This past summer has been a busy time for tax law changes. A groundbreaking law was put into effect in May with profound effects on investors, both good and bad. In August, the Pension Protection Act (PPA) was signed. Like its predecessor in May, the PPA has mostly good news for investors, yet there is also some less favorable news that must be properly understood to navigate the land mines in tax planning.

Most significant in the PPA was that the rules governing 529 College Savings Plan were made permanent. Less than a month ago, many of the tax savings associated with 529 plans were scheduled to "sunset" in 2011. Thanks to the PPA, families can move forward with confidence that their 529 plan withdrawals for college expenses will be totally tax free. Conspicuously absent from the PPA was permanence for the laws governing Education IRAs. Some key benefits with Education IRAs are still going to sunset in 2011, absent additional congressional action. Remember that with the May tax act, Custodial/UGMA accounts took a major hit, with the "Kiddie Tax" provisions being pushed back to age 18 from age 14.

With all these changes in the last few months, 529 plans now stand alone as the No. 1 college savings vehicle for the vast majority of families. These plans also receive the most favorable treatment in the federal financial aid formulas. You should strongly consider diverting any new funds to 529 plans (if you are certain the funds will not be needed prior to college). In addition, a rollover from a Custodial account to a 529 plan is permissible, and should be considered by many.

While the 529 plan tax law changes were significant, perhaps most unusual provision in the PPA was an incredible bonus given to seniors and charities. For the next two years (2006 and 2007) anyone over the age of 70 can withdraw money from their IRA tax-free if it is given to charity. While you are not allowed to claim a write-off for the charitable gift, the IRA withdrawal is normally taxable, so the net impact is often the same. These charitable withdrawals also count toward your Required Minimum Distribution (RMD), so in theory people could take their entire RMD this year tax-free and give it to their favorite charities.

Also included in the PPA were wonderful provisions that allow employers more latitude to automatically enroll employees in salary deferral 401(k) plans. This should force more Americans to be more accountable for their own retirement savings, so it is a very positive step. The PPA also allows financial services firms to more aggressively market their products to retirement plan participants. There are still many unanswered questions about these new rules. Individuals should be wary of the products pitched to them by these large firms, as there are very few safeguards that force them to serve as fiduciaries for their clients.

Americans of all ages have something to consider in light of these recent tax law changes. There is rarely a clear, one-size-fits-all answer to issues surrounding education planning, charitable giving, and retirement planning.

Owen Malcolm, CFP, is vice president and CFO of Sanders Financial Management. He can be reached at (770) 448-5111 or at omalcolm@sandersfmi.com.