Retirement Rollover Flexibility Act
Summary
The Retirement Rollover Flexibility Act amends the Internal Revenue Code of 1986 to allow individuals to roll over funds from Roth IRAs to designated Roth accounts, specifically through trustee-to-trustee transfers. It also addresses the treatment of these rollovers for tax purposes, including the handling of earnings and coordination with non-exclusion periods. The bill aims to provide greater flexibility in retirement savings management.
Expected Effects
This act will likely increase the options available to individuals for managing their retirement savings. It could simplify the process of consolidating retirement funds and potentially offer tax advantages depending on individual circumstances. The changes primarily affect those who utilize Roth IRAs and designated Roth accounts.
Potential Benefits
- Provides increased flexibility in managing retirement savings.
- Simplifies the process of consolidating retirement funds.
- Offers potential tax advantages for individuals utilizing Roth accounts.
- Allows for trustee-to-trustee transfers, reducing potential tax complications.
- May encourage greater participation in retirement savings plans.
Most Benefited Areas:
Potential Disadvantages
- May create additional complexity in the tax code, requiring careful planning.
- Could disproportionately benefit higher-income individuals who have Roth IRAs.
- Potential for unintended consequences related to tax avoidance if not carefully implemented.
- The changes might not significantly impact individuals with limited retirement savings.
- Requires individuals to stay within certain limits to qualify for the rollover.
Constitutional Alignment
The bill appears to align with the general welfare clause of the Constitution (Preamble), as it aims to improve the financial well-being of individuals by providing greater flexibility in retirement savings. Article I, Section 8, Clause 1 grants Congress the power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States. This bill falls under Congress's power to modify the tax code.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).