Printer Friendly

AICPA testifies at hearings on pension benefit protection.

The American Institute of CPAs urged Congress to remove tax disincentives that prevent business from funding their pension plans fully. Harvey Coustan, chairman of the AICPA tax executive committee, told the House Ways and Means Committee that while the Retirement Protection Act of 1993 (HR 3396) "addresses some of the issues protecting plan funding, additional important steps can and should be taken to ensure the necessary funds are put aside by plan sponsors to pay the benefits promised to American workers."

Coustan told the Journal "There are parts of the bill that w applaud, but we are opposed to others." In particular, the AICPA opposes the elimination of cross-testing, in which a complex set of rules to test for discrimination in defined-benefit plans also are used for defined-contribution plans. "Cross-testing treats all employees equally," Coustan said, "from the beginning to the end of employment."

The AICPA also opposes a 150% full-funding limitation that disallows deductions for employer contributions over and above 150% of current liabilities. In his testimony, Coustan pointed out that the term full funding as used in the bill did not mean a plan had enough funds on hand to pay all benefits when they come due. Rather, he said, full funding was based on an artificial assumption that a plan terminates today, with a 150% cap on today's liabilities.

In addition, Coustan said, the AICPA opposes the 50% reversion penalty. Under certain circumstances, an employer withdrawing funds from an overfunded pension plan must pay a 50% penalty tax on the reverted funds, even if they are used to enhance the security of other employee benefit programs.
COPYRIGHT 1994 American Institute of CPA's
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1994, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Publication:Journal of Accountancy
Article Type:Brief Article
Date:Jul 1, 1994
Previous Article:Test your knowledge of professional ethics.
Next Article:Senate resolution on stock options.

Related Articles
What to do if the IRS audits your pension plan.
AICPA urges expanding pension disclosures to workers.
GM to beef up pension assets by $10 million.
Starr testifies in Washington.
Deja vu on pension audits.
Is your retirement plan really safe? Protect your clients' assets from creditors.
AICPA, state societies, labor department expand national education campaign on fiduciary responsibilities and health benefits compliance.
Protect retirement assets: new bankruptcy legislation adds protections for retirement plans.
Best practices in EBP audits: regulatory pressure is heating up the market.
Pension reforms enacted by congress; AICPA helps CPAs understand new rules.

Terms of use | Privacy policy | Copyright © 2018 Farlex, Inc. | Feedback | For webmasters