pensionprotectionactof2006.docVIP

Pension Protection Act of 2006 Summary of Key Provisions ___________________________________________________________________ The AICPA Employee Benefit Plan Audit Quality Center has prepared this summary of the Pension Protection Act of 2006 to assist members in obtaining a general understanding of key provisions in the Act relating to financial, reporting and other matters that are highlighted in this summary This document was prepared from information included in the Joint Committee on Taxation, Technical Explanation of H.R. 4, the “Pension Protection Act of 2006,” as Passed by the House on July 28, 2006, and as Considered by the Senate on August 3, 2006 (JCX-38-06), August 3, 2006. ___________________________________________________________________ TITLE I: REFORM OF FUNDING RULES FOR SINGLE-EMPLOYER DEFINED BENEFIT PENSION PLANS Subtitle A--Amendments to Employee Retirement Income Security Act of 1974 Sec. 101. Minimum funding standards Replaces the existing rules related to the funding of single-employer defined benefit pension plans with a new minimum funding standard, which is satisfied if contributions to the plan equal at least the calculated minimum funding required. Also stipulates who is liable for contributions to the plan, allows for fund waivers in case of company hardship, and stipulates the requirements and process for requesting funding waivers. Sec. 102. Funding rules for single-employer defined benefit pension plans Describes the funding standards and minimum required contribution for a plan year. Includes new rules on measuring the benefit obligation and plan assets, use of interest rate assumptions, mortality tables, valuation date, credit balances for carryover and pre-funded balances. Establishes special rules for “at-risk” plans. For plan years beginning after December 31, 2005, and before January 1, 2008, the provision applies the present-law funding rules. For plan years beginning after December 31, 2007, the provision