The Pension Protection Act is designed to cover several circumstances related to pension plans. Passed in August of 2006, this act offers simple solutions for different facets of pensions that might crop up for the individuals who hold them or who are beneficiaries to them.


Automatic Enrollment

The Pension Protection Act of 2006 includes a provision that allows employers to set their employees up for immediate enrollment in the retirement plan that is being offered by the employer. The intention is to encourage workers to begin saving for their retirement early on so that they are financially capable of retiring. If an employee decides not to participate in the company’s option, he must submit a formal request to the company to opt out.


Investment Advice

This particular piece of legislation is responsible for allowing employers the option to provide investment advice to his employees regarding their retirement plans. The advice must be pertinent to the particular retirement options that are being offered by the employer. Typically, businesses sponsor the company that is handling the plan to come in and speak with employees regarding the options within the plan’s structure.


Funding of Retirement Plan

This legislation incorporates changes regarding the employer’s obligations related to the plan that he makes available to his employees. These obligations must be met according to a predetermined time frame. Plus, the plan can now be listed as a liability for the business offering it.


Rollovers and Non-Spouse Beneficiaries

In the past, only a spouse had the power to roll over the assets of a deceased worker’s retirement plan. This legislation incorporates new guidelines that allow non-spouse beneficiaries the right to roll over the assets. Non-spouse beneficiaries include children and domestic partners.


Direct Rollovers

Fortunately, the process of rolling over a 401k account to a ROTH account has been simplified. Today, it is possible to roll over a 401k account to a ROTH account directly bypassing the regular IRA.


Permanent Increases

This protection act makes certain contribution limits permanent for the following type of plans: IRA, Roth IRA, Roth 403B, and Roth 401k. This particular facet to the act also encompasses the catch-up provision for those workers who are fifty years of age or older.


College Funding Plans

A recent addition to the world of investment related to college funding, the 529 plan now has permanent tax free distribution status for those who choose to use them.


Credit for Savers Meeting Less than $2,000

A permanent tax credit is now in place for those individuals who contribute less than $2,000 to a qualified retirement plan. Typically, this credit ranges between 10 and 50 % of the AGI or adjustable gross income.


Annuities and Long Term Care

Long term care is an important issue, especially for retirees. A provision has been created that now allows a rider for long term care to be included within an annuity plan.


IRAs and Tax Refunds

Due to the provisions made in this piece of legislation, individuals receiving a tax refund can now set it up so that their tax refund is deposited directly into their IRA. The earnings will begin that much more quickly than if the refund was sent to the individual rather than deposited into his account.


While some individuals might never need to have knowledge of all of these provisions, at least some of them will affect them directly. When new legislation is created that pertains to retirement plans, it is always a good idea to read up on them and the basic changes that they incorporate in order to provide for your retirement years properly.


Intro: The Pension Protection Act incorporates a number of significant changes in retirement investing. Not all of these changes will affect every individual. However, it is responsible for some significant changes that are