, the amount treated as the value of plan assets shall be deemed to be such amount, reduced as provided in the following subparagraphs: (A) Applicability of shortfall amortization base For purposes of subsection (c)(5), the value of plan assets is deemed to be such amount, Page 1491 TITLE 26—INTERNAL REVENUE CODE § 430 reduced by the amount of the prefunding balance, but only if an election under para- graph (3) applying any portion of the prefunding balance in reducing the min- imum required contribution is in effect for the plan year. (B) Determination of excess assets, funding shortfall, and funding target attainment percentage (i) In general For purposes of subsections (a), (c)(4)(B), and (d)(2)(A), the value of plan assets is deemed to be such amount, reduced by the amount of the prefunding balance and the funding standard carryover balance. (ii) Special rule for certain binding agree- ments with PBGC For purposes of subsection (c)(4)(B), the value of plan assets shall not be deemed to be reduced for a plan year by the amount of the specified balance if, with respect to such balance, there is in effect for a plan year a binding written agreement with the Pension Benefit Guaranty Corporation which provides that such balance is not available to reduce the minimum required contribution for the plan year. For pur- poses of the preceding sentence, the term ‘‘specified balance’’ means the prefunding balance or the funding standard carryover balance, as the case may be. (C) Availability of balances in plan year for crediting against minimum required con- tribution For purposes of paragraph (3)(C)(i) of this subsection, the value of plan assets is deemed to be such amount, reduced by the amount of the prefunding balance. (5) Election to reduce balance prior to deter- minations of value of plan assets and cred- iting against minimum required contribu- tion (A) In general The plan sponsor may elect to reduce by any amount the balance of the prefunding balance and the funding standard carryover balance for any plan year (but not below zero). Such reduction shall be effective prior to any determination of the value of plan as- sets for such plan year under this section and application of the balance in reducing the minimum required contribution for such plan for such plan year pursuant to an elec- tion under paragraph (2). (B) Coordination between prefunding bal- ance and funding standard carryover balance To the extent that any plan has a funding standard carryover balance greater than zero, no election may be made under sub- paragraph (A) with respect to the prefunding balance. (6) Prefunding balance (A) In general A prefunding balance maintained by a plan shall consist of a beginning balance of zero, increased and decreased to the extent pro- vided in subparagraphs (B) and (C), and ad- justed further as provided in paragraph (8). (B) Increases (i) In general As of the first day of each plan year be- ginning after 2008, the prefunding balance of a plan shall be increased by the amount elected by the plan sponsor for the plan year. Such amount shall not exceed the ex- cess (if any) of— (I) the aggregate total of employer contributions to the plan for the pre- ceding plan year, over— (II) the minimum required contribu- tion for such preceding plan year. (ii) Adjustments for interest Any excess contributions under clause (i) shall be properly adjusted for interest ac- cruing for the periods between the first day of the current plan year and the dates on which the excess contributions were made, determined by using the effective interest rate for the preceding plan year and by treating contributions as being first used to satisfy the minimum required contribution. (iii) Certain contributions necessary to avoid benefit limitations disregarded The excess described in clause (i) with respect to any preceding plan year shall be reduced (but not below zero) by the amount of contributions an employer would be required to make under sub- section (b), (c), or (e) of section 436 to avoid a benefit limitation which would otherwise be imposed under such para- graph for the preceding plan year. Any contribution which may be taken into ac- count in satisfying the requirements of more than 1 of such paragraphs shall be taken into account only once for purposes of this clause. (C) Decreases The prefunding balance of a plan shall be decreased (but not below zero) by— (i) as of the first day of each plan year after 2008, the amount of such balance credited under paragraph (2) (if any) in re- ducing the minimum required contribution of the plan for the preceding plan year, and (ii) as of the time specified in paragraph (5)(A), any reduction in such balance elect- ed under paragraph (5). (7) Funding standard carryover balance (A) In general A funding standard carryover balance maintained by a plan shall consist of a be- ginning balance determined under subpara- graph (B), decreased to the extent provided in subparagraph (C), and adjusted further as provided in paragraph (8). (B) Beginning balance The beginning balance of the funding standard carryover balance shall be the posi- tive balance described in paragraph (1)(B)(ii)(II). Page 1492 TITLE 26—INTERNAL REVENUE CODE § 430 (C) Decreases The funding standard carryover balance of a plan shall be decreased (but not below zero) by— (i) as of the first day of each plan year after 2008, the amount of such balance credited under paragraph (2) (if any) in re- ducing the minimum required contribution of the plan for the preceding plan year, and (ii) as of the time specified in paragraph (5)(A), any reduction in such balance elect- ed under paragraph (5). (8) Adjustments for investment experience In determining the prefunding balance or the funding standard carryover balance of a plan as of the first day of the plan year, the plan sponsor shall, in accordance with regula- tions prescribed by the Secretary, adjust such balance to reflect the rate of return on plan assets for the preceding plan year. Notwith- standing subsection (g)(3), such rate of return shall be determined on the basis of fair market value and shall properly take into account, in accordance with such regulations, all con- tributions, distributions, and other plan pay- ments made during such period. (9) Elections Elections under this subsection shall be made at such times, and in such form and manner, as shall be prescribed in regulations of the Secretary. (g) Valuation of plan assets and liabilities (1) Timing of determinations Except as otherwise provided under this sub- section, all determinations under this section for a plan year shall be made as of the valu- ation date of the plan for such plan year. (2) Valuation date For purposes of this section— (A) In general Except as provided in subparagraph (B), the valuation date of a plan for any plan year shall be the first day of the plan year. (B) Exception for small plans If, on each day during the preceding plan year, a plan had 100 or fewer participants, the plan may designate any day during the plan year as its valuation date for such plan year and succeeding plan years. For purposes of this subparagraph, all defined benefit plans (other than multiemployer plans) maintained by the same employer (or any member of such employer’s controlled group) shall be treated as 1 plan, but only participants with respect to such employer or member shall be taken into account. (C) Application of certain rules in determina- tion of plan size For purposes of this paragraph— (i) Plans not in existence in preceding year In the case of the first plan year of any plan, subparagraph (B) shall apply to such plan by taking into account the number of participants that the plan is reasonably expected to have on days during such first plan year. (ii) Predecessors Any reference in subparagraph (B) to an employer shall include a reference to any predecessor of such employer. (3) Determination of value of plan assets For purposes of this section— (A) In general Except as provided in subparagraph (B), the value of plan assets shall be the fair market value of the assets. (B) Averaging allowed A plan may determine the value of plan as- sets on the basis of the averaging of fair market values, but only if such method— (i) is permitted under regulations pre- scribed by the Secretary, (ii) does not provide for averaging of such values over more than the period be- ginning on the last day of the 25th month preceding the month in which the valu- ation date occurs and ending on the valu- ation date (or a similar period in the case of a valuation date which is not the 1st day of a month), and (iii) does not result in a determination of the value of plan assets which, at any time, is lower than 90 percent or greater than 110 percent of the fair market value of such assets at such time. Any such averaging shall be adjusted for contributions, distributions, and expected earnings (as determined by the plan’s actu- ary on the basis of an assumed earnings rate specified by the actuary but not in excess of the third segment rate applicable under sub- section (h)(2)(C)(iii)), as specified by the Sec- retary. (4) Accounting for contribution receipts For purposes of determining the value of as- sets under paragraph (3)— (A) Prior year contributions If— (i) an employer makes any contribution to the plan after the valuation date for the plan year in which the contribution is made, and (ii) the contribution is for a preceding plan year, the contribution shall be taken into account as an asset of the plan as of the valuation date, except that in the case of any plan year beginning after 2008, only the present value (determined as of the valuation date) of such contribution may be taken into ac- count. For purposes of the preceding sen- tence, present value shall be determined using the effective interest rate for the pre- ceding plan year to which the contribution is properly allocable. (B) Special rule for current year contribu- tions made before valuation date If any contributions for any plan year are made to or under the plan during the plan year but before the valuation date for the plan year, the assets of the plan as of the valuation date shall not include— Page 1493 TITLE 26—INTERNAL REVENUE CODE § 430 (i) such contributions, and (ii) interest on such contributions for the period between the date of the contribu- tions and the valuation date, determined by using the effective interest rate for the plan year. (h) Actuarial assumptions and methods (1) In general Subject to this subsection, the determina- tion of any present value or other computa- tion under this section shall be made on the basis of actuarial assumptions and methods— (A) each of which is reasonable (taking into account the experience of the plan and reasonable expectations), and (B) which, in combination, offer the actu- ary’s best estimate of anticipated experience under the plan. (2) Interest rates (A) Effective interest rate For purposes of this section, the term ‘‘ef- fective interest rate’’ means, with respect to any plan for any plan year, the single rate of interest which, if used to determine the present value of the plan’s accrued or earned benefits referred to in subsection (d)(1), would result in an amount equal to the fund- ing target of the plan for such plan year. (B) Interest rates for determining funding target For purposes of determining the funding target and target normal cost of a plan for any plan year, the interest rate used in de- termining the present value of the benefits of the plan shall be— (i) in the case