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Happy Days Again?

The new Pension Protection Act largely addresses corporate plans, but it contains some goodies for individuals.

If you inherit a 401(k), you will be able to roll it over into an Individual Retirement Account and stretch out withdrawals -- and the taxes on them -- over the rest of your life. Before, only spouses could do that. Depending on the deceased's company, other heirs had to take the money as a lump sum, often within five years, and get hit with taxes right away.

Be sure to open a separate "inherited IRA" to receive the funds with a title that indicates who left you the money, says Natalie Choate, a lawyer with Bingham McCutchen in Boston. (Example: John Doe, deceased IRA, payable to Junior Doe as Beneficiary.") Next, arrange for a direct transfer of funds from the 401(k) into the IRA.

Another plus from the pension law: Donations of up to $100,000 made directly from an IRA to a charity can now count toward the required minimum distribution for IRA owners 70 1/2 or older. Depending on your bracket, the tax savings could be substantial. Act quickly: The deal is only good for 2006 and 2007.

On the downside, the new law bans taking deductions for donations of clothing or household goods unless the item is "in good used condition or better." Forget about write-offs for those ratty T-shirts.

If you lost possessions to a hurricane, flood, fire, or even a burglary, would you be able to back up your insurance claim? If not, consider using one of a dozen or more home inventory software programs to create a list and photos of your belongings, their cost, and other data. Where the programs differ is in the amount of detail on each item and the form of the records you can create.

The Quicken Home Inventory Manager from Intuit (INTU) and the Home Manager from, each $29.99, offer user-friendly formats for recording basic information such as an item's name, cost, and where you bought it. If you want to cross-reference and create multicolored, multifont graphics such as pie charts and bar graphs, check out My Stuff Deluxe from Contact Plus ($39.99 by download, $49.99 as a CD-ROM). Truth be told, the free Home Inventory software you can download from the Insurance Information Institute's site ( will suit most homeowners' needs.

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