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29 U.S. Code § 1085a - Minimum funding standards

(a) General rule

For purposes ofsection 1082 of this title, the term“accumulated funding deficiency” for a CSEC planmeans the excess of the total charges to the funding standard account for all planyears (beginning with the first planyear to whichsection 1082 of this title applies) over the total credits to such account for such years or, if less, the excess of the total charges to the alternative minimum funding standard account for such planyears over the total credits to such account for such years.

(b) Funding standard account

(1) Account required

Eachplan to which this section applies shall establish and maintain a funding standard account. Such account shall be credited and charged solely as provided in this section.

(2) Charges to accountFor aplan year, the funding standard account shall be charged with the sum of—

(A)

thenormal cost of the planfor the planyear,

(B) the amounts necessary to amortize in equal annual installments (until fully amortized)—

(i)

in the case of aplan in existence onJanuary 1, 1974, the unfunded past service liability under the planon the first day of the first planyear to whichsection 1082 of this title applies, over a period of 40 planyears,

(ii)

in the case of aplan which comes into existence afterJanuary 1, 1974, but before the first day of the first planyear beginning afterDecember 31, 2013, the unfunded past service liability under the planon the first day of the first planyear to whichsection 1082 of this title applies, over a period of 30 planyears,

(iii)

separately, with respect to eachplan year, the net increase (if any) in unfunded past service liability under theplan arising fromplan amendments adopted in such year, over a period of 15plan years,

(iv)

separately, with respect to eachplan year, the net experience loss (if any) under theplan, over a period of 5plan years, and

(v)

separately, with respect to eachplan year, the net loss (if any) resulting from changes in actuarial assumptions used under theplan, over a period of 10plan years,

(C)

the amount necessary to amortize eachwaived funding deficiency (within the meaning ofsection 1082(c)(3) of this title) for each prior planyear in equal annual installments (until fully amortized) over a period of 5 planyears,

(D)

the amount necessary to amortize in equal annual installments (until fully amortized) over a period of 5plan years any amount credited to the funding standard account under paragraph (3)(D), and

(E)

the amount necessary to amortize in equal annual installments (until fully amortized) over a period of 20 years the contributions which would be required to be made under theplan but for the provisions ofsection 1082(c)(7)(A)(i)(I) of this title (as in effect on the day beforeAugust 17, 2006).

(3) Credits to accountFor aplan year, the funding standard account shall be credited with the sum of—

(A)

the amount considered contributed by theemployer to or under the planfor the planyear,

(B) the amount necessary to amortize in equal annual installments (until fully amortized)—

(i)

separately, with respect to eachplan year, the net decrease (if any) in unfunded past service liability under theplan arising fromplan amendments adopted in such year, over a period of 15plan years,

(ii)

separately, with respect to eachplan year, the net experience gain (if any) under theplan, over a period of 5plan years, and

(iii)

separately, with respect to eachplan year, the net gain (if any) resulting from changes in actuarial assumptions used under theplan, over a period of 10plan years,

(C)

the amount of thewaived funding deficiency (within the meaning ofsection 1082(c)(3) of this title) for the planyear, and

(D)

in the case of aplan year for which theaccumulated funding deficiency is determined under the funding standard account if such planyear follows a planyear for which such deficiency was determined under the alternative minimum funding standard, the excess (if any) of any debit balance in the funding standard account (determined without regard to this subparagraph) over any debit balance in the alternative minimum funding standard account.

(4) Combining and offsetting amounts to be amortizedUnder regulations prescribed by theSecretary of the Treasury, amounts required to be amortized under paragraph (2) or paragraph (3), as the case may be—

(A)

may be combined into one amount under such paragraph to be amortized over a period determined on the basis of the remaining amortization period for all items entering into such combined amount, and

(B)

may be offset against amounts required to be amortized under the other such paragraph, with the resulting amount to be amortized over a period determined on the basis of the remaining amortization periods for all items entering into whichever of the two amounts being offset is the greater.

(5) Interest

(A) In general

Except as provided in subparagraph (B), the funding standard account (and items therein) shall be charged or credited (as determined under regulations prescribed by theSecretary of the Treasury) with interest at the appropriate rate consistent with the rate or rates of interest used under the planto determine costs.

