S. 3352: Retirement Rollover Flexibility Act

This bill, known as the Retirement Rollover Flexibility Act, proposes changes to the Internal Revenue Code to allow individuals to roll over funds from a Roth IRA to a designated Roth account. The key provisions of the bill are as follows:

Rollover Contributions from Roth IRAs

• The bill aims to amend Section 408 of the Internal Revenue Code to include a new clause, permitting direct transfers of amounts from an eligible Roth IRA to a designated Roth account without penalties or adverse tax consequences.
• The transfer must be made through a direct trustee-to-trustee transfer of the entire amount received.
• An "eligible Roth IRA" is defined as one where:
  • It is the only Roth IRA maintained by the individual for the relevant tax year.
  • It has a balance that does not exceed a certain limit specified in the Tax Code.

Treatment of Rollover Contributions

• The bill modifies Section 402A to clarify that rollover contributions from an eligible Roth IRA to a designated Roth account will be treated as regular contributions, which impacts how earnings are treated in case of taxable distributions.
• Specifically, the total amount rolled over will be considered an investment in the contract rather than income at the time of the transfer.

Coordination with Nonexclusion Period

• The bill amends Section 402A's rules regarding rollover contributions and their treatment during certain nonexclusion periods to ensure clarity on how these transactions should be accounted for in tax filings.

Effective Date

• The provisions of this bill will apply to amounts distributed on or after the date the bill is enacted.

Relevant Companies

• None found