House Bill Would Bump Up Cashout Limit
Legislation has been introduced in the U.S. House of Representatives that would boost the cashout limit for retirement plans, which its sponsors say will help make it easier for small businesses to offer retirement plans.
Reps. Tim Walberg (R-MI) and Gregorio Kilili Camacho Sablan (D-Northern Mariana Islands) have introduced the Retirement Plan Modernization Act (H.R. 4158)
, bipartisan legislation that the congressmen say will help small businesses better manage the administrative expenses of retirement plans “by providing a long-overdue update to the automatic IRA rollover limit for former employees’ assets.”
The Retirement Plan Modernization Act would raise the automatic IRA rollover limit, based on the rate of inflation, from $5,000 to $7,600, and allow for future increases to be indexed for inflation.
Under current law, automatic IRA rollovers occur if a participant is no longer employed by the employer sponsoring the retirement plan and his or her balance is between $1,000 and $5,000. While Congress has periodically adjusted the cashout limit over the years to reflect increasing costs of administration, the last time it was updated was 1997.
Walberg is the Chairman of the House Energy and Commerce Committee’s Subcommittee on Health, Employment, Labor, and Pensions; Sablan serves as Ranking Member of that subcommittee.