Coalition UpdatesReturn to Coalition Updates
Recent Capitol Hill Meetings
August 11, 2011
In late July, Alan Glickstein of Towers Watson and Derek Dorn and Barbara Pate of Davis & Harman visited with key Congressional staff regarding IRS/Treasurys proposed hybrid plan regulations. They met with the relevant committees in both chambers (the House Ways & Means and Education & Workforce Committees, and the Senate Finance and Health, Education, Labor & Pensions [HELP] Committees).
The goal for these meetings was to educate staff on the proposed regulations shortcomings and to ask for outreach to Treasury/IRS to express concern about them. In particular:
- The regulations inappropriately deem all interest rates above its proposed interest-crediting rate to exceed the required “market rate” of return. Rather, Treasury/IRS should create a safe harbor for its proposed interest-crediting rate, and should not deem all other rates per se excessive.
- The proposed 4% minimum and a 5% fixed rate of return are artificially low.
- The regulations inappropriately revive whipsaw where Congress clearly intended to eliminate the practice.
- There is no policy basis for prohibiting plans from offering subsidized benefits.
- Sponsors need a minimum of 12 months between regulations publication and their effective date to bring their plans into compliance.
- A robust transition rule should ensure that plans are treated as having complied with the law until the effective date if the plan has reasonably interpreted the statutory provision.
For your reference, please reference the background piece left behind with Congressional staff. The piece may be useful for yourself or others at your organization seeking a summary of the Coalitions five primary concerns with the additional hybrid rules.
Overall, the meetings were positive. On behalf of the Coalition, we asked the offices to contact the Treasury and the IRS to express concern with the proposed regulations. Many staff said they would consider that request, and we will follow up with them. In particular, Senator Enzi (R-WY), the Ranking Member of the Senate HELP Committee, has already included in the HELP hearing record a reference to our comment letter. Members of Congress are more likely to engage if they represent a company that is adversely impacted by a proposed regulation. Given the geographic breakdown of the key Senators and Congressmen, we ask: If you represent a cash balance plan with significant coverage in Michigan, Iowa, Wyoming, or Montana, please let us know if you would be open to engaging with your Senator/Member of Congress.
We would be delighted to work with you to draft a letter explaining the regulations challenges for your plan and/or to include a representative of your organization in future meetings with these staff.