Pension Protection Act of 2006: Understanding Your Retirement Security

The Pension Protection Act of 2006 is an important part of legislation for those that are saving for retirement. Here are the basics of the Pension Protection Act of 2006 and how it affects you.

Automatic Enrollment

With the provisions in the Pension Protection Act of 2006, employers are allowed to automatically enroll their employees into the company retirement plan. If the employee does not want to be a part of the plan, they will have to opt out of being included.

Pensions

Much of this legislation deals with improving the conditions in pension plans across the country. Many pensions were severely underfunded before this legislation took effect. Under the Pension Protection Act, companies have to have their pensions fully funded over a period of seven years. Employers are allowed to deduct the cost of the extra funding to the pension plans. If employers do not get their pension plans up to acceptable levels, they will have to pay a 10% tax.

Charitable Donations

Another part of the act covers charitable donations. According to the legislation, taxpayers will have to be able to verify their charitable donations with a receipt, canceled check, or some other acceptable financial document that proves the transaction.