The 600-plus page American Rescue Plan Act of 2021 (H.R. 1319) contains numerous provisions affecting nearly every sector of the economy, including the Butch Lewis Emergency Pension Plan Relief Act to provide multiemployer and single employer plan relief.
The multiemployer plan fix culminates a years-long debate where both parties acknowledged that a fix was needed but were never able to come to a bipartisan agreement.
According to a previous analysis of the bill, as of 2017, more than 300 plans were classified as in critical status, and more than 100 of those were classified as “critical and declining.” If a multiemployer plan were to fail, the backstop is the Pension Benefit Guaranty Corporation (PBGC), but the benefit guarantees the PBGC provides to participants in a multiemployer plan are pennies on the dollar and the PBGC’s latest funding report predicts the trust fund that provides these payments will go bust in 2026.
To address the crisis, the new law creates a “special financial assistance” program under which cash payments—or grants—will be made by the PBGC to financially troubled multiemployer plans. In addition, the legislation provides single-employer plan funding relief by extending the amortization period for funding shortfalls and the pension funding stabilization percentages, along with modifying the special rules for minimum funding standards for community newspaper plans.
The new law also expands the Section 162(m) limit to a broader set of “covered employees” and makes numerous other changes, including:
- an increase in exclusion for employer-provided dependent care assistance (section 9632);
- an extension and modification of credits for paid sick and family leave (section 9641);
- an extension and modification of the employee retention credit (section 9651); and
- modification of the tax treatment of student loan forgiveness (section 9675).
March 11 will serve as the date of enactment, which is significant because many of the effective dates in the new law, including many of the pension-based provisions, are tied to that date.
DOL Nominee Walsh Stalls
Despite it appearing that he was on his way to a quick confirmation, the full Senate still has not considered Biden's nomination of Boston Mayor Marty Walsh to be Secretary of Labor, more than a month after his confirmation hearing. At his Feb. 4 hearing before the Senate Health, Education, Labor and Pensions Committee, Walsh was widely praised by members from both parties, even though many Republicans acknowledged that they may not agree with his policy positions. In addition, Walsh vowed to work with both parties to address retirement policy issues coming before the Department of Labor.
According to a report in The Wall Street Journal, Walsh is “facing criticism” over his record on awarding contracts to Black- and Latino-owned firms. The Journal reports that three community groups recently filed a federal complaint against the city of Boston, alleging discrimination in its public contracting practices. The complaint reportedly was filed with the Justice Department’s Civil Rights Division in Washington.
Meanwhile, the Senate HELP Committee is scheduled to hold a hearing March 16 on the nomination of Julie Su to be Deputy Secretary of Labor. Su currently serves as Secretary of the California Labor and Workforce Development Agency. She is facing her own problems, as reports surfaced that hackers and identity thieves had stolen more than $11 billion of the $114 billion that California paid in unemployment claims last year.
President Biden still has not named a nominee to serve as Assistant Secretary of Labor for the Employee Benefits Security Administration.
Meanwhile, President Biden’s nominee to chair the Securities and Exchange Commission has moved one step closer to confirmation. The Senate Banking, Housing and Urban Affairs Committee voted 14-10 to advance the nomination of Gary Gensler to be Chairman of the SEC on March 10. Gensler’s nomination will now move to the full Senate, where he is likely to be confirmed.
Biden announced March 11 that he intends to nominate tax professor Lily Batchelder as Assistant Secretary for Tax Policy at the Treasury Department. From 2014 to 2015, Batchelder served as Deputy Director of the White House National Economic Council and Deputy Assistant to the President under President Obama, where she was responsible for tax and budget issues, including tax reform and retirement policy. From 2010 to 2014, she served as Majority Chief Tax Counsel for the Senate Finance Committee.
As an Assistant Secretary for Tax Policy, Batchelder would have a major role in shaping and overseeing the implementation of retirement-based regulations under the Internal Revenue Code, as well as helping to set the retirement policy priorities of the Biden administration.