To amend the Internal Revenue Code of 1986 to impose limitations on high-income taxpayers with large retirement account balances.
Sponsored By: Representative Neal, Richard E. [D-MA-1]
Introduced
Summary
Caps annual retirement contributions for ultra-wealthy savers. This bill would limit yearly contributions to IRAs and workplace retirement plans for taxpayers with very large aggregated balances, using a $10,000,000 reference amount to calculate contribution room.
Show full summary
- High-income savers would see their allowable annual contributions limited to the excess of $10,000,000 over their aggregated vested retirement balances as of the prior-year close. This reduces how much new money very large accounts can receive each year.
- The rule targets taxpayers by modified adjusted gross income with filing-status thresholds ranging from $225,000 up to $450,000 depending on status. Those income tests determine who is treated as an "applicable taxpayer."
- The change covers IRAs and common workplace plans such as 401(a), 403(b), and eligible 457(b), treats SEP and SIMPLE plans specially, adds a new excise tax on excess contributions under Section 4973(i), and requires IRS guidance and inflation adjustments after 2027. It would apply for taxable years beginning after December 31, 2026.
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Bill Overview
Analyzed Economic Effects
2 provisions identified: 0 benefits, 1 costs, 1 mixed.
New limits on big retirement contributions
If enacted, the bill would bar certain retirement contributions for high-income people who already have very large retirement balances. An "applicable taxpayer" is set by MAGI limits: $225,000 (married filing separately), $425,000 (head of household), $450,000 (married filing jointly or surviving spouse), and $400,000 (other). The annual contribution cap would be the excess, if any, of $10,000,000 over your aggregate vested retirement balances as of the end of the prior calendar year. SEP and SIMPLE contributions would not count as subject contributions but would reduce your available cap. The new limits would apply for taxable years beginning after December 31, 2026, and the dollar and income thresholds would be indexed after 2027.
Higher mandatory retirement withdrawals and taxes
If enacted, starting for plan and taxable years beginning after December 31, 2033, some high‑balance taxpayers would face larger required retirement withdrawals. The extra required amount would be based on how much your total retirement balances exceed the bill's $10,000,000 limit and on how much is in Roth accounts. Distributions for the increase would be treated as required withdrawals and would not be eligible for rollovers. The bill would let affected participants elect an immediate payout if they certify they are subject to the new required distribution rules, with an exception for certain non‑tradable ESOP stock. The bill would also exempt MRD-driven distributions (up to the required amount) from the 10% early‑withdrawal penalty, but it would require 37% federal withholding on these distributions (except qualified Roth distributions).
Sponsors & CoSponsors
Sponsor
Neal, Richard E. [D-MA-1]
MA • D
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
No roll call votes available for this bill.
View on Congress.gov