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CCH® PENSION AND BENEFITS — 1/8/08

House, Senate pass stand-alone tax technical corrections bill

The House and Senate have passed the Tax Technical Corrections Bill of 2007 (H.R. 4839) which contains language originally included in a military tax relief bill which passed the House on December 18, 2007, but which was later modified by the Senate (see below). The failure of the measure in the Senate required action on the stand-alone technical corrections measure.

The bill contains technical corrections to the Tax Relief and Health Care Act of 2006 (P.L. 109432), Title XII of the Pension Protection Act of 2006 (Provisions Relating to Exempt Organizations) (P.L. 109-280), the Tax Increase Prevention and Reconciliation Act of 2005 (P.L. 109-222), the Energy Policy Act of 2005 (P.L. 109-58), the American Jobs Creation Act of 2004 (P.L. 108-357) and other tax legislation. The technical corrections bill contains a handful of provisions affecting pensions and benefits, including amendments relating to IRA distributions made for charitable purposes, application of the special elective deferral limit under Code Sec. 402(g)(7) to designated Roth contributions, and application of FICA taxation to designated Roth contributions.

Senate modified military tax bill

Meanwhile, the Senate on December 19, 2007 passed by unanimous consent a modified version of the military tax relief measure, the Heroes Earnings Assistance and Relief Tax (HEART) bill (H.R. 3997) approved by the House the night before, making it necessary for the House to take up the modified bill in the next session of the 110th Congress. Both chambers then adjourned for the holiday recess. As with an earlier version of military tax relief (see CCH Pension Plan Guide ¶29,150), this bill would make permanent the rules allowing active duty reservists to make penalty-free withdrawals from retirement plans and IRAs. Currently, the rules allowing penalty-free withdrawals for active duty reservists apply to individuals ordered or called to active duty after September 11, 2001 and before December 31, 2007. The bill would also allow survivors of soldiers killed in combat to contribute military death gratuities to Roth IRAs and Coverdell education savings accounts.

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