A bipartisan pair of House tax writers has introduced H.R.6324, the Retirement Simplification and Clarity Act, a bill aiming to provide simplified and clarified rules for retirement savings. Authors of the bill are Reps. Jimmy Panetta (D-CA) and Darin LaHood (R-IL).

The bill would implement Government Accountability Office (GAO) recommendations to simplify 402(f) notices with a new safe harbor notice. A 402(f) Notice is a document that lays out the action steps that someone can take with their retirement savings. It is issued to participants who have separated from their employer and requested a distribution from their plan. It is the only disclosure that plans are required to provide to participants who are eligible for a rollover that is specifically about the options for their plan savings and its related tax consequences.

The bill also creates a new in-service rollover option to allow individuals aged 50+ to roll over some or all their existing retirement savings into an annuity product for guaranteed lifetime income while continuing to save in their 401(k) plan.

NAIFA supports the bill and is actively lobbying for its enactment.

The Retirement Simplification and Clarity Act has won considerable support from lawmakers on both sides of the aisle, but it has also triggered some concern about employees receiving the appropriate advice on whether to roll over a portion of their 401(k)s into annuities. Those issues are still being worked out.

Prospects: This bill is bipartisan and sponsored by members of the committee of jurisdiction (Ways & Means), so it has a decent chance for enactment. However, timing could be a problem. The bill is a likely candidate for inclusion in the next generation retirement savings bill (currently nicknamed SECURE 3.0). However, SECURE 3.0 is still in development with no final decisions made as to its contents. So, it is possible Congress will act on this bill this year—probably after the November elections, but it is equally possible that it will wait until the new Congress convenes next year.

NAIFA Staff Contact: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org