COVID Relief Bill Puts Ceiling on DC Plan Limits

As part of the push to enact a nearly $2 trillion stimulus bill, the House Ways & Means Committee moved forward Feb. 11 with a proposal to freeze retirement plan contribution limits to help offset the cost of multiemployer plan relief. 

On a party-line vote of 25-18, the committee approved the Butch Lewis Emergency Pension Plan Relief Act of 2021. Under the legislation, the annual cost-of-living adjustments for the following limits would be frozen starting in calendar year 2030: 

• the Code Section 415(c) annual contribution limit for DC plans; 
• the Section 415(b)(1)(A) annual defined benefit limit; and 
• the Section 401(a)(17) annual compensation limit. 

The freeze to the cost-of-living adjustments, however, would not apply to collectively bargained plans. 

The American Retirement Association is strongly opposed to the provision freezing cost of living adjustments on retirement plan savings and has noted that it will fight to get it removed. 

Multiemployer Plan Funding Relief

The legislation includes provisions to create a special financial assistance program for financially troubled multiemployer plans, as well as an increase in PBGC multiemployer plan premiums.   

It also would provide single-employer plan funding relief by extending the amortization period for funding shortfalls and extend pension funding stabilization percentages, along with modification of the special rules for minimum funding standards for community newspaper plans. 

As part of the budget process, the nine-part legislative package will now be sent to the House Budget Committee where it will be folded into the broader budget reconciliation bill to be considered by the full House of Representatives before moving to the Senate. Budget reconciliation legislation is subject to special fast-track procedures for consideration and would need only a simple majority in the Senate to approve the legislation, rather than 60 votes to cut off a filibuster. 

It is important to note that the legislation is still subject to change as it works its way through Congress.  

For our Feb. 9 post on the legislation, which includes a summary of the pension provisions, click here. In addition: 

• a Ways & Means summary of the pension provisions is here; 
• the legislative text of the Butch Lewis Emergency Pension Plan Relief Act is here; and
• a Joint Tax Committee description of the pension provisions can be found here.