House Passes Pension Reform Legislation

About a month after the Senate passed its version of pension reform legislation, the House on December 15, 2005, approved the Pension Protection Bill of 2005 (HR 2830) by a vote of 294 to 132. Key provisions in the legislation include:

• Strengthening funding requirements for defined benefit plans, improving information disclosure to workers, and restricting new benefit additions to underfunded plans without the inclusion of supporting resources;
• Increases in PBGC funding;
• Making permanent the IRA provisions enacted as part of the Economic Growth and Tax Relief Reconciliation Act of 2001;
• Making permanent the saver's credit;
• Encouraging automatic enrollment in 401(k) and other defined contribution plans;
• Waiving early distribution penalties for public service employees and military reservists and national guard personnel;
• Expanding IRA eligibility for military personnel by including combat pay as earned income;
• Expanding IRA eligibility for disabled personnel;
• Allowing tax refunds to be automatically deposited to IRAs; 
• Expanding tax-free rollovers on the death of an IRA holder; and
• Allowing limited rollover of flexible spending account funds.

A conference to resolve differences between the House and Senate versions is not expected until next year. The Administration has expressed support for the House version and concern that the Senate legislation does not go far enough to fund the Pension Benefit Guaranty Corporation (PBGC).