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CCH® PENSION AND BENEFITS — 3/28/06

Prediction: EGTRRA provisions to be made permanent in final pension reform bill

Bipartisan support exists in Congress to make permanent the retirement savings provisions contained in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA, P.L. 107-16), according to Jan Jacobson, director of retirement policy for the American Benefits Council. Jacobson spoke on March 20, 2006, at a media briefing in Washington, D.C. The EGTRRA retirement savings provisions, including those authorizing higher limits on IRA and plan contributions, catch-up contributions for older individuals, and Roth 401(k) plans, are set to expire at the end of 2010, but could be made permanent as part of the pension reform bill currently making its way through Congress.

House, Senate pension reform bills differ

The House version of pension reform, the Pension Protection Act of 2005, would make all of the retirement savings provisions in EGTRRA permanent. The Senate version, the Pension Security and Transparency Act of 2005, would not. House and Senate conferees are currently ironing out differences between the two bills.

According to Jacobson, the differences between the House and Senate versions do not mean that the retirement provisions will be allowed to expire. There is bipartisan support in Congress to make these provisions permanent, she said. The House-Senate conference will likely include the EGTRRA provisions in the final bill, Jacobson predicted.

Final bill likely before Memorial Day

In response to a question about how soon Congress will pass a pension reform bill, another official from the American Benefits Council said that time is running out for the final enacted legislation to have a 2007 effective date, since plans have to be given enough time to implement the many changes that are likely to come out of a final bill. The official predicted that a final bill will pass Congress before Memorial Day.

For more information on this and related topics, consult the CCH Pension Plan Guide.

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