The ERISA Industry Committee urges extension of Section 420
For Immediate Release
Washington, DC – The ERISA Industry Committee (ERIC) urges the House of Representatives to pass legislation this week that would extend a tax provision which facilitates the ability of companies to offer important retiree health and life insurance benefits.
ERIC supports the approach outlined in Section 420 of the Internal Revenue Service Code in H.R. 3038, the “Highway and Transportation Funding Act of 2015,” that would allow defined benefit plan sponsors with excess-funded pension plans the ability to extend the time period for using these excess assets from 2021 to 2025 to pay for retiree medical accounts and retiree life insurance.
For companies with over-funded pension plans, the ability to use these excess assets to pay for important retiree benefits is crucial to funding these significant benefits. The retiree life insurance benefit is particularly important for surviving spouses of workers who have retired from a company.
For large employer members, ERIC President and CEO Annette Guarisco Fildes says extending current law is essential: “Companies see this provision as critical to enabling them to offer vital health and life insurance benefits to their retirees and surviving spouses. We urge the House to pass the highway bill with this important protection for employee benefits.”
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July 15, 2015
The Honorable Paul Ryan
Chairman
Committee on Ways and Means
U.S. House of Representatives
The Honorable Sander Levin
Ranking Member
Committee on Ways and Means
U.S. House of Representatives
Dear Mr. Chairman and Ranking Member Levin:
We are writing to you in support of a proposal to extend Section 420 of the Internal Revenue Code through 2025. Section 420 allows companies with overfunded pension plans to fund retiree health care and life insurance benefits.
The ERISA Industry Committee (“ERIC”) is the only national trade association advocating solely for the employee benefits and compensation interests of the country’s largest employers. ERIC supports the ability of its large employer members to tailor health, retirement and compensation benefits for millions of employees, retirees and their families. ERIC’s members provide comprehensive retirement benefits to tens of millions of active and retired workers and their families.
Over the years, Section 420 has allowed companies to continue to pay for retiree health insurance for a countless number of retirees with no significant negative impact on pension funding. Congress has extended Section 420 four times since 1990, including most recently in the “Moving Ahead for Progress in the 21st Century (MAP-21) Act” in 2012.
H.R. 3038, the “Highway and Transportation Funding Act of 2015” includes a provision that would extend the ability of plan sponsors with excess pension plan assets to use Section 420 from 2021 to the end of 2025. ERIC and its member companies fully support the extension of Section 420 to fund valuable retiree health and life insurance benefits. Allowing companies to make transfers from overfunded pension plans to pay for retiree health benefits and group retiree life insurance premiums provides critical support to companies who are able to offer these benefits to retirees. The ability to fund group life insurance benefits for retirees is particularly important to surviving spouses.
We support this proposal and its inclusion in the Highway Trust Fund bill.
Respectfully,
Annette Guarisco Fildes
President & CEO
cc: The Honorable John Boehner
The Honorable Kevin McCarthy
The Honorable Steve Scalise
Members of the Ways and Means Committee