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Jul 5 2004
ERISA Update – Summer 2004
Author(s): Blitman & King LLP
Tags: Albany Law | Employee Benefits | Employment Law | Internal Revenue Code | Lawyers | Legal Counsel | Litigation Law | New York Law | Pension Equity Act | PFEA | Syracuse Lawyers
On April 10, 2004, President Bush signed into law the Pension Funding Equity Act of 2004 (“PFEA”). Before the PFEA, the Internal Revenue Code required defined benefit pension plans to use the interest rate on 30·year U.S. Treasury bonds to determine their funding status. The decision of the Treasury Department to cease issuing 30-year bonds in September 200 I led to artificially low 30-year rates which, in turn, inflated pension fund liabilities and jeopardized such plans. The PFEA replaces that interest rate tied to 30-year bonds with an interest rate based on the average rate of return on high-quality long-term corporate bonds for plan years beginning in 2004 and 2005.
