Today in ERISA History

Nov. 13, 1981 – The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) was introduced in the U.S. House of Representatives by Rep. Pete Stark (CA) as H.R. 4961.

TEFRA was signed into law by President Ronald Reagan on Sept. 3, 1982, becoming Public Law 97-248.

TEFRA modified some of the changes made by the Economic Recovery Tax Act of 1981 (ERTA), which had dramatically lowered income tax rate from a maximum rate of 96% to a maximum rate of 50%. Concerned that such a dramatic reduction in the tax rates would cause large budget deficits, TEFRA was passed to alleviate some of ERTA’s impact by increasing the tax received by the federal government through removing tax deductions and not increasing tax rates.

TEFRA made a number of changes to qualified plans, including adding limits on contributions and benefits, loans to participants, retirement savings for church employees, contributions for disabled employees, partial rollovers for IRA distributions, and new recordkeeping requirements.

TEFRA was incorporated into plan documents as the TEFRA/DEFRA/REA generation of plan documents, which came before the TRA’86 generation of plan document. If you search the current generation of plan documents, the EGTRRA plan documents, you will find a paragraph specifically referencing TEFRA.

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