The House on Friday, May 28, voted 215-204 to approve a major tax and jobs bill that includes funding relief for defined-benefit plans, enhances fee disclosure for defined-contribution plans and increases taxes that investment partners must pay on carried interest.
The legislation, The American Jobs and Closing Tax Loopholes Act of 2010, now goes to the Senate, which has adjourned for the Memorial Day recess but returns June 7.
The funding relief provision would allow DB plans to stretch out amortization periods for investment losses for two of the years between 2008 and 2011 over a period of either 15 years or nine years, at the option of the plan sponsor. Current law requires plans to amortize their investment losses over seven years.
The legislation would require partnerships to treat 75 percent of carried interest that is not due to a return on capital as ordinary income, at a rate of up to 35 percent. Carried interest currently is taxed as a capital gain at 15 percent.
In a statement, Rep. George Miller, D-California, said the DC plan disclosure provisions would expose hidden fees that could be eating into participant retirement savings.
“It is beyond time that Americans have basic, clear and timely information on the costs and the choices contained in their 401(k) plans,” Miller, chairman of the House Education and Labor Committee, said in the statement.
“We think the passage of defined-benefit pension plan funding relief will help save jobs and businesses across America,” said Jason Hammersla, a spokesman for the American Benefits Council. “We remain concerned with the many conditions and restrictions placed on the relief, but we believe the measure is critical to America’s continued economic recovery.”