S.Amdt. 3319

SA 3319. Mr. THUNE submitted an amendment intended to be proposed to
amendment SA 3310 proposed by Mr. Reid to the bill H.R. 2847, making
appropriations for the Departments of Commerce and Justice, and
Science, and Related Agencies for the fiscal year ending September 30,
2010, and for other purposes; which was ordered to lie on the table; as
follows:

Strike subtitle B of title V and insert the following:

Subtitle B--Transfer of Stimulus Funds

SEC. 551. TRANSFER OF STIMULUS FUNDS.

Notwithstanding section 5 of the American Recovery and
Reinvestment Act of 2009 (Pub. Law 111-5), from the amounts
appropriated or made available and remaining unobligated
under such Act, the Director of the Office of Management and
Budget shall transfer from time to time to the general fund
of the Treasury an amount equal to the sum of the amount of
any net reduction in revenues and the amount of any net
increase in spending resulting from the enactment of this
Act.

TITLE VI--BUSINESS RELIEF

Subtitle A--General Provisions

SEC. 601. PERMANENT INCREASE IN LIMITATIONS ON EXPENSING OF
CERTAIN DEPRECIABLE BUSINESS ASSETS.

(a) Nonapplication of Amendments.--The amendments made by
section 201 of this Act shall not apply.
(b) Permanent Increase.--Subsection (b) of section 179 is
amended--
(1) by striking ``$25,000'' and all that follows in
paragraph (1) and inserting ``$500,000.'',
(2) by striking ``$200,000'' and all that follows in
paragraph (2) and inserting ``$2,000,000'',
(3) by striking ``after 2007 and before 2011, the $120,000
and $500,000'' in paragraph (5)(A) and inserting ``after
2009, the $500,000 and the $2,000,000'',
(4) by striking ``2006'' in paragraph (5)(A)(ii) and
inserting ``2008'', and
(5) by striking paragraph (7).
(c) Permanent Expensing of Computer Software.--Section
179(d)(1)(A)(ii) is amended by striking ``and before 2011''.
(d) Effective Date.--The amendments made by subsections (b)
and (c) shall apply to taxable years beginning after December
31, 2008.

SEC. 602. EXTENSION OF ADDITIONAL FIRST-YEAR DEPRECIATION FOR
50 PERCENT OF THE BASIS OF CERTAIN QUALIFIED
PROPERTY.

(a) In General.--Paragraph (2) of section 168(k), as
amended by the American Recovery and Reinvestment Tax Act of
2009, is amended--
(1) by striking ``January 1, 2011'' in subparagraph (A)(iv)
and inserting ``January 1, 2012'', and
(2) by striking ``January 1, 2010'' each place it appears
and inserting ``January 1, 2011''.
(b) Conforming Amendments.--
(1) The heading for subsection (k) of section 168, as
amended by the American Recovery and Reinvestment Tax Act of
2009, is amended by striking ``January 1, 2010'' and
inserting ``January 1, 2011''.
(2) The heading for clause (ii) of section 168(k)(2)(B), as
so amended, is amended by striking ``Pre-january 1, 2010''
and inserting ``Pre-january 1, 2011''.
(3) Subparagraph (D) of section 168(k)(4) is amended by
striking ``and'' at the end of clause (ii), by striking the
period at the end of clause (iii) and inserting a comma, and
by adding at the end the following new clauses:
``(iv) `January 1, 2011' shall be substituted for `January
1, 2012' in subparagraph (A)(iv) thereof, and
``(v) `January 1, 2010' shall be substituted for `January
1, 2011' each place it appears in subparagraph (A)
thereof.''.
(4) Subparagraph (B) of section 168(l)(5), as so amended,
is amended by striking ``January 1, 2010'' and inserting
``January 1, 2011''.
(5) Subparagraph (C) of section 168(n)(2), as so amended,
is amended by striking ``January 1, 2010'' and inserting
``January 1, 2011''.
(6) Subparagraph (D) of section 1400L(b)(2) is amended by
striking ``January 1, 2010'' and inserting ``January 1,
2011''.
(7) Subparagraph (B) of section 1400N(d)(3), as so amended,
is amended by striking ``January 1, 2010'' and inserting
``January 1, 2011''.
(c) Effective Date.--The amendments made by this section
shall apply to property placed in service after December 31,
2009.

SEC. 603. INCREASED EXCLUSION AND OTHER MODIFICATIONS
APPLICABLE TO QUALIFIED SMALL BUSINESS STOCK.

(a) Increased Exclusion.--
(1) In general.--Subsection (a) of section 1202 is amended
to read as follows:
``(a) Exclusion.--
``(1) In general.--In the case of a taxpayer other than a
corporation, gross income shall not include the applicable
percentage of any gain from the sale or exchange of qualified
small business stock held for more than 5 years.
``(2) Applicable percentage.--For purposes of paragraph
(1), the applicable percentage is--
``(A) 50 percent, in the case of stock issued after August
10, 1993, and on or before February 18, 2009,
``(B) 75 percent, in the case of stock issued after
February 18, 2009, and on or before the date of the enactment
of the Hiring Incentives to Restore Employment Act, and
``(C) 100 percent, in the case of stock issued after the
date of the enactment of the Hiring Incentives to Restore
Employment Act.
``(3) Empowerment zone businesses.--
``(A) In general.--In the case of qualified small business
stock acquired after December 21, 2000, and on or before
February 18, 2009, in a corporation which is a qualified
business entity (as defined in section 1397C(b)) during
substantially all of the taxpayer's holding period for such
stock, paragraph (2)(A) shall be applied by substituting `60
percent' for `50 percent'.
``(B) Certain rules to apply.--Rules similar to the rules
of paragraphs (5) and (7) of section 1400B(b) shall apply for
purposes of this paragraph.
``(C) Gain after 2014 not qualified.--Subparagraph (A)
shall not apply to gain attributable to periods after
December 31, 2014.
``(D) Treatment of dc zone.--The District of Columbia
Enterprise Zone shall not be treated as an empowerment zone
for purposes of this paragraph.''.
(2) Conforming amendments.--
(A) The heading for section 1202 is amended by striking
``PARTIAL''.
(B) The item relating to section 1202 in the table of
sections for part I of subchapter P of chapter 1 is amended
by striking ``Partial exclusion'' and inserting
``Exclusion''.
(C) Section 1223(13) is amended by striking
``1202(a)(2),''.
(b) Repeal of Minimum Tax Preference.--Paragraph (7) of
section 57(a) is amended by adding at the end the following:
``The preceding sentence shall not apply to stock issued
after the date of the enactment of the Hiring Incentives to
Restore Employment Act.''.
(c) Increase in Limitation.--
(1) In general.--Subparagraph (A) of section 1202(b)(1) is
amended by striking ``$10,000,000'' and inserting
``$15,000,000''.
(2) Married individuals.--Subparagraph (A) of section
1202(b)(3) is amended by striking ``paragraph (1)(A) shall be
applied by substituting `$5,000,000' for `$10,000,000' '' and
inserting ``the amount under paragraph (1)(A) shall be half
of the amount otherwise in effect''.
(d) Modification of Definition of Qualified Small
Business.--Section 1202(d)(1) is amended by striking
``$50,000,000'' each place it appears and inserting
``$75,000,000''.
(e) Inflation Adjustments.--Section 1202 is amended by
redesignating subsection (k) as subsection (l) and by
inserting after subsection (j) the following new subsection:
``(k) Inflation Adjustment.--
``(1) In general.--In the case of any taxable year
beginning after 2010, the $15,000,000 amount in subsection
(b)(1)(A), the $75,000,000 amount in subsection (d)(1)(A),
and the $75,000,000 amount in subsection (d)(1)(B)

