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An individual retirement account (IRA) in the United States is a form of "individual retirement plan", provided by many financial institutions, that provides tax advantages for retirement savings. It is a trust that holds investment assets purchased with a taxpayer's earned income for the taxpayer's eventual benefit in old age.
A proposal to the 2005 President's Advisory Panel on Federal Tax Reform advocated increasing the AMT exemption to $100,000 ($50,000 for singles) and indexing it thereafter, applying a flat 25% rate, and allowing appropriate exemptions for income-producing activities, in addition to repeal of the regular tax.
The act also provided tax exemptions for retirement accounts as well as education savings in the Hope Scholarship Credit and Lifetime Learning Credits. Some expiring business tax provisions were extended. Legislative history. This was the first law devoted solely to tax cuts that Congress enacted using the fast-track budget reconciliation process.
Tax. A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures. A failure to pay, along with evasion of or resistance to taxation, is punishable by law.
Tax law. Various federal tax provisions of the Internal Revenue Code apply to pension plans. Similar rules apply to profit-sharing plans and stock bonus plans, which are commonly used for retirement savings. Significant portions of these tax law provisions parallel portions of ERISA (see discussion in a preceding section of this article).
The Act makes technical corrections related to the PPA of 2006. The Cooperative and Small Employer Charity Pension Flexibility Act (S. 1302; 113th Congress) is a proposed amendment that would make permanent an existing exemption from the Pension Protection Act of 2006 for a few small groups. Approximately 33 different plans would be affected.