Recently, President Obama signed into law the Highway and Transportation Funding Act (HATFA) of 2014. Littler reports that among other things, the law extends the pension provisions that were developed by the 2012 Moving Ahead for Progress for the 21st Century (Map 21). Here are the details:
- Map 21 amended the IRS code to set interest rates for pension plan funding valuations at approximately the 25-year average of historical interest rates.
- This range was between 90-110 percent in 2012, expanding to between 70-130 percent in 2016.
- HATFA extends the 90-110 percent range to 2017. The range then expands to 70-130 percent by 2021.
- The provisions are retroactive to the 2013 year and sponsors can defer using the HATFA rates until the 2014 plan year.
- In order to defer, sponsors need to provide written notice to the plan’s enrolled actuary and sponsor.
- In addition, a sponsor will be considered deferring if, on its Form 5500 and Schedule SB, it uses the Map 21 plan rates for 2013.
- The deferred status can be revoked if the plan files an amended return using the HATFA rates or provides written notice of the revocation.
- Election to defer must be made no later than December 21, 2014.
- According to the U.S. Department of Transportation’s Federal Highway Administration, the main thrust of Map 21 is a long term funding of surface transportation programs, with $105 billion provided for fiscal years 2013 and 2014. It was the first long term highway authorization provided since 2005. It builds on the highway, transit, bike and pedestrian programs that were established in 1991.
For more information on Map 21, HATFA, and other programs impacting the transportation industry, contact us.