Retirement Rollover Flexibility Act
- Bill Number
- S. 3352
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 1
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2025-12-04: Read twice and referred to the Committee on Finance. (text: CR S8512-8513)
- Last Updated
- 2026-01-06T16:07:01Z
AI-Generated Summary
Purpose The legislation aims to expand options for moving funds between certain retirement accounts by allowing direct transfers from Roth IRAs to designated Roth accounts in employer-sponsored plans.
Key Provisions
- Rollover Allowance: Amends the Internal Revenue Code to permit the full amount from an eligible Roth IRA (or in an automatic portability transaction) to be transferred directly to a designated Roth account.
- Eligible Roth IRA Definition: Limits eligibility to the sole Roth IRA (excluding certain employer-established ones) with a balance not exceeding the limit in section 401(a)(31)(B)(ii).
- Tax Treatment Updates: Treats these transfers as rollover contributions; earnings from the Roth IRA are treated as investment in the contract upon distribution.
- 5-Year Rule Coordination: Adjusts the start of the 5-year nonexclusion period for qualified distributions when a rollover occurs via an automatic portability provider, using the date of the original source plan contributions.
- Effective Date: Applies to amounts paid or distributed after the date the Act becomes law.
Significant Changes to Existing Law
- Currently, the Internal Revenue Code does not allow direct rollovers from Roth IRAs to designated Roth accounts; this bill creates that pathway.
- Introduces new rules for tracking contribution years in automatic portability cases to maintain consistency with existing 5-year qualification requirements.
Potential Impacts
- On Citizens: Provides greater flexibility for individuals to consolidate or move Roth retirement funds without tax penalties, potentially simplifying account management.
- On Government Agencies: Requires the Internal Revenue Service to update guidance and forms for tracking these new rollover types.
- On International Relations: No direct effects identified in the legislation.
Main Stakeholders Affected
- Individuals holding Roth IRAs and designated Roth accounts.
- Employers and plan administrators managing 401(k) or similar plans with designated Roth features.
- Automatic portability providers facilitating account transfers.
- The Internal Revenue Service, responsible for enforcement and tax reporting.
Notable Legal, Constitutional, or Political Implications
- The changes are limited to tax code adjustments with no apparent constitutional issues, as they involve standard congressional authority over taxation.
- May reduce administrative complexity for certain retirement transfers but could require new compliance tracking for the 5-year rule in specific rollover scenarios.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (1)
Sen. Bennet, Michael F. [D-CO]
Recent Actions
- 2025-12-04: Read twice and referred to the Committee on Finance. (text: CR S8512-8513)
- 2025-12-04:
- 2025-12-04: Introduced in Senate
Bill Versions
- Retirement Rollover Flexibility Act — issued 2025-12-04 — PDF (4 pages)