of benefits reasonably de- termined to be payable during the 5-year period beginning on the valuation date for the plan year, the first segment rate with respect to the applicable month, (ii) in the case of benefits reasonably de- termined to be payable during the 15-year period beginning at the end of the period described in clause (i), the second segment rate with respect to the applicable month, and (iii) in the case of benefits reasonably de- termined to be payable after the period de- scribed in clause (ii), the third segment rate with respect to the applicable month. (C) Segment rates For purposes of this paragraph— (i) First segment rate The term ‘‘first segment rate’’ means, with respect to any month, the single rate of interest which shall be determined by the Secretary for such month on the basis of the corporate bond yield curve for such month, taking into account only that por- tion of such yield curve which is based on bonds maturing during the 5-year period commencing with such month. (ii) Second segment rate The term ‘‘second segment rate’’ means, with respect to any month, the single rate of interest which shall be determined by the Secretary for such month on the basis of the corporate bond yield curve for such month, taking into account only that por- tion of such yield curve which is based on bonds maturing during the 15-year period beginning at the end of the period de- scribed in clause (i). (iii) Third segment rate The term ‘‘third segment rate’’ means, with respect to any month, the single rate of interest which shall be determined by the Secretary for such month on the basis of the corporate bond yield curve for such month, taking into account only that por- tion of such yield curve which is based on bonds maturing during periods beginning after the period described in clause (ii). (iv) Segment rate stabilization (I) In general If a segment rate described in clause (i), (ii), or (iii) with respect to any appli- cable month (determined without regard to this clause) is less than the applicable minimum percentage, or more than the applicable maximum percentage, of the average of the segment rates described in such clause for years in the 25-year pe- riod ending with September 30 of the cal- endar year preceding the calendar year in which the plan year begins, then the segment rate described in such clause with respect to the applicable month shall be equal to the applicable min- imum percentage or the applicable max- imum percentage of such average, which- ever is closest. The Secretary shall de- termine such average on an annual basis and may prescribe equivalent rates for years in any such 25-year period for which the rates described in any such clause are not available. Notwith- standing anything in this subclause, if the average of the first, second, or third segment rate for any 25-year period is less than 5 percent, such average shall be deemed to be 5 percent. (II) Applicable minimum percentage; ap- plicable maximum percentage For purposes of subclause (I), the ap- plicable minimum percentage and the applicable maximum percentage for a plan year beginning in a calendar year shall be determined in accordance with the following table: If the calendar year is: The applicable minimum percentage is: The applicable maximum percentage is: Any year in the period start- ing in 2012 and ending in 2019 .................................... 90% 110% Any year in the period start- ing in 2020 and ending in 2030 .................................... 95% 105% 2031 ....................................... 90% 110% 2032 ....................................... 85% 115% 2033 ....................................... 80% 120% 2034 ....................................... 75% 125% Page 1494 TITLE 26—INTERNAL REVENUE CODE § 430 If the calendar year is: The applicable minimum percentage is: The applicable maximum percentage is: After 2034 ............................. 70% 130%. (D) Corporate bond yield curve For purposes of this paragraph— (i) In general The term ‘‘corporate bond yield curve’’ means, with respect to any month, a yield curve which is prescribed by the Secretary for such month and which reflects the av- erage, for the 24-month period ending with the month preceding such month, of monthly yields on investment grade cor- porate bonds with varying maturities and that are in the top 3 quality levels avail- able. (ii) Election to use yield curve Solely for purposes of determining the minimum required contribution under this section, the plan sponsor may, in lieu of the segment rates determined under sub- paragraph (C), elect to use interest rates under the corporate bond yield curve. For purposes of the preceding sentence such curve shall be determined without regard to the 24-month averaging described in clause (i). Such election, once made, may be revoked only with the consent of the Secretary. (E) Applicable month For purposes of this paragraph, the term ‘‘applicable month’’ means, with respect to any plan for any plan year, the month which includes the valuation date of such plan for such plan year or, at the election of the plan sponsor, any of the 4 months which precede such month. Any election made under this subparagraph shall apply to the plan year for which the election is made and all suc- ceeding plan years, unless the election is re- voked with the consent of the Secretary. (F) Publication requirements The Secretary shall publish for each month the corporate bond yield curve (and the corporate bond yield curve reflecting the modification described in section 417(e)(3)(D) for such month) and each of the rates deter- mined under subparagraph (C) and the aver- ages determined under subparagraph (C)(iv) for such month. The Secretary shall also publish a description of the methodology used to determine such yield curve and such rates which is sufficiently detailed to enable plans to make reasonable projections regard- ing the yield curve and such rates for future months based on the plan’s projection of fu- ture interest rates. (3) Mortality tables (A) In general Except as provided in subparagraph (C) or (D), the Secretary shall by regulation pre- scribe mortality tables to be used in deter- mining any present value or making any computation under this section. Such tables shall be based on the actual experience of pension plans and projected trends in such experience. In prescribing such tables, the Secretary shall take into account results of available independent studies of mortality of individuals covered by pension plans. (B) Periodic revision The Secretary shall (at least every 10 years) make revisions in any table in effect under subparagraph (A) to reflect the actual experience of pension plans and projected trends in such experience. (C) Substitute mortality table (i) In general Upon request by the plan sponsor and ap- proval by the Secretary, a mortality table which meets the requirements of clause (iii) shall be used in determining any present value or making any computation under this section during the period of consecutive plan years (not to exceed 10) specified in the request. (ii) Early termination of period Notwithstanding clause (i), a mortality table described in clause (i) shall cease to be in effect as of the earliest of— (I) the date on which there is a signifi- cant change in the participants in the plan by reason of a plan spinoff or merg- er or otherwise, or (II) the date on which the plan actuary determines that such table does not meet the requirements of clause (iii). (iii) Requirements A mortality table meets the require- ments of this clause if— (I) there is a sufficient number of plan participants, and the pension plans have been maintained for a sufficient period of time, to have credible information necessary for purposes of subclause (II), and (II) such table reflects the actual expe- rience of the pension plans maintained by the sponsor and projected trends in general mortality experience. (iv) All plans in controlled group must use separate table Except as provided by the Secretary, a plan sponsor may not use a mortality table under this subparagraph for any plan maintained by the plan sponsor unless— (I) a separate mortality table is estab- lished and used under this subparagraph for each other plan maintained by the plan sponsor and if the plan sponsor is a member of a controlled group, each member of the controlled group, and (II) the requirements of clause (iii) are met separately with respect to the table so established for each such plan, deter- mined by only taking into account the participants of such plan, the time such plan has been in existence, and the ac- tual experience of such plan. Page 1495 TITLE 26—INTERNAL REVENUE CODE § 430 (v) Deadline for submission and disposition of application (I) Submission The plan sponsor shall submit a mor- tality table to the Secretary for ap- proval under this subparagraph at least 7 months before the 1st day of the period described in clause (i). (II) Disposition Any mortality table submitted to the Secretary for approval under this sub- paragraph shall be treated as in effect as of the 1st day of the period described in clause (i) unless the Secretary, during the 180-day period beginning on the date of such submission, disapproves of such table and provides the reasons that such table fails to meet the requirements of clause (iii). The 180-day period shall be extended upon mutual agreement of the Secretary and the plan sponsor. (D) Separate mortality tables for the disabled Notwithstanding subparagraph (A)— (i) In general The Secretary shall establish mortality tables which may be used (in lieu of the ta- bles under subparagraph (A)) under this subsection for individuals who are entitled to benefits under the plan on account of disability. The Secretary shall establish separate tables for individuals whose dis- abilities occur in plan years beginning be- fore January 1, 1995, and for individuals whose disabilities occur in plan years be- ginning on or after such date. (ii) Special rule for disabilities occurring after 1994 In the case of disabilities occurring in plan years beginning after December 31, 1994, the tables under clause (i) shall apply only with respect to individuals described in such subclause who are disabled within the meaning of title II of the Social Secu- rity Act and the regulations thereunder. (iii) Periodic revision The Secretary shall (at least every 10 years) make revisions in any table in ef- fect under clause (i) to reflect the actual experience of pension plans and projected trends in such experience. (4) Probability of benefit payments in the form of lump sums or other optional forms For purposes of determining any present value or making any computation under this section, there shall be taken into account— (A) the probability that future benefit pay- ments under the plan will be made in the form of optional forms of benefits provided under the plan (including lump sum distribu- tions, determined on the basis of the plan’s experience and other related assumptions), and (B) any difference in the present value of such future benefit payments resulting from the use of actuarial assumptions, in deter- mining benefit payments in any such op- tional form of benefits, which are different from those specified in this subsection. (5) Approval of large changes in actuarial as- sumptions (A) In general No actuarial assumption used to deter- mine the funding target for a plan to which this paragraph applies may be changed with- out the approval of the Secretary. (B) Plans