WASHINGTON (Aug. 25, 2006) — President Bush has signed the Pension Protection Act of 2006, a law designed to force employers with underfunded pension funds to achieve full funding.
The new law allows corporations to deduct the cost of additional pension contributions, but it also imposes strict funding guidelines and assesses a 10-percent excise tax on companies that don't meet them.
Among other things, the law also allows employers to enroll their employees automatically in a 401(k) retirement plan and gives employees the right to opt out. It also makes permanent various pension fund contribution increases and retirement fund tax credits that were passed earlier on a temporary basis.
While the pension funding provisions are mostly for large manufacturers, including aftermarket parts makers, the 401(k) provisions are a boon to tire dealers and other small businesses, noted Paul Fiore, director of government and business affairs at the Tire Industry Association.
“Most of our members do have financial advisers and hopefully those guys will inform them about the pension law,” Mr. Fiore said, adding that TIA also will include information about the new law in member publications.