SenateS. 5156119th Congress
Retirement Simplification and Clarity Act
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[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 5156 Introduced in Senate (IS)]
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119th CONGRESS
2d Session
S. 5156
To amend the Internal Revenue Code of 1986 to provide for in-service
rollovers for individual retirement annuity purchases, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 29, 2026
Mr. Marshall (for himself and Mrs. Gillibrand) introduced the following
bill; which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide for in-service
rollovers for individual retirement annuity purchases, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Retirement Simplification and
Clarity Act''.
SEC. 2. IN-SERVICE ROLLOVERS FOR ANNUITY PURCHASES.
(a) In General.--Section 401(k) of the Internal Revenue Code of
1986 is amended by adding at the end the following new paragraph:
``(17) Special rule for pre-retirement rollover.--
Notwithstanding the requirements of paragraph (2)(B)(i), a plan
may permit a participant who has attained age 50 or older to
elect a direct rollover to an individual retirement annuity (as
defined in section 408(b)) of all or a portion of the accrued
benefit of the participant attributable to employer
contributions made pursuant to the employee's election.''.
(b) Safe Harbor.--Section 402(f) of the Internal Revenue Code of
1986 is amended by redesignating paragraph (2) as paragraph (3) and by
inserting after paragraph (1) the following new paragraph:
``(2) Safe harbor.--
``(A) In general.--A written explanation shall
satisfy the requirements of paragraph (1) if it
includes the following information in concise, plain
language:
``(i) The taxpayer has 30 days to review
such explanation before they must take any
action.
``(ii) Distributions made directly to the
taxpayer will be subject to income tax
withholding and added to gross income to the
extent taxable.
``(iii) The taxpayer may owe an additional
10 percent tax on a distribution issued before
the taxpayer attains age 59\1/2\.
``(iv) A 20 percent income tax withholding
will apply to distributions that are not
eligible for rollover.
``(v) A taxpayer can defer Federal income
tax on eligible distributions by rolling such
distribution over to another qualified plan or
individual retirement arrangement.
``(vi) A taxpayer may not roll over--
``(I) required minimum
distributions,
``(II) hardship distributions,
``(III) a series of payments to be
made over a number of years,
``(IV) employee stock ownership
plan dividends, or
``(V) corrective distributions.
``(vii) The plan administrator can be
contacted for information regarding whether all
or a portion of a payment to the taxpayer is
eligible for rollover.
``(viii) A plan may require the taxpayer to
take a distribution upon the taxpayer's
attainment of the plan's retirement age, or in
the case of a benefit that is less than $7,000,
the plan may automatically pay the benefit
directly to the taxpayer or in a rollover to an
individual retirement account or, for
designated Roth amounts, a Roth IRA it
establishes for the taxpayer.
``(ix) Eligible amounts may be rolled over
to a new plan or to an individual retirement
account when a taxpayer changes employers, and
the administrator of the new plan can confirm
how to accomplish such a rollover.
``(x) The taxpayer may choose to leave
eligible amounts in the taxpayer's original
plan when changing employers.
``(xi) The taxpayer may roll over an
eligible distribution to an individual
retirement account or individual retirement
annuity, or a Roth IRA for designated Roth
contributions.
``(xii) Direct rollovers are not subject to
mandatory 20 percent withholding under section
3405, and the distribution may be in the form
of a check payable to the new plan or
arrangement or by electronic transfer.
``(xiii) If the taxpayer receives a payment
directly, the taxpayer has up to 60 days from
the date of distribution to roll over an amount
equal to the eligible amount received plus the
dollar amount that was withheld and sent to the
Internal Revenue Service.
``(xiv) The taxpayer may obtain additional
information from the Internal Revenue Service.
``(B) Regulations and guidance.--The Secretary may
promulgate such regulations and guidance as are
necessary to administer this section, including
regulations updating the list in subparagraph (A) as
necessary.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2026.
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