(B) ExceptionThe interest rate used for purposes of computing the amortization charge described in subsection (b)(2)(C) or for purposes of any arrangement under subsection (d) for anyplan year shall be the greater of—

(i)

150 percent of the Federal mid-term rate (as in effect undersection 1274 of title 26 for the 1st month of such planyear), or

(ii)

the rate of interest determined under subparagraph (A).

(6) Amortization schedules in effect

Amortization schedules for amounts described in paragraphs (2) and (3) that are in effect as of the last day of the lastplan year beginning beforeJanuary 1, 2014, by reason of section 104 of thePension Protection Act of 2006 shall remain in effect pursuant to their terms and this section, except that such amounts shall not be amortized again under this section.

(1) Determinations to be made under funding method

For purposes of this section,normal costs, accrued liability, past service liabilities, and experience gains and losses shall be determined under the funding method used to determine costs under the plan.

(2) Valuation of assets

(A) In general

For purposes of this section, the value of theplan’s assets shall be determined on the basis of any reasonable actuarial method of valuation which takes into account fair market value and which is permitted under regulations prescribed by theSecretary of the Treasury.

(B) Dedicated bond portfolio

TheSecretary of the Treasury may by regulations provide that the value of any dedicated bond portfolio of a planshall be determined by using the interest rate undersection 1082(b)(5) of this title (as in effect on the day beforeAugust 17, 2006).

(3) Actuarial assumptions must be reasonableFor purposes of this section, all costs, liabilities, rates of interest, and other factors under theplan shall be determined on the basis of actuarial assumptions and methods—

(A)

each of which is reasonable (taking into account the experience of theplan and reasonable expectations), and

(B)

which, in combination, offer the actuary’s best estimate of anticipated experience under theplan.

(4) Treatment of certain changes as experience gain or lossFor purposes of this section, if—

(A)

a change in benefits under theSocial Security Act [42 U.S.C. 301 et seq.] or in other retirement benefits created under Federal or Statelaw, or

(B)

a change in the definition of the term “wages” undersection 3121 of title 26 or a change in the amount of such wages taken into account under regulations prescribed for purposes of section 401(a)(5) of such title,

results in an increase or decrease inaccrued liability under a plan, such increase or decrease shall be treated as an experience loss or gain.

(5) Funding method and plan year

(A) Funding methods available

All funding methods available to CSECplans undersection 1082 of this title (as in effect on the day beforeAugust 17, 2006) shall continue to be available under this section.

(B) Changes

If the funding method for aplan is changed, the new funding method shall become the funding method used to determine costs and liabilities under theplan only if the change is approved by theSecretary of the Treasury. If the planyear for a planis changed, the new planyear shall become the planyear for the planonly if the change is approved by theSecretary of the Treasury.

(C) Approval required for certain changes in assumptions by certain single-employer plans subject to additional funding requirement

(i) In general

No actuarial assumption (other than the assumptions described in subsection (h)(3)) used to determine thecurrent liability for a planto which this subparagraph applies may be changed without the approval of the Secretaryof the Treasury.

(ii) Plans to which subparagraph appliesThis subparagraph shall apply to aplan only if—

(I)

theplan is a CSECplan,

(II)

the aggregate unfunded vested benefits as of the close of the precedingplan year (as determined undersection 1306(a)(3)(E)(iii) of this title) of such planand all other plansmaintained by the contributing sponsors (as defined insection 1301(a)(13) of this title) and members of such sponsors’ controlled groups(as defined insection 1301(a)(14) of this title) which are covered by subchapter III (disregarding planswith no unfunded vested benefits) exceed $50,000,000, and

(III)

the change in assumptions (determined after taking into account any changes in interest rate and mortality table) results in a decrease in the funding shortfall of theplan for the currentplan year that exceeds $50,000,000, or that exceeds $5,000,000 and that is 5 percent or more of thecurrent liability of the planbefore such change.

(6) Full fundingIf, as of the close of aplan year, aplan would (without regard to this paragraph) have anaccumulated funding deficiency (determined without regard to the alternative minimum funding standard account permitted under subsection (e)) in excess of the full funding limitation—

(A)

the funding standard account shall be credited with the amount of such excess, and

(B)

all amounts described in paragraphs (2)(B), (C), and (D) and (3)(B) of subsection (b) which are required to be amortized shall be considered fully amortized for purposes of such paragraphs.

