Roth Rollovers Expansion Bill Reintroduced in Congress

Lawmakers in both the Senate and House of Representatives have reintroduced legislation aimed at giving American workers greater flexibility to consolidate their retirement savings by allowing rollovers from Roth IRAs into employer-sponsored Roth accounts such as 401(k)s and 403(b)s.

The Retirement Rollover Flexibility Act was introduced in the Senate by Senators John Barrasso, R-Wyoming, and Michael Bennet, D-Colorado, and in the House by Representatives Darin LaHood, R-Illinois, and Linda Sánchez, D-California.

Under current law, workers cannot roll over savings from Roth individual retirement accounts into workplace Roth accounts, a restriction that often forces individuals to juggle multiple small accounts, incur additional fees or even cash out their savings early, according to the representatives’ announcement. The bill would amend the Internal Revenue Code to remove that barrier and permit direct trustee-to-trustee transfers between Roth IRAs and designated Roth accounts.

The bill’s introduction comes as more Americans are likely to have workplace Roth accounts, because a provision of the SECURE 2.0 Act of 2022 requires that starting in 2026, highly paid employees must make any catch-up contributions into a Roth account.

SECURE 2.0 does not require plan sponsors that do not currently offer Roth in their plans to start doing so. However, they must amend their plans if they would like to allow their employees older than age 50 whose wages exceed the threshold to make catch-up contributions next year.

Barrasso said in the announcement that the proposal “creates new options for workers to bring retirement savings with them when changing jobs,” adding that “retirement savings belong to the workers who earn them, and those savings should follow them throughout their careers.”

Bennet emphasized in his statement that the legislation “fixes that gap—ensuring all workers can consolidate their retirement savings, reduce fees, and keep their nest egg growing no matter where their career takes them.”

In the House, LaHood said building retirement security “is critical to the wellbeing of American families and the long-term strength of our economy,” while Sánchez added that “as more people use Roth IRAs, we need to make it easier for workers to move their savings into the Roth options offered through their jobs.”

The bill has the support of the American Retirement Association.

An earlier version of the Retirement Rollover Flexibility Act was first introduced in the previous congressional term by LaHood and Sánchez, but did not advance to a vote.

The Senate bill has been referred to the Senate Committee on Finance, while the House companion bill has been referred to the House Committee on Ways and Means.