The massive new Pension Protection Act of 2006, which President Bush signed into law on Aug. 17, extends more than 20 retirement planning provisions, adds tough restrictions for charitable deductions and affects literally dozens of vital tax rules.
Here’s a roundup of the key tax changes in the new law:
-Qualified plan incentives. The new law extends many favorable retirement plan provisions in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) that were scheduled to expire after 2010 (see box, page 2).
-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 th...(register to read more)