Legislation before the House Ways & Means Committee plans to help pay for a multiemployer plan bailout by utilizing a budget “gimmick” that would freeze retirement plan contribution limits—though not for collectively bargained plans.
More specifically, the Butch Lewis Emergency Pension Plan Relief Act of 2021, included as subtitle H of a nine-part package that the committee plans to mark up this week, would impose a cost-of-living freeze on:
the Code Section 415(c) annual contribution limit for defined contribution plans;
the Section 415(b)(1)(A) annual defined benefit limit; and
the Section 401(a)(17) annual compensation limit.
This appears to be designed to fill a budget hole in the 10-year scoring window—and as such would freeze these limits starting in calendar year 2030. Ironically, it’s scored to lose money in the years leading up to the effective date, apparently anticipating that individuals will be inclined to increase contributions before the limits are imposed.
Author(s): TED GODBOUT AND NEVIN E. ADAMS
Publication Date: 9 February 2021
Publication Site: ASPPA