[[Page S635]]

shall each be increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost of living adjustment determined under
section 1(f)(3) for the calendar year in which the taxable
year begins, determined by substituting `calendar year 2009'
for `calendar year 1992' in subparagraph (B) thereof.
``(2) Rounding.--If any amount as adjusted under paragraph
(1) is not a multiple of $1,000,000 such amount shall be
rounded to the next lowest multiple of $1,000,000.''.
(f) Effective Dates.--
(1) In general.--The amendments made by subsections (a),
(b), and (d) shall apply to stock acquired after the date of
the enactment of this Act.
(2) Limitation; inflation adjustment.--The amendments made
by subsections (c) and (e) shall apply to taxable years
ending after the date of the enactment of this Act.

SEC. 604. DEDUCTION FOR ELIGIBLE SMALL BUSINESS INCOME.

(a) In General.--Paragraph (1) of section 199(a) is amended
to read as follows:
``(1) In general.--There shall be allowed as a deduction an
amount equal to the sum of--
``(A) 9 percent of the lesser of--
``(i) the qualified production activities income of the
taxpayer for the taxable year, or
``(ii) taxable income (determined without regard to this
section) for the taxable year, and
``(B) in the case of an eligible small business for any
taxable year beginning after 2009, 20 percent of the lesser
of--
``(i) the eligible small business income of the taxpayer
for the taxable year, or
``(ii) taxable income (determined without regard to this
section) for the taxable year.''.
(b) Eligible Small Business; Eligible Small Business
Income.--Section 199 is amended by adding at the end the
following new subsection:
``(e) Eligible Small Business; Eligible Small Business
Income.--
``(1) Eligible small business.--For purposes of this
section, the term `eligible small business' means, with
respect to any taxable year--
``(A) a corporation the stock of which is not publicly
traded, or
``(B) a partnership,

which meets the gross receipts test of section 448(c)
(determined by substituting `$50,000,000' for `$5,000,000'
each place it appears in such section) for the taxable year
(or, in the case of a sole proprietorship, which would meet
such test if such proprietorship were a corporation).
``(2) Eligible small business income.--
``(A) In general.--For purposes of this section, the term
`eligible small business income' means the excess of--
``(i) the income of the eligible small business which--

``(I) is attributable to the actual conduct of a trade or
business,
``(II) is income from sources within the United States
(within the meaning of section 861), and
``(III) is not passive income (as defined in section
904(d)(2)(B)), over

``(ii) the sum of--

``(I) the cost of goods sold that are allocable to such
income, and
``(II) other expenses, losses, or deductions (other than
the deduction allowed under this section), which are properly
allocable to such income.

``(B) Exceptions.--The following shall not be treated as
income of an eligible small business for purposes of
subparagraph (A):
``(i) Any income which is attributable to any property
described in section 1400N(p)(3).
``(ii) Any income which is attributable to the ownership or
management of any professional sports team.
``(iii) Any income which is attributable to a trade or
business described in subparagraph (B) of section 1202(e)(3).
``(iv) Any income which is attributable to any property
with respect to which records are required to be maintained
under section 2257 of title 18, United States Code.
``(C) Allocation rules, etc.--Rules similar to the rules of
paragraphs (2), (3), (4)(D), and (7) of subsection (c) shall
apply for purposes of this paragraph.
``(3) Special rules.--Except as otherwise provided by the
Secretary, rules similar to the rules of subsection (d) shall
apply for purposes of this subsection.''.
(c) Conforming Amendment.--Section 199(a)(2) is amended by
striking ``paragraph (1)'' and inserting ``paragraph
(1)(A)''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2009.

SEC. 605. NONAPPLICATION OF CERTAIN LABOR STANDARDS.

Section 1601 of the American Recovery and Reinvestment Tax
Act of 2009 shall not apply to any specified tax credit bond
described in section 6431(f)(2)(A) of the Internal Revenue
Code of 1986 (as added by section 301 of this Act).

SEC. 606. E-VERIFY PROGRAM PARTICIPATION REQUIREMENT FOR
EMPLOYERS RECEIVING PAYROLL TAX FORGIVENESS.

(a) In General.--Paragraph (2) of section 3111(d), as added
by section 101, is amended by adding at the end the following
new subparagraph:
``(C) E-Verify program requirement.--The term `qualified
employer' shall not include any employer that does not
participate in the E-Verify Program carried out under
subtitle A of title IV of the Illegal Immigration Reform and
Immigrant Responsibility Act of 1996 as of the hiring date of
any qualified individual.''.
(b) Effective Date.--The amendment made by this section
shall apply as if included in section 101 of this Act.

Subtitle B--Pension Funding Relief

PART I--SINGLE EMPLOYER PLANS

SEC. 611. EXTENDED PERIOD FOR SINGLE-EMPLOYER DEFINED BENEFIT
PLANS TO AMORTIZE CERTAIN SHORTFALL
AMORTIZATION BASES.

(a) Amendments to ERISA.--
(1) In general.--Paragraph (2) of section 303(c) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1083(c)) is amended by adding at the end the following
subparagraph:
``(D) Special election for eligible plan years.--
``(i) In general.--If a plan sponsor elects to apply this
subparagraph with respect to the shortfall amortization base
of a plan for any eligible plan year (in this subparagraph
and paragraph (7) referred to as an `election year'), then,
notwithstanding subparagraphs (A) and (B)--

``(I) the shortfall amortization installments with respect
to such base shall be determined under clause (ii) or (iii),
whichever is specified in the election, and
``(II) the shortfall amortization installment for any plan
year in the 9-plan-year period described in clause (ii) or
the 15-plan-year period described in clause (iii),
respectively, with respect to such shortfall amortization
base is the annual installment determined under the
applicable clause for that year for that base.

``(ii) 2 plus 7 amortization schedule.--The shortfall
amortization installments determined under this clause are--

``(I) in the case of the first 2 plan years in the 9-plan-
year period beginning with the election year, interest on the
shortfall amortization base of the plan for the election year
(determined using the effective interest rate for the plan
for the election year), and
``(II) in the case of the last 7 plan years in such 9-plan-
year period, the amounts necessary to amortize the remaining
balance of the shortfall amortization base of the plan for
the election year in level annual installments over such last
7 plan years (using the segment rates under subparagraph (C)
for the election year).

