<nobr>May 29, 2007</nobr>

Congress Approves Pension Provisions in Iraq Supplemental Spending Bill

The House and Senate last Thursday approved H.R. 2206, the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act, 2007, which also includes a minimum wage increase, $4.8 billion in small business tax incentives, revenue raisers, and pension provisions. President Bush on Friday signed the legislation into law, which does not include a timetable for withdrawal of troops from Iraq.

The legislation includes four provisions that make technical corrections and modifications to the Pension Protection Act of 2006. These provisions:

o Modify the effective dates and requirements relating to a plan's election for treatment as a multi-employer plan. Under the provisions, a plan may elect an effective date for treatment as a multi-employer plan that is any plan year beginning on or after January 1, 1999, and ending before January 1, 2008.

o Modify requirements for the transfer of funds from over-funded pension plans to retiree medical accounts, specifically relating to the "minimum cost requirement" for a Section 420 qualified transfer.

o Extend the alternative deficit reduction contribution rules concerning airlines to plan years beginning before January 1, 2008.

o Include an airline-related provision, modifying the interest rate for plan sponsors that elect to amortize the plan's shortfall over a period of ten years. The bill provides for these plans to use an interest rate of 8.25 percent for purposes of determining the funding target for each of the ten plan years.

The Joint Committee on Taxation has released a technical explanation of the provisions included in HR 2206.

Websites:

Joint Tax Explanation

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