The Retirement Simplification and Clarity Act allows workers age 50 and older to roll over money from their employer-sponsored retirement plans (like 401(k)s) directly into individual retirement annuities without waiting until retirement. Previously, such in-service rollovers were generally prohibited before retirement. The bill also strengthens consumer protections by requiring retirement plan administrators to provide clearer, more comprehensive written explanations of rollover options and rules—covering details like withholding taxes, eligibility restrictions, and time limits for completing rollovers. The explanations must explain key concepts in plain language, such as which distributions can be rolled over (and which cannot, such as required minimum distributions and hardship withdrawals) and how direct rollovers avoid mandatory tax withholding. These changes take effect for tax years beginning after December 31, 2025, and aim to make retirement savings decisions simpler and more transparent for American workers.
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