``(iii) 15-year amortization.--The shortfall amortization
installments determined under this subparagraph are the
amounts necessary to amortize the shortfall amortization base
of the plan for the election year in level annual
installments over the 15-plan-year period beginning with the
election year (using the segment rates under subparagraph (C)
for the election year).
``(iv) Election.--

``(I) In general.--The plan sponsor of a plan may elect to
have this subparagraph apply to not more than 2 eligible plan
years with respect to the plan, except that in the case of a
plan described in section 106 of the Pension Protection Act
of 2006, the plan sponsor may only elect to have this
subparagraph apply to a plan year beginning in 2011.
``(II) Amortization schedule.--Such election shall specify
whether the amortization schedule under clause (ii) or (iii)
shall apply to an election year, except that if a plan
sponsor elects to have this subparagraph apply to 2 eligible
plan years, the plan sponsor must elect the same schedule for
both years.
``(III) Other rules.--Such election shall be made at such
time, and in such form and manner, as shall be prescribed by
the Secretary of the Treasury, and may be revoked only with
the consent of the Secretary of the Treasury. The Secretary
of the Treasury shall, before granting a revocation request,
provide the Pension Benefit Guaranty Corporation an
opportunity to comment on the conditions applicable to the
treatment of any portion of the election year shortfall
amortization base that remains unamortized as of the
revocation date.

``(v) Eligible plan year.--For purposes of this
subparagraph, the term `eligible plan year' means any plan
year beginning in 2008, 2009, 2010, or 2011, except that a
plan year shall only be treated as an eligible plan year if
the due date under subsection (j)(1) for the payment of the
minimum required contribution for such plan year occurs on or
after the date of the enactment of this subparagraph.
``(vi) Reporting.--A plan sponsor of a plan who makes an
election under clause (i) shall inform the Pension Benefit
Guaranty Corporation of such election in such form and manner
as the Director of the Pension Benefit Guaranty Corporation
may prescribe.
``(vii) Increases in required installments in certain
cases.--For increases in required contributions in cases of
excess compensation or extraordinary dividends or stock
redemptions, see paragraph (7).''.
(2) Increases in required installments in certain cases.--
Section 303(c) of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1083(c)) is amended by adding at the end
the following paragraph:
``(7) Increases in alternate required installments in cases
of excess compensation or extraordinary dividends or stock
redemptions.--
``(A) In general.--If there is an installment acceleration
amount with respect to a plan for any plan year in the 9-
plan-year or 15-plan-year period, whichever is applicable,
with respect to an election year under paragraph (2)(D), then
the shortfall amortization

[[Page S636]]

installment otherwise determined and payable under such
paragraph for such plan year shall, subject to the limitation
under subparagraph (B), be increased by such amount.
``(B) Total installments limited to shortfall base.--
Subject to rules prescribed by the Secretary of the Treasury,
if a shortfall amortization installment with respect to any
shortfall amortization base for an election year is required
to be increased for any plan year under subparagraph (A)--
``(i) such increase shall not result in the amount of such
installment exceeding the present value of such installment
and all succeeding installments with respect to such base
(determined without regard to such increase but after
application of clause (ii)), and
``(ii) subsequent shortfall amortization installments with
respect to such base shall, in reverse order of the otherwise
required installments, be reduced to the extent necessary to
limit the present value of such subsequent shortfall
amortization installments (after application of this
paragraph) to the present value of the remaining unamortized
shortfall amortization base.
``(C) Installment acceleration amount.--For purposes of
this paragraph--
``(i) In general.--The term `installment acceleration
amount' means, with respect to any plan year, the sum of--

``(I) the aggregate amount of excess employee compensation
determined under subparagraph (D) with respect to all
employees for the plan year, plus
``(II) the aggregate amount of extraordinary dividends and
redemptions determined under subparagraph (E) for the plan
year.

``(ii) Limitation to aggregate reduced required
contributions.--The installment acceleration amount for any
plan year shall not exceed the excess (if any) of--

``(I) the sum of the shortfall amortization installments
for the plan year and all preceding plan years in the
amortization period elected under paragraph (2)(D) with
respect to the shortfall amortization base with respect to an
election year, determined without regard to paragraph (2)(D)
and this paragraph, over
``(II) the sum of the shortfall amortization installments
for such plan year and all such preceding plan years,
determined after application of paragraph (2)(D) (and in the
case of any preceding plan year, after application of this
paragraph).

``(iii) Carryover of excess installment acceleration
amounts.--

``(I) In general.--If the installment acceleration amount
for any plan year (determined without regard to clause(ii))
exceeds the limitation under clause (ii), then, subject to
subclause (II), such excess shall be treated as an
installment acceleration amount with respect to the
succeeding plan year.
``(II) Cap to apply.--If any amount treated as an
installment acceleration amount under subclause (I) or this
subclause with respect any succeeding plan year, when added
to other installment acceleration amounts (determined without
regard to clause (ii)) with respect to the plan year, exceeds
the limitation under clause (ii), the portion of such amount
representing such excess shall be treated as an installment
acceleration amount with respect to the next succeeding plan
year.
``(III) Ordering rules.--For purposes of applying subclause
(II), installment acceleration amounts for the plan year
(determined without regard to any carryover under this
clause) shall be applied first against the limitation under
clause (ii) and then carryovers to such plan year shall be
applied against such limitation on a first-in, first-out
basis.

``(D) Excess employee compensation.--For purposes of this
paragraph--
``(i) In general.--The term `excess employee compensation'
means, with respect to any employee for any plan year, the
excess (if any) of--

``(I) the aggregate amount includible in income under
chapter 1 of the Internal Revenue Code of 1986 for
remuneration during the calendar year in which such plan year
begins for services performed by the employee for the plan
sponsor (whether or not performed during such calendar year),
over
``(II) $1,000,000.

``(ii) Amounts set aside for nonqualified deferred
compensation.--If during any calendar year assets are set
aside or reserved (directly or indirectly) in a trust (or
other arrangement as determined by the Secretary of the
Treasury), or transferred to such a trust or other
arrangement, by a plan sponsor for purposes of paying
deferred compensation of an employee under a nonqualified
deferred compensation plan (as defined in section 409A of
such Code) of the plan sponsor, then, for purposes of clause
(i), the amount of such assets shall be treated as
remuneration of the employee includible in income for the
calendar year unless such amount is otherwise includible in
income for such year. An amount to which the preceding
sentence applies shall not be taken into account under this
paragraph for any subsequent calendar year.
``(iii) Only remuneration for certain post-2009 services
counted.--Remuneration shall be taken into account under
clause (i) only to the extent attributable to services
performed by the employee for the plan sponsor after February
4, 2010.
``(iv) Exception for certain equity payments.--

``(I) In general.--Any amount includible in income with
respect to the granting on or after February 4, 2010, of an
equity interest described in subclause (II) shall not be
taken into account under clause (i)(I), but only if all
portions of such interest remain subject to a substantial
risk of forfeiture (other than in the case of death or
disability) at all times before the date which is 5 years
after the date on which such interest is granted.
``(II) Equity interests.--An equity interest is described
in this subclause if it is a stock option which is granted at
its fair market value on the date of the grant or a stock
appreciation right which is granted at its fair market value
on the date of the grant.
``(III) Substantial risk of forfeiture.--The term
`substantial risk of forfeiture' has the meaning given such
term by section 83(c)(1) of the Internal Revenue Code of
1986.
``(IV) Secretarial authority.--The Secretary of the
Treasury may by regulation provide for the application of
this clause in the case of a person other than a corporation.

