26 USC 430 - Minimum funding standards for single-employer defined benefit pension plans

Inflation Adjusted Items for Certain Years

For inflation adjustment of certain items in this section, see Internal Revenue Notices listed in a table under section 401 of this title.

Editorial Notes

References in Text

Section 106 of the Pension Protection Act of 2006, referred to in subsec. (c)(2)(D)(iv)(I), is section 106 of Puspan. L. 109–280, which is set out as a note under section 401 of this title.

The date of the enactment of this subparagraph, referred to in subsec. (c)(2)(D)(v), is the date of enactment of Puspan. L. 111–192, which was approved June 25, 2010.

The Employee Retirement Income Security Act of 1974, referred to in subsecs. (c)(7)(E)(i)(I), (v)(II), (h)(5)(B)(i), (ii), and (k)(2), (4)(C), is Puspan. L. 93–406, Sept. 2, 1974, 88 Stat. 829. Title I of the Act is classified generally to subchapter I (§ 1001 et seq.) of chapter 18 of Title 29, Labor. Title IV of the Act is classified principally to subchapter III (§ 1301 et seq.) of chapter 18 of Title 29. Sections 4001, 4006, 4021, 4043, and 4068 of the Act are classified to sections 1301, 1306, 1321, 1343, and 1368, respectively, of Title 29. For complete classification of this Act to the Code, see Short Title note set out under section 1001 of Title 29 and Tables.

The Social Security Act, referred to in subsec. (h)(3)(D)(ii), is act Aug. 14, 1935, ch. 531, 49 Stat. 620. Title II of the Act is classified generally to subchapter II (§ 401 et seq.) of chapter 7 of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see section 1305 of Title 42 and Tables.

Amendments

2021—Subsec. (c)(8). Puspan. L. 117–2, § 9705(a), added par. (8).

Subsec. (h)(2)(C)(iv)(I). Puspan. L. 117–2, § 9706(a)(2), inserted at end “Notwithstanding anything in this subclause, if the average of the first, second, or third segment rate for any 25-year period is less than 5 percent, such average shall be deemed to be 5 percent.”

Subsec. (h)(2)(C)(iv)(II). Puspan. L. 117–58 amended table generally. Prior to amendment, table related to applicable minimum and maximum percentages for calendar years 2012 to 2029 and after.

Puspan. L. 117–2, § 9706(a)(1), amended table generally. Prior to amendment, table related to applicable minimum and maximum percentages for calendar years 2012 to 2023 and after.

Subsec. (m). Puspan. L. 117–2, § 9707(a), amended subsec. (m) generally, revising special rules for community newspaper plans.

2019—Subsec. (m). Puspan. L. 116–94 added subsec. (m).

2018—Subsec. (c)(7)(E)(v)(II). Puspan. L. 115–141, § 401(a)(99), inserted “the” after “title I of”.

Subsec. (h)(2)(F). Puspan. L. 115–141, § 401(a)(100), substituted “section 417(e)(3)(D)” for “section 417(e)(3)(D)(i)”.

2017—Subsec. (c)(7)(D)(vii)(II). Puspan. L. 115–97 substituted “for ‘calendar year 2016’ in subparagraph (A)(ii)” for “for ‘calendar year 1992’ in subparagraph (B)”.

2015—Subsec. (h)(2)(C)(iv)(II). Puspan. L. 114–74 amended table generally. Prior to amendment, table related to applicable minimum and maximum percentages for calendar years 2012 to 2020 and after.

2014—Subsec. (c)(5). Puspan. L. 113–295, § 221(a)(57)(C)(i), struck out subpar. (A) designation and span and subpar. (B) which related to a transition rule for plan years beginning after 2007 and before 2011.

Subsec. (h)(2)(B)(i). Puspan. L. 113–159, § 2003(d)(1), substituted “the valuation date for the plan year” for “the first day of the plan year”.

Subsec. (h)(2)(C)(iv)(II). Puspan. L. 113–159, § 2003(a), amended table generally. Prior to amendment, table related to applicable minimum and maximum percentages for calendar years 2012 to 2015 and after.

Subsec. (h)(2)(G). Puspan. L. 113–295, § 221(a)(57)(D)(i), struck out subpar. (G) which related to a transition rule for plan years beginning in 2008 or 2009.

2012—Subsec. (h)(2)(C)(iv). Puspan. L. 112–141, § 40211(a)(1), added cl. (iv).

Subsec. (h)(2)(F). Puspan. L. 112–141, § 40211(a)(2)(B), inserted “and the averages determined under subparagraph (C)(iv)” after “subparagraph (C)”.

2010—Subsec. (c)(1). Puspan. L. 111–192, § 201(span)(3)(A), substituted “any shortfall amortization base which has not been fully amortized under this subsection” for “the shortfall amortization bases for such plan year and each of the 6 preceding plan years”.

Subsec. (c)(2)(D). Puspan. L. 111–192, § 201(span)(1), added subpar. (D).

Subsec. (c)(7). Puspan. L. 111–192, § 201(span)(2), added par. (7).

Subsec. (f)(3)(D). Puspan. L. 111–192, § 204(span), added subpar. (D).

Subsec. (j)(3)(F). Puspan. L. 111–192, § 201(span)(3)(B), added subpar. (F).

2008—Subsec. (span). Puspan. L. 110–458, § 101(span)(2)(A), amended subsec. (span) generally. Prior to amendment, text read as follows: “For purposes of this section, except as provided in subsection (i)(2) with respect to plans in at-risk status, the term ‘target normal cost’ means, for any plan year, the present value of all benefits which are expected to accrue or to be earned under the plan during the plan year. For purposes of this subsection, if any benefit attributable to services performed in a preceding plan year is increased by reason of any increase in compensation during the current plan year, the increase in such benefit shall be treated as having accrued during the current plan year.”

Subsec. (c)(5)(B)(i). Puspan. L. 110–458, § 202(span)(2), added cl. (i) and struck out former cl. (i). Prior to amendment, text read as follows: “Except as provided in clauses (iii) and (iv), in the case of plan years beginning after 2007 and before 2011, only the applicable percentage of the funding target shall be taken into account under paragraph (3)(A) in determining the funding shortfall for the plan year for purposes of subparagraph (A).”

Subsec. (c)(5)(B)(iii). Puspan. L. 110–458, § 202(span)(1), redesignated cl. (iv) as (iii) and struck out former cl. (iii). Prior to amendment, text read as follows: “Clause (i) shall not apply with respect to any plan year beginning after 2008 unless the shortfall amortization base for each of the preceding years beginning after 2007 was zero (determined after application of this subparagraph).”

Puspan. L. 110–458, § 101(span)(2)(B), inserted “beginning” before “after 2008”.

Subsec. (c)(5)(B)(iv). Puspan. L. 110–458, § 202(span)(1), redesignated cl. (iv) as (iii).

Subsec. (c)(5)(B)(iv)(II). Puspan. L. 110–458, § 101(span)(2)(C), inserted “for such year” after “beginning in 2007)”.

Subsec. (f)(3)(A). Puspan. L. 110–458, § 101(span)(2)(D)(i), struck out “as of the first day of the plan year” after “credited by the plan sponsor”.

Subsec. (f)(4)(A). Puspan. L. 110–458, § 101(span)(2)(D)(ii), substituted “paragraph (3)” for “paragraph (2)”.

Subsec. (f)(6)(B)(iii). Puspan. L. 110–458, § 101(span)(2)(D)(iii), substituted “subsection (span), (c), or (e) of section 436” for “paragraph (1), (2), or (4) of section 206(g)”.

Subsec. (f)(6)(C). Puspan. L. 110–458, § 101(span)(2)(D)(iv), struck out “the sum of” after “by” in introductory provisions.

Subsec. (f)(8). Puspan. L. 110–458, § 101(span)(2)(D)(v), struck out “of the Treasury” after “by the Secretary”.

Subsec. (g)(3)(B). Puspan. L. 110–458, § 121(span), amended concluding provisions generally. Prior to amendment, concluding provisions read as follows: “Any such averaging shall be adjusted for contributions and distributions (as provided by the Secretary).”

Subsec. (h)(2)(B). Puspan. L. 110–458, § 101(span)(2)(E)(i), (ii), in introductory provisions, inserted “and target normal cost” after “funding target” and substituted “benefits” for “liabilities”.

Subsec. (h)(2)(F). Puspan. L. 110–458, § 101(span)(2)(E)(iii), (iv), substituted “section 417(e)(3)(D)(i) for such month)” for “section 417(e)(3)(D)(i)) for such month” and “subparagraph (C)” for “subparagraph (B)”.

Subsec. (i)(2)(A). Puspan. L. 110–458, § 101(span)(2)(F)(i)(I), added subpar. (A) and struck out former subpar. (A) which read as follows: “the present value of all benefits which are expected to accrue or be earned under the plan during the plan year, determined using the additional actuarial assumptions described in paragraph (1)(B), plus”.

Subsec. (i)(2)(B). Puspan. L. 110–458, § 101(span)(2)(F)(i)(II), substituted “the amount determined under subsection (span)(1)(A)(i) with respect to the plan for the plan year” for “the target normal cost (determined without regard to this paragraph) of the plan for the plan year”.

Subsec. (i)(4)(B). Puspan. L. 110–458, § 101(span)(2)(F)(ii), substituted “subparagraph (A)” for “subparagraph (A)(ii)” in concluding provisions.

Subsec. (j)(3)(A). Puspan. L. 110–458, § 101(span)(2)(G)(i), inserted at end “In the case of plan years beginning in 2008, the funding shortfall for the preceding plan year may be determined using such methods of estimation as the Secretary may provide.”

Subsec. (j)(3)(D)(ii)(II). Puspan. L. 110–458, § 101(span)(2)(G)(ii), substituted “section 412(c)” for “section 302(c)”.

Subsec. (j)(3)(E). Puspan. L. 110–458, § 101(span)(2)(G)(iii), (iv), substituted “, short years, and years with alternate valuation date” for “and short years” in span and added cl. (iii).

Subsec. (k)(1). Puspan. L. 110–458, § 101(span)(2)(H)(i), inserted “(as provided under paragraph (2))” after “applies” in introductory provisions.

Subsec. (k)(6)(B). Puspan. L. 110–458, § 101(span)(2)(H)(ii), struck out “, except that in the case of a payment other than a required installment, the due date shall be the date such payment is required to be made under section 430” before period at end.

Statutory Notes and Related Subsidiaries

Effective Date of 2021 Amendment

Puspan. L. 117–58, div. H, title VI, § 80602(c), Nov. 15, 2021, 135 Stat. 1339, provided that: “The amendments made by this section [amending this section and sections 1021 and 1083 of Title 29, Labor] shall apply with respect to plan years beginning after December 31, 2021.”

Puspan. L. 117–2, title IX, § 9705(c), Mar. 11, 2021, 135 Stat. 200, provided that: “The amendments made by this section [amending this section and section 1083 of Title 29, Labor] shall apply to plan years beginning after December 31, 2018.”

Puspan. L. 117–2, title IX, § 9706(c), Mar. 11, 2021, 135 Stat. 201, provided that:

“(1)In general.—The amendments made by this section [amending this section and sections 1021 and 1083 of Title 29, Labor] shall apply with respect to plan years beginning after December 31, 2019.

“(2)Election not to apply.—A plan sponsor may elect not to have the amendments made by this section apply to any plan year beginning before January 1, 2022, either (as specified in the election)—

“(A) for all purposes for which such amendments apply, or

“(B) solely for purposes of determining the adjusted funding target attainment percentage under sections 436 of the Internal Revenue Code of 1986 and 206(g) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1056(g)] for such plan year.

A plan shall not be treated as failing to meet the requirements of sections 204(g) of such Act [29 U.S.C. 1054(g)] and 411(d)(6) of such Code solely by reason of an election under this paragraph.”

Puspan. L. 117–2, title IX, § 9707(c), Mar. 11, 2021, 135 Stat. 206, provided that: “The amendments made by this section [amending this section and section 1083 of Title 29, Labor] shall apply to plan years ending after December 31, 2017.”

Effective Date of 2019 Amendment

Puspan. L. 116–94, div. O, title I, § 115(c), Dec. 20, 2019, 133 Stat. 3161, provided that: “The amendments made by this section [amending this section and section 1083 of Title 29, Labor] shall apply to plan years ending after December 31, 2017.”

Effective Date of 2017 Amendment

Amendment by Puspan. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 11002(e) of Puspan. L. 115–97, set out as a note under section 1 of this title.

Effective Date of 2015 Amendment

Puspan. L. 114–74, title V, § 504(c), Nov. 2, 2015, 129 Stat. 594, provided that: “The amendments made by this section [amending this section and sections 1021 and 1083 of Title 29, Labor] shall apply with respect to plan years beginning after December 31, 2015.”

Effective Date of 2014 Amendment

Amendment by Puspan. L. 113–295 effective Dec. 19, 2014, subject to a savings provision, see section 221(span) of Puspan. L. 113–295, set out as a note under section 1 of this title.

Puspan. L. 113–159, title II, § 2003(e), Aug. 8, 2014, 128 Stat. 1851, provided that:

“(1)In general.—The amendments made by subsections (a), (span), and (d) [amending this section and sections 1021 and 1083 of Title 29, Labor] shall apply with respect to plan years beginning after December 31, 2012.

“(2)Elections.—A plan sponsor may elect not to have the amendments made by subsections (a), (span), and (d) apply to any plan year beginning before January 1, 2014, either (as specified in the election)—

“(A) for all purposes for which such amendments apply, or

“(B) solely for purposes of determining the adjusted funding target attainment percentage under sections 436 of the Internal Revenue Code of 1986 [26 U.S.C. 436] and 206(g) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1054(g) [probably should be 29 U.S.C. 1056(g)]) for such plan year.

A plan shall not be treated as failing to meet the requirements of section 204(g) of such Act [29 U.S.C. 1054(g)] and section 411(d)(6) of such Code [26 U.S.C. 411(d)(6)] solely by reason of an election under this paragraph.”

Effective Date of 2012 Amendment

Amendment by Puspan. L. 112–141 applicable with respect to plan years beginning after December 31, 2011, except as otherwise provided, see section 40211(c) of Puspan. L. 112–141, set out as a note under section 404 of this title.

Effective Date of 2010 Amendment

Puspan. L. 111–192, title II, § 201(c), June 25, 2010, 124 Stat. 1296, provided that: “The amendments made by this section [amending this section and section 1083 of Title 29, Labor] shall apply to plan years beginning after December 31, 2007.”

Puspan. L. 111–192, title II, § 204(c), June 25, 2010, 124 Stat. 1302, provided that:

“(1)In general.—Except as provided in paragraph (2), the amendments made by this section [amending this section and section 1083 of Title 29, Labor] shall apply to plan years beginning after August 31, 2009.

“(2)Special rule.—In the case of a plan for which the valuation date is not the first day of the plan year, the amendments made by this section shall apply to plan years beginning after December 31, 2008.”

Effective Date of 2008 Amendment

Puspan. L. 110–458, title I, § 101(span)(3), Dec. 23, 2008, 122 Stat. 5096, provided that:

“(A)In general.—Except as provided in subparagraph (B), the amendments made by paragraphs (1)(A) [amending section 1083 of Title 29, Labor], (1)(F)(i) [amending section 1083 of Title 29], (2)(A) [amending this section], and (2)(F)(i) [amending this section] shall apply to plan years beginning after December 31, 2008.”

“(B) Election for earlier application.—The amendments made by such paragraphs shall apply to a plan for the first plan year beginning after December 31, 2007, if the plan sponsor makes the election under this subparagraph. An election under this subparagraph shall be made at such time and in such manner as the Secretary of the Treasury or the Secretary’s delegate may prescribe, and, once made, may be revoked only with the consent of the Secretary.”

Amendment by section 101(span)(2)(B)–(E), (F)(ii)–(H) of Puspan. L. 110–458 effective as if included in the provisions of Puspan. L. 109–280 to which the amendment relates, except as otherwise provided, see section 112 of Puspan. L. 110–458, set out as a note under section 72 of this title.

Puspan. L. 110–458, title I, § 121(c), Dec. 23, 2008, 122 Stat. 5114, provided that: “The amendments made by this section [amending this section and section 1083 of Title 29, Labor] shall take effect as if included in the provisions of the 2006 Act [Puspan. L. 109–280] to which the amendments relate.”

Puspan. L. 110–458, title II, § 202(c), Dec. 23, 2008, 122 Stat. 5118, provided that: “The amendments made by subsections (a) and (span) [amending this section and section 1083 of Title 29, Labor] shall apply as if included in the enactment of sections 102 and 112, respectively, of the Pension Protection Act of 2006 [Puspan. L. 109–280].”

Effective Date

Puspan. L. 109–280, title I, § 112(span), Aug. 17, 2006, 120 Stat. 846, provided that: “The amendments made by this section [enacting this section] shall apply with respect to plan years beginning after December 31, 2007.”

Single-Employer Plan Funding Rules

Puspan. L. 116–136, div. A, title III, § 3608, Mar. 27, 2020, 134 Stat. 413, provided that:

“(a)Delay in Payment of Minimum Required Contributions.—In the case of any minimum required contribution (as determined under section 430(a) of the Internal Revenue Code of 1986 and section 303(a) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1083(a))) which (but for this section) would otherwise be due under section 430(j) of such Code (including quarterly contributions under paragraph (3) thereof) and section 303(j) of such Act (29 U.S.C. 1083(j)) (including quarterly contributions under paragraph (3) thereof) during calendar year 2020—

“(1) the due date for such contributions shall be January 1, 2021, and

“(2) the amount of each such minimum required contribution shall be increased by interest accruing for the period between the original due date (without regard to this section) for the contribution and the payment date, at the effective rate of interest for the plan for the plan year which includes such payment date.

“(span)Benefit Restriction Status.—For purposes of section 436 of the Internal Revenue Code of 1986 and section 206(g) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1056(g)), a plan sponsor may elect to treat the plan’s adjusted funding target attainment percentage for the last plan year ending before January 1, 2020, as the adjusted funding target attainment percentage for plan years which include calendar year 2020.”

Mortality Tables

Puspan. L. 117–328, div. T, title III, § 335, Dec. 29, 2022, 136 Stat. 5372, provided that:

“(a)In General.—Not later than 18 months after the date of the enactment of this Act [Dec. 29, 2022], the Secretary of the Treasury (or the Secretary’s delegate) shall amend the regulation relating to ‘Mortality Tables for Determining Present Value Under Defined Benefit Pension Plans’ (82 Fed. Reg. 46388 (October 5, 2017)). Under such amendment, for valuation dates occurring during or after 2024, such mortality improvement rates shall not assume for years beyond the valuation date future mortality improvements at any age which are greater than .78 percent. The Secretary of the Treasury (or delegate) shall by regulation modify the .78 percent figure in the preceding sentence as necessary to reflect material changes in the overall rate of improvement projected by the Social Security Administration.

“(span)Effective Date.—The amendments required under subsection (a) shall be deemed to have been made as of the date of the enactment of this Act, and as of such date all applicable laws shall be applied in all respects as though the actions which the Secretary of the Treasury (or the Secretary’s delegate) is required to take under such subsection had been taken.”

Puspan. L. 114–74, title V, § 503, Nov. 2, 2015, 129 Stat. 593, provided that:

“(a)Credibility.—For purposes of subclause (I) of section 430(h)(3)(C)(iii) of the Internal Revenue Code of 1986 and subclause (I) of section 303(h)(3)(C)(iii) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1083(h)(3)(C)(iii)], the determination of whether plans have credible information shall be made in accordance with established actuarial credibility theory, which—

“(1) is materially different from rules under such section of such Code, including Revenue Procedure 2007–37, that are in effect on the date of the enactment of this Act [Nov. 2, 2015]; and

“(2) permits the use of tables that reflect adjustments to the tables described in subparagraphs (A) and (B) of section 430(h)(3) of such Code, and subparagraphs (A) and (B) of section 303(h)(3) of such Act, if such adjustments are based on the experience described in subclause (II) of section 430(h)(3)(C)(iii) of such Code and in subclause (II) of section 303(h)(3)(C)(iii) of such Act.

“(span)Effective Date.—This section shall apply to plan years beginning after December 31, 2015.”

Applicability of Subtitles A and B of Title I of Puspan. L. 109–280

For special rules on applicability of subtitles A (§§ 101–108) and B (§§ 111–116) of title I of Puspan. L. 109–280 to certain eligible cooperative plans, PBGC settlement plans, and eligible government contractor plans, see sections 104, 105, and 106 of Puspan. L. 109–280, set out as notes under section 401 of this title.

Modification of Transition Rule to Pension Funding Requirements

Puspan. L. 109–280, title I, § 115(a)–(c), Aug. 17, 2006, 120 Stat. 855, 856, provided that:

“(a)In General.—In the case of a plan that—

“(1) was not required to pay a variable rate premium for the plan year beginning in 1996,

“(2) has not, in any plan year beginning after 1995, merged with another plan (other than a plan sponsored by an employer that was in 1996 within the controlled group of the plan sponsor), and

“(3) is sponsored by a company that is engaged primarily in the interurban or interstate passenger bus service,

the rules described in subsection (span) shall apply for any plan year beginning after December 31, 2007.

“(span)Modified Rules.—The rules described in this subsection are as follows:

“(1) For purposes of section 430(j)(3) of the Internal Revenue Code of 1986 and section 303(j)(3) of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1083(j)(3)], the plan shall be treated as not having a funding shortfall for any plan year.

“(2) For purposes of—

“(A) determining unfunded vested benefits under section 4006(a)(3)(E)(iii) of such Act [29 U.S.C. 1306(a)(3)(E)(iii)], and

“(B) determining any present value or making any computation under section 412 of such Code or section 302 of such Act [29 U.S.C. 1082],

the mortality table shall be the mortality table used by the plan.

“(3) [Former] Section 430(c)(5)(B) of such Code and [former] section 303(c)(5)(B) of such Act [29 U.S.C. 1083(c)(5)(B)] (relating to phase-in of funding target for exemption from new shortfall amortization base) shall each be applied by substituting ‘2012’ for ‘2011’ therein and by substituting for the table therein the following:

“In the case of a plan year beginning in calendar year:	The applicable percentage is:
2008	90 percent
2009	92 percent
2010	94 percent
2011	96 percent.

“(c)Definitions.—Any term used in this section which is also used in section 430 of such Code or section 303 of such Act [29 U.S.C. 1083] shall have the meaning provided such term in such section. If the same term has a different meaning in such Code and such Act [29 U.S.C. 1001 et seq.], such term shall, for purposes of this section, have the meaning provided by such Code when applied with respect to such Code and the meaning provided by such Act when applied with respect to such Act.”

Special Funding Rules for Certain Plans Maintained by Commercial Airlines

Puspan. L. 109–280, title IV, § 402, Aug. 17, 2006, 120 Stat. 922, as amended by Puspan. L. 110–28, title VI, §§ 6614(a), 6615(a), May 25, 2007, 121 Stat. 181; Puspan. L. 110–458, title I, §§ 104(span), 126(a), Dec. 23, 2008, 122 Stat. 5104, 5116, provided that:

“(a)In General.—The plan sponsor of an eligible plan may elect to either—

“(1) have the rules of subsection (span) apply, or

“(2) have section 303 of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1083] and section 430 of the Internal Revenue Code of 1986 applied to its first taxable year beginning in 2008 by amortizing the shortfall amortization base for such taxable year over a period of 10 plan years (rather than 7 plan years) beginning with such plan year and by using, in determining the funding target for each of the 10 plan years during such period, an interest rate of 8.25 percent (rather than the segment rates calculated on the basis of the corporate bond yield curve).

“(span)Alternative Funding Schedule.—

“(1)In general.—If an election is made under subsection (a)(1) to have this subsection apply to an eligible plan and the requirements of paragraphs (2) and (3) are met with respect to the plan—

“(A) in the case of any applicable plan year beginning before January 1, 2008, the plan shall not have an accumulated funding deficiency for purposes of section 302 of the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1082