Section 825 Pension Protection Act of 2006

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					                      Section 825 Pension Protection Act of 2006


Summary of new law: Up to $3,000 of otherwise taxable distributions from a
government pension plan may be excluded from income annually if used to pay for
qualified health insurance premiums of retired public safety officers.

Type of plans affected: 401(a), 457 under the PPA. Affects PERS and JRS.

Effective: Tax years beginning after December 31, 2006

Provision: Gross income does not include any distributions from an eligible
retirement plan of an electing retired public safety officer to the extent that the
distributions do not exceed the amount actually paid for qualified health insurance
premiums of the officer, spouse or eligible dependents for the tax year. Maximum
exclusion is $3,000.

Definition of qualified public safety officer: Act Sec. 1204(8)(A) of the Omnibus
Crime Control and Safe Streets Act of 1985 (42 USC Sec.3796b(9)(A)) includes:
    An individual involved in crime and juvenile delinquency control or
       reduction, or enforcement of the criminal laws (including juvenile
       delinquency), including but not limited to: police, corrections, probation,
       parole and judicial officers;
    Professional firefighters;
    Officially recognized or designated public employee members of a rescue
       squad or ambulance crew;
    Officially recognized or designated members of a legally organized volunteer
       fire department; and
    Officially recognized or designated chaplains of volunteer fire departments,
       fire departments and police departments.

Eligibility:
     member must be separated from service by reason of disability or attainment
       of normal retirement age.
     member who receives benefits prior to normal retirement age is not eligible.

Qualified health premiums
   Premiums for medical insurance
   Premiums for long-term care insurance

Retirees should contact their tax advisor to be sure they are eligible for this election
before making it.



Resource: Legislation 2006, Pension Protection Act of 2006, Law Explanation and Analysis
Resource: Legislation 2006, Pension Protection Act of 2006, Law Explanation and Analysis