Max Baucus: “the Job Creation and Worker Assistance Act of 2002 contains a package of technical corrections to EGTRRA, the tax cut…”

“the Job Creation and Worker Assistance Act of 2002 contains a package of technical corrections to EGTRRA, the tax cut bill we enacted last year. Among these technical corrections is a provision that corrects an unintended drafting error that prevented increased contributions to Simplified Employer Pension plans--also known as SEPs. Congress raised the percentage of compensation limit on all defined contribution plans, but the drafters failed to make the conforming change that would also have raised the percentage of compensation limit on SEP plans by an equal amount. Clearly, we intended to include SEP plans when we raised the compensation limit for defined contribution plans. As a result, this technical correction is entirely appropriate. There is no doubt this Congress intended for employers who sponsor SEPs for their workers to be able to contribute the maximum annual amount that we authorized under the law. However, we also intend that SEP plans comply with the law just as all other pension plans must. The Treasury Department has authority under existing law--Internal Revenue Code Section 408(l)(1)--to impose reporting requirements on SEPs. However, such requirements have not yet been implemented through any regulation. The Internal Revenue Service has indicated many SEP plan sponsors may not be in compliance with rules that require SEP plan contributions be provided to rank-and-file employees along with owners and key employees.”