The pension protection act was signed into law in august 2006 containing more than 900 pages of changes and refinements to regulations regarding defined benefit plans, defined contribution plans, individual retirement accounts and other issues related to retirement planning. Another dazzling book of the kind that only a government at war with itself can produce, the pension protection act is slyly named. Participant benefit statements and the pension protection. Pension protection act of 2006 makes changes to defined.
Even in 2006, i guess protection sounded better than destruction, although destruction was on everyones mind, as we were in the midst of two wars far away. Ten years after, the pension protection act falls short of. It requires companies who underfund their pension plans to pay additional premiums. To foster greater participation among workers who have access to such plans, congress included provisions that facilitate plan sponsors adoption of automatic enrollment policies in the pension protection act of 2006. When congress passed the pension protection act of 2006 ppa, they addressed a major problem faced by many employers sponsoring profit sharing, 401k, and 403b plans how to handle a case in which a participant is given investment options, but does not make a written investment election on how to invest his money. The pension protection act amended the irc to change the treatment of supporting organizations. A bill must be passed by both the house and senate in identical form and then be signed by the president to become law. The ppa also included numerous provisions that affect charitable giving. The legislation includes a variety of provisions to protect savers and boost retirement savings in iras and in defined contribution plans, such as irc sec. Under these procedures, an eligible plan may elect to be a multiemployer plan for all purposes under.
The pension protection act of 2006 ppa 2006 eliminated the full. Life insurance and the pension protection act of 2006. The pension protection act of 2006 ppa was signed into law in august of 2006. Issues of conforming book and tax income and capital cost recovery. Pension protection act of 2006 affects certain opers. The ppas most noteworthy changes to the distribution provisions are described below. The pension protection act of 2006and how it still helps. Premium proposed rule on february 20, 2007, pbgc published a proposed rule to amend pbgcs premium regulations to implement certain provisions of the deficit reduction act of 2005 and the pension protection act of 2006 that are effective beginning in 2006 or 2007. This bill was introduced in the 109 th congress, which met from jan 4, 2005 to. In its response to question 7 of the 2007 blue book, pbgc described its. The ppa was designed to improve pension plan funding requirements of employers, as well as 401k, ira and other retirement plans. According to the 2006 act, all pension had to be fully funded by the end of a seven year period that started in 2008. Approximately 33 different plans would be affected. Life insurance and the pension protection act of 2006 in the first week of august, the u.
Joint committee of the house and senate that investigates internal revenue taxation, and possibilities for tax simplification. News item there is one thing representatives for multiemployer pension plans can agree on. This memo summarizes the significant provisions of the ppa. Transamerica retirement services and its representatives cannot give. On august 17, 2006, president bush signed into law the pension protection act of 2006 the act, which is the most comprehensive pension reform legislation since erisa was enacted in 1974. Erisa anticutback rule at heart of debate on nccmp proposal for multiemployer plans. Pension protection act of 2006 makes changes to defined benefit governmental and church plans this is one of a series of pension analyst publications providing information on specific aspects of the 2006 pension reform legislation affecting defined benefit plans. The federal pension protection act ppa of 2006 was signed into law last year and became effective for the 2007 tax year. Pension protection act of 2006 definition investopedia. Pension protection act of 2006 revises eo tax rules. The act provides an exclusion from gross income for certain otherwise taxable ira distributions from a traditional.
It extends the requirement that companies that terminate their pensions must provide extra funding for. Bush signed into law the pension protection act of 2006. On august 17, 2006, the president signed the pension protection act of 2006. To foster greater retirement savings among workers who do not have access to an employersponsored plan, proposals have been made at the federal level for an automatic ira and. An act of legislation that makes a large number of reforms to u. Last year, president bush asked congress to strengthen protections for the pensions american workers rely on, and congress responded by passing this bipartisan bill. Hello, im drafting an article on supporting organizations. Pension protection act of 2006 fundraising software for. Reform of funding rules for singleemployer defined benefit pension plans. Summary of key changes from the pension protection act of. The pension protection act of 2006 act act provision effective date this summary is designed to provide an overview of h. A major goal of the ppa was to reform the pension laws and ensure that pension plans are funded. Last week president george bush signed into law the pension protection act of 2006. The provisions that would be implemented by this rule change the flat premium.
