Under the Restoring Pension Promises to Workers Act of 2007, retirement plans that only benefit top paid executives will lose their special tax treatment if the company does not offer a defined benefit pension plan to its non-executive workforce.
Current law allows companies to have separate retirement plans just for top paid executives with no requirement that the company also provide a pension plan for its other employees. In recent years, companies have frozen or terminated their pension plans while continuing to contribute to their executives-only plans.
This provision says that if a company does not provide a traditional defined benefit pension (with specified minimum benefits) for its other employees, the contributions that the company makes to the executives’ plan will be taxable to the executives.
Read section 101 of the Restoring Pension Promises to Workers Act of 2007 [PDF].< Back