to which paragraph applies This paragraph shall apply to a plan only if— (i) the plan is a defined benefit plan (other than a multiemployer plan) to which title IV of the Employee Retirement Income Security Act of 1974 applies, (ii) the aggregate unfunded vested bene- fits as of the close of the preceding plan year (as determined under section 4006(a)(3)(E)(iii) of the Employee Retire- ment Income Security Act of 1974) of such plan and all other plans maintained by the contributing sponsors (as defined in sec- tion 4001(a)(13) of such Act) and members of such sponsors’ controlled groups (as de- fined in section 4001(a)(14) of such Act) which are covered by title IV (disregarding plans with no unfunded vested benefits) ex- ceed $50,000,000, and (iii) the change in assumptions (deter- mined after taking into account any changes in interest rate and mortality table) results in a decrease in the funding shortfall of the plan for the current plan year that exceeds $50,000,000, or that ex- ceeds $5,000,000 and that is 5 percent or more of the funding target of the plan be- fore such change. (i) Special rules for at-risk plans (1) Funding target for plans in at-risk status (A) In general In the case of a plan which is in at-risk status for a plan year, the funding target of the plan for the plan year shall be equal to the sum of— (i) the present value of all benefits ac- crued or earned under the plan as of the beginning of the plan year, as determined by using the additional actuarial assump- tions described in subparagraph (B), and (ii) in the case of a plan which also has been in at-risk status for at least 2 of the 4 preceding plan years, a loading factor de- termined under subparagraph (C). (B) Additional actuarial assumptions The actuarial assumptions described in this subparagraph are as follows: (i) All employees who are not otherwise assumed to retire as of the valuation date but who will be eligible to elect benefits during the plan year and the 10 succeeding plan years shall be assumed to retire at the earliest retirement date under the plan but not before the end of the plan year for which the at-risk funding target and at- risk target normal cost are being deter- mined. Page 1496 TITLE 26—INTERNAL REVENUE CODE § 430 (ii) All employees shall be assumed to elect the retirement benefit available under the plan at the assumed retirement age (determined after application of clause (i)) which would result in the highest present value of benefits. (C) Loading factor The loading factor applied with respect to a plan under this paragraph for any plan year is the sum of— (i) $700, times the number of participants in the plan, plus (ii) 4 percent of the funding target (de- termined without regard to this para- graph) of the plan for the plan year. (2) Target normal cost of at-risk plans In the case of a plan which is in at-risk sta- tus for a plan year, the target normal cost of the plan for such plan year shall be equal to the sum of— (A) the excess of— (i) the sum of— (I) the present value of all benefits which are expected to accrue or to be earned under the plan during the plan year, determined using the additional actuarial assumptions described in para- graph (1)(B), plus (II) the amount of plan-related ex- penses expected to be paid from plan as- sets during the plan year, over (ii) the amount of mandatory employee contributions expected to be made during the plan year, plus (B) in the case of a plan which also has been in at-risk status for at least 2 of the 4 preceding plan years, a loading factor equal to 4 percent of the amount determined under subsection (b)(1)(A)(i) with respect to the plan for the plan year. (3) Minimum amount In no event shall— (A) the at-risk funding target be less than the funding target, as determined without regard to this subsection, or (B) the at-risk target normal cost be less than the target normal cost, as determined without regard to this subsection. (4) Determination of at-risk status For purposes of this subsection— (A) In general A plan is in at-risk status for a plan year if— (i) the funding target attainment per- centage for the preceding plan year (deter- mined under this section without regard to this subsection) is less than 80 percent, and (ii) the funding target attainment per- centage for the preceding plan year (deter- mined under this section by using the ad- ditional actuarial assumptions described in paragraph (1)(B) in computing the fund- ing target) is less than 70 percent. (B) Transition rule In the case of plan years beginning in 2008, 2009, and 2010, subparagraph (A)(i) shall be applied by substituting the following per- centages for ‘‘80 percent’’: (i) 65 percent in the case of 2008. (ii) 70 percent in the case of 2009. (iii) 75 percent in the case of 2010. In the case of plan years beginning in 2008, the funding target attainment percentage for the preceding plan year under subpara- graph (A) may be determined using such methods of estimation as the Secretary may provide. (C) Special rule for employees offered early retirement in 2006 (i) In general For purposes of subparagraph (A)(ii), the additional actuarial assumptions described in paragraph (1)(B) shall not be taken into account with respect to any employee if— (I) such employee is employed by a specified automobile manufacturer, (II) such employee is offered a substan- tial amount of additional cash com- pensation, substantially enhanced retire- ment benefits under the plan, or materi- ally reduced employment duties on the condition that by a specified date (not later than December 31, 2010) the em- ployee retires (as defined under the terms of the plan), (III) such offer is made during 2006 and pursuant to a bona fide retirement in- centive program and requires, by the terms of the offer, that such offer can be accepted not later than a specified date (not later than December 31, 2006), and (IV) such employee does not elect to accept such offer before the specified date on which the offer expires. (ii) Specified automobile manufacturer For purposes of clause (i), the term ‘‘specified automobile manufacturer’’ means— (I) any manufacturer of automobiles, and (II) any manufacturer of automobile parts which supplies such parts directly to a manufacturer of automobiles and which, after a transaction or series of transactions ending in 1999, ceased to be a member of a controlled group which in- cluded such manufacturer of auto- mobiles. (5) Transition between applicable funding tar- gets and between applicable target normal costs (A) In general In any case in which a plan which is in at- risk status for a plan year has been in such status for a consecutive period of fewer than 5 plan years, the applicable amount of the funding target and of the target normal cost shall be, in lieu of the amount determined without regard to this paragraph, the sum of— (i) the amount determined under this section without regard to this subsection, plus (ii) the transition percentage for such plan year of the excess of the amount de- Page 1497 TITLE 26—INTERNAL REVENUE CODE § 430 termined under this subsection (without regard to this paragraph) over the amount determined under this section without re- gard to this subsection. (B) Transition percentage For purposes of subparagraph (A), the transition percentage shall be determined in accordance with the following table: If the consecutive number of years (including the plan year) the plan is in at-risk status is— The transition percentage is— 1 ................................................. 20 2 ................................................. 40 3 ................................................. 60 4 ................................................. 80. (C) Years before effective date For purposes of this paragraph, plan years beginning before 2008 shall not be taken into account. (6) Small plan exception If, on each day during the preceding plan year, a plan had 500 or fewer participants, the plan shall not be treated as in at-risk status for the plan year. For purposes of this para- graph, all defined benefit plans (other than multiemployer plans) maintained by the same employer (or any member of such employer’s controlled group) shall be treated as 1 plan, but only participants with respect to such em- ployer or member shall be taken into account and the rules of subsection (g)(2)(C) shall apply. (j) Payment of minimum required contributions (1) In general For purposes of this section, the due date for any payment of any minimum required con- tribution for any plan year shall be 81⁄2 months after the close of the plan year. (2) Interest Any payment required under paragraph (1) for a plan year that is made on a date other than the valuation date for such plan year shall be adjusted for interest accruing for the period between the valuation date and the payment date, at the effective rate of interest for the plan for such plan year. (3) Accelerated quarterly contribution sched- ule for underfunded plans (A) Failure to timely make required install- ment In any case in which the plan has a fund- ing shortfall for the preceding plan year, the employer maintaining the plan shall make the required installments under this para- graph and if the employer fails to pay the full amount of a required installment for the plan year, then the amount of interest charged under paragraph (2) on the under- payment for the period of underpayment shall be determined by using a rate of inter- est equal to the rate otherwise used under paragraph (2) plus 5 percentage points. In the case of plan years beginning in 2008, the funding shortfall for the preceding plan year may be determined using such methods of estimation as the Secretary may provide. (B) Amount of underpayment, period of un- derpayment For purposes of subparagraph (A)— (i) Amount The amount of the underpayment shall be the excess of— (I) the required installment, over (II) the amount (if any) of the install- ment contributed to or under the plan on or before the due date for the install- ment. (ii) Period of underpayment The period for which any interest is charged under this paragraph with respect to any portion of the underpayment shall run from the due date for the installment to the date on which such portion is con- tributed to or under the plan. (iii) Order of crediting contributions For purposes of clause (i)(II), contribu- tions shall be credited against unpaid re- quired installments in the order in which such installments are required to be paid. (C) Number of required installments; due dates For purposes of this paragraph— (i) Payable in 4 installments There shall be 4 required installments for each plan year. (ii) Time for payment of installments The due dates for required installments are set forth in the following table: In the case of the fol- lowing required install- ment: The due date is: 1st ................................... April 15 2nd .................................. July 15 3rd ................................... October 15 4th ................................... January 15 of the fol- lowing year. (D) Amount of required installment For purposes of this paragraph— (i) In general The amount of any required installment shall be 25 percent of the required annual payment. (ii) Required annual payment For purposes of clause (i), the term ‘‘re- quired annual payment’’ means the lesser of— (I) 90 percent of the minimum required contribution (determined without regard to this subsection) to the plan for the plan year under this section, or (II) 100 percent of the minimum re- quired