As we discussed on the Washington Update call yesterday, Congress is working hard to fund a short term extension to fund the federal highway trust fund, which runs out of money on July 31, 2015. Discussions are underway for legislation to fund highway and transit programs through December 18, 2015. There are others in Congress who seek to fund the trust fund through the Presidential election in late 2016, however, there are challenges in this regard to come up with revenue-raisers that will fund the program through November 2016.
Currently, we understand that there could be a vote this week on H.R. 3038 the “Highway and Transportation Funding Act of 2015” which would provide funding for the highway trust fund through December 18, 2015. Ways and Means Committee Chairman Paul Ryan (R-WI) and Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA) have reportedly reached a deal. The cost of the short-term funding obligation through December 18th is approximately $8 billion. Over 60% of the revenue-raisers are from tax-related changes. One provision, which raises $175 million, is an extension of section 420, which permits excess pension funding of defined benefit plans to be used to pay for retiree health care and retiree life insurance premiums through the end of 2025. ERIC is very supportive of this provision.
As you may recall, The Highway, Investment, Job Creation, and Economic Growth Act of 2012 (“MAP-21”) extended the ability of employers to utilize section 420 through the year 2021 and expanded to allow employers to use excess pension assets to pay for retiree life insurance premiums. ERIC has strongly advocated AGAINST using an increase in PBGC premiums as a revenue-raiser as part of the highway trust fund reauthorization or “patch.” PBGC premiums have been utilized in past for revenue-raisers in non-retirement related legislation, but were NOT included in MAP-21. This provision would extend section 420 through 2025.
Other tax-related revenue-raisers in H.R. 3038 include requiring more detailed reporting from mortgage lenders on outstanding mortgages, requiring estates to report the value of the property upon the owner’s death and clarifying the statute of limitations on reassessing certain tax returns.
A copy of the bill (H.R. 3038) is available using the following link: http://docs.house.gov/billsthisweek/20150713/RYANWI_040_xml.pdf.
A summary of the revenue-raisers is available using the following link: http://waysandmeans.house.gov/wp-content/uploads/2015/07/HTF.pdf
We are very aware, that section 420 is an important tool for those of our members with significant overfunding. We are looking to work on ideas regarding ways to expand section 420 for additional uses, potentially to be used as part of a longer revenue raiser for a longer reauthorization of the highway trust fund. Therefore, we are starting a 420 Task Force to discuss ways to expand section 420 for wider use/additional uses. If you are interested in joining the 420 Task Force, please send me an email.
Posting by Kathryn Ricard, ERIC Senior Vice President for Retirement Policy