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CCH® PENSION AND BENEFITS — 1/2/07

Bush signs tax bill with mental health parity and HSA provisions

President Bush signed the Tax Relief and Health Care Act of 2006 (H.R. 6111) on December 20, 2006. The new law extends the provisions of the Mental Health Parity Act contained in the Internal Revenue Code and ERISA from December 31, 2006 to the end of 2007 and includes a major overhaul of the contribution rules for health savings accounts (HSAs).

The legislation allows a one-time contribution to an HSA of amounts distributed from an IRA, effective for tax years beginning after 2006. The contribution would have to be made in a direct trustee-to-trustee transfer. Amounts distributed from an IRA would not be includible in income, to the extent that the distribution would otherwise be includible in income, and the distributions would not be subject to the additional 10% premature distribution tax.

For more information on this and related topics, consult the CCH Pension Plan Guide.

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