Pension Action E-Newsletter

February 2, 2007

A Call for Shareholder Resolutions
Announcements of shareholder’s meetings are starting to arrive. We will keep you informed as we learn of important proxy votes that have been introduced by Pension Action subscribers. If there are any shareholder’s resolutions you would like us to pay particular attention to, tell us by sending an e-mail to pensionaction@pensionrights.org.

New PPA Provisions
Federal agencies will start implementing several provisions of the 1,000-page Pension Protection Act of 2006 (PPA) in the coming months. As they are released and implemented, we will describe the most important provisions to you. Below is information on provisions related to distributions from certain retirement savings plans such as 401(k), 403(b) and 457 plans. IRS Notice 2007-7 provides guidance on these provisions.

New IRA Rollover Option for Retirement Savings Plan Beneficiaries
Before the PPA, only widows and widowers could roll over an inherited retirement account into another retirement account without paying taxes. Non-spouse heirs, such as children, parents, and domestic partners, had to cash out the inherited account within five years and pay the appropriate taxes. As of January 1, 2007, the PPA allows non-spouse heirs of a deceased person’s retirement account to transfer or roll over the funds into a special “inherited IRA” without paying taxes. The heir must make annual withdrawals from the inherited IRA, but can do so over a lifetime, making the amount that is withdrawn each year – and the taxes that must be paid on those withdrawals – much less.

New Early Withdrawal Option for Retirement Savings Plans
Prior to the PPA, people were allowed to make early withdrawals from certain retirement savings plans for hardship reasons (such as medical or funeral expenses), but only on behalf of themselves, a spouse or a dependent   Under the new law, hardship withdrawals can be made on behalf of anyone who is listed as a beneficiary of the account. This provision goes into effect on August 17, 2007.

House and Senate Pass Legislation to Deny Pensions to Convicted Lawmakers
As part of ethics reform packages, the House and Senate have passed legislation that would deny pensions to any member of Congress convicted of an ethics-related crime. Current law only cancels pensions for lawmakers who are convicted for crimes such as espionage or treason. In the two bills, the pensions of lawmakers would be cancelled for convictions related to bribery, perjury and other ethics-related violations. The differences between the two bills will now be reconciled by a Conference Committee before the final legislation can be sent to the President for his signature. Neither of the bills is retroactive so they would not apply recently convicted lawmakers such as Randy “Duke” Cunningham and Bob Ney.

Articles of Interest
Please note that some news web sites require free registration to read an entire article, and some links may expire within several days after the article's publication date. You can find other recent articles in the Pension in the News and PRC in the News sections of our web site.