Congress Approves Measure to Ease Pension, IRA Rules

[420inTN]

Source: Bloomberg

By Brian Faler

Dec. 11 (Bloomberg) -- The U.S. Congress voted to ease pension-funding requirements and excuse older retirees from having to cash out retirement funds in an attempt to blunt the recession’s impact on their savings.

The Senate approved legislation today by unanimous consent to eliminate various penalties on companies whose pension funding falls below federal guidelines. The bill would also temporarily suspend requirements that people aged 70 1/2 begin cashing out assets in individual retirement accounts and 401(k) and 403(b) savings accounts.

“This vital legislation addresses the immediate needs of workers, retirees and businesses hit hard by the financial and economic crisis facing our country,” said Senator Edward M. Kennedy, a Massachusetts Democrat. “With trillions of dollars in retirement savings in serious jeopardy, the relief in this bill will help Americans weather the storm until the economy begins recovering.”

The vote, one day after the House approved the plan, sends the measure to President George W. Bush. White House Spokesman Tony Fratto declined to say whether Bush would sign the bill into law. “We continue to have concerns about measures to reduce funding for worker pensions,” Fratto said in an e-mail.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=avSKFVWh8_Ho&refer=home

[annabanana]

1. I have a bad feeling about this...

I feel "a step back" here...

[Robbien]

4. This article is a bunch of bull. This rule change only helps companies cheat employees

Kennedy is catapulting the propaganda with this

“This vital legislation addresses the immediate needs of workers, retirees and businesses hit hard by the financial and economic crisis facing our country,” said Senator Edward M. Kennedy, a Massachusetts Democrat. “With trillions of dollars in retirement savings in serious jeopardy, the relief in this bill will help Americans weather the storm until the economy begins recovering.”


Basically the rule is saying companies do not have to fund current unfunded pension costs. The major reason those unfunded pension costs are so high is because several years ago Congress originally relaxed the rules for funding pension costs. This downturn in the market just increased the unfunded situation. Now they are relaxing the funding rules AGAIN. Is there any dough in pension funds these days?

More cash available to pay exec bonuses I guess.

[antigop]

8. I'm afraid Ted sold us out AGAIN on pensions

He and Baucus were the lead negotiators on the Pension "Protection" Act that legalized cash balance pension conversions. We were sold out by that legislation.

The Pension Protection Act did put in funding requirements--now they want to relax those requirements.

IMO--this is NOT good. Companies don't want to put money into their pension funds and this allows them to get by with it.

[El Supremo]

2. Cash out what? n/m

[karynnj]

3. this refers to laws that require people to start

money out of things like IRAs at 70 1/2 years old - even if you don't need the money and taking it out now, if it is in stock that you think will recover some value before you need it. http://www.retirementthink.com/minimum-required-distributions/

[elifino]

5. Just turned 70 last month

That is a relief to me, as I still work part-time and still contribute 25% of my gross before tax to my 401K. I changed to fixed interest about a year ago and converted what I could legally to a Roth three year CD.

[FarCenter]

9. If you are still working, you may not have to start withdrawals after 70.5

http://www.irs.gov/retirement/participant/article/0,,id=151787,00.html

"The required beginning date is April 1 of the first year after the later of the following years:

- Calendar year in which you reach age 70½.

- Calendar year in which you retire.

However, a plan may require you to begin receiving distributions by April 1 of the year after you reach age 70½, even if you have not retired."

"If you are a 5% owner of the employer maintaining the plan, then you must begin receiving distributions by April 1 of the first year after the calendar year in which you reach age 70½. Additional information to help you determine your required beginning date is included in Publication 575."

[question everything]

6. Not there, yet, but knew that this was harsh on many

so it is good that Congress has done something to benefit regular folks, for a change.

[karynnj]

7. I agree - -it is not fair to reguire something that is against the

interests of teh people doing it.

[dabenpb]

10. A better plan ...

would be to allow for total withdrawal of monies from 401k plans with no penalties. Fine, pay the payroll tax on the money (it would be better if one did not have to) but remove the 10%-20% penalty. 401k plans are a pipe dream.