Highway bill gives overfunded DB plans some options
By:Hazel Bradford
Published: July 30, 2015 - Pensions & Investments
Sponsors of overfunded defined benefit plans will be able to use excess
pension funds for retiree health care and life insurance, under a highway bill
passed by the House late Wednesday. The Senate is expected to take up the
proposal this week, before the highway trust fund runs out of money on Aug.
1.
Internal Revenue Code Section 420(b) allows defined benefit pension plans
whose assets are at least 125% of their funding target to transfer some assets,
once per year, to a retiree medical account for the same group of participants.
Section 420 was set to expire after 2021 but will be extended through 2025 if
the House and Senate agree on a final highway bill.
Section 420 was enacted in 1990 when more pension plans were overfunded.
While fewer plans may be in that position today, gthey may be able to use it at
some point. Itfs a great opportunity to make sure that retiree health is paid
for,h said Diann Howland, vice president for legislative affairs with the
American Benefits Council in Washington.
Original Story Link: http://www.pionline.com/article/20150730/ONLINE/150739988/highway-bill-gives-overfunded-db-plans-some-options