The Segal Company's Compliance Alert

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July 26, 1999

PROPOSED CHANGES TO SECTION 415 LIMITS

Last week, the House of Representatives passed a $792 billion tax cut bill and the Finance Committee reported out a version that will be considered by the full Senate this week. Congress is aiming to pass tax legislation by the time of its August 6 recess; since it is likely to involve tax cuts in the $800 billion range, the President is just about certain to veto it.

It is widely expected that, when Congress comes back after Labor Day, a more serious effort will be made to come up with a tax relief package that the President can sign. Meanwhile, each of the two currently active bills would provide some Section 415 relief for multiemployer plans:

Both bills would eliminate the 100%-of-pay cap for multiemployer plans. (This is in all competing bills, including the Democrats' alternatives.)
The House bill would increase the Section 415(b) normal retirement dollar limit to $160,000 at age 62, which would automatically increase the early retirement dollar limits (to around $96,000 at age 55). This change would apply across the board, not just to multiemployer plans.
The Senate bill would give multiemployer plans the same normal and early retirement limits that apply to plans of governments and tax exempt organizations, i.e., $130,000 (for 1999) at age 62, $76,800 at age 55. It would also provide that multiemployer plan benefits are not aggregated with single employer plan benefits, for purposes of applying the 100%-of-pay limit.

The effective dates of the various relief provisions vary, based on estimates of the federal budget impact.

Compliance Alert, The Segal Company’s periodic electronic newsletter summarizing important federal legislation or regulations, is for informational purposes only. It is not intended to provide authoritative guidance. On all issues involving the interpretation or application of laws and regulations, plan sponsors should rely on their attorneys for legal advice.