Congress to address pension funding and appropriations bills after Thanksgiving recess

Congress will reconvene in early December 2003 to vote on a tax extenders bill that would provide employers with temporary funding relief and an omnibus appropriations bill that contains restrictions on the power of the IRS to implement cash balance regulations. The House will resume session on December 8, 2003 and the Senate will reconvene on December 9, 2003.

Funding issues holding up extenders bill. Legislation (H.R. 3521) passed by the House on November 20, 2003 to extend numerous expiring tax provisions would also: (1) replace the 30-year Treasury rate with a higher interest rate based on long-term corporate bonds for a two-year period, beginning in 2004 and (2) provide commercial airlines maintaining underfunded plans with an 80% reduction in the required deficit reduction contribution. The House bill, which carries an estimated cost of $7.2 billion, needs to be reconciled with a less expansive $1.2 billion measure (H.R. 1896) introduced in the Senate that would, in addition to providing a six-month extension of expiring tax provisions, allow for the transfer of excess defined benefit plan assets to retiree health accounts through 2013 and extend IRS authority to impose user fees through 2010.

As initially proposed, H.R. 1896 did not contain provisions adopted by the Senate Finance Committee in September 2003 that would have authorized a temporary suspension of the required deficit contribution. A compromise proposal that would have more closely resembled the House bill was rejected in the Senate on November 25, 2003. 

The intervening period between the Thanksgiving recess and the scheduled reconvene date of December 9, 2003 will allow Congressional leaders to effect a compromise proposal before interest rate relief provided by the Job Creation and Worker Assistance Act of 2002 expires at the end of the year. However, any proposal must be approved in the full Senate by unanimous consent, as Senate Majority Leader, Mitch McConnell (R-KY) has indicated that there will be no more Senate roll-call votes in 2003.

For more information on this and related topics, consult the CCH Pension Plan Guide.

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