New PPA Technical Corrections Bill Passes House

A revised version of the Pension Protection Act (PPA) Technical Corrections Act (H.R. 6382) passed the House, July 9, 2008, by a voice vote. The new bill was introduced by House Ways & Means Committee Chairman Rangel and House Education & Labor Committee Chairman Miller in late June in order to add some “less technical” provisions to the original PPA technical corrections bill that passed the House in March (H.R. 3361). (The bill that passed today will take the place of the bill passed in March.) The Senate is once again expected to consider PPA technical corrections legislation this summer -- the Senate originally approved a corrections bill (S. 1974) in December 2007 -- but outlook for the new provisions added to the latest version of the House bill is uncertain.

One of the new provisions included in H.R. 6382 deals with health reimbursement arrangement (HRA) beneficiaries. It permits a certain class of governmental plans to include non-spouse, non-dependent individuals as beneficiaries on employees’ HRA’s provided that those beneficiaries pay taxes on HRA amounts they ultimately receive. This provision was designed to help the Michigan and Minnesota state governments, both of which have HRAs that are funded by a medical trust established in connection with a public retirement system. This narrowly drafted provision would overrule the Treasury ruling (in these circumstances only) that does not permit non-spouse, non-dependent HRA beneficiaries.

Provisions from previous bill

In addition, the bill includes several provisions relevant to public-sector plans from the previously-passed PPA Technical Corrections bill (H.R. 3361/S. 1974). For example, the bill would clarify that the public safety retiree medical provision applies to self-insured health insurance plans, and it contains a provision making clear that the non-spousal rollover will be a mandatory plan feature for private and public plans for years beginning after Dec. 31, 2008.