``(v) Other exceptions.--The following amounts includible
in income shall not be taken into account under clause
(i)(I):

``(I) Commissions.--Any remuneration payable on a
commission basis solely on account of income directly
generated by the individual performance of the individual to
whom such remuneration is payable.
``(II) Payments under existing contracts.--Any remuneration
payable under a written binding contract that was in effect
on February 4, 2010, and which was not modified in any
material respect before such remuneration is repaid. This
subclause shall not apply to bonus payments payable under
such a contract during a calendar year to the extent that the
aggregate amount of such bonus payments during such calendar
year exceeds $100,000.

``(vi) Self-employed individual treated as employee.--The
term `employee' includes, with respect to a calendar year, a
self-employed individual who is treated as an employee under
section 401(c) of such Code for the taxable year ending
during such calendar year, and the term `compensation' shall
include earned income of such individual with respect to such
self-employment.
``(vii) Indexing of amount.--In the case of any calendar
year beginning after 2010, the dollar amount under clause
(i)(II) shall be increased by an amount equal to--

``(I) such dollar amount, multiplied by
``(II) the cost-of-living adjustment determined under
section 1(f)(3) of such Code for the calendar year,
determined by substituting `calendar year 2009' for `calendar
year 1992' in subparagraph (B) thereof.

If the amount of any increase under clause (i) is not a
multiple of $1,000, such increase shall be rounded to the
next lowest multiple of $1,000.
``(E) Extraordinary dividends and redemptions.--
``(i) In general.--The amount determined under this
subparagraph for any plan year is the sum of--

``(I) the aggregate amount of extraordinary dividends
declared during the plan year by the plan sponsor and
required to be reported under section 4043(c)(11), plus
``(II) if the plan sponsor redeems, in any 12-month period
ending during the plan year, an aggregate of 10 percent or
more of the total combined voting power of all classes of
stock entitled to vote, or an aggregate of 10 percent or more
of the total value of shares of all classes of stock, of the
plan sponsor, the aggregate fair market value of the stock so
redeemed.

``(ii) Only certain post-2009 dividends and redemptions
counted.--For purposes of clause (i)--

``(I) dividends shall be taken into account only if
declared after February 4, 2010, and
``(II) if clause (i)(II) otherwise applies for any plan
year (determined without regard to this subclause), only the
fair market value of redemptions occurring after February 4,
2010, shall be taken into account in determining the amount
under such clause for the plan year.

``(iii) Exception for intra-group dividends.--An
extraordinary dividend paid by one member of a controlled
group (as defined in section 302(d)(3)) to another member of
such group shall not be taken into account under clause
(i)(I).
``(F) Other definitions and rules.--For purposes of this
paragraph--
``(i) Bonus payment.--The term `bonus payment' means any
payment which is a payment for services rendered and which is
in addition to any amount payable to such individual for
services performed by such individual at a regular hourly,
daily, weekly, monthly, or similar periodic rate. Such term
does not include payments to an employee as commissions,
contributions to any qualified retirement plan (as defined in
section 4974(c) of the Internal Revenue Code of 1986),
welfare and fringe benefits, overtime pay, or expense
reimbursements. The Secretary of the Treasury may
recharacterize a payment that is a disguised bonus as a bonus
payment for purposes of this paragraph.
``(ii) Plan sponsor.--The term ` plan sponsor' includes any
member of the plan sponsor's controlled group (as defined in
section 302(d)(3)).
``(iii) Elections for multiple plans.--If a plan sponsor
makes elections under paragraph (2)(D) with respect to 2 or
more plans, the Secretary of the Treasury shall provide rules
for the application of this paragraph to such plans,
including rules for the ratable allocation of any installment
acceleration amount among such plans on the basis of

[[Page S637]]

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 of the
Treasury shall prescribe rules for the application of
paragraph (2)(D) and this paragraph in any case where there
is a merger or acquisition involving a plan sponsor making
the election under paragraph (2)(D).''.
(3) Conforming amendments.--Section 303 of such Act (29
U.S.C. 1083) is amended--
(A) in subsection (c)(1), by striking ``the shortfall
amortization bases for such plan year and each of the 6
preceding plan years'' and inserting ``any shortfall
amortization base which has not been fully amortized under
this subsection'', and
(B) in subsection (j)(3), by adding at the end the
following:
``(F) Quarterly contributions not to include certain
increased contributions.--Subparagraph (D) shall be applied
without regard to any increase under subsection (c)(7).''.
(b) Amendments to Internal Revenue Code of 1986.--
(1) In general.--Paragraph (2) of section 430(c) is amended
by adding at the end the following subparagraph:
``(D) Special election for eligible plan years.--
``(i) In general.--If a plan sponsor elects to apply this
subparagraph with respect to the shortfall amortization base
of a plan for any eligible plan year (in this subparagraph
and paragraph (7) referred to as an `election year'), then,
notwithstanding subparagraphs (A) and (B)--

``(I) the shortfall amortization installments with respect
to such base shall be determined under clause (ii) or (iii),
whichever is specified in the election, and
``(II) the shortfall amortization installment for any plan
year in the 9-plan-year period described in clause (ii) or
the 15-plan-year period described in clause (iii),
respectively, with respect to such shortfall amortization
base is the annual installment determined under the
applicable clause for that year for that base.

``(ii) 2 plus 7 amortization schedule.--The shortfall
amortization installments determined under this clause are--

``(I) in the case of the first 2 plan years in the 9-plan-
year period beginning with the election year, interest on the
shortfall amortization base of the plan for the election year
(determined using the effective interest rate for the plan
for the election year), and
``(II) in the case of the last 7 plan years in such 9-plan-
year period, the amounts necessary to amortize the remaining
balance of the shortfall amortization base of the plan for
the election year in level annual installments over such last
7 plan years (using the segment rates under subparagraph (C)
for the election year).

``(iii) 15-year amortization.--The shortfall amortization
installments determined under this subparagraph are the
amounts necessary to amortize the shortfall amortization base
of the plan for the election year in level annual
installments over the 15-plan-year period beginning with the
election year (using the segment rates under subparagraph (C)
for the election year).
``(iv) Election.--

``(I) In general.--The plan sponsor of a plan may elect to
have this subparagraph apply to not more than 2 eligible plan
years with respect to the plan, except that in the case of a
plan described in section 106 of the Pension Protection Act
of 2006, the plan sponsor may only elect to have this
subparagraph apply to a plan year beginning in 2011.
``(II) Amortization schedule.--Such election shall specify
whether the amortization schedule under clause (ii) or (iii)
shall apply to an election year, except that if a plan
sponsor elects to have this subparagraph apply to 2 eligible
plan years, the plan sponsor must elect the same schedule for
both years.
``(III) Other rules.--Such election shall be made at such
time, and in such form and manner, as shall be prescribed by
the Secretary, and may be revoked only with the consent of
the Secretary. The Secretary shall, before granting a
revocation request, provide the Pension Benefit Guaranty
Corporation an opportunity to comment on the conditions
applicable to the treatment of any portion of the election
year shortfall amortization base that remains unamortized as
of the revocation date.

