WASHINGTON — Corporations could be forced to make substantial new contributions to their pension plans this year, thanks to an IRS proposal that could boost pension liabilities.
The Internal Revenue Service is proposing a new mortality table that employers are supposed to use to calculate funding requirements. The new table would raise the average plan's liability as much as 10%, according to an estimate by Watson Wyatt Worldwide, Arlington, Va.
The official announcement of the table and its effective date is expected any day now, pending approval from the Department of Treasury. "It's in the clearance process," said Steve Pyrek, IRS spokesman, who declined additional comment.
The new table was supposed to go into effect for plan years beginning Jan. 1, 2007. But some lobbyists have been urging the Treasury Department to put a hold on it until January 2008, when many of the Pension Protection Act's funding requirements go into effect.
Key industry lobbyists don't dispute the need to update the exist ing mortality table. But they say a postponement would give the industry time to prepare for a complex transition to a new system of funding obligations.
Jennifer Zuccarelli, a Treasury Department spokeswoman, did not return several calls for comment.