October 2, 2006 | Posted By Diane Pfadenhauer | print this article

Pension Protection Act of 2006 Resources

The Pension Protection Act of 2006 enacts sweeping changes to most benefits plans.  Single employer, multiple employer, defined benefit, defined contribution, and IRA's are all affected by this legislation.  The Department of Labor has put together a Pension Reform Page on its website with resources, ranging from the simple and easy to read to the hundreds of pages of legislation.  Here are some links to helpful documents:
My advice:  start with the simple and work your way up to the complex!  This quick little outline of changes is just the beginning:
•Expansive sweep affects virtually all employer retirement plans

•Affects defined contribution plans, 401(k) plans, IRA’s, deferred compensation plans, retiree health benefits, health and welfare plans.

•Effective date: it depends
–Some are retroactive
–Some are when the regulations are issued
•Funding of Single Employer Defined Benefit Pension Plans:
–New funding rules go into effect for 2008 plan year
–Will require DB plan sponsors to contribute substantially more than they do under existing law
•Hybrid Plans – i.e. Cash Balance Plans
–Now will require 3 year cliff vesting
–“Wear-away safeguards” – where the plan is created from a traditional DB plan
•Provisions Affecting 401(k), 403(b) and 457(b) Plans
–Investment Advice to Participants – as of Jan. 1, 2007 a “fiduciary advisor” can now provide investment advice
–Paid by employer or from plan assets
–The DOL is required to issue a model notice for this provision
·Automatic Contribution Safe Harbor for 401(k) Plans
•“Qualified automatic contribution arrangements” - automatically defer a stated percentage of an employees pay and are exempt from the ADP and Top Heavy rules.
•Requires:
–Uniform application
–Automatic contribution amount (3%, but no more than 10%)
–Option to opt out
–Matching contributions
–Vesting in employer contributions at 2 years
–Advance notice of automatic contribution feature
•Additional Provisions
–Diversification requirements – for public employers who provide contributions in the form of employer stock
–Rules concerning “Blackout Periods”
–Modifications to 5500 Forms
–DB Plans must provide benefits statements every three years
–Changes to Summary Annual Report