``(v) Eligible plan year.--For purposes of this
subparagraph, the term `eligible plan year' means any plan
year beginning in 2008, 2009, 2010, or 2011, except that a
plan year shall only be treated as an eligible plan year if
the due date under subsection (j)(1) for the payment of the
minimum required contribution for such plan year occurs on or
after the date of the enactment of this subparagraph.
``(vi) Reporting.--A plan sponsor of a plan who makes an
election under clause (i) shall inform the Pension Benefit
Guaranty Corporation of such election in such form and manner
as the Director of the Pension Benefit Guaranty Corporation
may prescribe.
``(vii) Increases in required installments in certain
cases.--For increases in required contributions in cases of
excess compensation or extraordinary dividends or stock
redemptions, see paragraph (7).''.
(2) Increases in required contributions if excess
compensation paid.--Section 430(c) is amended by adding at
the end the following paragraph:
``(7) Increases in alternate required installments in cases
of excess compensation or extraordinary dividends or stock
redemptions.--
``(A) In general.--If there is an installment acceleration
amount with respect to a plan for any plan year in the 9-
plan-year or 15-plan-year period, whichever is applicable,
with respect to an election year under paragraph (2)(D), then
the shortfall amortization installment otherwise determined
and payable under such paragraph for such plan year shall,
subject to the limitation under subparagraph (B), be
increased by such amount.
``(B) Total installments limited to shortfall base.--
Subject to rules prescribed by the Secretary, if a shortfall
amortization installment with respect to any shortfall
amortization base for an election year is required to be
increased for any plan year under subparagraph (A)--
``(i) such increase shall not result in the amount of such
installment exceeding the present value of such installment
and all succeeding installments with respect to such base
(determined without regard to such increase but after
application of clause (ii)), and
``(ii) subsequent shortfall amortization installments with
respect to such base shall, in reverse order of the otherwise
required installments, be reduced to the extent necessary to
limit the present value of such subsequent shortfall
amortization installments (after application of this
paragraph) to the present value of the remaining unamortized
shortfall amortization base.
``(C) Installment acceleration amount.--For purposes of
this paragraph--
``(i) In general.--The term `installment acceleration
amount' means, with respect to any plan year, the sum of--

``(I) the aggregate amount of excess employee compensation
determined under subparagraph (D) with respect to all
employees for the plan year, plus
``(II) the aggregate amount of extraordinary dividends and
redemptions determined under subparagraph (E) for the plan
year.

``(ii) Limitation to aggregate reduced required
contributions.--The installment acceleration amount for any
plan year shall not exceed the excess (if any) of--

``(I) the sum of the shortfall amortization installments
for the plan year and all preceding plan years in the
amortization period elected under paragraph (2)(D) with
respect to the shortfall amortization base with respect to an
election year, determined without regard to paragraph (2)(D)
and this paragraph, over
``(II) the sum of the shortfall amortization installments
for such plan year and all such preceding plan years,
determined after application of paragraph (2)(D) (and in the
case of any preceding plan year, after application of this
paragraph).

``(iii) Carryover of excess installment acceleration
amounts.--

``(I) In general.--If the installment acceleration amount
for any plan year (determined without regard to clause(ii))
exceeds the limitation under clause (ii), then, subject to
subclause (II), such excess shall be treated as an
installment acceleration amount with respect to the
succeeding plan year.
``(II) Cap to apply.--If any amount treated as an
installment acceleration amount under subclause (I) or this
subclause with respect any succeeding plan year, when added
to other installment acceleration amounts (determined without
regard to clause (ii)) with respect to the plan year, exceeds
the limitation under clause (ii), the portion of such amount
representing such excess shall be treated as an installment
acceleration amount with respect to the next succeeding plan
year.
``(III) Ordering rules.--For purposes of applying subclause
(II), installment acceleration amounts for the plan year
(determined without regard to any carryover under this
clause) shall be applied first against the limitation under
clause (ii) and then carryovers to such plan year shall be
applied against such limitation on a first-in, first-out
basis.

``(D) Excess employee compensation.--For purposes of this
paragraph--
``(i) In general.--The term `excess employee compensation'
means, with respect to any employee for any plan year, the
excess (if any) of--

``(I) the aggregate amount includible in income under this
chapter for remuneration during the calendar year in which
such plan year begins for services performed by the employee
for the plan sponsor (whether or not performed during such
calendar year), over
``(II) $1,000,000.

``(ii) Amounts set aside for nonqualified deferred
compensation.--If during any calendar year assets are set
aside or reserved (directly or indirectly) in a trust (or
other arrangement as determined by the Secretary), or
transferred to such a trust or other arrangement, by a plan
sponsor for purposes of paying deferred compensation of an
employee under a nonqualified deferred compensation plan (as
defined in section 409A) of the plan sponsor, then, for
purposes of clause (i), the amount of such assets shall be
treated as remuneration of the employee includible in income
for the calendar year unless such amount is otherwise
includible in income for such year. 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

[[Page S638]]

shall be taken into account under clause (i) only to the
extent attributable to services performed by the employee for
the plan sponsor after February 4, 2010.
``(iv) Exception for certain equity payments.--

``(I) In general.--Any amount includible in income with
respect to the granting on or after February 4, 2010, of an
equity interest described in subclause (II) shall not be
taken into account under clause (i)(I), but only if all
portions of such interest remain subject to a substantial
risk of forfeiture (other than in the case of death or
disability) at all times before the date which is 5 years
after the date on which such interest is granted.
``(II) Equity interests.--An equity interest is described
in this subclause if it is a stock option which is granted at
its fair market value on the date of the grant or a stock
appreciation right which is granted at its fair market value
on the date of the grant.
``(III) Substantial risk of forfeiture.--The term
`substantial risk of forfeiture' has the meaning given such
term by section 83(c)(1).
``(IV) Secretarial authority.--The Secretary may by
regulation provide for the application of this clause in the
case of a person other than a corporation.

``(v) Other exceptions.--The following amounts includible
in income shall not be taken into account under clause
(i)(I):

``(I) Commissions.--Any remuneration payable on a
commission basis solely on account of income directly
generated by the individual performance of the individual to
whom such remuneration is payable.
``(II) Payments under existing contracts.--Any remuneration
payable under a written binding contract that was in effect
on February 4, 2010, and which was not modified in any
material respect before such remuneration is repaid. This
subclause shall not apply to bonus payments payable under
such a contract during a calendar year to the extent that the
aggregate amount of such bonus payments during such calendar
year exceeds $100,000.

``(vi) Self-employed individual treated as employee.--The
term `employee' includes, with respect to a calendar year, a
self-employed individual who is treated as an employee under
section 401(c) for the taxable year ending during such
calendar year, and the term `compensation' shall include
earned income of such individual with respect to such self-
employment.
``(vii) Indexing of amount.--In the case of any calendar
year beginning after 2010, the dollar amount under clause
(i)(II) shall be increased by an amount equal to--

``(I) such dollar amount, multiplied by
``(II) the cost-of-living adjustment determined under
section 1(f)(3) for the calendar year, determined by
substituting `calendar year 2009' for `calendar year 1992' in
subparagraph (B) thereof.