(7) Full-funding limitationFor purposes of paragraph (6), the term “full-funding limitation” means the excess (if any) of—

(A)

theaccrued liability (includingnormal cost) under the plan(determined under the entry age normal funding method if such accrued liabilitycannot be directly calculated under the funding method used for the plan), over

(B) the lesser of—

(i)

the fair market value of theplan’s assets, or

(ii)

the value of such assets determined under paragraph (2).

(i) In general.—In no event shall thefull-funding limitation determined under subparagraph (A) be less than the excess (if any) of—

(I)

90 percent of thecurrent liability (determined without regard to paragraph (4) of subsection (h)) of the plan(including the expected increase in suchcurrent liability due to benefits accruing during the planyear), over

(II)

the value of theplan’s assets determined under paragraph (2).

(ii) Assets.—

For purposes of clause (i), assets shall not be reduced by any credit balance in the funding standard account.

(8) Annual valuation

(A) In general

For purposes of this section, a determination of experience gains and losses and a valuation of theplan’s liability shall be made not less frequently than once every year, except that such determination shall be made more frequently to the extent required in particular cases under regulations prescribed by theSecretary of the Treasury.

(B) Valuation date

(i) Current year

Except as provided in clause (ii), the valuation referred to in subparagraph (A) shall be made as of a date within theplan year to which the valuation refers or within one month prior to the beginning of such year.

(ii) Use of prior year valuation

The valuation referred to in subparagraph (A) may be made as of a date within theplan year prior to the year to which the valuation refers if, as of such date, the value of the assets of theplan are not less than 100 percent of theplan’scurrent liability.

(iii) Adjustments

Information under clause (ii) shall, in accordance with regulations, be actuarially adjusted to reflect significant differences inparticipants.

(iv) Limitation

A change in funding method to use a prior year valuation, as provided in clause (ii), may not be made unless as of the valuation date within the priorplan year, the value of the assets of theplan are not less than 125 percent of theplan’scurrent liability.

(9) Time when certain contributions deemed madeFor purposes of this section, any contributions for aplan year made by anemployer during the period—

(A)

beginning on the day after the last day of suchplan year, and

(B)

ending on the day which is 8½ months after the close of theplan year,

shall be deemed to have been made on such last day.

(10) Anticipation of benefit increases effective in the future

In determining projected benefits, the funding method of a collectively bargained CSECplan described insection 413(a) of title 26 shall anticipate benefit increases scheduled to take effect during the term of the collective bargaining agreement applicable to the plan.

(d) Extension of amortization periodsThe period of years required to amortize any unfunded liability (described in any clause of subsection (b)(2)(B)) of anyplan may be extended by theSecretary of the Treasury for a period of time (not in excess of 10 years) if suchSecretary determines that such extension would carry out the purposes of this chapter and provide adequate protection forparticipants under the planand their beneficiaries, and if such Secretarydetermines that the failure to permit such extension would result in—

(1)

a substantial risk to the voluntary continuation of theplan, or

(2)

a substantial curtailment of pension benefit levels oremployee compensation.

(e) Alternative minimum funding standard

(1) In general

A CSECplan which uses a funding method that requires contributions in all years not less than those required under the entry age normal funding method may maintain an alternative minimum funding standard account for anyplan year. Such account shall be credited and charged solely as provided in this subsection.

(2) Charges and credits to accountFor aplan year the alternative minimum funding standard account shall be—

(A) charged with the sum of—

(i)

the lesser ofnormal cost under the funding method used under the planornormal cost determined under the unit credit method,

(ii)

the excess, if any, of thepresent value ofaccrued benefits under the planover the fair market value of the assets, and

(iii)

an amount equal to the excess (if any) of credits to the alternative minimum standard account for all priorplan years over charges to such account for all such years, and

(B)

credited with the amount considered contributed by theemployer to or under the planfor the planyear.

(3) Interest

The alternative minimum funding standard account (and items therein) shall be charged or credited with interest in the manner provided under subsection (b)(5) with respect to the funding standard account.

