Benefits & ERISA Law

Another Corrections Act to the Pension Protection Act Passes the House

By Suzanne Wynn

On Wednesday, the House of Representatives passed another Pension Protection Technical Corrections Act of 2008 by voice vote. This act, H.R. 6382, now heads to the Senate, where the last Pension Protection Technical Corrections Act of 2008, H.R. 3361, has been languishing since March 31, 2008. The Senate, which has already passed its version of the Pension Protection Technical Corrections Act of 2007, S.1974, can take up either version of these Acts from the House, or can create its own version.

Out of curiousity over what would have compelled the House of Representatives to pass a second Pension Protection Technical Corrections Act of 2008, I compared to two Acts to find the differences. The only differences between the Acts are in the last few pages in the section on Title II - Other Provisions.

The new sections of the PPTCA of 2008 are Section 201, which amends Sections 102 and 112 of PPA by adding the last sentence of section 303(g)(3)(B) of ERISA to state:

“Any such averaging shall be adjusted for contributions, distributions, and expected earnings (as determined by the plan?s actuary on the basis of an assumed earnings rate specified by the actuary but not in excess of the third segment rate applicable under subsection (h)(2)(C)(iii)), as specified by the Secretary of the Treasury.”

The last sentence of section 430(g)93)(B) is amended to read as follows:

“Any such averaging shall be adjusted for contributions, distributions, and expected earnings (as determined by the plan?s actuary on the basis of an assumed earnings rate specified by the actuary but not in excess of the third segment rate applicable under subsection (h)(2)(C)(iii)), as specified by the Secretary.??

The effective date for these two changes is that they will take effect as if included in the provisions of PPA to which the amendments relate, which is Congressional speak for everyone pretending that these two sentences are to be treated as if they were originally contained in Sections 102 and 112 of PPA.

The new version of PPTCA of 2008 modifies the interest rate assumption required with respect to certain small employer plans effective for years beginning after December 31, 2007. It amends section 415(b)(2) by adding this new clause at the end of Subparagraph (E):

??(vi) In the case of a plan maintained by an eligible employer (as defined in section 408(p)(2)(C)(i)), clause (ii) shall be applied without regard to subclause (II) thereof.??

Also included are changes to determining the market rate of return for governmental plans, the treatment of certain reimbursements from governmental plans for medical care, the rollover of amounts received in airline carrier bankruptcy to Roth IRAs, and the modification of the penalty for failure to file tax returns for partnerships and S corps.

pension protection act, ppa, 415(b)(2), PPTCA, Pension Protection Technical Correction Act, 303(g)(3), ERISA

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Full post as published by Pension Protection Act Blog on July 11, 2008 (boomark / email).