If the amount of any increase under clause (i) is not a
multiple of $1,000, such increase shall be rounded to the
next lowest multiple of $1,000.
``(E) Extraordinary dividends and redemptions.--
``(i) In general.--The amount determined under this
subparagraph for any plan year is the sum of--

``(I) the aggregate amount of extraordinary dividends
declared during the plan year by the plan sponsor and
required to be reported under section 4043(c)(11) of the
Employee Retirement Income Security Act of 1974 , plus
``(II) if the plan sponsor redeems, in any 12-month period
ending during the plan year, an aggregate of 10 percent or
more of the total combined voting power of all classes of
stock entitled to vote, or an aggregate of 10 percent or more
of the total value of shares of all classes of stock, of the
plan sponsor, the aggregate fair market value of the stock so
redeemed.

``(ii) Only certain post-2009 dividends and redemptions
counted.--For purposes of clause (i)--

``(I) dividends shall be taken into account only if
declared after February 4, 2010, and
``(II) if clause (i)(II) otherwise applies for any plan
year (determined without regard to this subclause), only the
fair market value of redemptions occurring after February 4,
2010, shall be taken into account in determining the amount
under such clause for the plan year.

``(iii) Exception for intra-group dividends.--An
extraordinary dividend paid by one member of a controlled
group (as defined in section 412(d)(3)) to another member of
such group shall not be taken into account under clause
(i)(I).
``(F) Other definitions and rules.--For purposes of this
paragraph--
``(i) Bonus payment.--The term `bonus payment' means any
payment which is a payment for services rendered and which is
in addition to any amount payable to such individual for
services performed by such individual at a regular hourly,
daily, weekly, monthly, or similar periodic rate. Such term
does not include payments to an employee as commissions,
contributions to any qualified retirement plan (as defined in
section 4974(c)), welfare and fringe benefits, overtime pay,
or expense reimbursements. The Secretary may recharacterize a
payment that is a disguised bonus as a bonus payment for
purposes of this paragraph.
``(ii) Plan sponsor.--The term ` plan sponsor' includes any
member of the plan sponsor's controlled group (as defined in
section 412(d)(3)).
``(iii) Elections for multiple plans.--If a plan sponsor
makes elections under paragraph (2)(D) with respect to 2 or
more plans, the Secretary shall provide rules for the
application of this paragraph to such plans, including rules
for the ratable allocation of any installment acceleration
amount among such plans on the basis of each plan's relative
reduction in the plan's shortfall amortization installment
for the first plan year in the amortization period described
in subparagraph (A) (determined without regard to this
paragraph).
``(iv) Mergers and acquisitions.--The Secretary shall
prescribe rules for the application of paragraph (2)(D) and
this paragraph in any case where there is a merger or
acquisition involving a plan sponsor making the election
under paragraph (2)(D).''.
(3) Conforming amendments.--Section 430 is amended--
(A) in subsection (c)(1), by striking ``the shortfall
amortization bases for such plan year and each of the 6
preceding plan years'' and inserting ``any shortfall
amortization base which has not been fully amortized under
this subsection'', and
(B) in subsection (j)(3), by adding at the end the
following:
``(F) Quarterly contributions not to include certain
increased contributions.--Subparagraph (D) shall be applied
without regard to any increase under subsection (c)(7).''.
(c) Effective Date.--The amendments made by this section
shall apply to plan years beginning after December 31, 2007.

SEC. 612. APPLICATION OF EXTENDED AMORTIZATION PERIOD TO
PLANS SUBJECT TO PRIOR LAW FUNDING RULES.

(a) In General.--Title I of the Pension Protection Act of
2006 is amended by redesignating section 107 as section 108
and by inserting the following after section 106:

``SEC. 107. APPLICATION OF EXTENDED AMORTIZATION PERIODS TO
PLANS WITH DELAYED EFFECTIVE DATE.

``(a) In General.--If the plan sponsor of a plan to which
section 104, 105, or 106 of this Act applies elects to have
this section apply for any eligible plan year (in this
section referred to as an `election year'), section 302 of
the Employee Retirement Income Security Act of 1974 and
section 412 of the Internal Revenue Code of 1986 (as in
effect before the amendments made by this subtitle and
subtitle B) shall apply to such year in the manner described
in subsection (b) or (c), whichever is specified in the
election. All references in this section to `such Act' or
`such Code' shall be to such Act or such Code as in effect
before the amendments made by this subtitle and subtitle B.
``(b) Application of 2 and 7 Rule.--In the case of an
election year to which this subsection applies--
``(1) 2-year lookback for determining deficit reduction
contributions for certain plans.--For purposes of applying
section 302(d)(9) of such Act and section 412(l)(9) of such
Code, the funded current liability percentage (as defined in
subparagraph (C) thereof) for such plan for such plan year
shall be such funded current liability percentage of such
plan for the second plan year preceding the first election
year of such plan.
``(2) Calculation of deficit reduction contribution.--For
purposes of applying section 302(d) of such Act and section
412(l) of such Code to a plan to which such sections apply
(after taking into account paragraph (1))--
``(A) in the case of the increased unfunded new liability
of the plan, the applicable percentage described in section
302(d)(4)(C) of such Act and section 412(l)(4)(C) of such
Code shall be the third segment rate described in sections
104(b), 105(b), and 106(b) of this Act, and
``(B) in the case of the excess of the unfunded new
liability over the increased unfunded new liability, such
applicable percentage shall be determined without regard to
this section.
``(c) Application of 15-Year Amortization.--In the case of
an election year to which this subsection applies, for
purposes of applying section 302(d) of such Act and section
412(l) of such Code--
``(1) in the case of the increased unfunded new liability
of the plan, the applicable percentage described in section
302(d)(4)(C) of such Act and section 412(l)(4)(C) of such
Code for any pre-effective date plan year beginning with or
after the first election year shall be the ratio of--
``(A) the annual installments payable in each year if the
increased unfunded new liability for such plan year were
amortized over 15 years, using an interest rate equal to the
third segment rate described in sections 104(b), 105(b), and
106(b) of this Act, to
``(B) the increased unfunded new liability for such plan
year, and
``(2) in the case of the excess of the unfunded new
liability over the increased unfunded new liability, such
applicable percentage shall be determined without regard to
this section.
``(d) Election.--
``(1) In general.--The plan sponsor of a plan may elect to
have this section apply to not more than 2 eligible plan
years with respect to the plan, except that in the case of a
plan to which section 106 of this Act applies, the plan
sponsor may only elect to have this section apply to 1
eligible plan year.
``(2) Amortization schedule.--Such election shall specify
whether the rules under subsection (b) or (c) shall apply to
an election year, except that if a plan sponsor elects

