President Bush signed the Pension Protection Act of 2006 into law August 17, marking the most comprehensive overhaul of the pension system since 1974.
The whopping 900-page legislation brings more certainty to defined benefit plan funding rules, while also enabling individuals to continue contributing at higher rates in their 401(k) and IRA retirement savings plans. The Act sets out new funding and disclosure requirements for a number of defined benefit pension plans. It also makes permanent the higher contribution limits to 401(k)s and IRAs under the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001, allows employers to set up automatic enrollment in 401(k) plans, and allows more types of providers to offer investment advice to employees.
While the overall package seems popular with advisors, former SEC Chairman Arthur Levitt, for one, says that he has “a very large problem with the provision that allows brokerage firms and mutual funds to give advice” to plan participants.