(f) Quarterly contributions required

(1) In generalIf a CSECplan which has afunded current liability percentage for the preceding planyear of less than 100 percent fails to pay the full amount of a required installmentfor the planyear, then the rate of interest charged to the funding standard account under subsection (b)(5) with respect to the amount of the underpayment for the period of the underpayment shall be equal to the greater of—

(A)

175 percent of the Federal mid-term rate (as in effect undersection 1274 of title 26 for the 1st month of such planyear), or

(B)

the rate of interest used under theplan in determining costs.

(2) Amount of underpayment, period of underpaymentFor purposes of paragraph (1)—

(A) AmountThe amount of the underpayment shall be the excess of—

(i)

therequired installment, over

(ii)

the amount (if any) of the installment contributed to or under theplan on or before thedue date for the installment.

(B) Period of underpayment

The period for which interest is charged under this subsection with regard to any portion of the underpayment shall run from thedue date for the installment to the date on which such portion is contributed to or under the plan(determined without regard to subsection (c)(9)).

For purposes of subparagraph (A)(ii), contributions shall be credited against unpaidrequired installments in the order in which such installments are required to be paid.

(3) Number of required installments; due datesFor purposes of this subsection—

(A) Payable in 4 installments

There shall be 4required installments for each planyear.

(B) Time for payment of installments

	In the case of the followingrequired installments:	Thedue date is:
	1st	April 15
	2nd	July 15
	3rd	October 15
	4th	January 15 of the following year.

(4) Amount of required installmentFor purposes of this subsection—

(A) In general

The amount of anyrequired installment shall be 25 percent of therequired annual payment.

(B) Required annual paymentFor purposes of subparagraph (A), the term “required annual payment” means the lesser of—

(i)

90 percent of the amount required to be contributed to or under theplan by theemployer for the planyear undersection 1082 of this title (without regard to any waiver under subsection (c) thereof), or

(ii)

100 percent of the amount so required for the precedingplan year.

Clause (ii) shall not apply if the precedingplan year was not a year of 12 months.

(5) Liquidity requirement

(A) In general

Aplan to which this paragraph applies shall be treated as failing to pay the full amount of anyrequired installment to the extent that the value of the liquid assetspaid in such installment is less than the liquidity shortfall(whether or not such liquidity shortfallexceeds the amount of such installment required to be paid but for this paragraph).

(B) Plans to which paragraph appliesThis paragraph shall apply to a CSECplan other than aplan described insection 1082(d)(6)(A) of this title (as in effect on the day beforeAugust 17, 2006) which—

(i)

is required to pay installments under this subsection for aplan year, and

(ii)

has aliquidity shortfall for any quarterduring such planyear.

For purposes of paragraph (1), any portion of an installment that is treated as not paid under subparagraph (A) shall continue to be treated as unpaid until the close of thequarter in which thedue date for such installment occurs.

(D) Limitation on increase

If the amount of anyrequired installment is increased by reason of subparagraph (A), in no event shall such increase exceed the amount which, when added to prior installments for the planyear, is necessary to increase thefunded current liability percentage (taking into account the expected increase in current liabilitydue to benefits accruing during the planyear) to 100 percent.

(E) DefinitionsFor purposes of this paragraph—

(i) Liquidity shortfall

The term “liquidity shortfall” means, with respect to anyrequired installment, an amount equal to the excess (as of the last day of the quarterfor which such installment is made) of the base amountwith respect to such quarterover 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 adjusteddisbursements from the plan for the 12 months ending on the last day of such quarter.

(II) Special rule

If the amount determined under subclause (I) exceeds an amount equal to 2 times the sum of the adjusteddisbursements from the plan for the 36 months ending on the last day of the quarterand an enrolled actuarycertifies to the satisfaction of the Secretaryof the Treasury that such excess is the result of nonrecurring circumstances, the base amountwith respect to such quartershall be determined without regard to amounts related to those nonrecurring circumstances.

(iii) Disbursements from the plan

The term “disbursements from the plan” means all disbursements from the trust, including purchases of annuities, payments of single sums and other benefits, and administrative expenses.

(iv) Adjusted disbursementsThe term “adjusted disbursements” meansdisbursements from the plan reduced by the product of—

(I)

theplan’sfunded current liability percentage for the planyear, and

(II)

the sum of the purchases of annuities, payments of single sums, and such other disbursements as theSecretary of the Treasury shall provide in regulations.

