HR 4, THE PENSION PROTECTION ACT OF 2006, WILL TRANSFORM THE 401(k) SYSTEM

CHICAGO (August 17, 2006) - The Profit Sharing/401k Council of America (PSCA) applauds President Bush for signing HR 4, The Pension Protection Act of 2006, into law today. The new law puts in place changes necessary to bring the employer-sponsored defined contribution plan system to its full potential. Specifically, the regulatory structure established in the 2001 Tax Act (EGTRRA) has been made permanent, and the Saver's Credit has been renewed, made permanent, and indexed. The barriers to automatic enrollment have been removed.

"The legislation will foster a redesign of employer-sponsored 401(k) and other defined contribution plans," said PSCA President David Wray. "This will greatly increase the number of employees participating in such programs and the amount they will accumulate for retirement."

By removing the barriers to automatic enrollment and making the defined contribution plan rules permanent, employers will be more likely to take the dramatic step of changing from an opt-in to an opt-out approach for their 401(k) plans. Not only do employers know with certainty that automatic enrollment is permissible under the law, they have the comfort of knowing that the future rules governing 401(k) will be the same as they are today.

The Profit Sharing/401(k) Council of America (PSCA), a national non-profit association of 1,200 companies and their 6 million employees, advocates increased retirement security through profit sharing, 401(k) and related defined contribution programs to federal policymakers and makes practical assistance with profit sharing and 401(k) plan design, administration, investment, compliance and communication available to its members. PSCA, established in 1947, is based on the principle that “defined contribution partnership in the workplace fits today’s reality.” PSCA's services are tailored to meet the needs of both large and small companies with members ranging in size from Fortune 100 firms to small, entrepreneurial businesses.