Pension Protection Act of 2006 (P.L. 109-280)

The Pension Protection Act of 2006 (P.L. 109-280) amended the Employee Retirement Income Security Act and the Internal Revenue Code of 1986 to establish new minimum funding standards for single-employer and multiemployer defined benefit pension plans. It extended interest rate rules for the funding standard account that require the use of a rate based on long-term investment grade corporate bonds rather than 30-year Treasury securities. The act amended the interest rate calculation for lump sum distributions, and required fully-funded, single-employer plans to pay variable-rate premiums to the Pension Benefit Guaranty Corporation. It also set forth alternative funding rules for commercial passenger airline defined benefit plans, and requirements related to funding notices that must be provided by defined benefit plans. Amendments allowed fiduciary advisers of a plan to give investment advice to participants or beneficiaries if certain requirements are met, and laid out rules that govern whether plans fail t meet requirements that prohibit age discrimination in defined benefit pension plans. The act increased deduction limits for single-employer and multiemployer plans, made permanent provisions from the Economic Growth and Tax Relief Reconciliation Act of 2001 related to individual retirement accounts and pensions, allowed annuity contracts and life insurance contracts to include long-term care insurance contracts, and amended provisions governing the benefits of tax court judges. It also required defined contribution plans holding publicly traded securities to provide employees with: (1) the opportunity to divest employer securities; and (2) at least three investment options other than employer securities. Amendments in the act allowed employers to automatically enroll employees in defined benefit plans, and provisions were amended governing the division of pension benefits upon divorce. The act authorized the Secretary of the Treasury to establish or change the Employee Plans Compliance Resolution System and any other employee plas correction policies. It prohibited reduction of unemployment compensation as a result of pension rollovers. Additional amendments modified provisions related to charitable contributions, tax-exempt organizations, and supporting organizations. Qualified tuition program provisions were permanently extended.