Compliance April 13, 2004

Agencies Release Pension Funding Implementation Rules

April 13, 2004 (PLANSPONSOR.com) - Following hard on the heels of President Bush's signature on the closely followed pension funding bill, the U.S. Treasury Department and the Internal Revenue Service (IRS) have issued rules implementing the legislation.

Reported by

Fred Schneyer

The government’s release about t he Pension Funding Equity Act came in two parts:

The measure replaces the 30-year Treasury bond rate with a new rate based on high-quality, long-term corporate bonds. The new rate, and the method used to determine it, contained in Notice 2004-34, are at http://www.treas.gov/press/releases/reports/notice.pdf .

The law also allows certain plan sponsors (including airlines and steel companies) to get relief from a part of their required pension plan contributions. Guidance on how to make and file the election with the IRS and the Treasury Department were in announcement 2004-38, at http://www.treas.gov/press/releases/reports/announcement.pdf .

“We are pleased to publish this rate immediately after enactment,” said Acting Assistant Secretary for Tax Policy Greg Jenner, in a news release. “The new interest rate provides a more appropriate measurement of pension liabilities, and we recognize that companies need the new rate to determine their quarterly plan contributions due on April 15. Still, we must continue to work toward comprehensive pension funding reform.”