Guest Article

(From the April 19, 2010 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)

DB Plan Sponsors Wait for Pension Funding Relief

Having finished work on health reform legislation, Congress is now turning its attention to other legislative priorities - including possible funding relief for defined benefit plan sponsors.

Status of Relief Effort

The Senate passed its version of funding relief in a substitute amendment to H.R. 4213, the American Workers, State, and Business Relief Act. The bill, which passed on March 10 with strong bipartisan support, includes the "2 plus 7" and "15 year" alternative amortization schedules, and would require increased funding installments if excess compensation (over $1 million) is paid to an employee or in the case of extraordinary dividends or stock redemptions.

The House proposal remains before the Ways and Means Committee and the Education and Labor Committees. The Committees reportedly are considering the imposition of additional conditions, such as allowing only active plans to be eligible for the "15 year" relief. Also being considered are provisions to regulate fee disclosure in defined contribution plans, and restrictions on the nondiscrimination rules to prohibit plan designs that significantly favor the highly compensated. The House could proceed to formulate its own bill or go to conference on the Senate bill to work out the differences.

In letters to the Committee Chairmen on April 13, the Secretary of Labor, as Chair of the Board of Directors of the Pension Benefit Guaranty Corporation, voiced support for funding relief and appeared to endorse the general structure of the current proposals in that she urged for the following four principles to be codified in any legislation:

Plan sponsors faced their first quarterly contribution deadline on April 15.

The information in this Washington Bulletin is general in nature only and not intended to provide advice or guidance for specific situations. If you have any questions or need additional information about articles appearing in this or previous versions of Washington Bulletin, please contact: Robert Davis 202.879.3094, Elizabeth Drigotas 202.879.4985, Mary Jones 202.378.5067, Stephen LaGarde 202.879-5608, Bart Massey 202.220.2104, Tom Pevarnik 202.879.5314, Sandra Rolitsky 202.220.2025, Deborah Walker 202.879.4955. Copyright 2010, Deloitte.