Contribution Limits and Increased Withdrawals for Large Retirement Accounts
This Act introduces new contribution limits for retirement accounts (like 401(k)s and IRAs) for individuals whose total retirement savings exceed $4 million. Citizens with very large savings will face mandatory, increased minimum distributions to reduce the excess balance, regardless of standard age requirements. The goal is to curb the accumulation of excessively large, tax-advantaged retirement funds, with a portion of the resulting revenue directed to Social Security funds.
Key points
Contribution Cap: Individuals whose aggregate balance across all applicable retirement plans (401(k), IRA, etc.) exceeds $4 million (indexed for inflation) are prohibited from making further applicable annual additions.
Mandatory Increased Distributions: The Act mandates increased minimum required distributions for individuals whose total savings exceed $4 million, regardless of whether amounts are otherwise required to be distributed under standard rules.
Excise Tax on Excess Contributions: Contributions exceeding the new limit will be treated as excess contributions and subject to an excise tax under section 4973 of the Internal Revenue Code.
Reporting Requirements: Plan administrators must report account balances to monitor compliance with the new aggregate contribution and balance limits.
Social Security Funding: 50% of the increased revenue generated by these changes will be appropriated to the Federal Old-Age and Survivors Trust Fund and the Federal Disability Insurance Trust Fund.
Status:
Expired
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