CFO Summary: Benefits of Recent IRS Pension Funding Relief
October 01, 2009
As many defined benefit plan sponsors continue to determine the long-term impact that the investment downturn of 2008 and early 2009 had on their defined benefit plans, some amount of funding relief has been delivered by the federal government. The Worker, Retiree, and Employer Recovery Act (WRERA) was signed into law in December 2008, providing modest funding relief for pension plan sponsors.
In March of this year, the Internal Revenue Service (IRS) issued guidance that addressed asset valuation methods for single employer defined benefit pension plans, provided automatic approval for a change in asset funding method for 2009 and also allowed for an automatic approval for a change in interest rate methods for 2009 (these methods usually cannot be changed more frequently than every fifth year). On September 25, 2009, the IRS released additional clarification permitting another automatic approval for an interest-rate method change in 2010, and more recently, final regulations applying to plan years beginning on or after January 1, 2010 were issued, incorporating this guidance.
CFO Summary: The Financial Benefits of Recent IRS Pension Funding Relief (PDF)