October 19, 2020
Council Lobbying Treasury, IRS on ‘January 1’ Pension Funding Timing Issue
While the American Benefits Council continues to push Congress on the important matter of defined benefit pension plan funding stabilization (see the October 7 Benefits Byte), we are also leading the effort to fix a small but crucial technical modification to prior pension relief provided under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
The CARES Act delayed the date by which plan sponsors would need to make 2020 contributions (with interest) until January 1, 2021. This appears to require companies to make the contribution by December 31, 2020 (the last business day of the year).
Because of the different accounting treatment attributable to making contributions due in 2021 as opposed to 2020, in numerous discussions with the U.S. Treasury Department and Internal Revenue Service, the Council has strongly recommended that Congress move the delayed contribution date to January 4.
On October 14, the Council was joined by the Committee on Investment of Employee Benefit Assets, the ERISA Industry Committee and the U.S. Chamber of Commerce in sending a letter to executive branch officials providing additional support for this recommendation, noting that changing the due date would help companies obtain credit, honor commitments to expand the business and create or retain jobs, among other things. “By delaying the payment by three days, it actually allows another quarter to increase cash levels as we all hope the economy continues on a recovery and everyone learns to work with the ‘new normal.’”
For more information on defined benefit pension matters, contact Lynn Dudley, senior vice president, global retirement and compensation policy, Diann Howland, vice president, legislative affairs, or Jan Jacobson, senior counsel, retirement policy.