Proposed Senate legislation (S 2352) would ease nondiscrimination testing for closed defined benefit (DB) pension plans. Introduced by Sens. Rob Portman, R-OH and Ben Cardin, D-MD, the Retirement Security Preservation Act mirrors the testing relief provided in the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 (HR 1994), a broad reform package that sailed through the House in May and is now awaiting Senate action. Broad bipartisan Senate support for the SECURE Act could push it to the president’s desk later this year, but if the bill falters, advocates for closed plan testing relief will likely try to advance this measure separately.
Using data provided by actuarial firms, the American Benefits Council estimates at least 450,000 plan participants could see their benefits frozen by 2020, absent testing relief. The Senate measure offers broader relief than proposed IRS regulations would provide, while incorporating some of the same anti-abuse protections. The bill includes permanent nondiscrimination testing relief for closed DB plans and significantly broadens the temporary relief provided in IRS Notice 2014-5, which applies through the 2019 plan year-end under Notice 2018-69.
Among other changes, the bill would:
If elected by a plan sponsor, the relief could apply to plan years beginning after Dec. 31, 2013.
Africa