[Congressional Record (Bound Edition), Volume 156 (2010), Part 9]
[Extensions of Remarks]
[Page 12530]
[From the U.S. Government Publishing Office, www.gpo.gov]




         FUNDING RELIEF TO MULTIEMPLOYER DEFINED BENEFIT PLANS

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                          HON. SANDER M. LEVIN

                              of michigan

                    in the house of representatives

                        Wednesday, June 30, 2010

  Mr. LEVIN. Madam Speaker, Section 211(a) of the bill before us gives 
funding relief to multiemployer defined benefit plans, by giving them 
more time to make up for the severe investment losses that they 
suffered in 2008 and the first quarter of 2009.
  One of the options would give multiemployer plans that meet a 
solvency test permission to amortize the net investment losses incurred 
either or both of the first 2 plan years ending after August 31, 2008 
over 30 years. The other option--which can be elected independent of 
the plans' decisions on the first choice--would allow multiemployer 
plans to smooth those losses up to 10 years, in determining the 
actuarial value of their assets. The full market value of the 
investment loss is intended to be calculated as the difference between 
the actual market value of the assets and the expected market value of 
those assets, calculated using the assumed rate of return used by the 
actuary for valuation purposes, at the end of the relevant plan year, 
with adjustments for contributions and disbursements. In addition, it 
is also intended that multiemployer plans are to be permitted to 
reflect the full amount of those losses in their funding calculations, 
including those portions of the losses that will be recognized over a 
period of up to 10 years in the actuarial value of assets.
  The bill limits the circumstances under which plans that elect either 
or both of the funding relief approaches may only be amended to 
increase benefits. It is intended that those restrictions apply for the 
first 2 plan years after the plan year in which relief is first 
reflected in the funding standard account. For instance, if the 
multiemployer plan chooses extended amortization for the losses 
incurred in the 2008 plan year, that would first be reflected in the 
funding standard account for the 2009 plan year, and the benefit-
increase restrictions would apply for the 2010 and 2011 plan years; if 
extended amortization (or 10-year smoothing) is also used for losses 
incurred in 2009, the restrictions would apply for the 2011 and 2012 
plan years. I note that a special effective date rule applies the 
restrictions only to benefit increases that become effective after the 
date of enactment.
  The funding relief approaches are also intended to be available to 
plans that use actuarial funding methods that do not identify 
experience gains and losses as separate items. Treasury and the IRS is 
expected to allow all multiemployer plans to use the relief, either as 
an overlay to a funding method that otherwise does not produce 
experience gains and losses or by giving blanket permission to 
multiemployer plans to switch to a method that does produce them, 
effective for all relevant plan years, and without regard to procedural 
restrictions in relevant Treasury and IRS guidance (such as Revenue 
Procedure 2001-40) on the number of method changes a plan can adopt 
within a given period of years or the deadline for electing the change 
for a given plan year.
  It is also intended that the funding relief approaches be made 
available in the case of a plan for which the deadline for determining 
funded status has already passed, and for a plan for which the deadline 
is approaching so quickly that plan sponsors and actuaries will have 
little time to take the relief into account in making these 
determinations. It is intended that Treasury and the IRS will provide a 
reasonable period for plan actuaries, if directed to do so by plan 
trustees, to withdraw their zone certifications for the first plan year 
that started after September 30, 2009, and substitute revised 
certifications if the result is different when the relief is taken into 
account. Treasury and the IRS is also expected to treat plan actuaries 
as not violating the deadlines for pending status certifications, even 
if they are completed within a reasonable period after the statutory 
due date, so that they can take account of changes due to the relief.
  Finally, because time is of the essence, it is expected that the 
Secretary of the Treasury and IRS will issue guidance under this 
legislation promptly after the bill's enactment and that such guidance 
will provide that an action taken in good faith based on a reasonable 
interpretation of the legislation (including these statements) until 
the guidance is issued will be deemed to comply with the legislative 
provisions.

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