The pension protection act of 2006 the ppa changes some of the rules regarding distributions from eligible retirement plans. In august, the pension protection act of 2006 was signed into law and will affect nearly all pension, 401k and other retirement plans in the united states. A number of these provisions are discussed in the following links. On august 17, 2006, the pension protection act of 2006 act was enacted. Today, president bush signed the pension protection act of 2006, the most sweeping reform of americas pension laws in over 30 years. Understanding the pension protection act of 2006 the pension protection act of 2006 ppa has paved the way for sweeping changes that can improve the retirement benefits of millions of american workers.
Webcast on eo provisions in pension protection act. The long term care insurance pension protection act of 2006 in section 845 was a piece of legislation that will allow the premiums for a long term care insurance policy to be paid pretax if the premiums are paid straight from the pension. Executive summary the pension protection act of 2006 changed tax valuation matters that affect how appraisals of noncash contributions are considered by the irs the irs now has greater authority to impose penalties on appraisers who value property at an amount that the irs later disputes. The pension protection act of 2006 employee benefits law. Generally written for pension reform, the act does include several provisions that will affect all nonprofit organizations and charitable giving, allowing individuals 70 12 or older to take taxfree withdrawals from their iras as long as the donation goes straight to the charity. Assuming that president bush signs the act into law, the pension protection act of 2006 will provide savers with more options and greater assurance that the current set of incentives will remain. The pension protection act of 2006 strengthened protections for workers owed pension benefits.
Pension protection act of 2006 pension rights center. Jct blue books general explanation of tax legislation top. Legislation not enacted by the end of a congress is cleared from the books. A significant number of those changes focus on the ongoing funding crisis affecting defined benefit plans.
Amendments to employee retirement income security act of 1974 sec. A defined benefit plan is a pension plan, usually funded. This act may be cited as the pension protection act of 2006. The pension protection act ppa was signed into law by president bush on august 17, 2006. The acts main focus is pension reform, but its provisions for improving defined contribution dc plans may have more farreaching consequences. The pension protection act of 2006 will help shore up our pension insurance system in several key ways. Complete analysis of the pension protection act of 2006.
Heres a new batch of such deadlines added by the pension protection act of 2006 ppa that could affect defined benefit pension plans for 2008 calendar year plans. Pension protection act changes valuations for tax purposes. This report discusses the new benefit statement requirements. Mind if i add some small reference to the ppas effect on charitable organizations, particularly supporting organizations. The senate passed the bill on august 3, 2006, and the house of representatives passed it on july 28, 2006. Summary of key changes from the pension protection act of 2006 following is a list of key required and optional amendments to taxqualified defined contribution plans referred to as dc plans in the chart and defined benefit plans referred to as db plans in the chart.
Defined benefit plan provisions of the pension protection. Pension protection act changes benefit public safety workers. The cooperative and small employer charity pension flexibility act s. Pension protection act of 2006 financial definition of. The provisions of the law are summarized in a report by the joint committee on taxation pdf. This presentation features an overview of the pension protection act of 2006 ppa and its impact on companies that sponsor defined benefit as well as defined contribution retirement plans. Pension protection act of 2006 law, explanation and. An act to provide economic security for all americans, and for other purposes. Pension protection act of 2006 business compliance. August 29, 2006 defined benefit plan provisions of the pension protection act of 2006 the newlyenacted pension protection act of 2006 the act includes many changes for both defined benefit and defined contribution plans. The system needs to be strengthened if it is going to survive.
This bill was introduced in the 109 th congress, which met from jan 4, 2005 to dec 9, 2006. It greatly increased the amounts that workers can contribute to retirement plans. Erisa, of course, requires adherence to a host of deadlines, and the failure to meet some of them can have serious consequences for a retirement plan sponsor. Pension protection act of 2006 the retirement plan blog. The pension protection act of 2006 solved this problem by repealing old funding rules that existed under the employee retirement income security act of 1974 and setting new minimum funding standards. Section 828 of the pension protection act waives the 10% penalty for early distributions made to qualified public safety employees who separate from service after attaining age 50 instead of age 55, as was the case prior to the act. Be it enacted by the senate and house of representatives of the united states of america in congress assembled, section 1. The one that got the most press was one that didnt passa trifecta bill that contained a compromise estate tax reform proposal that was, in the end, unable to garner enough. Multiemployer plan election procedures under the pension. Participant benefit statements and the pension protection act of 2006 introduction the pension protection act of 2006 ppa made several changes to pension law. This notice establishes implementing procedures for a special election concerning multiemployer plan status that may be made under the employee retirement income security act of 1974, as amended by the pension protection act of 2006. Irs specialists joined a panel of other exempt organizations experts to discuss these provisions in an irs sponsored webcast on march, 2007. The act introduces sweeping changes to defined contribution401k plans.
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