Section 201 of WRERA offers relief to employees. Internal Revenue Code Section 401(a)(9) requires plans to begin distributions to a worker no later than the April 1st following the year in which the employee reaches age 70.5 or retires. WRERA provides a one-year moratorium on the required minimum distribution rule, a change that is needed as employees choose to defer retirement in a worsening economy.

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According to the Technical Explanation of the Act written by the Joint Committee on Taxation, in the case of an individual whose required beginning date is April 1, 2010 (e.g., the individual attained age 70 1/2 in 2009), the first year for which a minimum distribution is required under current law is 2009. Under the provision, no distribution is required for 2009 and, thus, no distribution will be required to be made by April 1, 2010. However, the provision does not change the individual''s required beginning date for purposes of determining the required minimum distribution for calendar years after 2009. Thus, for an individual whose required beginning date is April 1, 2010, the required minimum distribution for 2010 will be required to be made no later than the last day of calendar year 2010...

WRERA Section 202 extends the PPAs transitional minimum funding rule for single-employer defined benefit plans for plan years beginning after 2007 and before 2011, even if the plans shortfall amortization base is not zero, as required under previous law. Under the revised rule, when determining whether a plan has a funding shortfall, a plan must consider only the applicable percentage of the funding target, not the plan's entire funding target.

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The WRERA also adopted a number of significant revisions to the PPA beyond technical corrections.

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The WRERA amends Code Section 415(b)(2) to clarify that the interest rate assumptions applicable to small employers (i.e. employers with no more than 100 employees who receive at least $5,000 in compensation from the employer) with respect to annual benefits payable under the plan when converting from a straight life annuity is not less than the greater of 5.5%, or the amount specified in the plan.

 

 The Age Discrimination in Employment Act deems certain hybrid defined benefit plans to be discriminatory unless the plan limits the annual interest credited to participants accounts to a market rate of return. WRERA Section 123 amends ADEA to provide that with respect to a governmental plan, a rate of return established pursuant to a federal, state, or local law, will be treated as a market rate of return and therefore, is a permissible method of crediting interest under ADEAs interest crediting requirement, unless the method violates another section of ADEA.

 

WRERA Section 124 amends Code Section 105(b) to add a new provision that states that amounts paid to a taxpayer from an accident or health plan funded by a medical trust in connection with a public retirement plan is not excluded from gross income solely because the plan reimburses health care expenses on behalf of a deceased plan participants beneficiary. This change was made to comport with Revenue Ruling 2007-36. The plan must have provided for the reimbursement on or before January 2008.