Act provides temporary funding relief for pension plans.

• Author: Nevius, Alistair M.

President Obama signed the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, P.L. 111-192, on June 25. The pension relief title of the act allows single-employer plans to elect to amortize over a longer period pension shortfalls caused by losses in asset value they experienced in 2008. However, if plan sponsors pay compensation exceeding $1 million to any employee (including nonqualified deferred compensation amounts set aside or reserved in a trust or other arrangement) or pay "extraordinary" dividends or stock redemptions during the relief period, they must increase pension installment contributions by the excess amount of the dividends or redemptions. The compensation limits apply to services performed after February 28, 2010.

Extraordinary dividends and stock redemptions are the portion of the combined total of dividends declared and stock redemptions paid during the plan year that exceeds the greater of either the employer's adjusted net income (without regard to interest, taxes, depreciation, and amortization expenses) in the preceding plan year or dividends declared in the plan year (if the employer has declared...