New Bills Spur Retirement Savings and Deliver Tax Advantages

The Pension Protection Act of 2006 and the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA), signed into law last year, include provisions that could have considerable implications for you and your clients. Here are some of the major outcomes of the new legislation:

• Elimination in 2010 of gross income limits for Roth conversions.
• Tax breaks for 529 plans made permanent.
• Higher alternative minimum tax exemption.
• Extended life to the 15% capital gains and dividend rate.
• “Kiddie tax” age increases to 18.
• Qualified charitable distributions can be made from an IRA directly to a charity.
• Tax refunds can be deposited directly into IRAs.
• Company retirement plan money can be rolled directly into a Roth IRA.
• Roth 401(k) and Roth 403(b) features made permanent.

Some key implications of pension reform