Pension Action E-Newsletter

 

December 17, 2008

Congress Passes Pension Funding Relief
Last week, Congress passed legislation giving pension plan funding relief to employers who have been affected by the financial meltdown. The Worker, Retiree, and Employer Recovery Act of 2008 (H.R. 7327) was passed unanimously by the House and the Senate. The bill has now been sent to the White House to be signed into law by the President.

The Pension Rights Center hopes that the funding relief provided by this legislation will make it less likely that pension plans will reduce benefits during the current economic crisis.

Here are a few key provisions of the Worker, Retiree, and Employer Recovery Act of 2008:

  • Relief for underfunded single employer pension plans. The legislation contains provisions making it less likely that the market downturn will require pension plans to freeze future benefits and eliminate lump sum payouts. Read the Center’s fact sheet on benefit restrictions in single employer plans.
  • Relief for underfunded multiemployer plans. The legislation gives multiemployer plans the option of using the plan’s pre-meltdown funding status when deciding whether “red zone cutback” provisions will be triggered. These cutback provisions can cost some older workers more than half of their expected early retirement benefits. Read the Center’s fact sheet on benefit restrictions in multiemployer plans.
  • Relief from required minimum distributions. The legislation temporarily suspends the penalty faced by individuals age 70½ and older if they do not make required distributions from their Individual Retirement Accounts (IRAs) and 401(k)-style plans in 2009. This provision does not to apply to “required minimum distributions” taken in 2008.
  • New Railroad Retirement spousal protections. The legislation amends the Pension Protection Act of 2006 to allow certain divorced widows of Railroad Retirement retirees to receive court-awarded benefits. These provisions will extend protections to women inadvertently overlooked in the earlier law.
For a detailed summary of provisions in the Worker, Retiree, and Employer Recovery Act of 2008, read a report from the Joint Committee on Taxation. Read the letter the Center sent Congress prior to the passage of this legislation.

Below are links to articles that provide more information about the legislation.

Thanks to everyone who wrote their members of Congress about this legislation, and thank you all for another successful year! With your help the Center has been able to help ensure that pension policy reflects the needs of American workers, retirees and their families. We look forward to another exciting year in 2009.

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