Curtis D. Sharp
Officer for Denominational and Public Relations
214-720-2127
Curt.Sharp@GuideStone.org

New Pension Law Provides Benefits for GuideStone Participants

September 20, 2006

DALLAS — New pension legislation enacted last month has removed some barriers to accumulating savings for retirement.

The Pension Protection Act of 2006 (PPA), passed overwhelmingly by both houses of Congress and signed by President George W. Bush on Aug. 17, 2006, provides new opportunities for accumulating and consolidating retirement savings, said O.S. Hawkins, president and CEO of GuideStone Financial Resources of the Southern Baptist Convention.

“The implementation of this legislation will enable us to better serve those who are serving the Lord throughout this great nation and world,” Hawkins said.

Of interest to GuideStone retirement plan participants, the PPA offers several benefits, including making some provisions of a key 2001 tax law — the Economic Growth and Tax Relief Reconciliation Act of 2001 — permanent. Prior to the PPA, the following provisions were set to sunset, or expire, after 2010.

• It continues a person’s ability to put more money into a retirement plan with favorable tax treatment. Currently, the overall limit to 403(b) or 401(k) plans is the lesser of $44,000 or 100% of compensation.
• It continues the age-50 catch-up contributions, which allow those 50 or over to contribute more to their retirement savings — up to $5,000 more for 2006.
• It continues a person’s ability to make greater use of Roth retirement savings, including making permanent Roth 403(b) contributions.
• It continues the Tax-Saver’s Credit, a tax credit of up to $1,000 for individuals with adjusted gross income below certain amounts who contribute to a retirement plan.

“The Pension Protection Act extends important opportunities to church pension plans just as they are provided to other government and private plans,” Hawkins explained. “Church pension plans provide critical support to more than a million clergy members across the country. Many of them have dedicated their careers to serve in economically disadvantaged communities. They should not be punished for devoting their lives to serve those most in need.”

Some new provisions available as part of the PPA also will benefit church plans, like those offered by GuideStone.

• It supports automatic enrollment of eligible persons. For plans using automatic enrollment, eligible employees are automatically enrolled in the plan without any action on the part of the employee. Those individuals will stay enrolled unless they take steps to get out of the plan. Automatic enrollment is viewed as a way to encourage saving for retirement. However, some state laws may interfere with a church plan’s ability to carry out automatic enrollment. GuideStone can assist church plans that desire to consider this approach.
• It allows participants to move amounts from one retirement plan to another, a concept known as portability. The law offers three new methods to move money: (1) effective in 2008, certain participants can roll money from a retirement plan to a Roth IRA; (2) effective in 2006, participants inheriting retirement plans from non-spouses have the ability to roll over benefits received as a non-spouse beneficiary to an IRA; and (3) effective in 2007, participants can rollover after-tax amounts from one retirement plan to another.
• It also allows a person who has reached 70 ½ years of age and who has an IRA to donate up to $100,000 from the IRA directly to a charity without tax consequences.

According to the White House’s Web site, President Bush called the Pension Protection Act, “the most sweeping reform of America’s pension laws in over 30 years.”

Word version - New pension law provides benefits for GuideStone participants