Retirement Simplification and Clarity Act
Summary
What This Bill Does
The Retirement Simplification and Clarity Act permits a 401(k) plan to let participants age 50 or older directly roll all or part of their accrued benefit attributable to elective employer contributions into an individual retirement annuity. It also creates a safe harbor for the written rollover explanation required by tax law if the notice gives concise plain-language information about review periods, withholding, gross income, 10 percent early distribution tax, 20 percent withholding for non-rollover distributions, tax deferral through rollovers, items that cannot be rolled over, plan administrator contacts, required or automatic distributions, job-change rollovers, leaving money in the original plan, IRA and Roth IRA options, direct-rollover mechanics, 60-day rollover rules, and IRS information. Treasury may update the safe harbor by regulation or guidance, and the amendments apply to taxable years after December 31, 2025.
Who Benefits and How
401(k) participants age 50 or older benefit from an in-service path to buy individual retirement annuities with eligible employer-contribution benefits. Annuity providers benefit from a new rollover channel. Plan participants benefit from clearer plain-language rollover notices explaining withholding, taxes, rollover options, and deadlines.
Who Bears the Burden and How
401(k) plan administrators must decide whether to allow in-service annuity rollovers and update notices, systems, and participant communications. Treasury and IRS must administer and potentially update the safe-harbor notice. Participants may face annuity fees, liquidity limits, or product-selection risks if they roll assets into individual retirement annuities.
Key Provisions
- Authorizes 401(k) plans to permit age-50-or-older participants to directly roll eligible employer-contribution benefits into individual retirement annuities.
- Creates a plain-language safe harbor for required rollover notices.
- Requires the safe-harbor notice to explain withholding, gross income, early distribution tax, rollover-eligible and ineligible payments, IRA options, and 60-day rollover rules.
- Authorizes Treasury regulations or guidance to administer and update the notice safe harbor.
- Applies the amendments to taxable years beginning after December 31, 2025.
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers with clause-level evidence links.
At a Glance
What This Bill Does
Allows age-50-or-older 401(k) participants to roll employer-contribution benefits into individual retirement annuities and creates a plain-language safe harbor for rollover notices.
Key Policy Areas
Retirement, Tax, Financial Services
Primary Purpose
Allows age-50-or-older 401(k) participants to roll employer-contribution benefits into individual retirement annuities and creates a plain-language safe harbor for rollover notices.
Policy Domains
Substantive provisions
Identified Gains
- 401(k) participants age 50 or older
- Individual retirement annuity providers
- Plan participants receiving rollover notices
- Retirement plan advisers
Identified Costs
- 401(k) plan administrators
- Department of the Treasury
- Internal Revenue Service
- Participants choosing annuity products
Sponsors
Legislative Progress
In CommitteeMr. Panetta (for himself, Mr. LaHood, Mr. Miller of Ohio, …
Referred to the House Committee on Ways and Means.
Introduced in House
Stakeholder Effects
cui bono?How this legislation distributes effects. Mention counts reflect frequency, not effect magnitude.
401(k) participants age 50 or older, 401(k) plan administrators, Individual retirement annuity providers
Positive-direction: 401(k) participants age 50 or older, Individual retirement annuity providers
Negative-direction: 401(k) plan administrators
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology