Compliance December 11, 2008

Pension Relief Bill with RMD Moratorium Slides through Senate

A day after U.S. House lawmakers unanimously approved a sweeping pension reform measure, the Senate followed suit on Thursday with its own unanimous approval of the bill.
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The House measure, H.R. 7237, which includes a one-year required minimum distribution (RMD) moratorium and a variety of pension funding provisions, passed out of the Senate as H.R. 6382, according to House and Senate records.

Long-time pension activist U.S. Senator Benjamin L. Cardin (D-Maryland) issued a statement late Thursday praising his Senate colleagues for moving the Pension Protection Technical Corrections Act of 2008 through the process on a rapid timetable.

“This bill is critically important for millions of seniors who might have been penalized financially for our nation’s economic downturn,” Cardin said, in a statement. “If we had failed to pass this moratorium, seniors would have been forced to take a loss on their investments just because they reached age 70 세, after they worked hard all their lives to save for retirement.’

In addition to the RMD issue, the bill includes a variety of pension funding measures and other provisions being sought by retirement services industry trade groups.

Pension Smoothing Provisions

For example, the bill features:

  • clarification of pension plan “smoothing,” allowing plans to recognize unexpected asset gains and losses over 24 months;
  • multiemployer plan relief, permitting plan sponsors to elect to temporarily freeze the status of certain multiemployer plans at the same funding status held in the previous plan year;
  • a rule easing the requirement that would otherwise compel employers to restrict the accrual of pension benefits; and
  • improved transition to the new funding rules, in which the phased-in funding threshold would hold at 92% for another year.

Before the Senate action, the trade groups expressed kudos to the House lawmakers for acting quickly and called on members of the other Congressional chamber to follow suit (See “RMD Bill Includes PPA Technical Corrections’).

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