contribution (determined without regard to this subsection or to any waiv- er under section 412(c)) to the plan for the preceding plan year. Subclause (II) shall not apply if the pre- ceding plan year referred to in such clause was not a year of 12 months. Page 1498 TITLE 26—INTERNAL REVENUE CODE § 430 (E) Fiscal years, short years, and years with alternate valuation date (i) Fiscal years In applying this paragraph to a plan year beginning on any date other than January 1, there shall be substituted for the months specified in this paragraph, the months which correspond thereto. (ii) Short plan year This subparagraph shall be applied to plan years of less than 12 months in ac- cordance with regulations prescribed by the Secretary. (iii) Plan with alternate valuation date The Secretary shall prescribe regula- tions for the application of this paragraph in the case of a plan which has a valuation date other than the first day of the plan year. (F) Quarterly contributions not to include certain increased contributions Subparagraph (D) shall be applied without regard to any increase under subsection (c)(7). (4) Liquidity requirement in connection with quarterly contributions (A) In general A plan to which this paragraph applies shall be treated as failing to pay the full amount of any required installment under paragraph (3) to the extent that the value of the liquid assets paid in such installment is less than the liquidity shortfall (whether or not such liquidity shortfall exceeds the amount of such installment required to be paid but for this paragraph). (B) Plans to which paragraph applies This paragraph shall apply to a plan (other than a plan described in subsection (g)(2)(B)) which— (i) is required to pay installments under paragraph (3) for a plan year, and (ii) has a liquidity shortfall for any quar- ter during such plan year. (C) Period of underpayment For purposes of paragraph (3)(A), any por- tion of an installment that is treated as not paid under subparagraph (A) shall continue to be treated as unpaid until the close of the quarter in which the due date for such in- stallment occurs. (D) Limitation on increase If the amount of any required installment is increased by reason of subparagraph (A), in no event shall such increase exceed the amount which, when added to prior install- ments for the plan year, is necessary to in- crease the funding target attainment per- centage of the plan for the plan year (taking into account the expected increase in fund- ing target due to benefits accruing or earned during the plan year) to 100 percent. (E) Definitions For purposes of this paragraph— (i) Liquidity shortfall The term ‘‘liquidity shortfall’’ means, with respect to any required installment, an amount equal to the excess (as of the last day of the quarter for which such in- stallment is made) of— (I) the base amount with respect to such quarter, over (II) the value (as of such last day) of the plan’s liquid assets. (ii) Base amount (I) In general The term ‘‘base amount’’ means, with respect to any quarter, an amount equal to 3 times the sum of the adjusted dis- bursements from the plan for the 12 months ending on the last day of such quarter. (II) Special rule If the amount determined under sub- clause (I) exceeds an amount equal to 2 times the sum of the adjusted disburse- ments from the plan for the 36 months ending on the last day of the quarter and an enrolled actuary certifies to the satis- faction of the Secretary that such excess is the result of nonrecurring cir- cumstances, the base amount with re- spect to such quarter shall be deter- mined without regard to amounts re- lated to those nonrecurring cir- cumstances. (iii) Disbursements from the plan The term ‘‘disbursements from the plan’’ means all disbursements from the trust, including purchases of annuities, pay- ments of single sums and other benefits, and administrative expenses. (iv) Adjusted disbursements The term ‘‘adjusted disbursements’’ means disbursements from the plan re- duced by the product of— (I) the plan’s funding target attain- ment percentage for the plan year, and (II) the sum of the purchases of annu- ities, payments of single sums, and such other disbursements as the Secretary shall provide in regulations. (v) Liquid assets The term ‘‘liquid assets’’ means cash, marketable securities, and such other as- sets as specified by the Secretary in regu- lations. (vi) Quarter The term ‘‘quarter’’ means, with respect to any required installment, the 3-month period preceding the month in which the due date for such installment occurs. (F) Regulations The Secretary may prescribe such regula- tions as are necessary to carry out this para- graph. (k) Imposition of lien where failure to make re- quired contributions (1) In general In the case of a plan to which this subsection applies (as provided under paragraph (2)), if— (A) any person fails to make a contribu- tion payment required by section 412 and Page 1499 TITLE 26—INTERNAL REVENUE CODE § 430 this section before the due date for such pay- ment, and (B) the unpaid balance of such payment (including interest), when added to the ag- gregate unpaid balance of all preceding such payments for which payment was not made before the due date (including interest), ex- ceeds $1,000,000, then there shall be a lien in favor of the plan in the amount determined under paragraph (3) upon all property and rights to property, whether real or personal, belonging to such person and any other person who is a member of the same controlled group of which such person is a member. (2) Plans to which subsection applies This subsection shall apply to a defined ben- efit plan (other than a multiemployer plan) covered under section 4021 of the Employee Retirement Income Security Act of 1974 for any plan year for which the funding target at- tainment percentage (as defined in subsection (d)(2)) of such plan is less than 100 percent. (3) Amount of lien For purposes of paragraph (1), the amount of the lien shall be equal to the aggregate unpaid balance of contribution payments required under this section and section 412 for which payment has not been made before the due date. (4) Notice of failure; lien (A) Notice of failure A person committing a failure described in paragraph (1) shall notify the Pension Ben- efit Guaranty Corporation of such failure within 10 days of the due date for the re- quired contribution payment. (B) Period of lien The lien imposed by paragraph (1) shall arise on the due date for the required con- tribution payment and shall continue until the last day of the first plan year in which the plan ceases to be described in paragraph (1)(B). Such lien shall continue to run with- out regard to whether such plan continues to be described in paragraph (2) during the pe- riod referred to in the preceding sentence. (C) Certain rules to apply Any amount with respect to which a lien is imposed under paragraph (1) shall be treated as taxes due and owing the United States and rules similar to the rules of subsections (c), (d), and (e) of section 4068 of the Em- ployee Retirement Income Security Act of 1974 shall apply with respect to a lien im- posed by subsection (a) and the amount with respect to such lien. (5) Enforcement Any lien created under paragraph (1) may be perfected and enforced only by the Pension Benefit Guaranty Corporation, or at the direc- tion of the Pension Benefit Guaranty Corpora- tion, by the contributing sponsor (or any member of the controlled group of the contrib- uting sponsor). (6) Definitions For purposes of this subsection— (A) Contribution payment The term ‘‘contribution payment’’ means, in connection with a plan, a contribution payment required to be made to the plan, in- cluding any required installment under paragraphs (3) and (4) of subsection (j). (B) Due date; required installment The terms ‘‘due date’’ and ‘‘required in- stallment’’ have the meanings given such terms by subsection (j). (C) Controlled group The term ‘‘controlled group’’ means any group treated as a single employer under subsections (b), (c), (m), and (o) of section 414. (l) Qualified transfers to health benefit accounts In the case of a qualified transfer (as defined in section 420), any assets so transferred shall not, for purposes of this section, be treated as assets in the plan. (m) Special rules for community newspaper plans (1) In general An eligible newspaper plan sponsor of a plan under which no participant has had the par- ticipant’s accrued benefit increased (whether because of service or compensation) after April 2, 2019, may elect to have the alternative standards described in paragraph (4) apply to such plan. (2) Eligible newspaper plan sponsor The term ‘‘eligible newspaper plan sponsor’’ means the plan sponsor of— (A) any community newspaper plan, or (B) any other plan sponsored, as of April 2, 2019, by a member of the same controlled group of a plan sponsor of a community newspaper plan if such member is in the trade or business of publishing 1 or more newspapers. (3) Election An election under paragraph (1) shall be made at such time and in such manner as pre- scribed by the Secretary. Such election, once made with respect to a plan year, shall apply to all subsequent plan years unless revoked with the consent of the Secretary. (4) Alternative minimum funding standards The alternative standards described in this paragraph are the following: (A) Interest rates (i) In general Notwithstanding subsection (h)(2)(C) and except as provided in clause (ii), the first, second, and third segment rates in effect for any month for purposes of this section shall be 8 percent. (ii) New benefit accruals Notwithstanding subsection (h)(2), for purposes of determining the funding target and normal cost of a plan for any plan year, the present value of any benefits ac- crued or earned under the plan for a plan year with respect to which an election Page 1500 TITLE 26—INTERNAL REVENUE CODE § 430 under paragraph (1) is in effect shall be de- termined on the basis of the United States Treasury obligation yield curve for the day that is the valuation date of such plan for such plan year. (iii) United States Treasury obligation yield curve For purposes of this subsection, the term ‘‘United States Treasury obligation yield curve’’ means, with respect to any day, a yield curve which shall be prescribed by the Secretary for such day on interest- bearing obligations of the United States. (B) Shortfall amortization base (i) Previous shortfall amortization bases The shortfall amortization bases deter- mined under subsection (c)(3) for all plan years preceding the first plan year to which the election under paragraph (1) ap- plies (and all shortfall amortization in- stallments determined with respect to such bases) shall be reduced to zero under rules similar to the rules of subsection (c)(6). (ii) New shortfall amortization base Notwithstanding subsection (c)(3), the shortfall amortization base for the first plan year to which the election under paragraph (1) applies shall be the funding shortfall of such plan for such plan year (determined using the interest rates as modified under subparagraph (A)). (C) Determination of shortfall amortization installments (i) 30-year period Subparagraphs (A) and (B) of subsection (c)(2) shall be applied by substituting ‘‘30- plan-year’’ for ‘‘7-plan-year’’ each place it appears. (ii) No special election The election under subparagraph (D) of subsection (c)(2) shall not apply to any plan year to which the election under paragraph (1) applies. (D) Exemption from