By unanimous consent, the Senate yesterday passed H.R. 7327, modifying the Pension Protection Act of 2006 to react to the current economic downturn. Senator Max Baucus (D-MT), chairman of the Senate Finance Committee, explained the importance of the legislation in a floor statement:
I wish to say this is very important relief for seniors and for the country. The bill includes a provision that would allow seniors who are 701⁄2 years of age not to have to make withdrawals from their IRA accounts that the current law requires. Under current law, if you are 701⁄2 or older, you must begin to withdraw significant amounts from your 401(k) accounts or IRA accounts and if you don’t, you pay a big penalty. At these times it is not wise to require that, because the accounts are lower in value and they should not have to make those withdrawals if they don’t want to.
In addition, this legislation would allow companies to postpone making increased contributions to their pension plans also required by the recent pension law. When we revised pension law a short while ago, we were pretty strict to protect employees by requiring companies to make contributions to the pension plans at a much faster rate. That made sense then, but given the economic downturn, with the market values down so much lower than they were back then, it makes sense, I believe—and I think most Senators agree—that those contributions should be postponed or later modified in order to keep companies viable.
A lot of companies need this to meet payrolls in these difficult times, and this will prevent them having to freeze their benefits.
The NAM and more than 400 other businesses, associations and others wrote a letter to Congress this week asking for relief on the pension mandates. We stress that the legislation in no way undermines the basic legislation, the Pension Protection Act of 2006. It is just a useful, necessary, helpful, etc., modification that reflects the new economic circumstances.
UPDATE (10:10 a.m.): For the full floor statement by Senator Baucus, go here.
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