[[Page S639]]

to have this section apply to 2 eligible plan years, the plan
sponsor must elect the same rule for both years.
``(3) Other rules.--Such election shall be made at such
time, and in such form and manner, as shall be prescribed by
the Secretary of the Treasury, and may be revoked only with
the consent of the Secretary of the Treasury.
``(e) Definitions.--For purposes of this section--
``(1) Eligible plan year.--For purposes of this
subparagraph, the term `eligible plan year' means any plan
year beginning in 2008, 2009, 2010, or 2011, except that a
plan year beginning in 2008 shall only be treated as an
eligible plan year if the due date for the payment of the
minimum required contribution for such plan year occurs on or
after the date of the enactment of this clause.
``(2) Pre-effective date plan year.--The term `pre-
effective date plan year' means, with respect to a plan, any
plan year prior to the first year in which the amendments
made by this subtitle and subtitle B apply to the plan.
``(3) Increased unfunded new liability.--The term
`increased unfunded new liability' means, with respect to a
year, the excess (if any) of the unfunded new liability over
the amount of unfunded new liability determined as if the
value of the plan's assets determined under subsection
302(c)(2) of such Act and section 412(c)(2) of such Code
equaled the product of the current liability of the plan for
the year multiplied by the funded current liability
percentage (as defined in section 302(d)(8)(B) of such Act
and 412(l)(8)(B) of such Code) of the plan for the second
plan year preceding the first election year of such plan.
``(4) Other definitions.--The terms `unfunded new
liability' and `current liability' shall have the meanings
set forth in section 302(d) of such Act and section 412(l) of
such Code.''.
(b) Eligible Charity Plans.--Section 104 of the Pension
Protection Act of 2006 is amended--
(1) by striking ``eligible cooperative plan'' wherever it
appears in subsections (a) and (b) and inserting ``eligible
cooperative plan or an eligible charity plan'', and
(2) by adding at the end the following new subsection:
``(d) Eligible Charity Plan Defined.--For purposes of this
section, a plan shall be treated as an eligible charity plan
for a plan year if the plan is maintained by more than one
employer and 100 percent of the employers are described in
section 501(c)(3) of such Code.''.
(c) Effective Date.--
(1) In general.--The amendment made by subsection (a) shall
take effect as if included in the Pension Protection Act of
2006.
(2) Eligible charity plan.--The amendments made by
subsection (b) shall apply to plan years beginning after
December 31, 2007, except that a plan sponsor may elect to
apply such amendments to plan years beginning after December
31, 2008. Any such election shall be made at such time, and
in such form and manner, as shall be prescribed by the
Secretary of the Treasury, and may be revoked only with the
consent of the Secretary of the Treasury.

SEC. 613. LOOKBACK FOR CERTAIN BENEFIT RESTRICTIONS.

(a) In General.--
(1) Amendment to erisa.--Section 206(g)(9) of the Employee
Retirement Income Security Act of 1974 is amended by adding
at the end the following:
``(D) Special rule for certain years.--Solely for purposes
of any applicable provision--
``(i) In general.--For plan years beginning on or after
October 1, 2008, and before October 1, 2010, the adjusted
funding target attainment percentage of a plan shall be the
greater of--

``(I) such percentage, as determined without regard to this
subparagraph, or
``(II) the adjusted funding target attainment percentage
for such plan for the plan year beginning after October 1,
2007, and before October 1, 2008, as determined under rules
prescribed by the Secretary of the Treasury.

``(ii) Special rule.--In the case of a plan for which the
valuation date is not the first day of the plan year--

``(I) clause (i) shall apply to plan years beginning after
December 31, 2007, and before January 1, 2010, and
``(II) clause (i)(II) shall apply based on the last plan
year beginning before November 1, 2007, as determined under
rules prescribed by the Secretary of the Treasury.

``(iii) Applicable provision.--For purposes of this
subparagraph, the term `applicable provision' means--

``(I) paragraph (3), but only for purposes of applying such
paragraph to a payment which, as determined under rules
prescribed by the Secretary of the Treasury, is a payment
under a social security leveling option which accelerates
payments under the plan before, and reduces payments after, a
participant starts receiving social security benefits in
order to provide substantially similar aggregate payments
both before and after such benefits are received, and
``(II) paragraph (4).''.

(2) Amendment to internal revenue code of 1986.--Section
436(j) of the Internal Revenue Code of 1986 is amended by
adding at the end the following:
``(3) Special rule for certain years.--Solely for purposes
of any applicable provision--
``(A) In general.--For plan years beginning on or after
October 1, 2008, and before October 1, 2010, the adjusted
funding target attainment percentage of a plan shall be the
greater of--
``(i) such percentage, as determined without regard to this
paragraph, or
``(ii) the adjusted funding target attainment percentage
for such plan for the plan year beginning after October 1,
2007, and before October 1, 2008, as determined under rules
prescribed by the Secretary.
``(B) Special rule.--In the case of a plan for which the
valuation date is not the first day of the plan year--
``(i) subparagraph (A) shall apply to plan years beginning
after December 31, 2007, and before January 1, 2010, and
``(ii) subparagraph (A)(ii) shall apply based on the last
plan year beginning before November 1, 2007, as determined
under rules prescribed by the Secretary.
``(C) Applicable provision.--For purposes of this
paragraph, the term `applicable provision' means--
``(i) subsection (d), but only for purposes of applying
such paragraph to a payment which, as determined under rules
prescribed by the Secretary, is a payment under a social
security leveling option which accelerates payments under the
plan before, and reduces payments after, a participant starts
receiving social security benefits in order to provide
substantially similar aggregate payments both before and
after such benefits are received, and
``(ii) subsection (e).''.
(b) Interaction With Wrera Rule.--Section 203 of the
Worker, Retiree, and Employer Recovery Act of 2008 shall
apply to a plan for any plan year in lieu of the amendments
made by this section applying to sections 206(g)(4) of the
Employee Retirement Income Security Act of 1974 and 436(e) of
the Internal Revenue Code of 1986 only to the extent that
such section produces a higher adjusted funding target
attainment percentage for such plan for such year.
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to plan years
beginning on or after October 1, 2008.
(2) Special rule.--In the case of a plan for which the
valuation date is not the first day of the plan year, the
amendments made by this section shall apply to plan years
beginning after December 31, 2007.

PART II--MULTIEMPLOYER PLANS

SEC. 621. ADJUSTMENTS TO FUNDING STANDARD ACCOUNT RULES.

(a) Adjustments.--
(1) Amendment to erisa.--Section 304(b) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1084(b)) is
amended by adding at the end the following new paragraph:
``(8) Special relief rules.--Notwithstanding any other
provision of this subsection--
``(A) Amortization of net investment losses.--
``(i) In general.--A multiemployer plan with respect to
which the solvency test under subparagraph (C) is met may
treat the portion of its experience loss attributable to the
net investment losses (if any) incurred in either or both of
the first two plan years beginning after August 31, 2008, as
an item separate from other experience losses, to be
amortized in equal annual installments (until fully
amortized) over a period of 30 plan years.
``(ii) No extension allowed.--If this subparagraph applies
for any plan year, no extension of the amortization period
under clause (i) shall be allowed under subsection (d).
``(iii) Net investment losses.--For purposes of this
subparagraph--

``(I) In general.--Net investment losses shall be
determined in the manner prescribed by the Secretary of the
Treasury on the basis of the difference between actual and
expected returns (including any difference attributable to
any criminally fraudulent investment arrangement).
``(II) Criminally fraudulent investment arrangements.--The
determination as to whether an arrangement is a criminally
fraudulent investment arrangement shall be made under rules
substantially similar to the rules prescribed by the
Secretary of the Treasury for purposes of section 165 of the
Internal Revenue Code of 1986.

``(B) Expanded smoothing period.--
``(i) In general.--A multiemployer plan with respect to
which the solvency test under subparagraph (C) is met may
change its asset valuation method in a manner which--

``(I) spreads the difference between expected and actual
returns for either or both of the first 2 plan years
beginning after August 31, 2008, over a period of not more
than 10 years,
``(II) provides that for either or both of such 2 plan
years the value of plan assets at any time shall not be less
than 80 percent or greater than 130 percent of the fair
market value of such assets at such time, or
``(III) makes both changes described in subclauses (I) and
(II) to such method.

