Pension Protection Act Blog

The House Ways and Means Committee is requesting comments on H.R. 3361, which is the House bill containing technical corrections to the Pension Protection Act.

Comments will be accepted until the close of business on November 1st and can be submitted by email following the procedures posted in the announcement for comments.

Technical corrections in tax geek speak means correcting typos, punctuation errors, and errors in Code section references. H.R. 3361 is worth reading and commenting on because, in some areas, it goes beyond technical corrections into making actual changes. The statement requesting comments by the House Ways and Means Committee characterizes H.R. 3361 as correcting the Pension Protection Act so that it reflects Congress’ original intent. For example, the provision on rollovers to nonspouse beneficiaries was originally to be mandatory. Then the IRS interpreted this section of PPA as not mandatory. H.R. 3361 makes rollovers to nonspouse beneficiaries a mandatory change again.

One of the interesting changes in H.R. 3361 is the change to Eligible Automatic Contribution Arrangements (EACAs), contained in Section 902 of the Pension Protection Act. The changes made by H.R. 3361 are as follows:

‘‘(3) ELIGIBLE AUTOMATIC CONTRIBUTION ARRANGEMENT.—
For purposes of this subsection, the term ‘eligible automatic contribution arrangement’ means an arrangement under an applicable employer plan—

‘‘(A) under which a participant may elect to have the employer make payments as contributions under the plan on behalf of the participant, or to the participant directly in cash,

‘‘(B) under which the participant is treated as having elected to have the employer make such contributions in an amount equal to a uniform percentage of compensation provided under the plan until the participant specifically elects not to have such contributions made (or specifically elects to have such contributions made at a different percentage), and“

‘‘(C) under which, in the absence of an investment election by the participant, contributions described in subparagraph (B) are invested in accordance with regulations prescribed by the Secretary of Labor under section 404(c)(5) of the Employee Retirement Income Security Act of 1974, and

‘‘(D) which meets the requirements of paragraph (4).”

H.R. 3361 says to strike subparagraph (C) and redesign subparagraph (D) as subparagraph (C) but it does not contain the specific language to redesign subparagraph (D), which is a little unusual. Before the bill is close to becoming enacted as a law, it should contain the actual language changes to the Internal Revenue Code.

Look for more information as this bill matures and moves closer to passage. It is still possible that this bill may become law before the end of this year.

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