Pension Protection Act of 2006

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President George W. Bush signs into law, the Pension Protection Act of 2006

The Pension Protection Act of 2006 (Pub. L. 109–280), 120 Stat. 780, was signed into law by U.S. President George W. Bush on August 17, 2006.

1 Pension reform
2 Charitable organization reform
- 2.1 Supporting Organizations
3 External links

[edit] Pension reform

This legislation requires companies who have underfunded their pension plans to pay higher premiums to the PBGC and extends the requirement of providing extra funding to the pension systems of companies that terminate their pension plans. It also requires companies to more accurately analyze their pension plans' obligations, closes loopholes that previously allowed some companies to underfund their plans by skipping payments, and raises the cap on the amount employers are allowed to invest in their own plans. This will allow employers to deduct more money using the pension tax shield in times of high profits.

It requires actuaries to use the equivalent of the projected accrued benefit cost method for determining annual normal cost.

Other elements:

Provides statutory authority for employers to automatically enroll workers in defined contribution plans, formerly, the authority came from DoL rulemaking
Expands disclosure that workers have about the performance of their pensions
Removes the conflict of interest fiduciary liability from giving self-interested investment advice for retirement accounts
Gives workers greater control over how their accounts are invested
Extends the 2001 tax act's contribution limits for IRAs and 401(k)s.

[edit] Charitable organization reform

The Pension Protection Act also reformed several types of tax-exempt charitable organizations including donor-advised funds, private foundations, and supporting organizations.

[edit] Supporting Organizations

The Pension Protection Act cracks down on supporting organizations, particularly type III supporting organizations. This act applies further regulations and penalties that takes away several of the privileges that supporting organizations have over private foundations. This includes applying private foundation law of excess benefit transactions, excess business holding rules, and pay out requirements among others.