at-risk treatment Subsection (i) shall not apply. (5) Community newspaper plan For purposes of this subsection— (A) In general The term ‘‘community newspaper plan’’ means any plan to which this section applies maintained as of December 31, 2018, by an employer which— (i) maintains the plan on behalf of par- ticipants and beneficiaries with respect to employment in the trade or business of publishing 1 or more newspapers which were published by the employer at any time during the 11-year period ending on December 20, 2019, (ii)(I) is not a company the stock of which is publicly traded (on a stock ex- change or in an over-the-counter market), and is not controlled, directly or indi- rectly, by such a company, or (II) is controlled, directly or indirectly, during the entire 30-year period ending on December 20, 2019, by individuals who are members of the same family, and does not publish or distribute a daily newspaper that is carrier-distributed in printed form in more than 5 States, and (iii) is controlled, directly or indirectly— (I) by 1 or more persons residing pri- marily in a State in which the commu- nity newspaper has been published on newsprint or carrier-distributed, (II) during the entire 30-year period ending on December 20, 2019, by individ- uals who are members of the same fam- ily, (III) by 1 or more trusts, the sole trust- ees of which are persons described in subclause (I) or (II), or (IV) by a combination of persons de- scribed in subclause (I), (II), or (III). (B) Newspaper The term ‘‘newspaper’’ does not include any newspaper (determined without regard to this subparagraph) to which any of the following apply: (i) Is not in general circulation. (ii) Is published (on newsprint or elec- tronically) less frequently than 3 times per week. (iii) Has not ever been regularly pub- lished on newsprint. (iv) Does not have a bona fide list of paid subscribers. (C) Control A person shall be treated as controlled by another person if such other person pos- sesses, directly or indirectly, the power to direct or cause the direction and manage- ment of such person (including the power to elect a majority of the members of the board of directors of such person) through the own- ership of voting securities. (6) Controlled group For purposes of this subsection, the term ‘‘controlled group’’ means all persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 as of December 20, 2019. (Added Pub. L. 109–280, title I, § 112(a), Aug. 17, 2006, 120 Stat. 826; amended Pub. L. 110–458, title I, §§ 101(b)(2), 121(b), title II, § 202(b), Dec. 23, 2008, 122 Stat. 5095, 5113, 5118; Pub. L. 111–192, title II, §§ 201(b), 204(b), June 25, 2010, 124 Stat. 1290, 1301; Pub. L. 112–141, div. D, title II, § 40211(a)(1), (2)(B), July 6, 2012, 126 Stat. 846, 847; Pub. L. 113–159, title II, § 2003(a), (d)(1), Aug. 8, 2014, 128 Stat. 1849, 1851; Pub. L. 113–295, div. A, title II, § 221(a)(57)(C)(i), (D)(i), Dec. 19, 2014, 128 Stat. 4046; Pub. L. 114–74, title V, § 504(a), Nov. 2, 2015, 129 Stat. 593; Pub. L. 115–97, title I, § 11002(d)(1)(X), Dec. 22, 2017, 131 Stat. 2060; Pub. L. 115–141, div. U, title IV, § 401(a)(99), (100), Mar. 23, 2018, 132 Stat. 1189; Pub. L. 116–94, div. O, title I, § 115(a), Dec. 20, 2019, 133 Stat. 3156; Pub. L. 117–2, title IX, §§ 9705(a), 9706(a), 9707(a), Mar. 11, 2021, 135 Stat. 199, 200, 202; Pub. L. 117–58, div. H, title VI, § 80602(a), Nov. 15, 2021, 135 Stat. 1338.) Page 1501 TITLE 26—INTERNAL REVENUE CODE § 430 INFLATION ADJUSTED ITEMS FOR CERTAIN YEARS For inflation adjustment of certain items in this section, see Internal Revenue Notices listed in a table under section 401 of this title. Editorial Notes REFERENCES IN TEXT Section 106 of the Pension Protection Act of 2006, re- ferred to in subsec. (c)(2)(D)(iv)(I), is section 106 of Pub. L. 109–280, which is set out as a note under section 401 of this title. The date of the enactment of this subparagraph, re- ferred to in subsec. (c)(2)(D)(v), is the date of enact- ment of Pub. L. 111–192, which was approved June 25, 2010. The Employee Retirement Income Security Act of 1974, referred to in subsecs. (c)(7)(E)(i)(I), (v)(II), (h)(5)(B)(i), (ii), and (k)(2), (4)(C), is Pub. L. 93–406, Sept. 2, 1974, 88 Stat. 829. Title I of the Act is classified gen- erally to subchapter I (§ 1001 et seq.) of chapter 18 of Title 29, Labor. Title IV of the Act is classified prin- cipally to subchapter III (§ 1301 et seq.) of chapter 18 of Title 29. Sections 4001, 4006, 4021, 4043, and 4068 of the Act are classified to sections 1301, 1306, 1321, 1343, and 1368, respectively, of Title 29. For complete classifica- tion of this Act to the Code, see Short Title note set out under section 1001 of Title 29 and Tables. The Social Security Act, referred to in subsec. (h)(3)(D)(ii), is act Aug. 14, 1935, ch. 531, 49 Stat. 620. Title II of the Act is classified generally to subchapter II (§ 401 et seq.) of chapter 7 of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see section 1305 of Title 42 and Tables. AMENDMENTS 2021—Subsec. (c)(8). Pub. L. 117–2, § 9705(a), added par. (8). Subsec. (h)(2)(C)(iv)(I). Pub. L. 117–2, § 9706(a)(2), in- serted at end ‘‘Notwithstanding anything in this sub- clause, if the average of the first, second, or third seg- ment rate for any 25-year period is less than 5 percent, such average shall be deemed to be 5 percent.’’ Subsec. (h)(2)(C)(iv)(II). Pub. L. 117–58 amended table generally. Prior to amendment, table related to appli- cable minimum and maximum percentages for calendar years 2012 to 2029 and after. Pub. L. 117–2, § 9706(a)(1), amended table generally. Prior to amendment, table related to applicable min- imum and maximum percentages for calendar years 2012 to 2023 and after. Subsec. (m). Pub. L. 117–2, § 9707(a), amended subsec. (m) generally, revising special rules for community newspaper plans. 2019—Subsec. (m). Pub. L. 116–94 added subsec. (m). 2018—Subsec. (c)(7)(E)(v)(II). Pub. L. 115–141, § 401(a)(99), inserted ‘‘the’’ after ‘‘title I of’’. Subsec. (h)(2)(F). Pub. L. 115–141, § 401(a)(100), sub- stituted ‘‘section 417(e)(3)(D)’’ for ‘‘section 417(e)(3)(D)(i)’’. 2017—Subsec. (c)(7)(D)(vii)(II). Pub. L. 115–97 sub- stituted ‘‘for ‘calendar year 2016’ in subparagraph (A)(ii)’’ for ‘‘for ‘calendar year 1992’ in subparagraph (B)’’. 2015—Subsec. (h)(2)(C)(iv)(II). Pub. L. 114–74 amended table generally. Prior to amendment, table related to applicable minimum and maximum percentages for cal- endar years 2012 to 2020 and after. 2014—Subsec. (c)(5). Pub. L. 113–295, § 221(a)(57)(C)(i), struck out subpar. (A) designation and heading and subpar. (B) which related to a transition rule for plan years beginning after 2007 and before 2011. Subsec. (h)(2)(B)(i). Pub. L. 113–159, § 2003(d)(1), sub- stituted ‘‘the valuation date for the plan year’’ for ‘‘the first day of the plan year’’. Subsec. (h)(2)(C)(iv)(II). Pub. L. 113–159, § 2003(a), amended table generally. Prior to amendment, table re- lated to applicable minimum and maximum percent- ages for calendar years 2012 to 2015 and after. Subsec. (h)(2)(G). Pub. L. 113–295, § 221(a)(57)(D)(i), struck out subpar. (G) which related to a transition rule for plan years beginning in 2008 or 2009. 2012—Subsec. (h)(2)(C)(iv). Pub. L. 112–141, § 40211(a)(1), added cl. (iv). Subsec. (h)(2)(F). Pub. L. 112–141, § 40211(a)(2)(B), in- serted ‘‘and the averages determined under subpara- graph (C)(iv)’’ after ‘‘subparagraph (C)’’. 2010—Subsec. (c)(1). Pub. L. 111–192, § 201(b)(3)(A), sub- stituted ‘‘any shortfall amortization base which has not been fully amortized under this subsection’’ for ‘‘the shortfall amortization bases for such plan year and each of the 6 preceding plan years’’. Subsec. (c)(2)(D). Pub. L. 111–192, § 201(b)(1), added sub- par. (D). Subsec. (c)(7). Pub. L. 111–192, § 201(b)(2), added par. (7). Subsec. (f)(3)(D). Pub. L. 111–192, § 204(b), added sub- par. (D). Subsec. (j)(3)(F). Pub. L. 111–192, § 201(b)(3)(B), added subpar. (F). 2008—Subsec. (b). Pub. L. 110–458, § 101(b)(2)(A), amended subsec. (b) generally. Prior to amendment, text read as follows: ‘‘For purposes of this section, ex- cept as provided in subsection (i)(2) with respect to plans in at-risk status, the term ‘target normal cost’ means, for any plan year, the present value of all bene- fits which are expected to accrue or to be earned under the plan during the plan year. For purposes of this sub- section, if any benefit attributable to services per- formed in a preceding plan year is increased by reason of any increase in compensation during the current plan year, the increase in such benefit shall be treated as having accrued during the current plan year.’’ Subsec. (c)(5)(B)(i). Pub. L. 110–458, § 202(b)(2), added cl. (i) and struck out former cl. (i). Prior to amend- ment, text read as follows: ‘‘Except as provided in clauses (iii) and (iv), in the case of plan years beginning after 2007 and before 2011, only the applicable percent- age of the funding target shall be taken into account under paragraph (3)(A) in determining the funding shortfall for the plan year for purposes of subparagraph (A).’’ Subsec. (c)(5)(B)(iii). Pub. L. 110–458, § 202(b)(1), redes- ignated cl. (iv) as (iii) and struck out former cl. (iii). Prior to amendment, text read as follows: ‘‘Clause (i) shall not apply with respect to any plan year beginning after 2008 unless the shortfall amortization base for each of the preceding years beginning after 2007 was zero (determined after application of this subpara- graph).’’ Pub. L. 110–458, § 101(b)(2)(B), inserted ‘‘beginning’’ be- fore ‘‘after 2008’’. Subsec. (c)(5)(B)(iv). Pub. L. 110–458, § 202(b)(1), redes- ignated cl. (iv) as (iii). Subsec. (c)(5)(B)(iv)(II). Pub. L. 110–458, § 101(b)(2)(C), inserted ‘‘for such year’’ after ‘‘beginning in 2007)’’. Subsec. (f)(3)(A). Pub. L. 110–458, § 101(b)(2)(D)(i), struck out ‘‘as of the first day of the plan year’’ after ‘‘credited by the plan sponsor’’. Subsec. (f)(4)(A). Pub. L. 110–458, § 101(b)(2)(D)(ii), sub- stituted ‘‘paragraph (3)’’ for ‘‘paragraph (2)’’. Subsec. (f)(6)(B)(iii). Pub. L. 110–458, § 101(b)(2)(D)(iii), substituted ‘‘subsection (b), (c), or (e) of section 436’’ for ‘‘paragraph (1), (2), or (4) of section 206(g)’’. Subsec. (f)(6)(C). Pub. L. 110–458, § 101(b)(2)(D)(iv), struck out ‘‘the sum of’’ after ‘‘by’’ in introductory provisions. Subsec. (f)(8). Pub. L. 110–458, § 101(b)(2)(D)(v), struck out ‘‘of the Treasury’’ after ‘‘by the Secretary’’. Subsec. (g)(3)(B). Pub. L. 110–458, § 121(b), amended concluding provisions generally. Prior to amendment, concluding provisions read as follows: ‘‘Any such aver- aging shall be adjusted for contributions and distribu- tions (as provided by the Secretary).’’ Subsec. (h)(2)(B). Pub. L. 110–458, § 101(b)(2)(E)(i), (ii), in introductory provisions, inserted ‘‘and target normal cost’’ after ‘‘funding target’’ and substituted ‘‘benefits’’ for ‘‘liabilities’’. Subsec. (h)(2)(F). Pub. L. 110–458, § 101(b)(2)(E)(iii), (iv), substituted ‘‘section 417(e)(3)(D)(i) for such Page 1502 TITLE 26—INTERNAL REVENUE CODE § 430 month)’’ for ‘‘section 417(e)(3)(D)(i)) for such month’’ and ‘‘subparagraph (C)’’ for ‘‘subparagraph (B)’’. Subsec. (i)(2)(A). Pub. L. 110–458, § 101(b)(2)(F)(i)(I), added subpar. (A) and struck out former subpar. (A) which read as follows: ‘‘the present value of all benefits which are expected to accrue or be earned under the plan during the plan year, determined using the addi- tional actuarial assumptions described in paragraph (1)(B), plus’’. Subsec. (i)(2)(B). Pub. L. 110–458, § 101(b)(2)(F)(i)(II), substituted ‘‘the amount determined under subsection (b)(1)(A)(i) with respect to the plan for the plan year’’ for ‘‘the target normal cost (determined without regard to this paragraph) of the plan for the plan year’’. Subsec. (i)(4)(B). Pub. L. 110–458, § 101(b)(2)(F)(ii), sub- stituted ‘‘subparagraph (A)’’ for ‘‘subparagraph (A)(ii)’’ in concluding provisions. Subsec. (j)(3)(A). Pub. L. 110–458, § 101(b)(2)(G)(i), in- serted at end ‘‘In the case of plan years beginning in 2008, the funding shortfall for the preceding plan year may be determined using such methods of estimation as the Secretary may provide.’’ Subsec. (j)(3)(D)(ii)(II). Pub. L. 110–458, § 101(b)(2)(G)(ii), substituted ‘‘section 412(c)’’ for ‘‘sec- tion 302(c)’’. Subsec. (j)(3)(E). Pub. L. 110–458, § 101(b)(2)(G)(iii), (iv), substituted ‘‘, short years, and years with alternate valuation date’’ for ‘‘and short years’’ in heading and added cl. (iii). Subsec. (k)(1). Pub. L. 110–458, § 101(b)(2)(H)(i), in- serted ‘‘(as provided under paragraph (2))’’ after ‘‘ap- plies’’ in introductory provisions. Subsec. (k)(6)(B). Pub. L. 110–458, § 101(b)(2)(H)(ii), struck out ‘‘, except that in the case of a payment other than a required installment, the due date shall be the date such payment is required to be made under section 430’’ before period at end. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2021 AMENDMENT Pub. L. 117–58, div. H, title VI, § 80602(c), Nov. 15, 2021, 135 Stat. 1339, provided that: ‘‘The amendments made by this section [amending this section and sections 1021 and 1083 of Title 29, Labor] shall apply with respect to plan years beginning after December 31, 2021.’’ Pub. L. 117–2, title IX, § 9705(c), Mar. 11, 2021, 135 Stat. 200, provided that: ‘‘The amendments made by this sec- tion [amending this section and section 1083 of Title 29, Labor] shall apply to plan years beginning after Decem- ber 31, 2018.’’ Pub. L. 117–2, title IX, § 9706(c), Mar. 11, 2021, 135 Stat. 201, provided that: ‘‘(1) IN GENERAL.—The amendments made by this sec- tion [amending this section and sections 1021 and 1083 of Title 29, Labor] shall apply with respect to plan years beginning after December 31, 2019. ‘‘(2) ELECTION NOT TO APPLY.—A plan sponsor may elect not to have the amendments made by this section apply to any plan year beginning before January 1, 2022, either (as specified in the election)— ‘‘(A) for all purposes for which such amendments apply, or ‘‘(B) solely for purposes of determining the adjusted funding target attainment percentage under sections 436 of the Internal Revenue Code of 1986 and 206(g) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1056(g)] for such plan year. A plan shall not be treated as failing to meet the re- quirements of sections 204(g) of such Act [29 U.S.C. 1054(g)] and 411(d)(6) of such Code solely by reason of an election under this paragraph.’’ Pub. L. 117–2, title IX, § 9707(c), Mar. 11, 2021, 135 Stat. 206, provided that: ‘‘The amendments made by this sec- tion [amending this section and section 1083 of Title 29, Labor] shall apply to plan years ending after December 31, 2017.’’ EFFECTIVE DATE OF 2019 AMENDMENT Pub. L. 116–94, div. O, title I, § 115(c), Dec. 20, 2019, 133 Stat. 3161, provided that: ‘‘The amendments made by this section [amending this section and section 1083 of Title 29, Labor] shall apply to plan years ending after December 31, 2017.’’ EFFECTIVE DATE OF 2017 AMENDMENT Amendment by Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 11002(e) of Pub. L. 115–97, set out as a note under section 1 of this title. EFFECTIVE DATE OF 2015 AMENDMENT Pub. L. 114–74, title V, § 504(c), Nov. 2, 2015, 129 Stat. 594, provided that: ‘‘The amendments made by this sec- tion [amending this section and sections 1021 and 1083 of Title 29, Labor] shall apply with respect to plan years beginning after December 31, 2015.’’ EFFECTIVE DATE OF 2014 AMENDMENT Amendment by Pub. L. 113–295 effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of Pub. L. 113–295, set out as a note under section 1 of this title. Pub. L. 113–159, title II, § 2003(e), Aug. 8, 2014, 128 Stat. 1851, provided that: ‘‘(1) IN GENERAL.—The amendments made by sub- sections (a), (b), and (d) [amending this section and sec- tions 1021 and 1083 of Title 29, Labor] shall apply with respect to plan years beginning after December 31, 2012. ‘‘(2) ELECTIONS.—A plan sponsor may elect not to have the amendments made by subsections (a), (b), and (d) apply to any plan year beginning before January 1, 2014, either (as specified in the election)— ‘‘(A) for all purposes for which such amendments apply, or ‘‘(B) solely for purposes of determining the adjusted funding target attainment percentage under sections 436 of the Internal Revenue Code of 1986 [26 U.S.C. 436] and 206(g) of the Employee Retirement Income Secu- rity Act of 1974 (29 U.S.C. 1054(g) [probably should be 29 U.S.C. 1056(g)]) for such plan year. A plan shall not be treated as failing to meet the re- quirements of section 204(g) of such Act [29 U.S.C. 1054(g)] and section 411(d)(6) of such Code [26 U.S.C. 411(d)(6)] solely by reason of an election under this paragraph.’’ EFFECTIVE DATE OF 2012 AMENDMENT Amendment by Pub. L. 112–141 applicable with re- spect to plan years beginning after December 31, 2011, except as otherwise provided, see section 40211(c) of Pub. L. 112–141, set out as a note under section 404 of this title. EFFECTIVE DATE OF 2010 AMENDMENT Pub. L. 111–192, title II, § 201(c), June 25, 2010, 124 Stat. 1296, provided that: ‘‘The amendments made by this section [amending this section and section 1083 of Title 29, Labor] shall apply to plan years beginning after De- cember 31, 2007.’’ Pub. L. 111–192, title II, § 204(c), June 25, 2010, 124 Stat. 1302, provided that: ‘‘(1) IN GENERAL.—Except as provided in paragraph (2), the amendments made by this section [amending this section and section 1083 of Title 29, Labor] 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.’’ EFFECTIVE DATE OF 2008 AMENDMENT Pub. L. 110–458, title I, § 101(b)(3), Dec. 23, 2008, 122 Stat. 5096, provided that: ‘‘(A) IN GENERAL.—Except as provided in subpara- graph (B), the amendments made by paragraphs (1)(A) [amending section 1083 of Title 29, Labor], (1)(F)(i) [amending section 1083 of Title 29], (2)(A) [amending this section], and (2)(F)(i) [amending this section] shall apply to plan years beginning after December 31, 2008.’’ Page 1503 TITLE 26—INTERNAL REVENUE CODE § 430 ‘‘(B) ELECTION FOR EARLIER APPLICATION.—The amend- ments made by such paragraphs shall apply to a plan for the first plan year beginning after December 31, 2007, if the plan sponsor makes the election under this subparagraph. An election under this subparagraph shall be made at such time and in such manner as the Secretary of the Treasury or the Secretary’s delegate may prescribe, and, once made, may be revoked only with the consent of the Secretary.’’ Amendment by section 101(b)(2)(B)–(E), (F)(ii)–(H) of Pub. L. 110–458 effective as if included in the provisions of Pub. L. 109–280 to which the amendment relates, ex- cept as otherwise provided, see section 112 of Pub. L. 110–458, set out as a note under section 72 of this title. Pub. L. 110–458, title I, § 121(c), Dec. 23, 2008, 122 Stat. 5114, provided that: ‘‘The amendments made by this section [amending this section and section 1083 of Title 29, Labor] shall take effect as if included in the provi- sions of the 2006 Act [Pub. L. 109–280] to which the amendments relate.’’ Pub. L. 110–458, title II, § 202(c), Dec. 23, 2008, 122 Stat. 5118, provided that: ‘‘The amendments made by sub- sections (a) and (b) [amending this section and section 1083 of Title 29, Labor] shall apply as if included in the enactment of sections 102 and 112, respectively, of the Pension Protection Act of 2006 [Pub. L. 109–280].’’ EFFECTIVE DATE Pub. L. 109–280, title I, § 112(b), Aug. 17, 2006, 120 Stat. 846, provided that: ‘‘The amendments made by this sec- tion [enacting this section] shall apply with respect to plan years beginning after December 31, 2007.’’ SINGLE-EMPLOYER PLAN FUNDING RULES Pub. L. 116–136, div. A, title III, § 3608, Mar. 27, 2020, 134 Stat. 413, provided that: ‘‘(a) DELAY IN PAYMENT OF MINIMUM REQUIRED CON- TRIBUTIONS.—In the case of any minimum required con- tribution (as determined under section 430(a) of the In- ternal Revenue Code of 1986 and section 303(a) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1083(a))) which (but for this section) would other- wise be due under section 430(j) of such Code (including quarterly contributions under paragraph (3) thereof) and section 303(j) of such Act (29 U.S.C. 1083(j)) (includ- ing quarterly contributions under paragraph (3) there- of) during calendar year 2020— ‘‘(1) the due date for such contributions shall be January 1, 2021, and ‘‘(2) the amount of each such minimum required contribution shall be increased by interest accruing for the period between the original due date (without regard to this section) for the contribution and the payment date, at the effective rate of interest for the plan for the plan year which includes such payment date. ‘‘(b) BENEFIT RESTRICTION STATUS.—For purposes of section 436 of the Internal Revenue Code of 1986 and section 206(g) of the Employee Retirement Income Se- curity Act of 1974 (29 U.S.C. 1056(g)), a plan sponsor may elect to treat the plan’s adjusted funding target attain- ment percentage for the last plan year ending before January 1, 2020, as the adjusted funding target attain- ment percentage for plan years which include calendar year 2020.’’ MORTALITY TABLES Pub. L. 117–328, div. T, title III, § 335, Dec. 29, 2022, 136 Stat. 5372, provided that: ‘‘(a) IN GENERAL.—Not later than 18 months after the date of the enactment of this Act [Dec. 29, 2022], the Secretary of the Treasury (or the Secretary’s delegate) shall amend the regulation relating to ‘Mortality Ta- bles for Determining Present Value Under Defined Ben- efit Pension Plans’ (82 Fed. Reg. 46388 (October 5, 2017)). Under such amendment, for valuation dates occurring during or after 2024, such mortality improvement rates shall not assume for years beyond the valuation date future mortality improvements at any age which are greater than .78 percent. The Secretary of the Treasury (or delegate) shall by regulation modify the .78 percent figure in the preceding sentence as necessary to reflect material changes in the overall rate of improvement projected by the Social Security Administration. ‘‘(b) EFFECTIVE DATE.—The amendments required under subsection (a) shall be deemed to have been made as of the date of the enactment of this Act, and as of such date all applicable laws shall be applied in all re- spects as though the actions which the Secretary of the Treasury (or the Secretary’s delegate) is required to take under such subsection had been taken.’’ Pub. L. 114–74, title V, § 503, Nov. 2, 2015, 129 Stat. 593, provided that: ‘‘(a) CREDIBILITY.—For purposes of subclause (I) of section 430(h)(3)(C)(iii) of the Internal Revenue Code of 1986 and subclause (I) of section 303(h)(3)(C)(iii) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1083(h)(3)(C)(iii)], the determination of whether plans have credible information shall be made in ac- cordance with established actuarial credibility theory, which— ‘‘(1) is materially different from rules under such section of such Code, including Revenue Procedure 2007–37, that are in effect on the date of the enact- ment of this Act [Nov. 2, 2015]; and ‘‘(2) permits the use of tables that reflect adjust- ments to the tables described in subparagraphs (A) and (B) of section 430(h)(3) of such Code, and subpara- graphs (A) and (B) of section 303(h)(3) of such Act, if such adjustments are based on the experience de- scribed in subclause (II) of section 430(h)(3)(C)(iii) of such Code and in subclause (II) of section 303(h)(3)(C)(iii) of such Act. ‘‘(b) EFFECTIVE DATE.