(v) Liquid assets

The term “liquid assets” means cash, marketable securities and such other assets as specified by the Secretaryof the Treasury in regulations.

(vi) Quarter

The term “quarter” means, with respect to anyrequired installment, the 3-month period preceding the month in which the due datefor such installment occurs.

(F) Regulations

TheSecretary of the Treasury may prescribe such regulations as are necessary to carry out this paragraph.

(6) Fiscal years and short years

(A) Fiscal years

In applying this subsection to aplan year beginning on any date other than January 1, there shall be substituted for the months specified in this subsection, the months which correspond thereto.

(B) Short plan year

This subsection shall be applied toplan years of less than 12 months in accordance with regulations prescribed by theSecretary of the Treasury.

(g) Imposition of lien where failure to make required contributions

(1) In generalIn the case of aplan to which this section applies, if—

(A)

anyperson fails to make arequired installment under subsection (f) or any other payment required under this section before the due datefor such installment or other payment, and

(B)

the unpaid balance of such installment or other payment (including interest), when added to the aggregate unpaid balance of all preceding such installments or other payments for which payment was not made before thedue date (including interest), exceeds $1,000,000,

then there shall be a lien in favor of theplan in the amount determined under paragraph (3) upon all property and rights to property, whether real or personal, belonging to suchperson and any otherperson who is a member of the samecontrolled group of which such personis a member.

(2) Plans to which subsection applies

This subsection shall apply to a CSECplan for anyplan year for which thefunded current liability percentage of such planis less than 100 percent. This subsection shall not apply to any planto whichsection 1321 of this title does not apply (as such section is in effect onDecember 8, 1994).

(3) Amount of lienFor purposes of paragraph (1), the amount of the lien shall be equal to the aggregate unpaid balance ofrequired installments and other payments required under this section (including interest)—

(A)

forplan years beginning after 1987, and

(B)

for which payment has not been made before thedue date.

(4) Notice of failure; lien

(A) Notice of failure

Aperson committing a failure described in paragraph (1) shall notify thePension Benefit Guaranty Corporation of such failure within 10 days of the due datefor the required installmentor other payment.

(B) Period of lien

The lien imposed by paragraph (1) shall arise on thedue date for therequired installment or other payment and shall continue until the last day of the first planyear in which the planceases to be described in paragraph (1)(B). Such lien shall continue to run without regard to whether such plancontinues to be described in paragraph (2) during the period referred to in the preceding sentence.

Any amount with respect to which a lien is imposed under paragraph (1) shall be treated as taxes due and owing theUnited States and rules similar to the rules of subsections (c), (d), and (e) ofsection 1368 of this title shall apply with respect to a lien imposed by subsection (a) [1] and the amount with respect to such lien.

(5) Enforcement

Any lien created under paragraph (1) may be perfected and enforced only by thePension Benefit Guaranty Corporation, or at the direction of thePension Benefit Guaranty Corporation, by any contributing employer(or any member of the controlled groupof the contributing employer).

(6) DefinitionsFor purposes of this subsection—

(A) Due date; required installment

The terms “due date” and “required installment” have the meanings given such terms by subsection (f), except that in the case of a payment other than arequired installment, the due dateshall be the date such payment is required to be made under this section.

(B) Controlled group

The term “controlled group” means any group treated as a single employerunder subsections (b), (c), (m), and (o) ofsection 414 of title 26.

(h) Current liabilityFor purposes of this section—

(1) In general

The term “current liability” means all liabilities to employeesand their beneficiaries under the plan.

(2) Treatment of unpredictable contingent event benefits

(A) In general

For purposes of paragraph (1), anyunpredictable contingent event benefit shall not be taken into account until the event on which the benefit is contingent occurs.

(B) Unpredictable contingent event benefitThe term “unpredictable contingent event benefit” means any benefit contingent on an event other than—

(i)

age, service, compensation, death, or disability, or

(ii)

an event which is reasonably and reliably predictable (as determined by theSecretary of the Treasury).

(3) Interest rate and mortality assumptions used

(A) Interest rate

The rate of interest used to determinecurrent liability under this section shall be the third segment rate determined undersection 1083(h)(2)(C) of this title.

