Strengthening Benefit Plans Act of 2025

This bill lets companies move “extra” money from certain benefit plans to help pay for current workers’ benefits, with guardrails to protect employees and retirees. It allows transfers of extra funds from retiree health accounts into the pension plan (or to a VEBA in limited cases) to support active employee benefits, and it allows transfers of surplus money from a traditional pension into a 401(k)-style plan, when certain protections are met . These transfers are not counted as employer income and aren’t treated as a prohibited transaction or an employer “reversion,” but employers cannot take a tax deduction for the transferred amounts or for benefits paid from them . Employees must get a notice at least 60 days before a transfer of retiree health assets, and only one such transfer can happen per plan each year .

“Extra” retiree health assets means more than 125% of the employer’s expected retiree health costs; recent contributions and post‑2023 benefit cuts can’t be used to create “extra” funds. If a pension plan is terminating, all retiree health account assets count as extra and may be transferred, mainly back into the pension plan or, in limited cases, to a VEBA to pay allowed benefits for members other than certain key employees . For pension-to-401(k) transfers, “surplus” means the pension has more than 110% of the liabilities used for federal premiums. All pension benefits must become fully vested as if the plan had ended, and benefits in the replacement plan cannot be reduced for several years after the transfer . Transferred assets are treated as part of the plan for funding calculations under pension rules .