On June 25, 2010, the Preservation of Access for Care for Medicare Beneficiaries and Pension Relief Act of 2010 was signed into law. The new law allows plans to delay amortization of losses from any two years from 2008 to 2011 as follows:
- 2 and 7 Rule: Plan can delay amortizing losses for two years. During the delay, they must pay "interest' of those losses; OR
- 15 year Rule: Plan can amortize losses over a 15-year period.
The law requires plans sponsors who use the relief to make additional "cash flow" contributions if they pay compensation in excess or $1 million or make extraordinary dividends and/or redemptions. However, the law does not include the additional reporting to the Pension Benefit Guaranty Corporation (PBGC) included in earlier versions of the bill.
On July 20, 2010, the Internal Revenue Service issued Notice 2010-55 providing preliminary guidance for single-employer plans on using the relief before the Service issues rules. (A notice dealing with multiemployer plans was also issued.) The notice also outlines issues that may be addressed in future guidance, including:
- How to determine the amount needed to satisfy minimum funding requirements,
- How to make an election to sue the special funding rules.
- How to meet the requirement to notify participants and beneficiaries.