(B) Mortality tables

(i) Secretarial authority

TheSecretary of the Treasury may by regulation prescribe mortality tables to be used in determiningcurrent liability under this subsection. Such tables shall be based upon the actual experience of pension plansand projected trends in such experience. In prescribing such tables, the Secretaryof the Treasury shall take into account results of available independent studies of mortality of individuals covered by pension plans.

(ii) Periodic review

TheSecretary of the Treasury shall periodically (at least every 5 years) review any tables in effect under this subsection and shall, to the extent theSecretary of the Treasury determines necessary, by regulation update the tables to reflect the actual experience ofpension plans and projected trends in such experience.

(i) In general

In the case ofplan years beginning afterDecember 31, 1995, the Secretaryof the Treasury shall establish mortality tables which may be used (in lieu of the tables under subparagraph (B)) to determine current liabilityunder this subsection for individuals who are entitled to benefits under the planon account of disability. The Secretaryof the Treasury shall establish separate tables for individuals whose disabilities occur in planyears beginning beforeJanuary 1, 1995, and for individuals whose disabilities occur in planyears beginning on or after such date.

(ii) Special rule for disabilities occurring after 1994

In the case of disabilities occurring inplan years beginning afterDecember 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 theSocial Security Act [42 U.S.C. 401 et seq.] and the regulations thereunder.

(4) Certain service disregarded

(A) In general

In the case of aparticipant to whom this paragraph applies, only the applicable percentage of the years of service before such individual became aparticipant shall be taken into account in computing thecurrent liability of the plan.

(B) Applicable percentage

For purposes of this subparagraph, the applicable percentage shall be determined as follows:

	If the years of participation are:	The applicable percentage is:
	1	20
	2	40
	3	60
	4	80
	5 or more	100.

(C) Participants to whom paragraph appliesThis subparagraph shall apply to anyparticipant who, at the time of becoming aparticipant—

(i)

has not accrued any other benefit under any defined benefitplan (whether or not terminated) maintained by theemployer or a member of the samecontrolled group of which the employeris a member,

(ii)

who first becomes aparticipant under the planin a planyear beginning afterDecember 31, 1987, and

(iii)

has years of service greater than the minimum years of service necessary for eligibility to participate in theplan.

(D) Election

Anemployer may elect not to have this subparagraph apply. Such an election, once made, may be revoked only with the consent of theSecretary of the Treasury.

(i) Funded current liability percentageFor purposes of this section, the term “funded current liability percentage” means, with respect to any planyear, the percentage which—

(1)

the value of theplan’s assets determined under subsection (c)(2), is of

(2)

thecurrent liability under the plan.

(j) Funding restoration statusNotwithstanding any other provisions of this section—

(1) Normal cost payment

(A) In generalIn the case of a CSECplan that is in funding restoration status for aplan year, for purposes ofsection 1082 of this title, the term“accumulated funding deficiency” means, for such planyear, the greater of—

(i)

the amount described in subsection (a), or

(ii)

the excess of thenormal cost of the planfor the planyear over the amount actually contributed to or under the planfor the planyear.

(B) Normal cost

In the case of a CSECplan that uses aspread gain funding method, for purposes of this subsection, the term“normal cost” means normal costas determined under the entry age normal funding method.

(2) Plan amendments

In the case of a CSECplan that is in funding restoration status for aplan year, no amendment to suchplan may take effect during suchplan year if such amendment has the effect of increasing liabilities of theplan by means of increases in benefits, establishment of new benefits, changing the rate of benefit accrual, or changing the rate at which benefits become nonforfeitable. This paragraph shall not apply to anyplan amendment that is required to comply with any applicable law. This paragraph shall cease to apply with respect to anyplan year, effective as of the first day of theplan year (or if later, the effective date of the amendment) upon payment by theplan sponsor of a contribution to the plan(in addition to any contribution required under this section without regard to this paragraph) in an amount equal to the increase in thefunding liability of the planattributable to the planamendment.

