Compliance March 14, 2008

U.S. House PPA Corrections Bill Leaves out Smoothing

March 14, 2008 (PLANSPONSOR.com) -The U.S. House of Representatives has approved a measure tuning up the Pension Protection Act (PPA), but the bill did not deal with the issue of defined benefit plan asset smoothing.
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A Senate version approved in December (S.1974) included smoothing guidance for regulators and plan sponsors.

During the debate on H.R. 3361, the Pension Protection Technical Corrections Act of 2008, on Wednesday, Representative Earl Pomeroy (D-North Dakota) said he supported the bill in its “narrow, technical” form, but also strongly supported the inclusion of asset smoothing (See Pomeroy Calls for Asset Smoothing Clarification ).

“This bill provides the needed clarification for the Treasury Department, Internal Revenue Service, corporations and other businesses who sponsor retirement plans, as well as working families who contribute to and benefit from 401(k) plans or defined contribution plans,” Pomeroy asserted in his House speech. “For the employers who have weathered the storm and are persistently committed to providing a secured retirement for their workers, this bill is for you. For the beneficiary of a 401(k) plan who wants to keep money in a retirement plan savings vehicle to finance retirement rather than being forced to spend it currently, this bill is for you.”

The IRS issued on January 31 Notice 2008-21, providing relief on the use of new funding calculation rules (See IRS Delays Effective Date for New DB Funding Calculations ).

The text of H. R. 3361 is here .

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