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CCH® PENSION AND BENEFITS — 6/2/08

Despite veto threat, House passes extenders bill with pension provisions

The House on May 21, 2008 passed H.R. 6049 (the Renewable Energy and Job Creation Bill of 2008), tax extenders legislation that includes a handful of provisions affecting pensions and employee benefits. White House advisors have recommended that President Bush veto the extenders bill in its current form, objecting to certain revenue raising provisions in the measure and the failure of the legislation to include AMT relief.

The bill would extend the exclusion for qualified charitable distributions from Roth or traditional IRAs to distributions made in taxable years beginning after December 31, 2007, and before January 1, 2009. In addition, the rules for qualified reservist distributions would be extended to individuals ordered or called to active duty before January 1, 2009. Under these rules, which applied after September 11, 2001, and before December 31, 2007, a qualified reservist distribution from an IRA or attributable to an elective deferral from a 401(k)-type plan was not subject to the early distribution tax if the qualified reservist was ordered or called to active duty for a period in excess of 179 days or for an indefinite period.

The bill contains a controversial revenue raising provision, which would modify the tax treatment of offshore deferred compensation, generally effective with respect to amounts deferred that are attributable to services performed after December 31, 2008. In a statement released on May 16, 2008, the American Benefits Council recommended that the provision be rejected, contending that it is overly broad, would be “nearly impossible to administer,” and would be applied retroactively.