601 Pennsylvania Avenue, N.W.

South Building –Suite 900

Washington, D.C. 20004-2601

Phone: 202-220-3172

Fax: 202-639-8238

July 19, 2007

Internal Revenue Service


Notice 2007-14

Courier’s Desk

Internal Revenue Service

1111 Constitution Avenue, N.W.

Washington, DC

Re: Comments in Response to IRS Notice 2007-14

Dear Friends:

The National Retiree Legislative Network (NRLN) is a non-partisan, grassroots coalition of retiree associations, individual retirees and pre-retirees devoted to enacting federal legislation and supporting reasonable interpretive and implementing regulation designed to protect participants in retirement and other employee benefit plans and preserve their health benefits in retirement. With support from its more than 2 million members nationwide and its Washington, DC-based staff, the NRLN identifies and rallies support for Federal legislation and regulation that will guarantee fair and equitable treatment of retirees and pre-retirees from the private and public sectors. Our members reside in all 50 states and our association members are organizations of retirees from the Fortune 500.

Most of the NRLN members are currently receiving pension benefits from defined benefit plans and are very concerned about the continued viability and financial health of defined benefit pension plans. We strongly supported many of the provisions in the Pension Protection Act that were designed to strengthen the fiscal underpinnings of these plans. However, we are concerned that under current law, companies may be able to use pension plan assets to finance expenses that more properly should be paid from corporate assets, thus reducing the amount of pension assets that are available to pay traditional pension benefits. In particular, we are concerned about the unilateral ability of employers to reduce plan assets substantially at a single point in time by offering lump sum severance or layoff benefits to one or more individuals. We believe this type of severance cost should be paid out of the company’s operating expenses, not the pension plan.

Further, pre-tax funding that collateralizes the vested interests of participants, as required by ERISA, permits corporate tax avoidance. Diverting these assets, to pay for corporate restructuring expense, effectively allows corporations a chance to avoid taxes a second time.

We commend the Treasury Department and the Internal Revenue Service for recognizing the need to clarify the types of benefits that are permitted to be paid from qualified defined benefit plans and the NLRN urges you to move forward to propose guidance in this area. If we can be of any assistance in that process, please feel free to contact us.

Sincerely yours,

President, National Retiree Legislative Network