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October 4, 2006
Default Investments: Great Expectations
One of the sections of the Pension Protection Act (“PPA”, P.L. 109-280) believed to be most important for purposes of augmenting retirement savings, is the default investment piece. This section of the law is intended to provide a plan sponsor with some degree of relief from liability for any losses due to investment selections made on behalf of plan participants. With the demise of defined benefit plans, and arguably, the weakening of Social Security, it is more and more incumbent upon individuals to save for retirement. To this end, the law encourages employer/plan sponsors to place as many individuals in retirement plans as possible.
September 6, 2006
PPA: Pretty Powerful Act for Pension Protection?
On August 17, 2006, President Bush signed the Pension Protection Act of 2006 (“PPA”, P.L. 109-280). This law makes significant changes to provisions affecting benefit plans. The majority of this law relates to defined benefit plans. However, it includes many changes affecting defined contribution plans, and even a few that affect welfare benefit plans. Following is a summary of select provisions of the law.
Tax-Favored Medical Accounts - Pay the Right Party
In Revenue Ruling 2006-36, the IRS clarified that the only way medical expenses can be reimbursed on a tax-favored basis from a medical reimbursement account is if the expenses to be reimbursed are those of the employee, or his/her spouse or dependent(s).
HSA Guidance Again! Comparability Rules
As promised, the health savings account (HSA) rules relating to employer contributions have been finalized. If an employer makes a contribution to the HSA of employees, the employer must satisfy what are known as the comparability rules. The final HSA comparability rules make several significant modifications to the proposed regulations issued in August, 2005.
August 17, 2006