(3) Funding restoration plan

The sponsor of a CSECplan shall establish a written funding restorationplan within 180 days of the receipt by theplan sponsor of a certification from the planactuary that the planis in funding restoration status for a planyear. Such funding restoration planshall consist of actions that are calculated, based on reasonably anticipated experience and reasonable actuarial assumptions, to increase the plan’sfunded percentage to 100 percent over a period that is not longer than the greater of 7 years or the shortest amount of time practicable. Such funding restoration planshall take into account contributions required under this section (without regard to this paragraph). If a planremains in funding restoration status for 2 or more years, such funding restoration planshall be updated each year after the 1st such year within 180 days of receipt by the plan sponsorof a certification from the planactuary that the planremains in funding restoration status for the planyear.

(4) Annual certification by plan actuaryNot later than the 90th day of eachplan year of a CSECplan, theplan actuary shall certify to theplan sponsor whether or not the planis in funding restoration status for the planyear, based on the plan’sfunded percentage as of the beginning of the planyear. For this purpose, the actuary may conclusively rely on an estimate of—

(A)

theplan’sfunding liability, based on thefunding liability of the planfor the preceding planyear and on reasonable actuarial estimates, assumptions, and methods, and

(B)

the amount of any contributions reasonably anticipated to be made for the precedingplan year.

Contributions described in subparagraph (B) shall be taken into account in determining theplan’sfunded percentage as of the beginning of the planyear.

(5) DefinitionsFor purposes of this subsection—

(A) Funding restoration status

A CSECplan shall be treated as in funding restoration status for aplan year if theplan’sfunded percentage as of the beginning of such planyear is less than 80 percent.

(B) Funded percentageThe term “funded percentage” means the ratio (expressed as a percentage) which—

(i)

the value ofplan assets (as determined under subsection (c)(2)), bears to

(ii)

theplan’sfunding liability.

The term “funding liability” for a planyear means the present valueof all benefits accrued or earned under the planas of the beginning of the planyear, based on the assumptions used by the planpursuant to this section, including the interest rate described in subsection (b)(5)(A) (without regard to subsection (b)(5)(B)).

(D) Spread gain funding method

The term “spread gain funding method” has the meaning given such term under rules and forms issued by the Secretaryof the Treasury.

(Pub. L. 93–406, title I, § 306, as addedPub. L. 113–97, title I, § 102(a),Apr. 7, 2014,128 Stat. 1102.)

[1] So in original. Probably should be “paragraph (1)”.

Editorial Notes

References in Text

Section 104 of thePension Protection Act of 2006, referred to in subsec. (b)(6), issection 104 of Pub. L. 109–280, which is set out as a note undersection 401 of Title 26,Internal Revenue Code.

TheSocial Security Act, referred to in subsecs. (c)(4)(A) and (h)(3)(C)(ii), is act Aug. 14, 1935, ch. 531,49 Stat. 620, which is classified generally to chapter 7 (§ 301 et seq.) of Title 42, The Public Health and Welfare. Title II of the Act is classified generally to subchapter II (§ 401 et seq.) of chapter 7 of Title 42. For complete classification of this Act to the Code, seesection 1305 of Title 42 and Tables.

This chapter, referred to in subsec. (d), was in the original “this Act”, meaningPub. L. 93–406, known as theEmployee Retirement Income Security Act of 1974. Titles I, III, and IV of such Act are classified principally to this chapter. For complete classification of this Act to the Code, see Short Title note set out undersection 1001 of this title and Tables.

Prior Provisions

A prior section 1085a,Pub. L. 93–406, title I, § 306, as addedPub. L. 99–272, title XI, § 11015(a)(1)(A)(ii),Apr. 7, 1986,100 Stat. 264; amendedPub. L. 100–203, title IX, § 9306(e)(2),Dec. 22, 1987,101 Stat. 1330–355;Pub. L. 101–239, title VII, § 7891(a)(1),Dec. 19, 1989,103 Stat. 2445, related to securityfor waivers of minimum funding standard and extensions of amortization period, prior to repeal byPub. L. 109–280, title I, § 101(a),Aug. 17, 2006,120 Stat. 784.

Statutory Notes and Related Subsidiaries

Effective Date

Section applicable to years beginning afterDec. 31, 2013, seesection 3 of Pub. L. 113–97, set out as an Effective Date of 2014 Amendment note undersection 401 of Title 26,Internal Revenue Code.

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29 U.S. Code § 1085a - Minimum funding standards

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