Pension plans

Contributions into pension plans come from the employer and employee. The investment portfolio is controlled by the company, not the employee. With pension plans, you are given a fixed amount of income when you retire. The payout usually depends on the length of time you worked and the your salary. An individual can decide to receive their pension in a lump sum or monthly payouts.

Pension Protection Act of 2006

IRA and Plan Provisions

PPA 2006 was signed into law on August 17, 2006 but there are many different effective dates. Deep in the 900 plus pages of this behemoth tax act are several IRA and plan gems that create retirement planning opportunities for your clients.

Summary of Key Points

Key retirement provisions from the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) 2001 are made permanent

The Pension Protection Act of 2006 (PPA 2006) was signed into law on August 17, 2006

Beginning immediately, IRA owners and IRA beneficiaries age 70½ and older can make tax-free IRA distributions of up to $100,000 a year to a charity if the funds are transferred directly from the IRA to the charity – This provision was extended through 2009, then through 2011, and now through 2013, with two special transitional rules for 2012 QCDs

As of 2007, non-spouse beneficiaries of company plans can make direct transfers of plan funds to inherited IRAs -This provision was made mandatory beginning in 2010

As of 2008, company plan funds can be converted directly to Roth IRAs