The Senate this afternoon approved a tax and jobs bill that includes pension contribution relief for corporate defined benefit plans.
The American Workers, State and Business Relief Act of 2010, passed by a 62-36 vote, includes a provision to allow DB plans to stretch out amortization periods for investment losses for two of the years between 2008 and 2011, either over a period of up to 15 years or over a nine-year period. Current law requires plans to amortize their investment losses over seven years.
A key provision will require employers that extend their amortization periods to make additional contributions to their pension funds if they pay employees in excess of $1 million a year, pay out extraordinary dividends to shareholders or redeem in excess of 10% of the market capitalization of their stock.
Under a compromise amendment accepted by the Senate on March 9, plan sponsors that opt for the extended nine-year amortization period would be obliged to make the additional plan funding contributions for only three years.
Employers that opt for the extended 15-year amortization would be obliged to make the additional payments for five years.
The bill now goes to the House.