Sec. 40211. PENSION FUNDING STABILIZATION

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## SEC. 40211 PENSION FUNDING STABILIZATION ###

(a)Amendments to Internal Revenue Code of 1986 ####

(1)In general Subparagraph

(C)of section 430(h)(2) of the Internal Revenue Code of 1986 is amended by adding at the end the following new clause: > > ###### “(iv) Segment rate stabilization > > > ###### “(I) In general > > If a segment rate described in clause (i), (ii), or

(iii)with respect to any applicable month (determined without regard to this clause) is less than the applicable minimum percentage, or more than the applicable maximum percentage, of the average of the segment rates described in such clause for years in the 25-year period ending with September 30 of the calendar year preceding the calendar year in which the plan year begins, then the segment rate described in such clause with respect to the applicable month shall be equal to the applicable minimum percentage or the applicable maximum percentage of such average, whichever is closest. The Secretary shall determine such average on an annual basis and may prescribe equivalent rates for years in any such 25-year period for which the rates described in any such clause are not available. > > > ###### “(II) Applicable minimum percentage; applicable maximum percentage > > For purposes of subclause (I), the applicable minimum percentage and the applicable maximum percentage for a plan year beginning in a calendar year shall be determined in accordance with the following table: ``If the calendar year is:The applicable minimum percentage is:The applicable maximum percentage is:201290%110%201385%115%201480%120%201575%125%After 201570%130%.''. > ####

(2)Conforming amendments #####

(A)**[**[26 U.S.C. 404](/us/usc/t26/s404)**]** Paragraph

(6)of section 404(o) of such Code is amended by inserting “(determined by not taking into account any adjustment under clause

(iv)of subsection (h)(2)(C) thereof)” before the period. #####

(B)Subparagraph

(F)of section 430(h)(2) of such Code is amended by inserting “and the averages determined under subparagraph (C)(iv)” after “subparagraph (C)”. #####

(C)Subparagraphs

(C)and

(D)of section 417(e)(3) of such Code are each amended by striking “section 430(h)(2)(C)” and inserting “section 430(h)(2)(C) (determined by not taking into account any adjustment under clause

(iv)thereof)”. #####

(D)Section 420 of such Code is amended by adding at the end the following new subsection: > > ### “(g) Segment Rates Determined Without Pension Stabilization > > For purposes of this section, section 430 shall be applied without regard to subsection (h)(2)(C)(iv) thereof.” > . ###

(b)Amendments to Employee Retirement Income Security Act of 1974 ####

(1)In general Subparagraph

(C)of section 303(h)(2) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1083(h)(2)) is amended by adding at the end the following new clause: > > ###### “(iv) Segment rate stabilization > > > ###### “(I) In general > > If a segment rate described in clause (i), (ii), or

(iii)with respect to any applicable month (determined without regard to this clause) is less than the applicable minimum percentage, or more than the applicable maximum percentage, of the average of the segment rates described in such clause for years in the 25-year period ending with September 30 of the calendar year preceding the calendar year in which the plan year begins, then the segment rate described in such clause with respect to the applicable month shall be equal to the applicable minimum percentage or the applicable maximum percentage of such average, whichever is closest. The Secretary of the Treasury shall determine such average on an annual basis and may prescribe equivalent rates for years in any such 25-year period for which the rates described in any such clause are not available. > > > ###### “(II) Applicable minimum percentage; applicable maximum percentage > > For purposes of subclause (I), the applicable minimum percentage and the applicable maximum percentage for a plan year beginning in a calendar year shall be determined in accordance with the following table: ``If the calendar year is:The applicable minimum percentage is:The applicable maximum percentage is:201290%110%201385%115%201480%120%201575%125%After 201570%130%.''. > ####

(2)Disclosure of effect of segment rate stabilization on plan funding #####

(A)In general Paragraph

(2)of section 101(f) of such Act (29 U.S.C. 1021(f)) is amended by adding at the end the following new subparagraph: > > ##### “(D) Effect of segment rate stabilization on plan funding > > > ###### “(i) In general > > In the case of a single-employer plan for an applicable plan year, each notice under paragraph

