Key Provisions of Pensions Bill
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Friday, December 16, 2005; 8:45 AM
Pension changes:
-Requires employers to fund up to 100 percent of pension liabilities. Funding shortfalls must be filled within seven years.
-Establishes a new measure, using three interest rates calculated from a corporate bond yield curve, by which companies determine their pension liabilities.
-Bars underfunded pension plans from increasing benefits or paying plant shutdown benefits unless liabilities are paid for up front.
-States that plans that are less than 80-percent funded cannot use credit balances to avoid minimum required contributions.
-Bars funding of executive compensation plans when worker pension plans are severely underfunded.
-Raises the annual premium paid to the Pension Benefit Guaranty Corporation from $19 to $30 per participant.
-Clarifies current law by creating a uniform age discrimination standard for all cash balance plans.
Tax changes:
-Makes permanent a 2001 law increasing contribution limits on Individual Retirement Accounts, including higher "catch up" contributions allowed for those age 50 and older.
-Allows a tax-free rollover of IRA or pension accounts to a designated beneficiary, expanding current law that allows rollovers only to a spouse.
-Makes permanent a temporary credit to help low-income families save money.
