Monday, March 01, 2021
NRLN Action Alert
Amending Section 420
Transfer Rule Is A Win-Win
You are being asked to respond to this very important Action Alert to both of your U.S. Senators because early Saturday the House passed the current COVID-19 economic stimulus legislation through the budget reconciliation process and sent it to the Senate. Click here to email the NRLN’s letter.
This pending legislation provides a unique opportunity to urge your Senators to include in the COVID-19 bill an amendment to the Employee Retirement Income Security Act (ERISA) and Internal Revenue Code (IRC) Section 420 that would help protect healthcare and life insurance benefits for millions of retirees with a single employer defined benefit pension.
NRLN has been lobbying to reduce the Section 420 surplus transfer limits from 120% and 125% to a lower level of 110% for “de minimis” transfers of not more than 1.75% of plan assets for a single or multi-year transfer. A single employer pension plan funded at 110% provides an ample cushion for market volatility.
The incentive for this Section 420 amendment is that with the funding level at 110% percent, the pension plan sponsor can use plan surplus to pay for benefits which saves current expense and would raise federal tax revenue. At least 35,000 NRLN members’ health care and life insurance would be better protected today by this change and pension plans would remain well protected at the 110% level.
Please take a few minutes to email the NRLN’s letter to your Senators. You are encouraged to add in the letter’s last paragraph after “as a retiree” to state the name of the company you retired from. The letter notes the Section 420 amendment is important to your fellow retirees.
Bill Kadereit, President
National Retiree Legislative Network