Last month, President Bush signed the second major Tax Act of the year into law. "There are provisions in this Tax Act that will help many taxpayers reduce the income taxes they will pay down the road," explains Andrew D. Schwartz, CPA.

Below are some of the provisions of the Pension Protection Act of 2006 that impact a variety of taxpayers.

1. Increased Retirement Plan Contribution Limits To Continue Past 2010 2. Direct Deposit of a Tax Refund Into An IRA 3. Direct Rollovers Into A Roth IRA No Longer Limited to IRAs 4. Expiring Savers Tax Credit Made Permanent 5. Threshold For Annual 5500-EZ Filing Increased 6. Qualified Distributions Made From 529 Plans Continue to Be Tax-Free After 2010

Other Changes

This year, the Pension Protection Act of 2006 limits the deduction that can be claimed for donated clothing and household items. As of August 17, a person can only claim a deduction for donated goods that are in good condition or better.

This Tax Act also changes a few other of the charitable donation rules. Effective August 17, individuals must maintain a canceled check, bank record, or receipt from the charity substantiating the date and amount of any donation they're claiming. And through 2007, people 70 or older can withdraw up to $100,000 per year from their IRAs, tax-free, provided they donate that money to a qualified charitable organization.

"The Pension Protection Act of 2006 made numerous changes to the U.S. Income Tax rules and will take quite a while for taxpayers and tax professionals to digest. While many of these provisions will help save you taxes, it looks like tax simplification has once again been overlooked," says Schwartz, who is founder of CPA Niche, LLC (www.cpaniche.com), a site where taxpayers can interact with CPAs who specialize in a variety of niches such as healthcare, real estate professionals, newlyweds and lawyers.

Read the entire article "Pension Protection Act Affects Most Taxpayers", Click Here

Companies, long concerned with the liability connected to their 401(k) operations because the fiduciaries of the plan could potentially be held personally liable, are beginning to use the Pension Protection Act (PPA) to shield their fiduciaries from liability. Under the PPA, plan sponsors can select a managed 401(k)/403(b) service which shifts liability away from the plan's fiduciaries for those who use it.

"We're recommending that plan sponsors use a fiduciary advisor program as a way to insulate their fiduciaries from the liability associated with participant investment advice," said Ron W. Hagan, Chief Operating Officer (COO) of Roland|Criss Fiduciary Services, a leading fiduciary protection specialist. "The Pension Protection Act gives plan sponsors protection in the area of governance and controls and participant investment advice."

The 401(k) landscape is shifting dramatically and mostly for the better. However, there is still the potential for conflicted advice. The PPA has removed the long-standing conflict of interest rule that stopped fund providers from choosing funds on behalf of 401(k)/403(b) participants. It will be up to the plan sponsors to act as the gatekeeper to assure their employees are not receiving conflicted management and/or advice.

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