<nobr>Apr 28, 2009</nobr>

House Republican Leader Boehner Introduces "Savings Recovery Act"

House Republican Leader John Boehner (R-OH) along with 21 other senior Republican cosponsors on April 22 introduced the "Savings Recovery Act" (H.R. 2021) that seeks to help Americans rebuild their retirement, college, and personal savings. Representative Boehner issued a "blueprint" of this bill in March.

H.R. 2021 includes both defined benefit funding relief and defined contribution provisions, as well as provisions addressing 529 college savings plan relief, Social Security earnings penalty, and capital gains and losses. Highlights of the pension and savings provisions include:

Defined Benefit Funding Relief

• A temporary expansion of the asset corridor from 10% to 20% for two years (to soften the impact of historic market losses in 2008); and


• "Nine and Two Rule" -- require "interest-only" payments on 2008 losses for 2009 and 2010, thereby extending the seven-year amortization period to nine years.

Defined Contribution & IRA Provisions

• Permanently increase the IRA contribution limit to match the employer-sponsored plan limit (currently $16,500);


• Temporarily increase the employee IRA and employer-sponsored plan contribution limit to $33,000 for three years (employer-sponsored plan contribution limit is currently $16,500);


• Temporarily increase the combined employee and employer contribution cap to $65,500 for three years, 2009, 2010 and 2011 (currently capped at $49,000);


• Temporarily increase the catch-up contribution cap for IRAs and employer-sponsored plans to $10,000 for three years (currently capped at $1,000 for IRAs and $2,500 for SIMPLE IRAs); and


• Extend the suspension of the required minimum distribution rules for three years, through 2012 (currently suspended for 2009 only).

In the summary accompanying the bill, the sponsors state that "[r]ules requiring plans to recognize most of their losses in 2008 immediately and make up for those losses quickly are leaving many companies with unmanageable obligations, which could force employers to stop offering their pension plan altogether. To help ensure the viability of these worker pension plans, and allow employers to retain jobs and weather the economic storm, the Savings Recovery Act temporarily provides a increased glide path for recognizing losses and two additional years to resolve funding shortfalls."

Boehner's support regarding temporary relief for defined benefit funding is a significant and positive development in our attempt to pass legislation aimed at providing defined benefit funding relief. ERIC has consistently stated that our members are not looking to reopen the PPA, but need temporary relief as a result of the economic crisis.

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H.R. 2021

Summary of Savings Recovery Act

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