Key Provisions of the Pension Protection Act of 2006 and the Worker, Retiree, and Employer Recovery Act of 2008

AuthorSeymour Goldberg
ProfessionSenior partner in the law firm of Goldberg & Goldberg, P.C., Woodbury, New York
Pages24-28
24
KEY PROVISIONS OF THE
PENSION PROTECTION
ACT OF 2006
AND THE WORKER, RETIREE,
AND EMPLOYER RECOVERY ACT
OF 2008
The Pension Protection Act of 2006 permits a nonspouse beneficiary of
an eligible retirement plan to establish an inherited IRA. Certain trusts
may qualify for this relief as well. These provisions apply to nonspouse
beneficiaries with respect to amounts payable from a qualified retirement
plan, governmental section 457 plan, and a 403(b) tax sheltered annuity.
If the paperwork is done correctly and spousal consent, if applicable,
is obtained, then a nonspouse beneficiary and certain trusts can be the
beneficiary of a participant’s death benefit from an eligible retirement
plan for the purpose of establishing an inherited IRA. The Pension Pro-
tection Act provision was optional. However, under the Worker, Retiree,
and Employer Recovery Act of 2008 (WRERA), this provision is manda-
tory for plan years commencing after December 31, 2009.
Internal Revenue Code at Section 402(c)(11)(A) discusses distri-
butions to an inherited IRA of a nonspouse beneficiary of an eligible
retirement plan. It indicates that it must be made from an eligible re-
tirement plan of a deceased employee by means of a direct transfer to an
inherited IRA or an inherited IRA annuity established for purposes of
receiving the distribution on behalf of an individual who is a designated
beneficiary of an employee and who is not the surviving spouse of the
employee.
Internal Revenue Code Section 402(c)(11)(B) provides that certain
trusts are treated as beneficiaries for the above purposes if the trust sat-
isfies the IRS rules.

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