Federal Issues

    Temporary Funding Relief for Defined Benefit Pension Plans 

    AICPA Position

    AICPA supports temporary funding relief for pension plans, and worked with a coalition, coordinated by the U.S. Chamber of Congress, to win the required legislative action.

    Background

    Due to the current economic crisis, many defined benefit pension plans are currently underfunded according to the Pension Protection Act of 2006, which requires pension plans to be fully funded as defined by the Act.  The value of assets held by many pension plans has fallen due to recent declines in global financial markets.  And liabilities have increased due to the low interest rate environment.  As a result, payments to fund the losses in pension plans and comply with funding levels required by the 2006 law would impose significant financial hardship on many companies. This in turn would likely cause those companies to restrain expenditures, such as hiring or retaining workers, and research and development, all of which are necessary to help end the recession. Temporary funding relief for the shortfall would alleviate the burden on the sponsoring company with no adverse effect on the payment of pensions to retirees.

    The temporary funding relief act offer two alternatives.  The first allows the shortfall to be made up over 15 years, instead of the current 7-year period.  A second alternative would allow interest-only payments to be made on the shortfall for 2 years, with the normal 7-year amortization of the shortfall to begin at the end of the 2-year period.

    Legislative Action

    A bill has been introduced in the House by Representatives Earl Pomeroy, a North Dakota Democrat, and Pat Tiberi, an Ohio Republican.  No action has been taken on the Pomeroy/Tiberi bill.  Temporary pension funding relief utilizing the 15-year and 2/7-year amortization alternatives was included in the American Workers, State, and Business Relief Act of 2010, which passed the Senate on March 10, 2010.  This bill, originally passed by the House in December 2009 as a tax extenders bill, includes tax extenders, long term unemployment insurance, and COBRA benefits provisions.  House and Senate leadership hope to reconcile the differences in the bills soon.  However, issues primarily related to the cost of the bills, unrelated to the pension provisions, made the timing of final passage uncertain.

    One part of the extenders bill was deemed critical by House and Senate leadership.  This was the so-called "Doc Fix" that stopped a significant cut in Medicare reimbursements to doctors.  The pension provisions were attached to this legislation as an offsetting revenue increase.  The bill, the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (H.R. 3962) was signed by the President on June 25, 2010.

    Copy of Legislation

    A copy of the law is available on the Library of Congress's THOMAS website.  The law and all Congressional actions are available by searching for H.R. 3962 by bill number.  Earlier versions of the legislation, H.R. 3936 (Pomeroy/Tiberi bill) and H.R. 4213 (extenders bill) are also on THOMAS.

    AICPA Letters

    January 19, 2010 Coalition letter to Congress

    December 22, 2009 Coalition letter to President Obama

    Staff Contact

    Peter Kravitz
    Director, Congressional and Political Affairs
    202.434.2918
    pkravitz@aicpa.org

     

     

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    Congressional and Political Affairs Advocacy

    Overview The AICPA monitors and advocates on legislative and other matters that affect the accounting profession. Working with state CPA societies and other professional organizations, the AICPA provides information to and educates federal, state and local policymakers regarding key issues.
    Published on October 22, 2014

    Accounting Partnership Retirement Practices

    Article In letters to members of the Equal Employment Opportunity Commission (EEOC), the American Institute of CPAs (AICPA) has asked commissioners to reject staff appeals to investigate and litigate against accounting firms regarding partner retirement provisions
    Published on October 21, 2014

    Preserving the Cash Basis Method of Accounting for CPA Firms

    Article The AICPA is opposed to certain provisions included in tax reform proposals that would limit the availability of the cash basis method of accounting.
    Published on September 29, 2014

    Cash Accounting Bipartisan Letter to the House of Representatives

    Legislative Letters
    Published on September 11, 2014

    Federal Legislative and Regulatory Issues

    Federal Law This page highlights the advocacy issues in which the Congressional & Political Affairs Team is advocating on behalf of the profession, and also those issues that the team has recently followed.
    Published on September 05, 2014

    Cash Accounting Senate Letter

    Legislative Letters
    Published on August 07, 2014

    XBRL

    Article Extensible Business Reporting Language (XBRL) used in financial and other reporting allows for easier access to more transparent information.  AICPA supports legislative proposals to utilize XBRL by companies, Federal agencies and recipients of Federal funds.
    Published on May 20, 2014

    Camp Letter On Cash Basis April 25, 2014

    Legislative Letters The American Institute of CPAs (AICPA) voices strong opposition to draft legislation that would limit the use of the cash method of accounting for pass-through entities and personal service corporations.
    Published on May 08, 2014

    Convergence of International and US Accounting Principles and IFRS

    Article International Financial Reporting Standards (IFRS) set by the International Accounting Standards Board (IASB) in London is a response to worldwide demand from regulators, investors, businesses, and auditing firms for a single set of high-quality, globally-accepted accounting standards.
    Published on April 17, 2014

    AICPA Letter to SEC on Proposed Regulation Crowdfunding

    Comment Letter AICPA comments on the SEC's proposed new Regulation Crowdfunding under the Securities Act of 1933 and the Securities Exchange Act of 1934 to implement the requirements of Title III of the JOBS Act as published in SEC File No. S7-09-13.
    Published on February 06, 2014

    Jan 2014 - AICPA Statement for the Record regarding Conferences and Travel

    Article AICPA provided a Statement for the Record to the Senate Homeland Security and Government Affairs Committee in  response  to the hearing held on January 14, 2014 entitled, "Examining Conference and Travel Spending Across the Federal Government."
    Published on January 28, 2014

    Cash Basis Letter to Senate Finance Committee from Associations-Jan7-2014

    Legislative Letters Cash Basis Letter to Senate Finance Committee dated Jaunary 7, 2014 from American Council of Engineering Companies, American Dental Association, American Farm Bureau Federation, American Institute of Architects, American Institute of CPAs and S Corporation Association.
    Published on January 22, 2014

    Municipal Advisors

    Issue Brief The AICPA generally supports the SEC’s proposed rules as a means to strengthen investor protections in the municipal securities market.  The AICPA is concerned, however, because the proposed rule would require that accountants performing customary and usual accounting services would be required to register as municipal advisors.
    Published on January 07, 2014

    ERISA Fiduciary Definition - Appraisers of Employee Stock Ownership Plans

    Article The AICPA believes that the U.S. DOL should implement rules that would require appraisers of ESOPs to meet minimum qualification requirements, including holding relevant credentials and training, and comply with applicable professional valuation standards.
    Published on December 30, 2013

    Take Action Legislation Affecting ESOP Appraisers

    Article The AICPA urges FVS section members to seek congressional support of legislation to fix DOL fiduciary proposal on ESOP appraisers S. 273/HR 2041.
    Published on September 18, 2013

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