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Pension Protection Act of 2006 – IRAs
On August 17, 2006, President Bush signed the Pension Protection Act of 2006 (PPA-06),
a comprehensive pension reform bill that has been the subject of negotiations between
the House of Representatives and the Senate since early in 2006. Certain provisions
of PPA-06 took effect immediately. Other provisions become effective in 2007
or later.
PPA-06 provisions make the following changes to IRAs.
- Makes permanent the EGTRRA Traditional, Roth, and SIMPLE IRA contribution, catch-up contribution,
and portability
provisions
- Provides for annual cost of living increases of Traditional and Roth IRA income restrictions (deduction
and contribution eligibility)
- Makes permanent the EGTRRA
Saver's Tax Credit for IRA and certain employer-sponsored retirement plan contributions
- Provides for direct rollovers (or conversion of pretax and after tax starting in 2008) of assets from QRPs, governmental
457(b) plans, 403(a), and 403(b) plans to Roth IRAs (effective for distributions
after December 31, 2007)
- Allows Traditional and Roth IRA holders age 70½ and older who direct IRA distributions
to be paid directly to qualified charities to exclude donated assets of up to $100,000
per year from their income. This is effective for only the 2006 and 2007 tax years (also available to beneficiaries who are over age 70½)
- Allows certain guardsmen or reservists called to active duty for 180-plus days to
take penalty-free distributions from IRAs, and to repay those amounts to IRAs over
a two-year period (distributions after September 11, 2001, and before December 31,
2007)
- Allows income tax refunds to be paid directly to an IRA (effective after December
31, 2006)
- Provides investment advice guidance and a
prohibited transaction exemption for fiduciary advisors of IRAs, health savings
accounts, and Coverdell education savings accounts (effective after December 31,
2006)
- Allows employees participating in 401(k) plans of certain bankrupt employers to
make additional IRA contributions (up to $3,000 per year) above the annual contribution
limit (effective only for tax years 2007 through 2009)
Read more about the Pension Protection Act of 2006:
IRAs | Defined contribution
retirement plans
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