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Legislation to relax pension plan rules for senior citizens and employers was introduced and passed in Congress late last week. The “Worker, Retiree and Employer Recovery Act” (H.R. 7327) would suspend for one year the 50 percent tax penalty otherwise imposed upon seniors who do not make the minimum withdrawal required by their defined contribution retirement plans.
The bill would also temporarily delay the designation of multi-employer plans as in endangered or critical status. The bill provides that, for the October 1, 2008 through September 30, 2009 period, sponsors may elect to retain the plan’s status designation for the previous plan year. For plans that were in endangered or critical status for the preceding year, the plan sponsor would not be required to update its plan or schedules as otherwise required by the Employee Retirement Income Security Act (ERISA). The bill would also extend funding improvement periods for plans in endangered or critical status from 10 to 13 years, and for plans in seriously endangered status from 15 to 18 years.
The Worker, Retiree and Employer Recovery Act was introduced by Rep. Rangel (D-NY) on December 10, 2008, and the House passed the bill without objection that same day. The Senate passed the legislation on December 11, 2008 by unanimous consent.