The Retirement Fairness Act would impose new limits on high-balance retirement accounts by capping annual contributions at $4 million per person across all retirement plans combined, with the limit adjusted annually for inflation. Anyone exceeding this threshold would face an excise tax on excess contributions, and their required minimum distributions would increase substantially to help spend down balances above the $4 million level. The bill affects wealthy individuals with large retirement account balances, including those with 401(k)s, IRAs, 403(b) plans, and similar accounts. The legislation takes effect for tax years beginning after December 31, 2024, with a phase-in period during 2025 where individuals with existing large balances would withdraw only 10 percent of their excess in the first year. The bill directs half of any new tax revenue generated from these provisions to Social Security's retirement and disability trust funds.
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