Summary of Worker, Retiree and Employer Recovery Act of 2008
I have previously written about several components of the Worker, Retiree and Employer Recovery Act and its impact of plan administration. On January 29, 2009, the Congressional Research Service released its Overview prepared for Congress that summarizes the key provisions relating to the "Economic Crisis." The entire report can be viewed here.
Some of the key provisions:
- Waiver of the minimum distributions, which suspends the minimum distribution requirements for 2009.
- Extends the funding transition rule for Single-Employer plans under the Pension Protection Act to allow plans to use follow the transition rule even if the plan's shortfall amortization base was not zero in the preceding year.
- For single employer defined benefit plans, it allows that, for the first plan years beginning between 10/1/08 through 9/30/09, plans may use the adjusted funding target attainment percentage of the preceding year (instead of the current year) if the preceding year is greater to avoid restrictions on benefit accruals.
- For multiemployer defined benefit plans, it allows that, for the first plan years beginning between 10/1/08 through 9/30/09, plan sponsors may elect to use the same certified funding status for the plan of the prior year.
- For multiemployer defined benefit plans, there is a three year extension provided to funding improvement or rehabilitation plans for endangered (10 extended to 13 years) or critical status (15 extended to 18) plans.
Certain other technical corrections are summarized but these 5 have the most impact on retirement plans. I anticipate that the waiver of minimum distributions will get the most press, but clearly if you are dealing with an underfunded defined benefit plan, the other four provisions may significantly impact how you handle your 2009 funding obligations.
