New Bill Would Permit Roth IRA to Roth 401(k) Rollovers
Current law prohibits workers from rolling Roth IRA savings into workplace-based Roth retirement plans.
A new bipartisan bill introduced by U.S. Reps. Darin LaHood, R-Ill., and Linda Sánchez, D-Calif., would permit retirement savers to roll money directly from a Roth individual retirement account into a Roth 401(k) or other type of Roth-style workplace retirement account.
As noted in a joint statement issued by the lawmakers, current law prohibits workers from rolling Roth IRA savings into workplace-based Roth retirement plans offered by employers.
LaHood and Sánchez say their bill would specifically allow transfers of workers’ contributions from Roth IRAs to a workplace designated Roth account, including Roth 401(k)s, Roth 403(b)s or Roth 457(b)s.
The lawmakers say the bill builds off their previous jointly introduced legislation known as the Starter-K Act, which was included as part of the popular Secure 2.0 Act legislation and created a simplified “starter” defined contribution plan tailored for the needs of small businesses and their employees.
The legislation is already garnering the support of retirement industry groups, including the American Retirement Association and its CEO, Brian Graff. According to an ARA analysis, the bill would benefit workers in several ways, including the reduction of “duplicative fees” inherent in maintaining multiple accounts and reduced retirement savings leakage by allowing the seamless transfer of Roth savings through the auto-portability process.
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