American Rescue Plan Act of 2021 (5) 9705

Going through the text of the stimulus bill, section 9705 turns to funding relief for Single Employer plans by returning to the 15 year amortization schedule for minimum funding purposes for 2022 (with optional election for 2019, 2020, and 2021) as if draconian PBGC premiums were not enough in themselves to discourage underfunding.

SEC. 9705. EXTENDED AMORTIZATION FOR SINGLE EMPLOYER PLANS.

(a) 15-YEARAMORTIZATIONUNDER THE INTERNAL REVENUE CODE OF1986.—Section 430(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

‘‘(8) 15-YEAR AMORTIZATION.—With respect to plan years beginning after December 31, 2021 (or, at the election of the plan sponsor, plan years beginning after December 31, 2018, December 31, 2019, or December 31, 2020)—

…..‘‘(A) the shortfall amortization bases for all plan years preceding the first plan year beginning after December 31, 2021 (or after whichever earlier date is elected pursuant to this paragraph), and all shortfall amortization installments determined with respect to such bases, shall be reduced to zero, and

…..‘‘(B) subparagraphs (A) and (B) of paragraph (2) shall each be applied by substituting ‘15-plan-year period’ for ‘7-plan-year period’.’’.

(b) 15-YEARAMORTIZATIONUNDER THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF1974.—Section 303(c) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1083(c)) is amended by adding at the end the following new paragraph:

‘‘(8) 15-YEAR AMORTIZATION.—With respect to plan years beginning after December 31, 2021 (or, at the election of the plan sponsor, plan years beginning after December 31, 2018, December 31, 2019, or December 31, 2020)—

…..‘‘(A) the shortfall amortization bases for all plan years preceding the first plan year beginning after December 31, 2021 (or after whichever earlier date is elected pursuant to this paragraph), and all shortfall amortization installments determined with respect to such bases, shall be reduced to zero, and

…..‘‘(B) subparagraphs (A) and (B) of paragraph (2) shall each be applied by substituting ‘15-plan-year period’ for ‘7-plan-year period’.’’.

(c) EFFECTIVE DATE.—The amendments made by this section shall apply to plan years beginning after December 31, 2018.

10 responses to this post.

  1. Posted by Tough Love on March 16, 2021 at 12:52 pm

    Quoting from something on Mary Pay Campbell’s daily update included in today’s pensiontsunami …………

    “A current example of California’s bipartisan capitulation to public employees is OPEB—formally, “Other Post-Employment Benefits”—chiefly, health insurance for retired employees and their dependents costing the state $10 billion per year. Those benefits are provided even when the retiree or dependent has another job that offers insurance, is covered by Medicare, or is entitled to premium support from the Affordable Care Act.

    No other state in America showers such subsidies on retired employees, who are already entitled to the highest pensions in the land. But both parties have been obstacles to OPEB reform because both fear retribution from government employee unions. If you have any doubt about that, check out donations to legislators on both sides of the aisle”
    ———————————-

    YES ………….. PUBLIC Sector Unions are a CANCER inflicted upon Civilized Society.UP

    Reply

  2. Posted by MJF on March 16, 2021 at 1:41 pm

    In hindsight the PBGC should have been shut down when the funds started to go negative. It was formed in 1974 when labor trades were in demand and unions were strong. That changed as US industry was gradually gutted and offshored and animosity between labor and owners sharpened. It was a slow creep but 45 years later here we are. Everyone involved just sat and watched the whole thing burn like a tire dump. You could liken it to a superfund site that needs to be cleaned up. Oh well, here’s the bill.

    Reply

    • Posted by PS Drone on March 16, 2021 at 3:41 pm

      They thought they would avoid another Studebaker debacle (bankruptcy voided their paygo pension plan and retirees got the shaft) by forcing defined benefit plan sponsors to fork over “insurance” premiums to the PBGC. Another well-thought-out government mandate that helped begin the eventual elimination of many DB plans. They should have instead mandated full funding of plans and not allowed sponsors to “raid” plans when times were good in order to pump up their reported earnings (e.g. IBM, GE, Ford, GM, etc.). Not much you can do about multi-employer plans when some employers go broke, but full current funding could have at least provided vesting through the date of dissolution so there was some lingering pension value for laid-off employees seeking new employment.

      Reply

      • Posted by MJF on March 16, 2021 at 4:30 pm

        I was thinking a way to do that without using force is to have a back office monitoring pension funds. Could be fairly small, how many funds are there. When the fund goes below 100% the plan gets a notice of default. No fines or abuse, just a notice. The kicker would be that the fund is required to notify the members that the plan is in default. That would put the necessary pressure on the fund manager to stop snorting cocaine and get to work. And also the members would know exactly what was going on in real time and not get sledge hammered 30 years down the road.

        Reply

      • Posted by MJF on March 16, 2021 at 8:42 pm

        Yes the pension money must be placed in an escrow account absolutely out of reach of management. It is lunacy to have people who can go bankrupt in control of your savings account. Like I said money in the bank is money in the bank, debt is debt. If your money in the bank is someone else’s debt you need to be careful. Gov obviously doesn’t care they will just tax the losses out of you.

        Reply

  3. Posted by MJ on March 16, 2021 at 4:36 pm

    MJF, the whole shit show now can be likened to a tire dump burn, the superfund site is slowly filling up and it remains to be seen if it will ever be cleaned up before it just explodes

    Reply

  4. […] Posted on March 16, 2021March 16, 2021 by Mary Pat Campbell American Rescue Plan Act of 2021 (5) 9705 […]

    Reply

  5. Posted by Tough Love on March 16, 2021 at 8:55 pm

    Off topic …………

    This story just made me smile……….

    https://www.cnn.com/2021/03/16/us/man-autism-linkedin-cover-letter-trnd/index.html

    Reply

    • I’d take a chance on him. Obviously he couldn’t be a police officer but he sure can do secretary work etc. Good for him. I’d be proud to have him on my team.

      Reply

      • Posted by Tough Love on March 17, 2021 at 2:23 pm

        While we don’t really know the details, he said he’s “gifted at math” and “really good with technology”. Note that some with autism are mathematical savants.

        Needing a mentor to teach him MIGHT be an issue (depends on the degree), but hopefully he’ll be given a shot at some in the animation filed, not just a secretarial position. Heck do secretary’s even exist any longer. I’ve been typing my own stuff for well over a decade.

        Reply

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