President Signs into Law New Funding Rules for Certain Cooperative and Charity Plans.
(Parker Tax Publishing April 29, 2014)

On April 7, 2014, President Obama signed into law the Cooperative and Small Employer Charity Pension Flexibility Act of 2013. Pub. L. 113-97 (4/7/14).

The Pension Protection Act of 2006 (PPA) changed the way most pension plans must be funded. However, Congress carved out a temporary exemption from PPA's funding rules for rural cooperative multiple employer defined benefit plans to give Congress more time determine whether the PPA rules are appropriate for such plans. The Pension Relief Act of 2010 expanded the exemption to include eligible charity plans. The temporary exemption was set to expire for plan years beginning on or after January 1, 2017.

The Cooperative and Small Employer Charity Pension Flexibility Act of 2013 implements pension funding rules that reflect the special circumstances of these so-called Cooperative and Small Employer Charity plans (CSEC plans). These rules generally apply to years beginning after December 31, 2013, and are similar to those that currently apply to CSEC plans. A CSEC plan may elect not to be treated as a CSEC plan, in which case the plan is subject to the PPA rules as of its first plan year beginning after December 31, 2013.

The Act also imposes additional transparency requirements on CSEC plans.

For a discussion of qualified plan funding requirements, see Parker Tax ¶130,545. (Staff Editor Parker Tax Publishing)

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