Pension Protection Act of 2006

On August 3, 2006, Congress passed the pension Protection Act of 2006 (H.R. 4) . President Bush signed the legislation into law on Thursday, August 17, 2006. Below is a summary of the major provisions.

Tax Provisions.

The bill makes permanent (or until Congress passes some more laws) the provisions from the Economic Growth and Tax Relief Reconciliation Act of 2001 related to individual retirement accounts and pensions.

Increase in annual contribution limit for IRA's

Increase in the contribution limits on 401(k) plans

Catch-up contributions for people age 50 and over

Tax credit for pension start-up costs

Treatment of elective deferrals as after-tax Roth contributions

Makes permanent the savers tax credit aimed at lower income taxpayers

Provides for increased flexibility and favorable tax treatment of annuity and life insurance contracts with a long-term care insurance option.

Provides for direct deposit of tax refunds into IRA's

Waives the 10 percent early withdrawal penalty for distributions to public safety employees over 50 who may retire early. (For all you cops up north this is your chance to retire.)

Waives the early withdrawal penalties on distributions from an IRA or pension plan taken by members of the National Guard and Reserves called to active duty.

Permanently extends Section 529 qualified tuition programs

Charitable Provisions

Provides for tax=-free distributions from IRA's for charitable purposes

Provides a basis adjustment to stock of S corporation contributing property

Extends the charitable deduction for contributions of book inventory

There are several other major changes that you can find if you wish. This bill is 393 pages long and makes good reading. You can look it up on the internet under:

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_bills&docid=f:h4enr.txt.pdf

Call us if you have any questions at 800-723-7093