—This section shall apply to plan years beginning after December 31, 2015.’’ APPLICABILITY OF SUBTITLES A AND B OF TITLE I OF PUB. L. 109–280 For special rules on applicability of subtitles A (§§ 101–108) and B (§§ 111–116) of title I of Pub. L. 109–280 to certain eligible cooperative plans, PBGC settlement plans, and eligible government contractor plans, see sections 104, 105, and 106 of Pub. L. 109–280, set out as notes under section 401 of this title. MODIFICATION OF TRANSITION RULE TO PENSION FUNDING REQUIREMENTS Pub. L. 109–280, title I, § 115(a)–(c), Aug. 17, 2006, 120 Stat. 855, 856, provided that: ‘‘(a) IN GENERAL.—In the case of a plan that— ‘‘(1) was not required to pay a variable rate pre- mium for the plan year beginning in 1996, ‘‘(2) has not, in any plan year beginning after 1995, merged with another plan (other than a plan spon- sored by an employer that was in 1996 within the con- trolled group of the plan sponsor), and ‘‘(3) is sponsored by a company that is engaged pri- marily in the interurban or interstate passenger bus service, the rules described in subsection (b) shall apply for any plan year beginning after December 31, 2007. ‘‘(b) MODIFIED RULES.—The rules described in this subsection are as follows: ‘‘(1) For purposes of section 430(j)(3) of the Internal Revenue Code of 1986 and section 303(j)(3) of the Em- ployee Retirement Income Security Act of 1974 [29 U.S.C. 1083(j)(3)], the plan shall be treated as not hav- ing a funding shortfall for any plan year. ‘‘(2) For purposes of— ‘‘(A) determining unfunded vested benefits under section 4006(a)(3)(E)(iii) of such Act [29 U.S.C. 1306(a)(3)(E)(iii)], and ‘‘(B) determining any present value or making any computation under section 412 of such Code or section 302 of such Act [29 U.S.C. 1082], the mortality table shall be the mortality table used by the plan. ‘‘(3) [Former] Section 430(c)(5)(B) of such Code and [former] section 303(c)(5)(B) of such Act [29 U.S.C. Page 1504 TITLE 26—INTERNAL REVENUE CODE § 430 1083(c)(5)(B)] (relating to phase-in of funding target for exemption from new shortfall amortization base) shall each be applied by substituting ‘2012’ for ‘2011’ therein and by substituting for the table therein the following: ‘‘In the case of a plan year beginning in calendar year: The applica- ble percent- age is: 2008 .......................................................... 90 percent 2009 .......................................................... 92 percent 2010 .......................................................... 94 percent 2011 .......................................................... 96 percent. ‘‘(c) DEFINITIONS.—Any term used in this section which is also used in section 430 of such Code or section 303 of such Act [29 U.S.C. 1083] shall have the meaning provided such term in such section. If the same term has a different meaning in such Code and such Act [29 U.S.C. 1001 et seq.], such term shall, for purposes of this section, have the meaning provided by such Code when applied with respect to such Code and the meaning pro- vided by such Act when applied with respect to such Act.’’ SPECIAL FUNDING RULES FOR CERTAIN PLANS MAINTAINED BY COMMERCIAL AIRLINES Pub. L. 109–280, title IV, § 402, Aug. 17, 2006, 120 Stat. 922, as amended by Pub. L. 110–28, title VI, §§ 6614(a), 6615(a), May 25, 2007, 121 Stat. 181; Pub. L. 110–458, title I, §§ 104(b), 126(a), Dec. 23, 2008, 122 Stat. 5104, 5116, pro- vided that: ‘‘(a) IN GENERAL.—The plan sponsor of an eligible plan may elect to either— ‘‘(1) have the rules of subsection (b) apply, or ‘‘(2) have section 303 of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1083] and sec- tion 430 of the Internal Revenue Code of 1986 applied to its first taxable year beginning in 2008 by amor- tizing the shortfall amortization base for such tax- able year over a period of 10 plan years (rather than 7 plan years) beginning with such plan year and by using, in determining the funding target for each of the 10 plan years during such period, an interest rate of 8.25 percent (rather than the segment rates cal- culated on the basis of the corporate bond yield curve). ‘‘(b) ALTERNATIVE FUNDING SCHEDULE.— ‘‘(1) IN GENERAL.—If an election is made under sub- section (a)(1) to have this subsection apply to an eli- gible plan and the requirements of paragraphs (2) and (3) are met with respect to the plan— ‘‘(A) in the case of any applicable plan year begin- ning before January 1, 2008, the plan shall not have an accumulated funding deficiency for purposes of section 302 of the Employee Retirement Income Se- curity Act of 1974 [29 U.S.C. 1082] and sections 412 and 4971 of the Internal Revenue Code of 1986 if con- tributions to the plan for the plan year are not less than the minimum required contribution deter- mined under subsection (e) for the plan for the plan year, and ‘‘(B) in the case of any applicable plan year begin- ning on or after January 1, 2008, the minimum re- quired contribution determined under sections 303 of such Act [29 U.S.C. 1083] and 430 of such Code shall, for purposes of sections 302 and 303 of such Act and sections 412, 430, and 4971 of such Code, be equal to the minimum required contribution deter- mined under subsection (e) for the plan for the plan year. ‘‘(2) ACCRUAL RESTRICTIONS.— ‘‘(A) IN GENERAL.—The requirements of this para- graph are met if, effective as of the first day of the first applicable plan year and at all times there- after while an election under this section is in ef- fect, the plan provides that— ‘‘(i) the accrued benefit, any death or disability benefit, and any social security supplement de- scribed in the last sentence of section 411(a)(9) of such Code and section 204(b)(1)(G) of such Act [29 U.S.C. 1054(b)(1)(G)], of each participant are fro- zen at the amount of such benefit or supplement immediately before such first day, and ‘‘(ii) all other benefits under the plan are elimi- nated, but only to the extent the freezing or elimination of such benefits would have been permitted under section 411(d)(6) of such Code and section 204(g) of such Act if they had been implemented by a plan amendment adopted immediately before such first day. ‘‘(B) INCREASES IN SECTION 415 LIMITS.—If a plan provides that an accrued benefit of a participant which has been subject to any limitation under sec- tion 415 of such Code will be increased if such limi- tation is increased, the plan shall not be treated as meeting the requirements of this section unless, ef- fective as of the first day of the first applicable plan year (or, if later, the date of the enactment of this Act [Aug. 17, 2006]) and at all times thereafter while an election under this section is in effect, the plan provides that any such increase shall not take effect. A plan shall not fail to meet the require- ments of section 411(d)(6) of such Code and section 204(g) of such Act solely because the plan is amend- ed to meet the requirements of this subparagraph. ‘‘(3) RESTRICTION ON APPLICABLE BENEFIT IN- CREASES.— ‘‘(A) IN GENERAL.—The requirements of this para- graph are met if no applicable benefit increase takes effect at any time during the period begin- ning on July 26, 2005, and ending on the day before the first day of the first applicable plan year. ‘‘(B) APPLICABLE BENEFIT INCREASE.—For purposes of this paragraph, the term ‘applicable benefit in- crease’ means, with respect to any plan year, any increase in liabilities of the plan by plan amend- ment (or otherwise provided in regulations provided by the Secretary) which, but for this paragraph, would occur during the plan year by reason of— ‘‘(i) any increase in benefits, ‘‘(ii) any change in the accrual of benefits, or ‘‘(iii) any change in the rate at which benefits become nonforfeitable under the plan. ‘‘(4) EXCEPTION FOR IMPUTED DISABILITY SERVICE.— Paragraphs (2) and (3) shall not apply to any accrual or increase with respect to imputed service provided to a participant during any period of the partici- pant’s disability occurring on or after the effective date of the plan amendment providing the restric- tions under paragraph (2) (or on or after July 26, 2005, in the case of the restrictions under paragraph (3)) if the participant— ‘‘(A) was receiving disability benefits as of such date, or ‘‘(B) was receiving sick pay and subsequently de- termined to be eligible for disability benefits as of such date. ‘‘(c) DEFINITIONS.—For purposes of this section— ‘‘(1) ELIGIBLE PLAN.—The term ‘eligible plan’ means a defined benefit plan (other than a multiemployer plan) to which sections 302 of such Act [29 U.S.C. 1082] and 412 of such Code applies which is sponsored by an employer— ‘‘(A) which is a commercial passenger airline, or ‘‘(B) the principal business of which is providing catering services to a commercial passenger airline. ‘‘(2) APPLICABLE PLAN YEAR.—The term ‘applicable plan year’ means each plan year to which the election under subsection (a)(1) applies under subsection (d)(1)(A). ‘‘(d) ELECTIONS AND RELATED TERMS.— ‘‘(1) YEARS FOR WHICH ELECTION MADE.— ‘‘(A) ALTERNATIVE FUNDING SCHEDULE.—If an elec- tion under subsection (a)(1) was made with respect to an eligible plan, the plan sponsor may select ei- ther a plan year beginning in 2006 or a plan year be- ginning in 2007 as the first plan year to which such Page 1505 TITLE 26—INTERNAL REVENUE CODE § 430 election applies. The election shall apply to such plan year and all subsequent years. The election shall be made— ‘‘(i) not later than December 31, 2006, in the case of an election for a plan year beginning in 2006, or ‘‘(ii) not later than December 31, 2007, in the case of an election for a plan year beginning in 2007. ‘‘(B) 10 YEAR AMORTIZATION.—An election under subsection (a)(2) shall be made not later than De- cember 31, 2007. ‘‘(C) ELECTION OF NEW PLAN YEAR FOR ALTER- NATIVE FUNDING SCHEDULE.—In the case of an elec- tion under subsection (a)(1), the plan sponsor may specify a new plan year in such election and the plan year of the plan may be changed to such new plan year without the approval of the Secretary of the Treasury. ‘‘(2) MANNER OF ELECTION.—A plan sponsor shall make any election under subsection (a) in such man- ner as the Secretary of the Treasury may prescribe. Such election, once made, may be revoked only with the consent of such Secretary. ‘‘(e) MINIMUM REQUIRED CONTRIBUTION.—In the case of an eligible plan with respect to which an election is made under subsection (a)(1)— ‘‘(1) IN GENERAL.—In the case of any applicable plan year during the amortization period, the minimum required contribution shall be the amount necessary to amortize the unfunded liability of the plan, deter- mined as of the first day of the plan year, in equal an- nual installments (until fully amortized) over the re- mainder of the amortization period. Such amount shall be separately determined for each applicable plan year. ‘‘(2) YEARS AFTER AMORTIZATION PERIOD.—In the case of any plan year beginning after the end of the amortization period, section 302(a)(2)(A) of such Act [29 U.S.C. 1082(a)(2)(A)] and section 412(a)(2)(A) of such Code shall apply to such plan, but the prefunding balance and funding standard carryover balance as of the first day of the first of such years under section 303(f) of such Act [29 U.S.C. 1083(f)] and section 430(f) of such Code shall be zero. ‘‘(3) DEFINITIONS.