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Pension Protection Act of 2006 Includes Little-Known Benefits

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Even as the recent national election was ramping up late last summer, Congress passed and the President signed the Pension Protection Act of 2006. Billed as a great boon to most workers, the Act may not have nearly the advertised effect—primarily because of a continuing shift away from traditional “defined benefit” pension plans and toward “defined contribution” retirement arrangements. Still, there are a number of items every worker should know about—particularly those invested in IRAs and 401(k) plans.

The new law may actually accelerate the trend away from defined benefit retirement plans. Because it requires companies to use stricter accounting standards in calculating the amount of money required to fully fund such plans, many analysts predict that more employers will review their existing plans and instead move toward pension plans that create a separate account for each worker, with no guarantee of retirement income levels.

For those with existing 401(k) and IRA retirement accounts, however, the new law provides a small handful of new options. Among the benefits offered to those workers and their beneficiaries:

  • Even before the new law you could withdraw money from an IRA or Roth IRA, then make a charitable gift and deduct the gift for income tax purposes. You might not, however, be able to deduct the entire gift—meaning you would pay taxes on income that you are giving away. The new law lets you give instructions for a distribution directly from your IRA or Roth IRA to a charity with no tax effect at all, ensuring that you get the entire benefit of the charitable gift. Two limits: the maximum amount you can direct to charity is $100,000, and you only have tax years 2006 and 2007 to make the gift.
  • If you are the beneficiary of an IRA, 401(k) or other qualified plan, you can direct that the plan’s contents be rolled over into an “inherited” IRA. That means you will not be stuck with the plan’s rules about distributions (some plans do not allow withdrawals over your life expectancy, for instance, even though the tax laws permit such “stretch” distributions).
  • The Treasury Department has been ordered to issue new, liberalized rules on hardship withdrawals from 401(k) accounts. The new rules should make it easier to withdraw money for the benefit of not only the account owner, but also persons listed as beneficiaries under the plan.
  • It will be easier to roll 401(k) money over into a Roth IRA—though the tax will still have to be paid in the year of the conversion. Under old rules, the rollover required two steps (401(k) to IRA, then to Roth IRA).

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Robert B. Fleming


Robert Fleming is a Fellow of both the American College of Trust and Estate Counsel and the National Academy of Elder Law Attorneys. He has been certified as a Specialist in Estate and Trust Law by the State Bar of Arizona‘s Board of Legal Specialization, and he is also a Certified Elder Law Attorney by the National Elder Law Foundation. Robert has a long history of involvement in local, state and national organizations. He is most proud of his instrumental involvement in the Special Needs Alliance, the premier national organization for lawyers dealing with special needs trusts and planning.

Robert has two adult children, two young grandchildren and a wife of over fifty years. He is devoted to all of them. He is also very fond of Rosalind Franklin (his office companion corgi), and his homebound cat Muninn. He just likes people, their pets and their stories.

Elizabeth N.R. Friman


Elizabeth Noble Rollings Friman is a principal and licensed fiduciary at Fleming & Curti, PLC. Elizabeth enjoys estate planning and helping families navigate trust and probate administrations. She is passionate about the fiduciary work that she performs as a trustee, personal representative, guardian, and conservator. Elizabeth works with CPAs, financial professionals, case managers, and medical providers to tailor solutions to complex family challenges. Elizabeth is often called upon to serve as a neutral party so that families can avoid protracted legal conflict. Elizabeth relies on the expertise of her team at Fleming & Curti, and as the Firm approaches its third decade, she is proud of the culture of care and consideration that the Firm embodies. Finding workable solutions to sensitive and complex family challenges is something that Elizabeth and the Fleming & Curti team do well.

Amy F. Matheson


Amy Farrell Matheson has worked as an attorney at Fleming & Curti since 2006. A member of the Southern Arizona Estate Planning Council, she is primarily responsible for estate planning and probate matters.

Amy graduated from Wellesley College with a double major in political science and English. She is an honors graduate of Suffolk University Law School and has been admitted to practice in Arizona, Massachusetts, New York, and the District of Columbia.

Prior to joining Fleming & Curti, Amy worked for American Public Television in Boston, and with the international trade group at White & Case, LLP, in Washington, D.C.

Amy’s husband, Tom, is an astronomer at NOIRLab and the Head of Time Domain Services, whose main project is ANTARES. Sadly, this does not involve actual time travel. Amy’s twin daughters are high school students; Finn, her Irish Red and White Setter, remains a puppy at heart.

Famous people's wills

Matthew M. Mansour


Matthew is a law clerk who recently earned his law degree from the University of Arizona James E. Rogers College of Law. His undergraduate degree is in psychology from the University of California, Santa Barbara. Matthew has had a passion for advocacy in the Tucson community since his time as a law student representative in the Workers’ Rights Clinic. He also has worked in both the Pima County Attorney’s Office and the Pima County Public Defender’s Office. He enjoys playing basketball, caring for his cat, and listening to audiobooks narrated by the authors.