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Congress Passed Bill to Help Retirees

Posted on February 2nd, 2009 by Iwaller

The House and Senate on December 10 and December 11, respectively, approved the Worker, Retiree and Employer Recovery Act of 2008 (HR 7327) by unanimous consent and was signed into law by President Bush on December 23, 2008. “Congress worked swiftly, and in a bipartisan way, in order to provide important relief to seniors who may face a steep tax if they do not make a withdrawal from their depleted retirement accounts.” said Rep. George Miller (D-CA), the chairman of the House Education and Labor Committee.Among the provisions is a measure to provide relief for seniors age 70 1/2 or older who are required to take distributions from their retirement plans under current law. The provision would allow savings to stay put and avoid a tax hit for seniors when the market is down. Another measure gives generally healthy multi-employer pension plans that were hurt by the decline in the stock market the ability to avoid drastic contribution increases and cutbacks in worker benefits.

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Additional provisions in the bill will allow single-employer pension plans to account for expected and unexpected earnings in addition to contributions and distributions when determining the value of the plan’s assets. Those plans that fall below the set target funding percentage for a particular year will be required to fund up to the specified funding percentage for that year, instead of 100 percent. Other provisions in the bill were also included in the Pension Protection Technical Corrections Act of 2008 (HR 6382), originally passed by the Senate in December 2007, and the House in March and July of 2008.

This 2nd provision is of some concern as it eases funding requirements for companies and other pension plans forced to make additional contributions as a result of the economic downturn.

 However Senator Edward Kennedy, D-Mass, says “it will make an important difference to millions of workers”.  He noted that in the past five years, some $8 billion in pension savings have been lost as companies terminate their plans, shifting benefit responsibilities onto the federal agency that insures such plans, the Pension Benefit Guaranty Corp.

Filed under: Senior Finances and Economy

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