The massive new Pension Protection Act of 2006 extends more than 20 retirement planning provisions, adds tough restrictions for charitable deductions and impacts literally dozens of vital tax rules.
Here’s a roundup of the key changes in the new law:
Funding defined-benefit plans. The new law requires employers—beginning in 2008—to fund defined-benefit plans to cover 100 percent of the liability instead of the current 90 percent. Plans that aren’t fully funded at the beginning of 2008 may gradually increase funding over a seven-year period.
Strategy: Weigh the extra cost against the benefits. This new rule could force your company to revamp its defined-benefit plan or switch to another type of plan.
Plan deduction limits. The new law also encourages employers to create a funding cushion through higher deduction limits. For plan years beginning in 2006 an...(register to read more)