—For purposes of this section— ‘‘(A) UNFUNDED LIABILITY.—The term ‘unfunded li- ability’ means the unfunded accrued liability under the plan, determined under the unit credit funding method. ‘‘(B) AMORTIZATION PERIOD.—The term ‘amortiza- tion period’ means the 17-plan year period begin- ning with the first applicable plan year. ‘‘(4) OTHER RULES.—In determining the minimum required contribution and amortization amount under this subsection— ‘‘(A) the provisions of section 302(c)(3) of such Act and section 412(c)(3) of such Code, as in effect before the date of enactment of this section [Aug. 17, 2006], shall apply, ‘‘(B) a rate of interest of 8.85 percent shall be used for all calculations requiring an interest rate, and ‘‘(C) the value of plan assets shall be determined under sections 303(g)(3) of such Act [29 U.S.C. 1083(g)(3)] and 430(g)(3) of such Code. ‘‘(5) SPECIAL RULE FOR CERTAIN PLAN SPINOFFS.—For purposes of subsection (b), if, with respect to any eli- gible plan to which this subsection applies— ‘‘(A) any applicable plan year includes the date of the enactment of this Act, ‘‘(B) a plan was spun off from the eligible plan during the plan year but before such date of enact- ment, the minimum required contribution under paragraph (1) for the eligible plan for such applicable plan year shall be an aggregate amount determined as if the plans were a single plan for that plan year (based on the full 12-month plan year in effect prior to the spin- off). The employer shall designate the allocation of such aggregate amount between such plans for the applicable plan year. ‘‘(f) SPECIAL RULES FOR CERTAIN BALANCES AND WAIV- ERS.—In the case of an eligible plan with respect to which an election is made under subsection (a)(1)— ‘‘(1) FUNDING STANDARD ACCOUNT AND CREDIT BAL- ANCES.—Any charge or credit in the funding standard account under section 302 of such Act [29 U.S.C. 1082] or section 412 of such Code, and any prefunding bal- ance or funding standard carryover balance under section 303 of such Act [29 U.S.C. 1083] or section 430 of such Code, as of the day before the first day of the first applicable plan year, shall be reduced to zero. ‘‘(2) WAIVED FUNDING DEFICIENCIES.—Any waived funding deficiency under sections 302 and 303 of such Act or section 412 of such Code, as in effect before the date of enactment of this section [Aug. 17, 2006], shall be deemed satisfied as of the first day of the first ap- plicable plan year and the amount of such waived funding deficiency shall be taken into account in de- termining the plan’s unfunded liability under sub- section (e)(3)(A). In the case of a plan amendment adopted to satisfy the requirements of subsection (b)(2), the plan shall not be deemed to violate section 304(b) of such Act [29 U.S.C. 1084(b)] or section 412(f) of such Code, as so in effect, by reason of such amend- ment or any increase in benefits provided to such plan’s participants under a separate plan that is a de- fined contribution plan or a multiemployer plan. ‘‘(g) OTHER RULES FOR PLANS MAKING ELECTION UNDER THIS SECTION.— ‘‘(1) SUCCESSOR PLANS TO CERTAIN PLANS.—If— ‘‘(A) an election under paragraph (1) or (2) of sub- section (a) is in effect with respect to any eligible plan, and ‘‘(B) the eligible plan is maintained by an em- ployer that establishes or maintains 1 or more other defined benefit plans (other than any multi- employer plan), and such other plans in combina- tion provide benefit accruals to any substantial number of successor employees, the Secretary of the Treasury may, in the Secretary’s discretion, determine that any trust of which any other such plan is a part does not constitute a quali- fied trust under section 401(a) of the Internal Revenue Code of 1986 unless all benefit obligations of the eligi- ble plan have been satisfied. For purposes of this paragraph, the term ‘successor employee’ means any employee who is or was covered by the eligible plan and any employees who perform substantially the same type of work with respect to the same business operations as an employee covered by such eligible plan. ‘‘(2) SPECIAL RULES FOR TERMINATIONS.— ‘‘(A) PBGC LIABILITY LIMITED.—[Amended section 1322 of Title 29, Labor.] ‘‘(B) TERMINATION PREMIUM.—In applying section 4006(a)(7)(A) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1306(a)(7)(A)] to an eligible plan during any period in which an election under subsection (a)(1) is in effect— ‘‘(i) ‘$2,500’ shall be substituted for ‘$1,250’ in such section if such plan terminates during the 5- year period beginning on the first day of the first applicable plan year with respect to such plan, and ‘‘(ii) such section shall be applied without re- gard to subparagraph (B) of section 8101(d)(2) of the Deficit Reduction Act of 2005 [Pub. L. 109–171, 29 U.S.C. 1306 note] (relating to special rule for plans terminated in bankruptcy). The substitution described in clause (i) shall not apply with respect to any plan if the Secretary of Labor determines that such plan terminated as a result of extraordinary circumstances such as a ter- rorist attack or other similar event. ‘‘(3) LIMITATION ON DEDUCTIONS UNDER CERTAIN PLANS.—Section 404(a)(7)(C)(iv) of the Internal Rev- enue Code of 1986, as added by this Act, shall not apply with respect to any taxable year of a plan spon- sor of an eligible plan if any applicable plan year with respect to such plan ends with or within such taxable year. Page 1506 TITLE 26—INTERNAL REVENUE CODE § 431 ‘‘(4) NOTICE.—In the case of a plan amendment adopted in order to comply with this section, any no- tice required under section 204(h) of such Act [29 U.S.C. 1054(h)] or section 4980F(e) of such Code shall be provided within 15 days of the effective date of such plan amendment. This subsection shall not apply to any plan unless such plan is maintained pur- suant to one or more collective bargaining agree- ments between employee representatives and 1 or more employers. ‘‘(h) EXCLUSION OF CERTAIN EMPLOYEES FROM MIN- IMUM COVERAGE REQUIREMENTS.— ‘‘(1) IN GENERAL.—[Amended section 410 of this title.] ‘‘(2) EFFECTIVE DATE.—The amendment made by this subsection [amending section 410 of this title] shall apply to years beginning before, on, or after the date of the enactment of this Act [Aug. 17, 2006]. ‘‘(i) EXTENSION OF SPECIAL RULE FOR ADDITIONAL FUNDING REQUIREMENTS.—In the case of an employer which is a commercial passenger airline, section 302(d)(12) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1082(d)(12)] and section 412(l)(12) of the Internal Revenue Code of 1986, as in effect before the date of the enactment of this Act [Aug. 17, 2006], shall each be applied— ‘‘(1) by substituting ‘January 1, 2008’ for ‘December 28, 2005’ in subparagraph (D)(i) thereof, and ‘‘(2) without regard to subparagraph (D)(ii). ‘‘(j) EFFECTIVE DATE.—Except as otherwise provided in this section, the provisions of and amendments made by this section [amending section 410 of this title and section 1322 of Title 29, Labor] shall apply to plan years ending after the date of the enactment of this Act [Aug. 17, 2006].’’ [Pub. L. 110–458, title I, § 126(b), Dec. 23, 2008, 122 Stat. 5116, provided that: ‘‘The amendment made by this sec- tion [amending section 402(e)(4)(C) of Pub. L. 109–280, set out above] shall apply to plan years beginning after December 31, 2007.’’] [Pub. L. 110–28, title VI, § 6614(b), May 25, 2007, 121 Stat. 181, provided that: ‘‘The amendment made by sub- section (a) [amending section 402(i)(1) of Pub. L. 109–280, set out above] shall take effect as if included in section 402 of the Pension Protection Act of 2006 [Pub. L. 109–280].’’] [Pub. L. 110–28, title VI, § 6615(b), May 25, 2007, 121 Stat. 181, provided that: ‘‘The amendment made by this section [amending section 402(a)(2) of Pub. L. 109–280, set out above] shall take effect as if included in the provisions of the Pension Protection Act of 2006 [Pub. L. 109–280] to which such amendment relates.’’] § 431. Minimum funding standards for multiem- ployer plans (a) In general For purposes of section 412, the accumulated funding deficiency of a multiemployer plan for any plan year is the amount, determined as of the end of the plan year, equal to the excess (if any) of the total charges to the funding standard account of the plan for all plan years (beginning with the first plan year for which this part ap- plies to the plan) over the total credits to such account for such years. (b) Funding standard account (1) Account required Each multiemployer plan to which this part applies shall establish and maintain a funding standard account. Such account shall be cred- ited and charged solely as provided in this sec- tion. (2) Charges to account For a plan year, the funding standard ac- count shall be charged with the sum of— (A) the normal cost of the plan for the plan year, (B) the amounts necessary to amortize in equal annual installments (until fully amor- tized)— (i) in the case of a plan which comes into existence on or after January 1, 2008, the unfunded past service liability under the plan on the first day of the first plan year to which this section applies, over a period of 15 plan years, (ii) separately, with respect to each plan year, the net increase (if any) in unfunded past service liability under the plan aris- ing from plan amendments adopted in such year, over a period of 15 plan years, (iii) separately, with respect to each plan year, the net experience loss (if any) under the plan, over a period of 15 plan years, and (iv) separately, with respect to each plan year, the net loss (if any) resulting from changes in actuarial assumptions used under the plan, over a period of 15 plan years, (C) the amount necessary to amortize each waived funding deficiency (within the mean- ing of section 412(c)(3)) for each prior plan year in equal annual installments (until fully amortized) over a period of 15 plan years, (D) the amount necessary to amortize in equal annual installments (until fully amor- tized) over a period of 5 plan years any amount credited to the funding standard ac- count under section 412(b)(3)(D) (as in effect on the day before the date of the enactment of the Pension Protection Act of 2006), and (E) the amount necessary to amortize in equal annual installments (until fully amor- tized) over a period of 20 years the contribu- tions which would be required to be made under the plan but for the provisions of sec- tion 412(c)(7)(A)(i)(I) (as in effect on the day before the date of the enactment of the Pen- sion Protection Act of 2006). (3) Credits to account For a plan year, the funding standard ac- count shall be credited with the sum of— (A) the amount considered contributed by the employer to or under the plan for the plan year, (B) the amount necessary to amortize in equal annual installments (until fully amor- tized)— (i) separately, with respect to each plan year, the net decrease (if any) in unfunded past service liability under the plan aris- ing from plan amendments adopted in such year, over a period of 15 plan years, (ii) separately, with respect to each plan year, the net experience gain (if any) under the plan, over a period of 15 plan years, and (iii) separately, with respect to each plan year, the net gain (if any) resulting from changes in actuarial assumptions used under the plan, over a period of 15 plan years,