Under the “Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010,” an employer with an underfunded pension plan may be able to postpone some of its obligations.
Instead of making up lost ground with extra contributions over seven years, the new law allows a plan sponsor to delay the start of the seven-year period by paying only the required interest for two years. Alternatively, the plan sponsor can elect to amortize the funding shortfall over a 15-year period.
Note: If an owner-employee is paid an extremely large salary, it might hurt. For compensation paid after Feb. 28, 2010, any excess over $1 million of salary must be added to the amount of the required contribution.
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