(1)shall include— > > > ###### “(I) > > a statement that the MAP-21 modified the method for determining the interest rates used to determine the actuarial value of benefits earned under the plan, providing for a 25-year average of interest rates to be taken into account in addition to a 2-year average, > > > ###### “(II) > > a statement that, as a result of the MAP-21, the plan sponsor may contribute less money to the plan when interest rates are at historical lows, and > > > ###### “(III) > > a table which shows (determined both with and without regard to section 303(h)(2)(C)(iv)) the funding target attainment percentage (as defined in section 303(d)(2)), the funding shortfall (as defined in section 303(c)(4)), and the minimum required contribution (as determined under section 303), for the applicable plan year and each of the 2 preceding plan years. > > > ###### “(ii) Applicable plan year > > For purposes of this subparagraph, the term ‘applicable plan year’ means any plan year beginning after December 31, 2011, and before January 1, 2015, for which— > > > ###### “(I) > > the funding target (as defined in section 303(d)(2)) is less than 95 percent of such funding target determined without regard to section 303(h)(2)(C)(iv), > > > ###### “(II) > > the plan has a funding shortfall (as defined in section 303(c)(4) and determined without regard to section 303(h)(2)(C)(iv)) greater than $500,000, and > > > ###### “(III) > > the plan had 50 or more participants on any day during the preceding plan year. > > For purposes of any determination under subclause (III), the aggregation rule under the last sentence of section 303(g)(2)(B) shall apply. > > > ###### “(iii) Special rule for plan years beginning before 2012 > > In the case of a preceding plan year referred to in clause (i)(III) which begins before January 1, 2012, the information described in such clause shall be provided only without regard to section 303(h)(2)(C)(iv).” > . #####

(B)Model notice **[**[29 U.S.C. 1021 note](/us/usc/t29/s1021)**]** The Secretary of Labor shall modify the model notice required to be published under section 501(c) of the Pension Protection Act of 2006 to prominently include the information described in section 101(f)(2)(D) of the Employee Retirement Income Security Act of 1974, as added by this paragraph. ####

(3)Conforming amendments #####

(A)Subparagraph

(F)of section 303(h)(2) of such Act (29 U.S.C. 1083(h)(2)) is amended by inserting “and the averages determined under subparagraph (C)(iv)” after “subparagraph (C)”. #####

(B)Clauses

(ii)and

(iii)of section 205(g)(3)(B) of such Act (29 U.S.C. 1055(g)(3)(B)) are each amended by striking “section 303(h)(2)(C)” and inserting “section 303(h)(2)(C) (determined by not taking into account any adjustment under clause

(iv)thereof)”. #####

(C)Clause

(iv)of section 4006(a)(3)(E) of such Act (29 U.S.C. 1306(a)(3)(E)) is amended by striking “section 303(h)(2)(C)” and inserting “section 303(h)(2)(C) (notwithstanding any regulations issued by the corporation, determined by not taking into account any adjustment under clause

(iv)thereof)”. #####

(D)Section 4010(d) of such Act (29 U.S.C. 1310(d)) is amended by adding at the end the following: > > #### “(3) Pension stabilization disregarded > > For purposes of this section, the segment rates used in determining the funding target and funding target attainment percentage shall be determined by not taking into account any adjustment under section 302(h)((2)(C)(iv).” > . ###

(c)Effective Date **[**[26 U.S.C. 1404 note](/us/usc/t26/s1404)**]** ####

(1)In general The amendments made by this section shall apply with respect to plan years beginning after December 31, 2011. ####

(2)Rules with respect to elections #####

(A)Adjusted funding target attainment percentage A plan sponsor may elect not to have the amendments made by this section apply to any plan year beginning before January 1, 2013, either (as specified in the election)— ######

(i)for all purposes for which such amendments apply, or ######

(ii)solely for purposes of determining the adjusted funding target attainment percentage under sections 436 of the Internal Revenue Code of 1986 and 206(g) of the Employee Retirement Income Security Act of 1974 for such plan year. A plan shall not be treated as failing to meet the requirements of sections 204(g) of such Act and 411(d)(6) of such Code solely by reason of an election under this paragraph. #####

(B)Opt out of existing elections If, on the date of the enactment of this Act, an election is in effect with respect to any plan under sections 303(h)((2)(D)(ii) of the Employee Retirement Income Security Act of 1974 and 430(h)((2)(D)(ii) of the Internal Revenue Code of 1986, then, notwithstanding the last sentence of each such section, the plan sponsor may revoke such election without the consent of the Secretary of the Treasury. The plan sponsor may make such revocation at any time before the date which is 1 year after such date of enactment and such revocation shall be effective for the 1st plan year to which the amendments made by this section apply and all subsequent plan years. Nothing in this subparagraph shall preclude a plan sponsor from making a subsequent election in accordance with such sections. ### PART II PBGC PREMIUMS

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