Senate Version of Extender Bill Eliminates Pension Fee Disclosure Provision

Posted on June 10, 2010 by Ilyse Schuman

On Tuesday, the Senate resumed consideration of the American Jobs and Closing Tax Loopholes Act (H.R. 4213) (pdf), also known as the “tax extender” or “jobs bill” that would extend emergency unemployment compensation and other tax break programs, as well as provide temporary pension funding relief. Although the Senate passed a tax extender bill in March, the House of Representatives on May 28 narrowly cleared a scaled-back version of this legislation that omitted a number of the original provisions, including an extension of the premium COBRA subsidy. The revised Senate bill unveiled this week, which has been offered in the form of a substitute amendment, does not contain the defined contribution plan fee disclosure provisions that would have required the creation of rules relating to fees incurred in connection with defined contribution plans (such as 401(k) plans) for plan administrators and plan participants. A COBRA subsidy extension was not among the changes included in the Senate substitute either. A summary of all of the changes made by the Senate amendment can be found here. (pdf)

Other provisions contained in the House-passed version, such as those providing for refundable alternative minimum tax (AMT) credits for corporations making domestic investments; an employer wage credit for activated military reservists; temporary pension funding relief for single- and multi-employer plans; and unemployment compensation program extensions, remain intact. With respect to the unemployment provisions, the substitute amendment summary (pdf) explains that the bill would do the following:

  • Extend the Emergency Unemployment Compensation (EUC) program through November 2010. This program – which provides up to 53 weeks of extended unemployment benefits depending on a state’s unemployment rate – ended in May.
  • Continue the Extended Benefits (EB) program through November 2010. The EB provided up to an additional 13 to 20 weeks of benefits in certain states (13 weeks for states at or above 6.5% unemployment and another 7 weeks for states at or above 8% unemployment).
  • Extend Federal Additional Compensation (FAC) through November 2010. FAC, which was also phased out in May, increases unemployment benefits by $25 a week. 
  • Eliminate the penalty for part-time employment in the EUC program. As stated in the summary, the bill coordinates EUC benefits with regular unemployment benefits by providing states with a number of options to allow EUC claimants to remain eligible for the EUC program when they become newly entitled to state unemployment compensation if switching to state benefits would reduce their weekly UI check by at least $100 or 25%.

The effort to reinstate the COBRA subsidy extension may continue as more amendments are offered and the bill continues to take shape over the coming days. 

Photo credit: borisyankov
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Compromise Bill Extending COBRA, Unemployment Benefits Introduced

Posted on May 21, 2010 by Ilyse Schuman

On Thursday, House Ways and Means Committee Chairman Sander Levin (D-MI) and Senate Finance Committee Chairman Max Baucus (D-MT) introduced a summary of the American Jobs and Closing Tax Loopholes Act, (pdf) joint legislation that, among other things, extends emergency unemployment benefits and COBRA credits through the end of 2010, and provides pension funding relief for single- and multi-employer pension plans. The legislation will be introduced as a House Amendment to the American Workers, State, and Business Relief Act of 2010 (H.R. 4213), which the Senate passed in March as an amendment to the original Tax Extenders Act of 2009 that cleared the House in December.

According to the summary, (pdf) the joint bill contains provisions that would offer the following:

COBRA

  • Extension of premium assistance for COBRA benefits. The American Recovery and Reinvestment Act (ARRA) created a program to provide a 65% COBRA health insurance premium subsidy for up to 15 months for workers who have been involuntarily terminated. After several extensions, eligibility for the COBRA premium assistance will expire for individuals terminated after May 31, 2010. The bill would extend eligibility for the program to individuals terminated on or before December 31, 2010.

Unemployment Insurance

  • Extension of the Emergency Unemployment Compensation (EUC) program. The Emergency Unemployment Compensation (EUC) program is scheduled to phase out at the end of May 2010. This program provides up to fifty-three (53) weeks of extended benefits. The bill would extend the EUC program through December 2010.
  • Extension of the Extended Benefits (EB) program. 100% federal funding for the Extended Benefits (EB) program is scheduled to phase out at the end of May 2010. This program provides up to an additional 13 to 20 weeks of benefits in certain states (i.e., 13 weeks for states at or above 6.5% unemployment and another 7 weeks for states at or above 8% unemployment). The bill would extend full funding for the EB program through December 2010.

Pension Funding Relief

  • Single employer plan funding relief measures include: extended period for single employer defined benefit plans to amortize certain shortfall amortization bases; application of an extended amortization period to plans subject to prior law funding rules; suspension of certain funding level limitations; temporary allowance of election to apply balances against minimum required contribution; modification of the reporting requirement by requiring additional reporting if aggregate unfunded vested benefits of plans maintained by the sponsor exceed $75 million; and rollover of amounts received in airline carrier bankruptcy.
  • Multiemployer plan funding relief measures include: optional use of 30-year amortization periods; optional longer recovery periods for multiemployer plans in endangered or critical status; modification of certain amortization extensions under prior law; alternative default schedule for plans in endangered or critical status; and the provision of transition rules for the certifications of plan status.

Miscellaneous Business Provisions

  • Employer wage credit for activated military reservists. The bill would extend through 2010 the provision that provides eligible small business employers with a credit against the taxpayer’s income tax liability for a taxable year in an amount equal to twenty percent of the sum of differential wage payments to activated military reservists.
  • Refundable AMT credits for corporations making domestic investments. The bill would allow corporations to receive a refund of a portion of their alternative minimum tax (AMT) credits if they invest during 2010 in capital equipment for use in the United States.

It is expected that the legislation will be considered by the House and Senate next week.
 
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