``(ii) Asset valuation methods.--If this subparagraph
applies for any plan year--

``(I) the Secretary of the Treasury shall not treat the
asset valuation method of the plan as unreasonable solely
because of the changes in such method described in clause
(i), and

[[Page S640]]

``(II) such changes shall be deemed approved by such
Secretary under section 302(d)(1) and section 412(d)(1) of
such Code.

``(iii) Amortization of reduction in unfunded accrued
liability.--If this subparagraph and subparagraph (A) both
apply for any plan year, the plan shall treat any reduction
in unfunded accrued liability resulting from the application
of this subparagraph as a separate experience amortization
base, to be amortized in equal annual installments (until
fully amortized) over a period of 30 plan years rather than
the period such liability would otherwise be amortized over.
``(C) Solvency test.--The solvency test under this
paragraph is met only if the plan actuary certifies that the
plan is projected to have sufficient assets to timely pay
expected benefits and anticipated expenditures over the
amortization period, taking into account the changes in the
funding standard account under this paragraph.
``(D) Restriction on benefit increases.--If subparagraph
(A) or (B) apply to a multiemployer plan for any plan year,
then, in addition to any other applicable restrictions on
benefit increases, a plan amendment increasing benefits may
not go into effect during either of the 2 plan years
immediately following such plan year unless--
``(i) the plan actuary certifies that--

``(I) any such increase is paid for out of additional
contributions not allocated to the plan immediately before
the application of this paragraph to the plan, and
``(II) the plan's funded percentage and projected credit
balances for such 2 plan years are reasonably expected to be
substantially the same as such percentage and balances would
have been if the benefit increase had not been adopted, or

``(ii) the amendment is required as a condition of
qualification under part I of subchapter D of chapter 1 of
the Internal Revenue Code of 1986 or to comply with other
applicable law.
``(E) Reporting.--A plan sponsor of a plan to which this
paragraph applies shall inform the Pension Benefit Guaranty
Corporation of such application in such form and manner as
the Director of the Pension Benefit Guaranty Corporation may
prescribe.''.
(2) Amendment to internal revenue code of 1986.--Section
431(b) is amended by adding at the end the following new
paragraph:
``(8) Special relief rules.--Notwithstanding any other
provision of this subsection--
``(A) Amortization of net investment losses.--
``(i) In general.--A multiemployer plan with respect to
which the solvency test under subparagraph (C) is met may
treat the portion of its experience loss attributable to the
net investment losses (if any) incurred in either or both of
the first two plan years beginning after August 31, 2008, as
an item separate from other experience losses, to be
amortized in equal annual installments (until fully
amortized) over a period of 30 plan years.
``(ii) No extension allowed.--If this subparagraph applies
for any plan year, no extension of the amortization period
under clause (i) shall be allowed under subsection (d).
``(iii) Net investment losses.--For purposes of this
subparagraph--

``(I) In general.--Net investment losses shall be
determined in the manner prescribed by the Secretary on the
basis of the difference between actual and expected returns
(including any difference attributable to any criminally
fraudulent investment arrangement).
``(II) Criminally fraudulent investment arrangements.--The
determination as to whether an arrangement is a criminally
fraudulent investment arrangement shall be made under rules
substantially similar to the rules prescribed by the
Secretary for purposes of section 165.

``(B) Expanded smoothing period.--
``(i) In general.--A multiemployer plan with respect to
which the solvency test under subparagraph (C) is met may
change its asset valuation method in a manner which--

``(I) spreads the difference between expected and actual
returns for either or both of the first 2 plan years
beginning after August 31, 2008, over a period of not more
than 10 years,
``(II) provides that for either or both of such 2 plan
years the value of plan assets at any time shall not be less
than 80 percent or greater than 130 percent of the fair
market value of such assets at such time, or
``(III) makes both changes described in subclauses (I) and
(II) to such method.

``(ii) Asset valuation methods.--If this subparagraph
applies for any plan year--

``(I) the Secretary shall not treat the asset valuation
method of the plan as unreasonable solely because of the
changes in such method described in clause (i), and
``(II) such changes shall be deemed approved by the
Secretary under section 302(d)(1) of the Employee Retirement
Income Security Act of 1974 and section 412(d)(1).

``(iii) Amortization of reduction in unfunded accrued
liability.--If this subparagraph and subparagraph (A) both
apply for any plan year, the plan shall treat any reduction
in unfunded accrued liability resulting from the application
of this subparagraph as a separate experience amortization
base, to be amortized in equal annual installments (until
fully amortized) over a period of 30 plan years rather than
the period such liability would otherwise be amortized over.
``(C) Solvency test.--The solvency test under this
paragraph is met only if the plan actuary certifies that the
plan is projected to have sufficient assets to timely pay
expected benefits and anticipated expenditures over the
amortization period, taking into account the changes in the
funding standard account under this paragraph.
``(D) Restriction on benefit increases.--If subparagraph
(A) or (B) apply to a multiemployer plan for any plan year,
then, in addition to any other applicable restrictions on
benefit increases, a plan amendment increasing benefits may
not go into effect during either of the 2 plan years
immediately following such plan year unless--
``(i) the plan actuary certifies that--

``(I) any such increase is paid for out of additional
contributions not allocated to the plan immediately before
the application of this paragraph to the plan, and
``(II) the plan's funded percentage and projected credit
balances for such 2 plan years are reasonably expected to be
substantially the same as such percentage and balances would
have been if the benefit increase had not been adopted, or

``(ii) the amendment is required as a condition of
qualification under part I of subchapter D or to comply with
other applicable law.
``(E) Reporting.--A plan sponsor of a plan to which this
paragraph applies shall inform the Pension Benefit Guaranty
Corporation of such application in such form and manner as
the Director of the Pension Benefit Guaranty Corporation may
prescribe.''.
(b) Effective Dates.--
(1) In general.--The amendments made by this section shall
take effect as of the first day of the first plan year
beginning after August 31, 2008, except that any election a
plan makes pursuant to this section that affects the plan's
funding standard account for the first plan year beginning
after August 31, 2008, shall be disregarded for purposes of
applying the provisions of section 305 of the Employee
Retirement Income Security Act of 1974 and section 432 of the
Internal Revenue Code of 1986 to such plan year.
(2) Restrictions on benefit increases.--Notwithstanding
paragraph (1), the restrictions on plan amendments increasing
benefits in sections 304(b)(8)(D) of such Act and
431(b)(8)(D) of such Code, as added by this section, shall
take effect on the date of enactment of this Act.

TITLE VII--DETERMINATION OF BUDGETARY EFFECTS

SEC. 701. DETERMINATION OF BUDGETARY EFFECTS.

The budgetary effects of this Act, for the purpose of
complying with the Statutory Pay-As-You-Go-Act of 2010, shall
be determined by reference to the latest statement titled
``Budgetary Effects of PAYGO Legislation'' for this Act,
submitted for printing in the Congressional Record by the
Chairman of the Senate Budget Committee, provided that such
statement has been submitted prior to the vote on passage.
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